Code of Federal Regulations (alpha)

CFR /  Title 26  /  Part 1  /  Sec. 1.6041-4 Foreign-related items and other exceptions.

(a) Exempted foreign-related items--(1) through (3) [Reserved] For further guidance, see Sec. 1.6041-4T(a)(1) through (3).

(4) Returns of information are not required for amounts paid with respect to notional principal contracts referred to in Sec. 1.863-7 or 1.988-2(e) which the payor may treat as effectively connected income of a foreign payee under the provisions of Sec. 1.1441-4(a)(3) or if the payee provides a representation in a master agreement that governs the transactions in notional principal contracts between the parties (for example, an International Swap and Derivatives Association (ISDA) Agreement, including the Schedule thereto) or in the confirmation on the particular notional principal contract transaction that the counterparty is a foreign person. See, however, Sec. 1.1461-1(c)(2)(i) for applicable reporting requirements.

(5) Returns of information are not required for the period that the amounts paid represent assets blocked as described in Sec. 1.1441-2(e)(3). The exemption in this paragraph (a)(5) shall terminate when payment is deemed to occur in accordance with the provisions of Sec. 1.1441-2(e)(3).

(6) For rules concerning direct sellers, see Sec. 1.6041A-1(d)(3)(i)(C).

(7) [Reserved] For further guidance, see Sec. 1.6041-4T(a)(7).

(b) [Reserved] For further guidance, see Sec. 1.6041-4T(b).

(c) Conversion into United States dollars of amounts paid in foreign currency. For rules concerning foreign currency conversion, see Sec. 1.6049-4(d)(3)(i).

(d) Effective/applicability date. (1) The provisions of this section apply to payments made after December 31, 2000.

(1) The provisions of this section apply to payments made after December 31, 2000.

(2) [Reserved] For further guidance, see Sec. 1.6041-4T(d)(2). [T.D. 8734, 62 FR 53473, Oct. 14, 1997, as amended by T.D. 8804, 63 FR 72188, Dec. 31, 1998; T.D. 8856, 64 FR 73412, Dec. 30, 1999; T.D. 8881, 65 FR 32205, May 22, 2000; T.D. 9658, 79 FR 12793, Mar. 6, 2014] Sec. 1.6041-4T Foreign-related items and other exceptions (temporary).

(a) [Reserved] For further guidance, see Sec. 1.6041-4(a).

(1) Returns of information are not required for payments that a payor can, prior to payment, reliably associate with documentation upon which it may rely to treat as made to a foreign beneficial owner in accordance with Sec. 1.1441-1(e)(1)(ii) or as made to a foreign payee in accordance with Sec. 1.6049-5(d)(1) or presumed to be made to a foreign payee under Sec. 1.6049-5(d)(2), (3), (4), or (5). Returns of information are also not required for a payment that a payor or middleman can, prior to payment, reliably associate with documentation upon which it may rely to treat as made to a foreign intermediary or flow-through entity in accordance with Sec. 1.1441-1(b) if it obtains from the intermediary or flow-through entity a withholding statement described in Sec. 1.6049-5(b)(14) that allocates the payment to a chapter 4 withholding rate pool (as defined in Sec. 1.6049-4(f)(5)) or specific payees to which withholding applies under chapter 4. Payments excepted from reporting under this paragraph (a)(1) may be reportable, for purposes of chapter 3 of the Internal Revenue Code (Code), under Sec. 1.1461-1(b) and (c) and, for purposes of chapter 4 of the Code, under Sec. 1.1474-1(d)(2). The provisions in Sec. 1.6049-5(c) regarding documentation of foreign status shall apply for purposes of this paragraph (a)(1). The provisions in Sec. 1.6049-5(c)(5) regarding the definitions of U.S. payor and non-U.S. payor shall also apply for purposes of this paragraph (a)(1). See Sec. 1.1441-1(b)(3)(iii)(B) and (C) for special payee rules regarding scholarships, grants, pensions, annuities, etc. The provisions of Sec. 1.1441-1 shall apply by substituting the term payor for the term withholding agent and without regard to the fact that the provisions apply only to amounts subject to withholding under chapter 3 of the Code and the regulations under that chapter.

(2) Returns of information are not required for payments of amounts from sources outside the United States (determined under the provisions of part I, subchapter N, chapter 1 of the Code and the regulations under those provisions) paid by a non-U.S. payor or non-U.S. middleman and that are paid and received outside the United States. For a definition of non-U.S. payor and non-U.S. middleman, see Sec. 1.6049-5(c)(5). For circumstances in which an amount is considered to be paid and received outside the United States, see Sec. 1.6049-4(f)(16).

(3) If a foreign intermediary, as described in Sec. 1.1441-1(c)(13), or a U.S. branch that is not treated as a U.S. person receives a payment from a payor, which payment the payor can reliably associate with a valid withholding certificate described in Sec. 1.1441-1(e)(3)(ii) or (iii), or Sec. 1.1441-1(e)(3)(v), respectively, furnished by such intermediary or branch, then the intermediary or branch is not required to report such payment when it, in turn, pays the amount, unless, and to the extent, the intermediary or branch knows that the payment is required to be reported under this section and was not so reported. For example, if a U.S. branch described in Sec. 1.1441-1(b)(2)(iv) fails to provide information regarding U.S. persons that are not exempt from reporting under Sec. 1.6041-3(q) to the person from whom the U.S. branch receives the payment, the U.S. branch must report the payment on an information return. See, however, paragraph (a)(7) of this section for when reporting under section 6041is coordinated with reporting under chapter 4 of the Code or an applicable IGA (as defined in Sec. 1.6049-4(f)(7)). The exception described in this paragraph (a)(3) for amounts paid by a foreign intermediary shall not apply to a qualified intermediary that assumes reporting responsibility under chapter 61 of the Code with respect to amounts reportable under the agreement described in Sec. 1.1441-1(e)(5)(iii).

(4) through (6) [Reserved] For further guidance, see Sec. 1.6041-4(a)(4) through (6).

(7) Returns of information are not required for payments with respect to which a return is not required by applying the rules of Sec. 1.6049-4(c)(4) (by substituting the term a payment subject to reporting under section 6041 for the term an interest payment).

(b) Joint owners. Amounts paid to joint owners for which a certificate or documentation is required as a condition for being exempt from reporting under paragraph (a) of this section are presumed made to U.S. payees who are not exempt recipients if, prior to payment, the payor or middleman cannot reliably associate the payment either with a Form W-9 furnished by one of the joint owners in the manner required in Sec. Sec. 31.3406(d)-1 through 31.3406(d)-5, or with documentation described in paragraph (a)(1) of this section furnished by each joint owner upon which the payor or middleman can rely to treat each joint owner as a foreign payee or foreign beneficial owner. However, in the case of a withholdable payment (as defined in Sec. 1.6049-4(f)(15)) made to joint payees, if any joint payee does not appear to be an individual, the payment is presumed made to a foreign payee that is a nonparticipating FFI (as defined in Sec. 1.1471-1(b)(82)). See Sec. 1.1471-3(f)(7).

(c) through (d)(1) [Reserved] For further guidance, see Sec. 1.6041-4(c) through (d)(1).

(2) The provisions of paragraphs (a)(1) through (3), (a)(7), and (b) of this section apply to payments made after June 30, 2014.

(e) Expiration date. The applicability of this section expires on February 28, 2017. [T.D. 9658, 79 FR 12793, Mar. 6, 2014]