(a) In general. Except as provided in paragraph (b) of this section, the term dividend for purposes of this section and Sec. Sec. 1.6042-2 and 1.6042-4 means the amounts described in the following paragraphs (a) (1) through (3) of this section--
(1) Any distribution made by a corporation to its shareholders which is a dividend as defined in section 316; and
(2) Any payment made by a stockbroker to any person as a substitute for a dividend. Such a payment includes any payment made in lieu of a dividend to a person whose stock has been borrowed. See Sec. 1.6045-2(h) for coordination of the reporting requirements under sections 6042 and 6045(d) with respect to such payments; and
(3) A distribution from a regulated investment company (irrespective of the fact that any part of the distribution may not represent ordinary income (i.e., may, for example, represent a capital gain dividend as defined in section 852(b)(3)(C)).
(b) Exceptions--(1) In general. For purposes of Sec. Sec. 1.6042-2 and 1.6042-4, the amounts described in paragraphs (b)(1)(i) through (vii) of this section are not dividends.
(1) In general. For purposes of Sec. Sec. 1.6042-2 and 1.6042-4, the amounts described in paragraphs (b)(1)(i) through (vii) of this section are not dividends.
(i) Amounts paid by an insurance company to a policyholder, other than a dividend upon its capital stock.
(ii) Payments (however denominated) by a mutual savings bank, savings and loan association, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares. See, however, section 6049 and the regulations under that section for provisions requiring reporting of these payments.
(iii) and (iv) [Reserved] For further guidance, see Sec. 1.6042-3T(b)(1)(iii) and (iv).
(v) Distributions or payments for the period that the amounts represent assets blocked as described in Sec. 1.1441-2(e)(3). The exemption in this paragraph (b)(1)(v) shall terminate when payment is deemed to occur in accordance with the rules of Sec. 1.1441-2(e)(3).
(vi) [Reserved] For further guidance, see Sec. 1.6042-3T(b)(1)(vi).
(vii) With respect to amounts paid or credited after December 31, 1982, any amount paid or credited to any person described in Sec. 1.6049-4(c)(1)(ii), unless a tax is withheld under section 3406 and is not refunded by the payor in accordance with Sec. 31.6413(a)-3 of this chapter (Employment Tax Regulations).
(2) Payor. The term payor has the same meaning as described in Sec. 1.6049-4(a)(2).
(3) [Reserved] For further guidance, see Sec. 1.6042-3T(b)(3).
(4) 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).
(5) Effective/applicability date--(i) The provisions of this paragraph (b) apply to payments made after December 31, 2000.
(i) The provisions of this paragraph (b) apply to payments made after December 31, 2000.
(ii) [Reserved] For further guidance, see Sec. 1.6042-3T(b)(5)(ii).
(c) Special rule. If a person makes a payment which may be a dividend, or if a nominee receives a payment which may be a dividend, but such person or nominee is unable to determine the portion of the payment which is a dividend (as defined in paragraphs (a) and (b) of this section) at the time he files his return under Sec. 1.6042-2, he shall, for purposes of such section, treat the entire amount of such payment as a dividend. [T.D. 6628, 27 FR 12797, Dec. 28, 1962, as amended by T.D. 6908, 31 FR 16774, Dec. 31, 1966; T.D. 7987, 49 FR 42719, Oct. 24, 1984; T.D. 8029, 50 FR 23680, June 5, 1985; T.D. 8734, 62 FR 53475, Oct. 14, 1997; T.D. 8804, 63 FR 72186, Dec. 31, 1998; 64 FR 73411, Dec. 30, 1999; T.D. 8881, 65 FR 32205, May 22, 2000; T.D. 9658, 79 FR 12794, Mar. 6, 2014] Sec. 1.6042-3T Dividends subject to reporting (temporary).
(a) through (b)(1)(ii) [Reserved] For further guidance, see Sec. 1.6042-3(a) through (b)(1)(ii).
(iii) Distributions or 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 payments 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 in accordance with Sec. 1.1441-1(b) if it obtains from the intermediary 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 to specific payees to which withholding under chapter 4 applies. Payments excepted from reporting under this paragraph (b)(1)(iii) may be reportable, for purposes of chapter 3 of the Internal Revenue Code (Code), under Sec. 1.1461-1(b) and (c) or, for chapter 4 purposes, 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 (b)(1)(iii). The provisions in Sec. 1.6049-5(c) regarding the definitions of U.S. payor and non-U.S. payor shall also apply for purposes of this paragraph (b)(1)(iii). 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.
(iv) Distributions or payments from sources outside the United States (as determined under the provisions of part I, subchapter N, chapter 1 of the Code and the regulations under those provisions) that are 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).
(v) [Reserved] For further guidance, see Sec. 1.6042-3(b)(1)(v).
(vi) 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. 1.6049-4(c)(1)(ii) to the person from whom the U.S. branch receives the payment, the amount paid by the U.S. branch to such person is a dividend. See, however, Sec. 1.6042-2(a)(1)(i)(A) for when reporting under section 6042 is coordinated with reporting under chapter 4 of the Code or an applicable IGA (as defined in Sec. 1.6049-4(f)(7)). The exception of this paragraph (b)(1)(vi) 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).
(vii) through (b)(2) [Reserved] For further guidance, see Sec. 1.6042-3(b)(1)(vii) through (b)(2).
(3) Joint owners. Amounts paid to joint owners for which a certificate or documentation is required as a condition for being exempt from reporting under this paragraph (b) 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 of this chapter, or with documentation described in paragraph (b)(1)(iii) of this section furnished by each joint owner upon which it 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 such 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). For purposes of applying this paragraph (b)(3), the grace period described in Sec. 1.6049-5(d)(2)(ii) shall apply only if each payee qualifies for such grace period.
(4) through (5)(i) [Reserved] For further guidance, see Sec. 1.6042-3(b)(4) through (b)(5)(i).
(ii) The provisions of paragraphs (b)(1)(iii), (b)(1)(iv), (b)(1)(vi), and (b)(3) of this section apply to payments made after June 30, 2014.
(c) [Reserved] For further guidance, see Sec. 1.6042-3(c).
(d) Expiration date. The applicability of this section expires on February 28, 2017. [T.D. 9658, 79 FR 12794, Mar. 6, 2014]