Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons, Information Reporting and Backup Withholding on Payments Made to Certain U.S. Persons, and Portfolio Interest Treatment; Correction, 22378-22381 [2014-09161]
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Federal Register / Vol. 79, No. 77 / Tuesday, April 22, 2014 / Rules and Regulations
regulations, and Congressional intent to
implement section 777A(d)(1)(B) of the
Act, where appropriate. Therefore, a
determination to apply a particular
comparison method to calculate a
respondent’s weighted-average dumping
margin is not punitive, but rather a
reflection of the respondent’s own
pricing behavior.
The Department disagrees that the
application of the average-to-transaction
method negates the Department’s
abandonment of denying offsets for nondumped sales in investigations or
reviews. In 2006, the Department came
into compliance with certain WTO
rulings and changed its practice to grant
offsets for non-dumped comparison
results when using the average-toaverage method in less-than-fair-value
investigations.29 With the 2012 Final
Modification, the Department changed
its practice in certain types of reviews,
including administrative reviews, to
follow its WTO-compliant practice in
less-than-fair-value investigations and to
use the average-to-average method while
granting offsets for non-dumped
comparison results. The Department has
not changed its approach with respect to
the application of the average-totransaction method, which includes the
denial of offsets for non-dumped sales
when aggregating the transactionspecific comparison results. This is
based on the fundamental differences
between the average-to-average method
and the average-to-transaction method
and has been upheld by the Federal
Circuit.30
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7. Other Comments
Two commenters raise concerns with
the Department’s current approach, in
particular the Department’s use of the
Cohen’s d test. Specifically, these
commenters contend that the Cohen’s d
test is not a recognized statistical
measure for identifying targeted sales,
and fails to account for directionality,
i.e. it does not distinguish between
positive and negative results. As a
result, the test wrongly captures sales
that are not targeted. Instead, these
commenters argue that a pooled
standard deviation should be based on
a weighted average, rather than simple
average variances, and the Department
should control for more independent
variables in each run, as well as apply
additional filters before determining
targeted sales.
29 Antidumping
Proceedings: Calculation of the
Weighted-Average Dumping Margin During an
Antidumping Investigation; Final Modification, 71
FR 77722 (Dec. 27, 2006).
30 Union Steel v. United States, 713 F.3d 1101,
1103 (Fed. Cir. 2013).
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The Department’s Response
In the Proposed Rule, the Department
advised that it was ‘‘seeking comments
from parties to clarify the status of the
previously withdrawn regulatory
provisions with regard to antidumping
duty investigations,’’ and also invited
comment on the effect of the Proposed
Rule on recent modifications to the
Department’s methodology, i.e., the
2012 Final Modification.31 The
Department further explained that it
was inviting parties ‘‘to comment on
this proposed rulemaking and the
proposed effective date. Further, any
party may submit comments expressing
its disagreement with the Department’s
proposal and may propose an
alternative approach. If any party
believes that the Department should
reinstate the previously withdrawn
regulations, that party should explain
how to reinstate the withdrawn
regulations and include suggestions on
how to codify such reinstatement, as
well as any suggestions on the effective
date.’’ 32
The comments submitted with respect
to the characteristics and application of
the Cohen’s d test are beyond the scope
of the rulemaking, i.e., the Proposed
Rule, and therefore, the Department
need not reach consideration of these
comments. The Department expects to
request comments from parties on its
current differential pricing analysis
separately.
Classification
Executive Order 12866
This rulemaking is not significant for
purposes of Executive Order 12866 of
September 30, 1993 (‘‘Regulatory
Planning and Review’’) (58 FR 51735
(October 4, 1993)).
Paperwork Reduction Act
This proposed rule contains no new
collection of information subject to the
Paperwork Reduction Act, 44 U.S.C.
Chapter 35.
Executive Order 13132
This proposed rule does not contain
policies with federalism implications as
that term is defined in section 1(a) of
Executive Order 13132, dated August 4,
1999 (64 FR 43255 (August 10, 1999)).
Regulatory Flexibility Act
The Chief Counsel for Regulation
certified to the Chief Counsel for
Advocacy of the Small Business
Administration (‘‘SBA’’) at the proposed
rule stage that this rule would not have
31 Proposed
32 Id.
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Rule, at 60240.
at 60241.
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a significant economic impact on a
substantial number of small business
entities under the provisions of the
Regulatory Flexibility Act, 5 U.S.C.
605(b). For this reason, a Final
Regulatory Flexibility Analysis is not
required and one has not been prepared.
Dated: April 7, 2014.
Paul Piquado,
Assistant Secretary for Enforcement and
Compliance.
[FR Doc. 2014–08186 Filed 4–21–14; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9658]
RIN 1545–BL18
Withholding of Tax on Certain U.S.
Source Income Paid to Foreign
Persons, Information Reporting and
Backup Withholding on Payments
Made to Certain U.S. Persons, and
Portfolio Interest Treatment;
Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting amendments.
AGENCY:
This document contains
corrections to final and temporary
regulations (TD 9658), which were
published in the Federal Register on
Thursday, March 6, 2014 (79 FR 12726).
The regulations relate to the
withholding of tax on certain U.S.
source income paid to foreign persons,
information reporting and backup
withholding with respect to payments
made to certain U.S. persons, portfolio
interest paid to nonresident alien
individuals and foreign corporations,
and the associated requirements
governing collection, refunds, and
credits of withheld amounts under these
rules.
DATES: This correction is effective on
April 22, 2014 and is applicable on
March 6, 2014.
FOR FURTHER INFORMATION CONTACT:
Nancy J. Lee, (202) 317–6942 (not a tollfree call).
SUPPLEMENTARY INFORMATION:
SUMMARY:
Background
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under section 6045 of the Code.
The temporary regulation that is the
subject of these corrections is § 1.6045–
1, promulgated under section 6045 of
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Federal Register / Vol. 79, No. 77 / Tuesday, April 22, 2014 / Rules and Regulations
the Internal Revenue Code. This
regulation affects persons that are
brokers making certain returns of
information with respect to their
customers.
Need for Correction
As published, the temporary
regulation contains errors in the
instructions that need to be corrected.
First, the instructions indicate that
§ 1.6045–1T is amended. However, the
temporary regulation is added, not
amended. Second, the instructions do
not add paragraphs (m) through (o),
which should be included in the
temporary regulation by cross-reference
to the final regulation. The correcting
amendments add the temporary
regulation, including paragraphs (m)
through (o).
List of Subjects in CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
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 1.6045–1T is added to
read as follows:
■
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§ 1.6045–1T Returns of information of
brokers and barter exchanges (temporary).
(a) through (c)(3)(i) [Reserved]. For
further guidance, see § 1.6045–1(a)
through (c)(3)(i)(C)(2)(iv).
(ii) Excepted sales. No return of
information is required with respect to
a sale effected by a broker for a customer
if the sale is an excepted sale. For this
purpose, a sale is an excepted sale if it
is—
(A) So designated by the Internal
Revenue Service in a revenue ruling or
revenue procedure (see § 601.601(d)(2)
of this chapter); or
(B) A sale with respect to which a
return is not required by applying the
rules of § 1.6049–4(c)(4) (by substituting
the term a sale subject to reporting
under section 6045 for the term an
interest payment).
(iii) through (xiii) [Reserved]. For
further guidance, see § 1.6045–
1(c)(3)(iii) through (xiii).
(xiv) Certain redemptions. No return
of information is required under this
section for payments made by a stock
transfer agent (as described in § 1.6045–
1(b)(iv)) with respect to a redemption of
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stock of a corporation described in
section 1297(a) with respect to a
shareholder in the corporation if—
(A) The stock transfer agent obtains
from the corporation a written
certification signed by an officer of the
corporation, that states that the
corporation is described in section
1297(a) for each calendar year during
which the stock transfer agent relies on
the provisions of paragraph (c)(3)(xiv) of
this section, and the stock transfer agent
has no reason to know that the written
certification is unreliable or incorrect;
(B) The stock transfer agent identifies,
prior to payment, the corporation as a
participating FFI (including a reporting
Model 2 FFI) (as defined in § 1.6049–
4(f)(10) or (f)(14), respectively), or
reporting Model 1 FFI (as defined in
§ 1.6049–4(f)(13)), in accordance with
the requirements of § 1.1471–3(d)(4)
(substituting the terms stock transfer
agent and corporation for the terms
withholding agent and payee);
(C) The stock transfer agent obtains,
before each year the payment would
otherwise be reported, a written
certification representing that the
corporation shall report the payment as
part of its account holder reporting
obligations under chapter 4 of the Code
or an applicable IGA (as defined in
§ 1.6049–4(f)(7)) and provided the stock
transfer agent does not know that the
corporation is not reporting the payment
as required. A stock transfer agent that
knows that the corporation is not
reporting the payment as required under
chapter 4 of the Code or an applicable
IGA must report all payments reportable
under this section that it makes during
the year in which it obtains such
knowledge; and
(D) The stock transfer agent is not also
acting in its capacity as a custodian,
nominee, or other agent of the payee
with respect to the payment.
(xv) Effective/applicability date.
Paragraphs (c)(3)(ii) and (xiv) of this
section apply to sales effected on or
after July 1, 2014. (For sales effected
before July 1, 2014, see paragraph
(c)(3)(ii) of this section as in effect and
contained in 26 CFR part 1 revised April
1, 2013.)
(c)(4) through (g)(1) [Reserved]. For
further guidance, see § 1.6045–1(c)(4)
through (g)(1).
(i) With respect to a sale effected at an
office of a broker either inside or outside
the United States, the broker may treat
the customer as an exempt foreign
person if the broker can, prior to the
payment, reliably associate the payment
with documentation upon which it can
rely in order to treat the customer as a
foreign beneficial owner in accordance
with § 1.1441–1(e)(1)(ii), as made to a
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22379
foreign payee in accordance with
§ 1.6049–5(d)(1), or presumed to be
made to a foreign payee under § 1.6049–
5(d)(2) or (3). For purposes of this
paragraph (g)(1)(i), the provisions in
§ 1.6049–5(c) regarding rules applicable
to documentation of foreign status shall
apply with respect to a sale when the
broker completes the acts necessary to
effect the sale at an office outside the
United States, as described in paragraph
(g)(3)(iii)(A) of this section, and no
office of the same broker within the
United States negotiated the sale with
the customer or received instructions
with respect to the sale from the
customer. The provisions in § 1.6049–
5(c) regarding the definitions of U.S.
payor, U.S. middleman, non-U.S. payor,
and non-U.S. middleman shall also
apply for purposes of this paragraph
(g)(1)(i). The provisions of § 1.1441–1
shall apply by substituting the terms
broker and customer for the terms
withholding agent and payee and
without regard for the fact that the
provisions apply to amounts subject to
withholding under chapter 3 of the
Internal Revenue Code (Code). The
provisions of § 1.6049–5(d) shall apply
by substituting the terms broker and
customer for the terms payor and payee.
For purposes of this paragraph (g)(1)(i),
a broker that is required to obtain, or
chooses to obtain, a beneficial owner
withholding certificate described in
§ 1.1441–1(e)(2)(i) from an individual
may rely on the withholding certificate
only to the extent the certificate
includes a certification that the
beneficial owner has not been, and at
the time the certificate is furnished,
reasonably expects not to be present in
the United States for a period
aggregating 183 days or more during
each calendar year to which the
certificate pertains. The certification is
not required if a broker receives
documentary evidence under § 1.6049–
5(c)(1) or (4).
(ii) through (3)(iii) [Reserved]. For
further guidance, see § 1.6045–1(g)(1)(ii)
through (g)(3)(iii).
(iv) Special rules where the customer
is a foreign intermediary or certain U.S.
branches. A foreign intermediary, as
defined in § 1.1441–1(c)(13), is an
exempt foreign person, except when the
broker has actual knowledge (within the
meaning of § 1.6049–5(c)(3)) that the
person for whom the intermediary acts
is a U.S. person that is not exempt from
reporting under paragraph (c)(3) of this
section or the broker is required to
presume under § 1.6049–5(d)(3) that the
payee is a U.S. person that is not an
exempt recipient. If a foreign
intermediary, as described in § 1.1441–
1(c)(13), or a U.S. branch that is not
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treated as a U.S. person receives a
payment from a payor or middleman,
which payment the payor or middleman
can reliably associate with a valid
withholding certificate described in
§ 1.1441–1(e)(3)(ii) or (iii) or § 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 § 1.1441–1(b)(2)(iv)
fails to provide information regarding
U.S. persons that are not exempt from
reporting under paragraph (c)(3) of this
section 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 (c)(3)(ii) of this section for
when reporting under section 6045 is
coordinated with reporting under
chapter 4 of the Code or an applicable
IGA (as defined in § 1.6049–4(f)(7)). The
exception of this paragraph (g)(3)(iv) for
amounts paid by a foreign intermediary
shall not apply to a qualified
intermediary that assumes reporting
responsibility under chapter 61 of the
Code except as provided under the
agreement described in § 1.1441–
1(e)(5)(iii).
(4) Examples. The application of the
provisions of this paragraph (g) may be
illustrated by the following examples:
Example 1. FC is a foreign corporation that
is not a U.S. payor or U.S. middleman
described in § 1.6049–5(c)(5) that regularly
issues and retires its own debt obligations. A
is an individual whose residence address is
inside the United States, who holds a bond
issued by FC that is in registered form
(within the meaning of section 163(f) and the
regulations under that section). The bond is
retired by FP, a foreign corporation that is a
broker within the meaning of paragraph (a)(1)
of this section and the designated paying
agent of FC. FP mails the proceeds to A at
A’s U.S. address. The sale would be
considered to be effected at an office outside
the United States under paragraph
(g)(3)(iii)(A) of this section except that the
proceeds of the sale are mailed to a U.S.
address. For that reason, the sale is
considered to be effected at an office of the
broker inside the United States under
paragraph (g)(3)(iii)(B) of this section.
Therefore, FC is a broker under paragraph
(a)(1) of this section with respect to this
transaction because, although it is not a U.S.
payor or U.S. middleman, as described in
§ 1.6049–5(c)(5), it is deemed to effect the
sale in the United States. FP is a broker for
the same reasons. However, under the
multiple broker exception under paragraph
(c)(3)(iii) of this section, FP, rather than FC,
is required to report the payment because FP
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is responsible for paying the holder the
proceeds from the retired obligations. Under
paragraph (g)(1)(i) of this section, FP may not
treat A as an exempt foreign person and must
make an information return under section
6045 with respect to the retirement of the FC
bond, unless FP obtains the certificate or
documentation described in paragraph
(g)(1)(i) of this section.
Example 2. The facts are the same as in
Example 1 except that FP mails the proceeds
to A at an address outside the United States.
Under paragraph (g)(3)(iii)(A) of this section,
the sale is considered to be effected at an
office of the broker outside the United States.
Therefore, under paragraph (a)(1) of this
section, neither FC nor FP is a broker with
respect to the retirement of the FC bond.
Accordingly, neither is required to make an
information return under section 6045.
Example 3. The facts are the same as in
Example 2 except that FP is also the agent
of A. The result is the same as in Example
2. Neither FP nor FC are brokers under
paragraph (a)(1) of this section with respect
to the sale since the sale is effected outside
the United States and neither of them are
U.S. payors (within the meaning of § 1.6049–
5(c)(5)).
Example 4. The facts are the same as in
Example 1 except that the registered bond
held by A was issued by DC, a domestic
corporation that regularly issues and retires
its own debt obligations. Also, FP mails the
proceeds to A at an address outside the
United States. Interest on the bond is not
described in paragraph (g)(1)(ii) of this
section. The sale is considered to be effected
at an office outside the United States under
paragraph (g)(3)(iii)(A) of this section. DC is
a broker under paragraph (a)(1)(i)(B) of this
section. DC is not required to report the
payment under the multiple broker exception
under paragraph (c)(3)(iii) of this section. FP
is not required to make an information return
under section 6045 because FP is not a U.S.
payor described in § 1.6049–5(c)(5) and the
sale is effected outside the United States.
Accordingly, FP is not a broker under
paragraph (a)(1) of this section.
Example 5. The facts are the same as in
Example 4 except that FP is also the agent
of A. DC is a broker under paragraph (a)(1)
of this section. DC is not required to report
under the multiple broker exception under
paragraph (c)(3)(iii) of this section. FP is not
required to make an information return under
section 6045 because FP is not a U.S. payor
described in § 1.6049–5(c)(5) and the sale is
effected outside the United States and
therefore FP is not a broker under paragraph
(a)(1) of this section.
Example 6. The facts are the same as in
Example 4 except that the bond is retired by
DP, a broker within the meaning of paragraph
(a)(1) of this section and the designated
paying agent of DC. DP is a U.S. payor under
§ 1.6049–5(c)(5). DC is not required to report
under the multiple broker exception under
paragraph (c)(3)(iii) of this section. DP is
required to make an information return under
section 6045 because it is the person
responsible for paying the proceeds from the
retired obligations unless DP obtains the
certificate or documentary evidence
described in paragraph (g)(1)(i) of this
section.
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Example 7. Customer A owns U.S.
corporate bonds issued in registered form
after July 18, 1984, and carrying a stated rate
of interest. The bonds are held through an
account with foreign bank, X, and are held
in street name. X is a wholly-owned
subsidiary of a U.S. company and is not a
qualified intermediary within the meaning of
§ 1.1441–1(e)(5)(ii). X has no documentation
regarding A. A instructs X to sell the bonds.
In order to effect the sale, X acts through its
agent in the United States, Y. Y sells the
bonds and remits the sales proceeds to X. X
credits A’s account in the foreign country. X
does not provide documentation to Y and has
no actual knowledge that A is a foreign
person but it does appear that A is an entity
(rather than an individual).
(i) Y’s obligations to withhold and report.
Y treats X as the customer, and not A,
because Y cannot treat X as an intermediary
because it has received no documentation
from X. Y is not required to report the sales
proceeds under the multiple broker
exception under paragraph (c)(3)(iii) of this
section, because X is an exempt recipient.
Further, Y is not required to report the
amount of accrued interest paid to X on Form
1042–S under § 1.1461–1(c)(2)(ii) because
accrued interest is not an amount subject to
reporting under chapter 3 unless the
withholding agent knows that the obligation
is being sold with a primary purpose of
avoiding tax.
(ii) X’s obligations to withhold and report.
Although X has effected, within the meaning
of paragraph (a)(1) of this section, the sale of
a security at an office outside the United
States under paragraph (g)(3)(iii) of this
section, X is treated as a broker, under
paragraph (a)(1) of this section, because as a
wholly-owned subsidiary of a U.S.
corporation, X is a controlled foreign
corporation and therefore is a U.S. payor. See
§ 1.6049–5(c)(5). Under the presumptions
described in § 1.6049–5(d)(2) (as applied to
amounts not subject to withholding under
chapter 3), X must apply the presumption
rules of § 1.1441–1(b)(3)(i) through (iii), with
respect to the sales proceeds, to treat A as a
partnership that is a U.S. non-exempt
recipient because the presumption of foreign
status for offshore obligations under
§ 1.1441–1(b)(3)(iii)(D) does not apply. See
paragraph (g)(1)(i) of this section. Therefore,
unless X is an FFI (as defined in § 1.1471–
1(b)(47)) that is excepted from reporting the
sales proceeds under paragraph (c)(3)(ii) of
this section, the payment of proceeds to A by
X is reportable on a Form 1099 under
paragraph (c)(2) of this section. X has no
obligation to backup withhold on the
payment based on the exemption under
§ 31.3406(g)–1(e) of this chapter, unless X has
actual knowledge that A is a U.S. person that
is not an exempt recipient. X is also required
to separately report the accrued interest (see
paragraph (d)(3) of this section) on Form
1099 under section 6049 because A is also
presumed to be a U.S. person who is not an
exempt recipient with respect to the payment
because accrued interest is not an amount
subject to withholding under chapter 3 and,
therefore, the presumption of foreign status
for offshore obligations under § 1.1441–
1(b)(3)(iii)(D) does not apply. See § 1.6049–
5(d)(2)(i).
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Example 8. The facts are the same as in
Example 7, except that X is a foreign
corporation that is not a U.S. payor under
§ 1.6049–5(c).
(i) Y’s obligations to withhold and report.
Y is not required to report the sales proceeds
under the multiple broker exception under
paragraph (c)(3)(iii) of this section, because X
is the person responsible for paying the
proceeds from the sale to A.
(ii) X’s obligations to withhold and report.
Although A is presumed to be a U.S. payee
under the presumptions of § 1.6049–5(d)(2),
X is not considered to be a broker under
paragraph (a)(1) of this section because it is
a not a U.S. payor under § 1.6049–5(c)(5).
Therefore X is not required to report the sale
under paragraph (c)(2) of this section.
(5) Effective/applicability date—(i)
[Reserved]. For further guidance, see
§ 1.6045–1(g)(5)(i).
(ii) The provisions of paragraphs
(g)(1)(i), (g)(3)(iv), and (g)(4) of this
section apply to payments made on or
after July 1, 2014.
(h) through (p) [Reserved]. For further
guidance, see § 1.6045–1(h) through (p).
(q) Expiration date. The applicability
of this section expires on February 28,
2017.
Martin V. Franks,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. 2014–09161 Filed 4–21–14; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 100
[Docket No. USCG–2013–1061]
RIN 1625–AA08
Special Local Regulations; Eighth
Coast Guard District Annual and
Recurring Marine Events Update
Coast Guard, DHS.
Interim final rule; request for
comments.
AGENCY:
ACTION:
The Coast Guard is amending
and updating its special local
regulations relating to recurring marine
parades, regattas, and other events that
take place in the Eighth Coast Guard
District area of responsibility (AOR).
This interim rule informs the public of
regularly scheduled marine parades,
regattas, and other recurring events that
require additional safety measures
through establishing a special local
regulation. Through this interim rule the
current list of recurring marine events
requiring special local regulations is
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SUMMARY:
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updated with revisions, additional
events, and removal of events that no
longer take place in the Eighth Coast
Guard District AOR. When these special
local regulations are enforced, certain
restrictions are placed on marine traffic
in specified areas. Additionally, this one
rulemaking project reduces
administrative costs involved in
producing a separate rule for each
individual recurring event and serves to
provide notice of the known recurring
events requiring a special local
regulation throughout the year.
DATES: This rule is effective April 22,
2014. Comments and related material
must be received by the Coast Guard on
or before May 22, 2014.
ADDRESSES: Documents mentioned in
this preamble are part of Docket Number
USCG–2013–1061. To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on ‘‘Open Docket
Folder’’ on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
You may submit comments, identified
by docket number, using any one of the
following methods:
(1) Federal eRulemaking Portal:
https://www.regulations.gov.
(2) Fax: (202) 493–2251.
(3) Mail or Delivery: Docket
Management Facility (M–30), U.S.
Department of Transportation, West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue SE.,
Washington, DC 20590–0001. Deliveries
accepted between 9 a.m. and 5 p.m.,
Monday through Friday, except federal
holidays. The telephone number is 202–
366–9329.
See the ‘‘Public Participation and
Request for Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for further instructions on
submitting comments. To avoid
duplication, please use only one of
these three methods.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email Shelley R. Miller, Eighth Coast
Guard District Waterways Management
Division, (504) 671–2139 or email,
Shelley.R.Miller@uscg.mil. If you have
questions on viewing the docket, call
Cheryl Collins, Program Manager,
Docket Operations, telephone 202–366–
9826.
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
22381
SUPPLEMENTARY INFORMATION:
Table of Acronyms
BNM Broadcast Notice to Mariners
COTP Captain of the Port
DHS Department of Homeland Security
FR Federal Register
LNM Local Notice to Mariners
NPRM Notice of Proposed Rulemaking
A. Public Participation and Request for
Comments
We encourage you to participate in
this rulemaking by submitting
comments and related materials. All
comments received will be posted
without change to https://
www.regulations.gov and will include
any personal information you have
provided.
1. Submitting Comments
If you submit a comment, please
include the docket number for this
rulemaking, indicate the specific section
of this document to which each
comment applies, and provide a reason
for each suggestion or recommendation.
You may submit your comments and
material online at https://
www.regulations.gov, or by fax, mail, or
hand delivery, but please use only one
of these means. If you submit a
comment online, it will be considered
received by the Coast Guard when you
successfully transmit the comment. If
you fax, hand deliver, or mail your
comment, it will be considered as
having been received by the Coast
Guard when it is received at the Docket
Management Facility. We recommend
that you include your name and a
mailing address, an email address, or a
telephone number in the body of your
document so that we can contact you if
we have questions regarding your
submission.
To submit your comment online, go to
https://www.regulations.gov, type the
docket number [USCG–2013–1061] in
the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on ‘‘Submit a
Comment’’ on the line associated with
this rulemaking.
If you submit your comments by mail
or hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit
comments by mail and would like to
know that they reached the Facility,
please enclose a stamped, self-addressed
postcard or envelope. We will consider
all comments and material received
during the comment period and may
change the rule based on your
comments.
E:\FR\FM\22APR1.SGM
22APR1
]]>Agencies
[Federal Register Volume 79, Number 77 (Tuesday, April 22, 2014)]
[Rules and Regulations]
[Pages 22378-22381]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09161]
=======================================================================
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9658]
RIN 1545-BL18
Withholding of Tax on Certain U.S. Source Income Paid to Foreign
Persons, Information Reporting and Backup Withholding on Payments Made
to Certain U.S. Persons, and Portfolio Interest Treatment; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final and temporary
regulations (TD 9658), which were published in the Federal Register on
Thursday, March 6, 2014 (79 FR 12726). The regulations relate to the
withholding of tax on certain U.S. source income paid to foreign
persons, information reporting and backup withholding with respect to
payments made to certain U.S. persons, portfolio interest paid to
nonresident alien individuals and foreign corporations, and the
associated requirements governing collection, refunds, and credits of
withheld amounts under these rules.
DATES: This correction is effective on April 22, 2014 and is applicable
on March 6, 2014.
FOR FURTHER INFORMATION CONTACT: Nancy J. Lee, (202) 317-6942 (not a
toll-free call).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under section 6045 of the Code. The temporary regulation
that is the subject of these corrections is Sec. 1.6045-1, promulgated
under section 6045 of
[[Page 22379]]
the Internal Revenue Code. This regulation affects persons that are
brokers making certain returns of information with respect to their
customers.
Need for Correction
As published, the temporary regulation contains errors in the
instructions that need to be corrected. First, the instructions
indicate that Sec. 1.6045-1T is amended. However, the temporary
regulation is added, not amended. Second, the instructions do not add
paragraphs (m) through (o), which should be included in the temporary
regulation by cross-reference to the final regulation. The correcting
amendments add the temporary regulation, including paragraphs (m)
through (o).
List of Subjects in CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is corrected by making the following
correcting amendments:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.6045-1T is added to read as follows:
Sec. 1.6045-1T Returns of information of brokers and barter exchanges
(temporary).
(a) through (c)(3)(i) [Reserved]. For further guidance, see Sec.
1.6045-1(a) through (c)(3)(i)(C)(2)(iv).
(ii) Excepted sales. No return of information is required with
respect to a sale effected by a broker for a customer if the sale is an
excepted sale. For this purpose, a sale is an excepted sale if it is--
(A) So designated by the Internal Revenue Service in a revenue
ruling or revenue procedure (see Sec. 601.601(d)(2) of this chapter);
or
(B) A sale 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
sale subject to reporting under section 6045 for the term an interest
payment).
(iii) through (xiii) [Reserved]. For further guidance, see Sec.
1.6045-1(c)(3)(iii) through (xiii).
(xiv) Certain redemptions. No return of information is required
under this section for payments made by a stock transfer agent (as
described in Sec. 1.6045-1(b)(iv)) with respect to a redemption of
stock of a corporation described in section 1297(a) with respect to a
shareholder in the corporation if--
(A) The stock transfer agent obtains from the corporation a written
certification signed by an officer of the corporation, that states that
the corporation is described in section 1297(a) for each calendar year
during which the stock transfer agent relies on the provisions of
paragraph (c)(3)(xiv) of this section, and the stock transfer agent has
no reason to know that the written certification is unreliable or
incorrect;
(B) The stock transfer agent identifies, prior to payment, the
corporation as a participating FFI (including a reporting Model 2 FFI)
(as defined in Sec. 1.6049-4(f)(10) or (f)(14), respectively), or
reporting Model 1 FFI (as defined in Sec. 1.6049-4(f)(13)), in
accordance with the requirements of Sec. 1.1471-3(d)(4) (substituting
the terms stock transfer agent and corporation for the terms
withholding agent and payee);
(C) The stock transfer agent obtains, before each year the payment
would otherwise be reported, a written certification representing that
the corporation shall report the payment as part of its account holder
reporting obligations under chapter 4 of the Code or an applicable IGA
(as defined in Sec. 1.6049-4(f)(7)) and provided the stock transfer
agent does not know that the corporation is not reporting the payment
as required. A stock transfer agent that knows that the corporation is
not reporting the payment as required under chapter 4 of the Code or an
applicable IGA must report all payments reportable under this section
that it makes during the year in which it obtains such knowledge; and
(D) The stock transfer agent is not also acting in its capacity as
a custodian, nominee, or other agent of the payee with respect to the
payment.
(xv) Effective/applicability date. Paragraphs (c)(3)(ii) and (xiv)
of this section apply to sales effected on or after July 1, 2014. (For
sales effected before July 1, 2014, see paragraph (c)(3)(ii) of this
section as in effect and contained in 26 CFR part 1 revised April 1,
2013.)
(c)(4) through (g)(1) [Reserved]. For further guidance, see Sec.
1.6045-1(c)(4) through (g)(1).
(i) With respect to a sale effected at an office of a broker either
inside or outside the United States, the broker may treat the customer
as an exempt foreign person if the broker can, prior to the payment,
reliably associate the payment with documentation upon which it can
rely in order to treat the customer as a foreign beneficial owner in
accordance with Sec. 1.1441-1(e)(1)(ii), 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) or (3). For purposes of this
paragraph (g)(1)(i), the provisions in Sec. 1.6049-5(c) regarding
rules applicable to documentation of foreign status shall apply with
respect to a sale when the broker completes the acts necessary to
effect the sale at an office outside the United States, as described in
paragraph (g)(3)(iii)(A) of this section, and no office of the same
broker within the United States negotiated the sale with the customer
or received instructions with respect to the sale from the customer.
The provisions in Sec. 1.6049-5(c) regarding the definitions of U.S.
payor, U.S. middleman, non-U.S. payor, and non-U.S. middleman shall
also apply for purposes of this paragraph (g)(1)(i). The provisions of
Sec. 1.1441-1 shall apply by substituting the terms broker and
customer for the terms withholding agent and payee and without regard
for the fact that the provisions apply to amounts subject to
withholding under chapter 3 of the Internal Revenue Code (Code). The
provisions of Sec. 1.6049-5(d) shall apply by substituting the terms
broker and customer for the terms payor and payee. For purposes of this
paragraph (g)(1)(i), a broker that is required to obtain, or chooses to
obtain, a beneficial owner withholding certificate described in Sec.
1.1441-1(e)(2)(i) from an individual may rely on the withholding
certificate only to the extent the certificate includes a certification
that the beneficial owner has not been, and at the time the certificate
is furnished, reasonably expects not to be present in the United States
for a period aggregating 183 days or more during each calendar year to
which the certificate pertains. The certification is not required if a
broker receives documentary evidence under Sec. 1.6049-5(c)(1) or (4).
(ii) through (3)(iii) [Reserved]. For further guidance, see Sec.
1.6045-1(g)(1)(ii) through (g)(3)(iii).
(iv) Special rules where the customer is a foreign intermediary or
certain U.S. branches. A foreign intermediary, as defined in Sec.
1.1441-1(c)(13), is an exempt foreign person, except when the broker
has actual knowledge (within the meaning of Sec. 1.6049-5(c)(3)) that
the person for whom the intermediary acts is a U.S. person that is not
exempt from reporting under paragraph (c)(3) of this section or the
broker is required to presume under Sec. 1.6049-5(d)(3) that the payee
is a U.S. person that is not an exempt recipient. If a foreign
intermediary, as described in Sec. 1.1441-1(c)(13), or a U.S. branch
that is not
[[Page 22380]]
treated as a U.S. person receives a payment from a payor or middleman,
which payment the payor or middleman 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 paragraph (c)(3) of this section 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
(c)(3)(ii) of this section for when reporting under section 6045 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 (g)(3)(iv) for amounts paid by a foreign intermediary shall
not apply to a qualified intermediary that assumes reporting
responsibility under chapter 61 of the Code except as provided under
the agreement described in Sec. 1.1441-1(e)(5)(iii).
(4) Examples. The application of the provisions of this paragraph
(g) may be illustrated by the following examples:
Example 1. FC is a foreign corporation that is not a U.S. payor
or U.S. middleman described in Sec. 1.6049-5(c)(5) that regularly
issues and retires its own debt obligations. A is an individual
whose residence address is inside the United States, who holds a
bond issued by FC that is in registered form (within the meaning of
section 163(f) and the regulations under that section). The bond is
retired by FP, a foreign corporation that is a broker within the
meaning of paragraph (a)(1) of this section and the designated
paying agent of FC. FP mails the proceeds to A at A's U.S. address.
The sale would be considered to be effected at an office outside the
United States under paragraph (g)(3)(iii)(A) of this section except
that the proceeds of the sale are mailed to a U.S. address. For that
reason, the sale is considered to be effected at an office of the
broker inside the United States under paragraph (g)(3)(iii)(B) of
this section. Therefore, FC is a broker under paragraph (a)(1) of
this section with respect to this transaction because, although it
is not a U.S. payor or U.S. middleman, as described in Sec. 1.6049-
5(c)(5), it is deemed to effect the sale in the United States. FP is
a broker for the same reasons. However, under the multiple broker
exception under paragraph (c)(3)(iii) of this section, FP, rather
than FC, is required to report the payment because FP is responsible
for paying the holder the proceeds from the retired obligations.
Under paragraph (g)(1)(i) of this section, FP may not treat A as an
exempt foreign person and must make an information return under
section 6045 with respect to the retirement of the FC bond, unless
FP obtains the certificate or documentation described in paragraph
(g)(1)(i) of this section.
Example 2. The facts are the same as in Example 1 except that FP
mails the proceeds to A at an address outside the United States.
Under paragraph (g)(3)(iii)(A) of this section, the sale is
considered to be effected at an office of the broker outside the
United States. Therefore, under paragraph (a)(1) of this section,
neither FC nor FP is a broker with respect to the retirement of the
FC bond. Accordingly, neither is required to make an information
return under section 6045.
Example 3. The facts are the same as in Example 2 except that FP
is also the agent of A. The result is the same as in Example 2.
Neither FP nor FC are brokers under paragraph (a)(1) of this section
with respect to the sale since the sale is effected outside the
United States and neither of them are U.S. payors (within the
meaning of Sec. 1.6049-5(c)(5)).
Example 4. The facts are the same as in Example 1 except that
the registered bond held by A was issued by DC, a domestic
corporation that regularly issues and retires its own debt
obligations. Also, FP mails the proceeds to A at an address outside
the United States. Interest on the bond is not described in
paragraph (g)(1)(ii) of this section. The sale is considered to be
effected at an office outside the United States under paragraph
(g)(3)(iii)(A) of this section. DC is a broker under paragraph
(a)(1)(i)(B) of this section. DC is not required to report the
payment under the multiple broker exception under paragraph
(c)(3)(iii) of this section. FP is not required to make an
information return under section 6045 because FP is not a U.S. payor
described in Sec. 1.6049-5(c)(5) and the sale is effected outside
the United States. Accordingly, FP is not a broker under paragraph
(a)(1) of this section.
Example 5. The facts are the same as in Example 4 except that FP
is also the agent of A. DC is a broker under paragraph (a)(1) of
this section. DC is not required to report under the multiple broker
exception under paragraph (c)(3)(iii) of this section. FP is not
required to make an information return under section 6045 because FP
is not a U.S. payor described in Sec. 1.6049-5(c)(5) and the sale
is effected outside the United States and therefore FP is not a
broker under paragraph (a)(1) of this section.
Example 6. The facts are the same as in Example 4 except that
the bond is retired by DP, a broker within the meaning of paragraph
(a)(1) of this section and the designated paying agent of DC. DP is
a U.S. payor under Sec. 1.6049-5(c)(5). DC is not required to
report under the multiple broker exception under paragraph
(c)(3)(iii) of this section. DP is required to make an information
return under section 6045 because it is the person responsible for
paying the proceeds from the retired obligations unless DP obtains
the certificate or documentary evidence described in paragraph
(g)(1)(i) of this section.
Example 7. Customer A owns U.S. corporate bonds issued in
registered form after July 18, 1984, and carrying a stated rate of
interest. The bonds are held through an account with foreign bank,
X, and are held in street name. X is a wholly-owned subsidiary of a
U.S. company and is not a qualified intermediary within the meaning
of Sec. 1.1441-1(e)(5)(ii). X has no documentation regarding A. A
instructs X to sell the bonds. In order to effect the sale, X acts
through its agent in the United States, Y. Y sells the bonds and
remits the sales proceeds to X. X credits A's account in the foreign
country. X does not provide documentation to Y and has no actual
knowledge that A is a foreign person but it does appear that A is an
entity (rather than an individual).
(i) Y's obligations to withhold and report. Y treats X as the
customer, and not A, because Y cannot treat X as an intermediary
because it has received no documentation from X. Y is not required
to report the sales proceeds under the multiple broker exception
under paragraph (c)(3)(iii) of this section, because X is an exempt
recipient. Further, Y is not required to report the amount of
accrued interest paid to X on Form 1042-S under Sec. 1.1461-
1(c)(2)(ii) because accrued interest is not an amount subject to
reporting under chapter 3 unless the withholding agent knows that
the obligation is being sold with a primary purpose of avoiding tax.
(ii) X's obligations to withhold and report. Although X has
effected, within the meaning of paragraph (a)(1) of this section,
the sale of a security at an office outside the United States under
paragraph (g)(3)(iii) of this section, X is treated as a broker,
under paragraph (a)(1) of this section, because as a wholly-owned
subsidiary of a U.S. corporation, X is a controlled foreign
corporation and therefore is a U.S. payor. See Sec. 1.6049-5(c)(5).
Under the presumptions described in Sec. 1.6049-5(d)(2) (as applied
to amounts not subject to withholding under chapter 3), X must apply
the presumption rules of Sec. 1.1441-1(b)(3)(i) through (iii), with
respect to the sales proceeds, to treat A as a partnership that is a
U.S. non-exempt recipient because the presumption of foreign status
for offshore obligations under Sec. 1.1441-1(b)(3)(iii)(D) does not
apply. See paragraph (g)(1)(i) of this section. Therefore, unless X
is an FFI (as defined in Sec. 1.1471-1(b)(47)) that is excepted
from reporting the sales proceeds under paragraph (c)(3)(ii) of this
section, the payment of proceeds to A by X is reportable on a Form
1099 under paragraph (c)(2) of this section. X has no obligation to
backup withhold on the payment based on the exemption under Sec.
31.3406(g)-1(e) of this chapter, unless X has actual knowledge that
A is a U.S. person that is not an exempt recipient. X is also
required to separately report the accrued interest (see paragraph
(d)(3) of this section) on Form 1099 under section 6049 because A is
also presumed to be a U.S. person who is not an exempt recipient
with respect to the payment because accrued interest is not an
amount subject to withholding under chapter 3 and, therefore, the
presumption of foreign status for offshore obligations under Sec.
1.1441-1(b)(3)(iii)(D) does not apply. See Sec. 1.6049-5(d)(2)(i).
[[Page 22381]]
Example 8. The facts are the same as in Example 7, except that X
is a foreign corporation that is not a U.S. payor under Sec.
1.6049-5(c).
(i) Y's obligations to withhold and report. Y is not required to
report the sales proceeds under the multiple broker exception under
paragraph (c)(3)(iii) of this section, because X is the person
responsible for paying the proceeds from the sale to A.
(ii) X's obligations to withhold and report. Although A is
presumed to be a U.S. payee under the presumptions of Sec. 1.6049-
5(d)(2), X is not considered to be a broker under paragraph (a)(1)
of this section because it is a not a U.S. payor under Sec. 1.6049-
5(c)(5). Therefore X is not required to report the sale under
paragraph (c)(2) of this section.
(5) Effective/applicability date--(i) [Reserved]. For further
guidance, see Sec. 1.6045-1(g)(5)(i).
(ii) The provisions of paragraphs (g)(1)(i), (g)(3)(iv), and (g)(4)
of this section apply to payments made on or after July 1, 2014.
(h) through (p) [Reserved]. For further guidance, see Sec. 1.6045-
1(h) through (p).
(q) Expiration date. The applicability of this section expires on
February 28, 2017.
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2014-09161 Filed 4-21-14; 8:45 am]
BILLING CODE 4830-01-P
