Announcement 2009-42

Hummingbird Tribal Foundation
Woodside, CA
Diamond-A-CAT-A-ME, Inc.
Houston, TX
Constitutional Educational Research
Foundation
Rancho Cordova, CA
Family Home Providers, Inc.
Cumming, GA

Special Rules To Reduce
Section 1446 Withholding;
Correction
Announcement 2009–42
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendments.
SUMMARY: This document contains corrections to final regulations (T.D. 9394,
2008–21 I.R.B. 988) that were published
in the Federal Register on Tuesday, April
29, 2008 (73 FR 23069) regarding when
a partnership may consider certain deductions and losses of a foreign partner to reduce or eliminate the partnership’s obligation to pay withholding tax under section
1446 on effectively connected taxable income allocable under section 704 to such
partner. The regulations will affect partnerships engaged in a trade or business in
the United States that have one or more foreign partners.
DATES: This correction is effective on
April 2, 2009, and is applicable on April
29, 2008.
FOR
FURTHER
INFORMATION
CONTACT: Ronald M. Gootzeit at (202)
622–3860 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the subject
of this document are under sections 1446,
1464, 6071, 6091, 6151, 6302, and 6414
of the Internal Revenue Code.
Need for Correction
As published, final regulations (T.D.
9394) contains errors that may prove to be
misleading and are in need of clarification.

May 18, 2009

*****
Correction of Publication
Accordingly, 26 CFR part 1 is corrected by making the following correcting
amendments:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1446–6 is amended as
follows:
1. Paragraph (c)(2)(i) is revised.
2. The last sentence of paragraph
(d)(3)(ii) is revised and a new sentence is
added at the end of the paragraph.
3. Paragraphs (e)(1)(vi) second occurrence, (e)(1)(vii), and (e)(1)(viii) are
redesignated as paragraphs (e)(1)(vii),
(e)(1)(viii), and (e)(1)(ix), respectively.
4. The first sentence of paragraph (e)(2)
Example 2.(i) is revised.
5. The third and fourth sentences of
paragraph (e)(2) Example 2.(ii) are revised.
6. The fourth sentence of paragraph
(e)(2) Example 4. is revised.
7. Paragraph (e)(2) Example 6.(ii) is
revised.
The revisions and addition read as follows:
§1.1446–6 Special rules to reduce a
partnership’s 1446 tax with respect to
a foreign partner’s allocable share of
effectively connected taxable income.
*****
(c) * * *
(2) * * *
(i) Form of certification. A partner’s
certification to a partnership under paragraph (c)(1)(i) or (iii) of this section shall
be made using Form 8804–C, “Certificate
Of Partner-Level Items to Reduce Section
1446 Withholding,”in accordance with the
instructions of the form and the rules of
this section.
*****
(d) * * *
(3) * * *
(ii) * * * To permit the partnership to
reasonably rely on such certificate, the
partnership shall be considered to have
satisfied the requirements of paragraph
(d)(3)(i) of this section if the partnership

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demonstrates that such failure was due
to reasonable cause and not willful neglect and if once the partnership becomes
aware of the failure, the partnership attaches the certificate and computation, as
well as a written statement setting forth
the reasons for the failure to comply with
the requirements of paragraph (d)(3)(i) of
this section, to an amended Form 8813
or amended Forms 8804 and 8805 for
the relevant period. All such submissions
should be sent to the address provided in
the instructions to Form 8804–C.
*****
(e) * * *
(2) * * *
Example 2. * * *
(i) Assume the same facts as in Example 1. * * *
(ii) * * * As described in Example 1, NRA’s year
4 U.S. income tax return is a qualifying U.S. income
tax return because it will report income or gain effectively connected with a U.S. trade or business and is
described under paragraph (b)(2)(iii)(C) of this section. Although NRA’s year 5 U.S. income tax return
reports income or gain effectively connected with a
U.S. trade or business or deductions or losses properly allocated and apportioned to such activities it is
not a qualifying U.S. income tax return under paragraph (b)(2)(iii) of this section. * * *
*****
Example 4. * * * NRA timely-filed (within the
meaning of paragraph (b)(2) of this section) U.S. income tax returns for years 1 through 6 reporting its allocable share of ECTI (or loss) from XYZ (and timely
paid all tax shown on such returns). * * *
*****
Example 6. * * *
(ii) If PRS had considered only $900 (or a lesser
amount) of NRA’s certified net operating loss when
computing and paying its 1446 tax during year 4 then,
under paragraph (d)(2)(iii) of this section, PRS would
not be liable for 1446 tax because it did not consider
a net operating loss greater than the amount actually
available to NRA.

Par. 3. Section 1.1464–1 is amended by
revising paragraph (c) to read as follows:
§1.1464–1 Refunds or credits.
*****
(c) Effective/Applicability date. The
last sentence in paragraph (a) of this section shall apply to partnership taxable
years beginning after April 29, 2008.
Par. 4. Section 1.6151–1 is amended by
revising paragraph (e) to read as follows:
§1.6151–1 Time and place for paying tax
shown on returns.
*****

2009–20 I.R.B.

(e) Effective/Applicability date. Paragraph (d)(2) of this section shall apply to
publicly traded partnerships described in
§1.1446–4 for partnership taxable years
beginning after April 29, 2008.
*****

2009–20 I.R.B.

LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).

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(Filed by the Office of the Federal Register on April 1, 2009,
8:45 a.m., and published in the issue of the Federal Register
for April 2, 2009, 74 F.R. 14931)

May 18, 2009