n-16-42.pdf

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Proposed Qualified Intermediary Agreement

Notice 2016-42

SECTION 1. PURPOSE

This Notice sets forth the proposed qualified intermediary (QI) withholding
agreement (QI agreement) entered into under §1.1441-1(e)(5).
1
In general, the QI
agreement allows foreign persons to enter into an agreement with the Internal Revenue
Service (IRS) to simplify their obligations as a withholding agent under chapters 3 and 4
and as a payor under chapter 61 and section 3406 for amounts paid to their account
holders.
The QI agreement currently in effect, as provided in Rev. Proc. 2014-39, 2014-29
I.R.B. 150, (the 2014 QI agreement), expires on December 31, 2016. The proposed
changes to the QI agreement described in this Notice, subject to any modifications
included in a revenue procedure containing the final QI agreement (to be issued later in
2016), will apply to QI agreements that are in effect on or after January 1, 2017, as

1
Unless otherwise provided, all citations in this Notice and the QI agreement included in
this Notice are to the Internal Revenue Code of 1986, as amended (Code) and to the
Income Tax Regulations thereunder
.

provided in section 5 of this Notice. Section 2 of this Notice describes the highlights of
the proposed changes to the 2014 QI agreement and provides a general description of
corresponding changes that will be made to the withholding foreign partnership
agreement (WP agreement) and withholding foreign trust agreement (WT agreement),
the current versions of which were published in Rev. Proc. 2014-47, 2014-35 I.R.B 393.
Section 3 of this Notice provides the application procedures for becoming a QI and
renewing a QI agreement. Section 4 of this Notice provides the proposed QI
agreement. Comments with respect to the proposed QI agreement are requested by
August 31, 2016.
SECTION 2. HIGHLIGHTS OF CHANGES TO THE 2014 QI AGREEMENT
.01 Qualified Derivatives Dealers and Section 871(m). On September 18, 2015, final
and temporary regulations under section 871(m) and sections 1441, 1461, and 1473
(collectively, the 871(m) regulations) were published in T.D. 9734 addressing the
treatment of dividend equivalents from U.S. sources. Section 871(m) treats “dividend
equivalent” payments as U.S. source dividends for purposes of chapters 3 and 4 and
sections 871(a), 881, and 4948(a). As a result, dividend equivalent payments are
amounts subject to withholding (as defined in §1.1441-2(a)) for purposes of sections
1441 through 1443 and withholdable payments (as defined in §1.1473-1(a)) for
purposes of sections 1471 and 1472. Accordingly, a withholding agent generally is
required to deduct and withhold a tax equal to 30 percent on any dividend equivalent
payment unless an exception from, or lower rate of, withholding applies.
(A) In general. This Notice proposes new provisions to the QI agreement that will
permit a QI that is an eligible entity to act as a qualified derivatives dealer (QDD) and

provides the requirements and obligations that will apply to a QDD. When a QDD
provides a valid withholding certificate to a withholding agent, the withholding agent will
not be required to withhold on certain payments made to the QDD when the QDD is
acting
as a principal (that is, not as an intermediary). Under the proposed QI
agreement, these payments are payments with respect to potential section 871(m)
transactions (as defined in §1.871-15(a)(12)) and payments with respect to underlying
securities (as defined in §1.871-15(a)(15)). The requirements and obligations
applicable to QDDs will be effective for QDDs when they enter into QI agreements after
the proposed QI agreement in this Notice is finalized (with effective dates on or after
January 1, 2017).
(B) Requirements and scope of QDD status. To be a QDD, an entity must enter
into a QI agreement and be an eligible entity. Pursuant to §1.1441-1T(e)(6)(ii), a QI is
an “eligible entity” if it is one of the three following types of entities: (1) a dealer in
securities that is subject to regulatory supervision as a dealer by a governmental
authority in the jurisdiction in which it is organized or operates; (2) a bank subject to
regulatory supervision as a bank by a governmental authority in the jurisdiction in which
it is organized or operates and that issues potential section 871(m) transactions to
customers and receives dividends or dividend equivalent payments pursuant to
potential section 871(m) transactions to hedge those transactions issued to customers;
or (3) an entity that is wholly-owned by a bank subject to regulatory supervision as a
bank by a governmental authority in the jurisdiction in which it is organized or operates
and that issues potential section 871(m) transactions to customers and receives
dividends or dividend equivalent payments pursuant to potential section 871(m)

transactions to hedge those transactions issued to customers.
If a foreign branch of a U.S. financial institution meets the requirements of an
eligible entity, the foreign branch may enter into a QI agreement to act as a QDD. That
foreign branch will be permitted to document and report recipients of those payments in
reporting pools consistent with the provisions of sections 5 and 8 of the proposed QI
agreement and to use the collective refund procedure, if otherwise permitted under
section 9.04 of the proposed QI agreement.
Under the proposed QI agreement, a QI may only act as a QDD for payments with
respect to potential section 871(m) transactions or underlying securities that it receives
and payments with respect to potential section 871(m) transactions that it makes as a
principal, whether or not the payments are received or made in its dealer capacity. A QI
that acts as a QDD generally will be required to act as a QDD for (a) all payments with
respect to potential section 871(m) transactions and underlying securities that it
receives as a principal, and (b) all payments with respect to potential section 871(m)
transactions that it makes as a principal. However, to the extent the payment received
by a QI as a principal is treated as income effectively connected with QI’s trade or
business in the United States, then the QI is not allowed to act as a QDD for such
payment. Similarly, when a QI makes a payment with respect to a potential section
871(m) transaction that is a deduction properly allocated to the QI’s gross income that is
effectively connected with the conduct of such trade or business within the United
States, that payment may not be included in the QDD’s offsetting payments (as
described below) for purposes of determining its “section 871(m) amount” (as defined in
section 2.79 of the proposed QI Agreement and described in section 2.01(D), below).

A QI, however, may not act as a QDD when it receives or makes a payment with
respect to a potential section 871(m) transaction as an intermediary as opposed to as a
principal (for example, when the QI acts as a custodian of a structured note with a
payment referencing a dividend of a domestic corporation). As a result, the QI may, but
is not required to, act as a QI for those payments. The QI may treat the payments in the
same manner as it would other withholdable payments or reportable amounts it
receives, and thus it may either act as a QI (and choose whether or not to assume
primary withholding responsibility), or it may act as a nonqualified intermediary (NQI) for
such payments.
(C) Reporting and withholding responsibilities of a QDD. When a QI acts as a
QDD, it must assume primary chapters 3 and 4 withholding responsibility and primary
Form 1099 reporting and section 3406 backup withholding responsibility for all
payments made with respect to potential section 871(m) transactions as a principal. A
QDD will be required to withhold on the dividend payment date for the applicable
dividend. If a QDD makes any payment with respect to a potential section 871(m)
transaction that is not a dividend equivalent payment but is an amount subject to
chapter 3 or 4 withholding or a reportable payment, the QDD must also assume primary
chapters 3 and 4 withholding responsibility and primary Form 1099 reporting and
section 3406 backup withholding responsibility for all of those payments. Under the
proposed QI agreement, a QDD’s reporting responsibilities also include specific payee
(rather than pooled) reporting on Form 1042-S, Foreign Person’s U.S. Source Income
Subject to Withholding, for payments to other QDDs to which the QDD makes a
payment of an amount subject to chapter 3 withholding.

Among the other information reporting obligations described in sections 7 and 8 of
the proposed QI agreement, a QDD will be required to report on separate Forms 1042-
S the amount of qualifying dividend equivalent offsetting payments (as defined in
section 2.70 of the proposed QI agreement and described in section 2.01(D), below)
that represent (a) the aggregate amount of payments made to a United States person
that would be dividend equivalent payments if made to a person who was not a United
States person (as described in section 2.70(A)(1) of the proposed QI agreement); and
(b) the aggregate amount of payments of effectively connected income (as described in
section 2.70(A)(2) of the proposed QI agreement). In addition, a QDD will be required
to provide specific information (for example, name, address, and U.S. TIN) upon
request of the IRS about U.S. non-exempt recipients that receive qualifying dividend
equivalent offsetting payments described in section 2.70(A)(1) of the proposed QI
agreement. To the extent necessary, a QDD must obtain a waiver from each U.S. non-
exempt recipient described in the preceding sentence of any limitation on providing
such information to the IRS. If the QDD does not obtain a waiver or collect and
maintain such information about a U.S. non-exempt recipient, any payment made to that
U.S. non-exempt recipient is not a qualifying dividend equivalent offsetting payment. A
QI will be required to report these payments in a pool on a separate Form 1042-S. The
maintenance of such information by QDDs will assist the IRS in ensuring the
compliance of these U.S. non-exempt recipients with their reporting of income
associated with these transactions and of QDDs with their obligations under the QI
agreement.
(D) Tax liability of a QDD. A QDD (other than a foreign branch of a U.S. financial

institution acting as a QDD) must determine and pay any “QDD tax liability.” A QDD tax
liability is the sum of a QDD’s liability under sections 871(a) and 881 for (a) its “section
871(m) amount” (as defined in section 2.79 of the proposed QI agreement); (b) its
dividends that are not on underlying securities associated with potential section 871(m)
transactions and its dividend equivalent payments received as a QDD in its non-dealer
capacity; and (c) any other U.S. source FDAP payments received as a QDD with
respect to potential section 871(m) transactions or underlying securities that are not
dividend or dividend equivalent payments. For purposes of determining the QDD tax
liability, payments received by a QDD acting as a proprietary trader are treated as
payments received in its non-dealer capacity, while transactions properly reflected in a
QDD’s dealer book are presumed to be held by a dealer in its dealer capacity. For
purposes of determining the QDD tax liability, dealer activity is limited to its activity as a
derivatives dealer.
Even though a QDD may act as a QDD for payments received in a non-dealer
capacity, only payments made and received in its dealer capacity may be used for
purposes of calculating its section 871(m) amount. In its dealer capacity, a QDD may
hold underlying securities that are associated with potential section 871(m) transactions.
An underlying security is associated with a potential section 871(m) transaction when
the QDD holds that underlying security to manage the risk of price changes with respect
to a potential section 871(m) transaction that the QDD entered into in the normal course
of its business as a dealer. If a QDD holds stock in its non-dealer capacity (for
example, as a proprietary trader), the QDD cannot treat that stock as an underlying
security associated with a potential section 871(m) transaction for purposes of

calculating its section 871(m) amount.
A QDD remains liable for tax on any dividends and dividend equivalents it receives
in its dealer capacity to the extent the QDD is not contractually obligated to make
offsetting payments that reference the same dividend or dividend equivalent that it
received as a dealer. To determine its tax liability on dividends and dividend
equivalents that it receives, a QDD may aggregate all dividends on underlying securities
associated with potential section 871(m) transactions and dividend equivalent payments
that it receives that reference the same dividend and all dividend equivalent payments
that it is contractually obligated to make as a dealer that reference the same dividend.
Transactions properly reflected in a QDD’s dealer book are presumed to be held by the
QDD in its dealer capacity for purposes of determining the QDD’s tax liability. The net
amount of the payments received and the offsetting payments made is referred to as
the QDD’s “section 871(m) amount.” See section 2.79 of the proposed QI agreement.
Under the proposed QI agreement, the amount of offsetting payments includes any
dividend equivalent payment and any qualifying dividend equivalent offsetting payment
that the QDD makes or is contractually obligated to make with respect to the same
dividend. A “qualifying dividend equivalent offsetting payment” is defined in section 2.70
of the proposed QI agreement as (a) any payment made or contractually obligated to be
made to a United States person that would be a dividend equivalent payment if made to
a person who was not a United States person and (b) any payment made to a foreign
person that would be a dividend equivalent payment if the payment were not treated as
income effectively connected with the conduct of a U.S. trade or business. As
discussed in section 2.01(C), above, to the extent a QDD does not obtain a waiver from

a U.S. non-exempt recipient of a payment described in (a) in the preceding sentence of
any limitation on providing its name, address, and TIN (if any) to the IRS and does not
collect and maintain such information, payments made to that U.S. non-exempt
recipient are not qualifying dividend equivalent offsetting payments.
A QDD will report its QDD tax liability on a Form 1042, Annual Withholding Tax
Return for U.S. Source Income of Foreign Persons. The QDD’s payment and deposit
requirements with respect to any taxes due with respect to its QDD tax liability on Form
1042 are described in sections 3.08 and 3.09(C) of the proposed QI agreement. When
a foreign branch of a U.S. financial institution acts as a QDD, the branch is not required
to report a QDD tax liability for income relating to potential section 871(m) transactions
and underlying securities on Form 1042. Instead, the U.S. financial institution must file
the appropriate U.S. income tax return (for example, Form 1120, U.S. Corporation
Income Tax Return) for the tax year covered by the QI agreement to report and pay its
tax liability under chapter 1.
(E) Accounts for purposes of section 871(m) transactions. Generally, an “account”
for purposes of the QI agreement means any account for which QI acts as a qualified
intermediary. See section 2.01 of the proposed QI agreement. QIs and taxpayers,
however, do not always hold section 871(m) transactions in an account relationship.
Section 2.01 of the proposed QI agreement therefore defines “account,” when applied to
a QI acting as a QDD, as any potential section 871(m) transaction or underlying security
where the QI receives payments as a principal and any potential section 871(m)
transaction where the QI makes payments as a principal. However, section 5 of the
proposed QI agreement does not require a QI that is acting as a QDD to document

each account; rather it limits a QDD’s obligation to document only an account holder of
an account to which the QDD makes a reportable payment or qualifying dividend
equivalent offsetting payment (or payment that otherwise would have been a qualifying
dividend equivalent offsetting payment but for the QDD’s failure to obtain a waiver or
collect and maintain information about a U.S. non-exempt recipient account holder as
required by section 8.03(C) of the proposed QI agreement).
(F) Qualified securities lenders. Once implemented, the QDD regime is intended
to replace the qualified securities lender (QSL) regime described in Notice 2010-46,
2010-25 I.R.B. 757. The proposed QI agreement will require a QI to act as a QDD for
all securities lending and sale-repurchase transactions the QDD enters into that are
section 871(m) transactions, in addition to acting as a QDD for payments with respect to
other potential section 871(m) transactions and underlying securities as a principal. All
securities lending and sale-repurchase transactions the QI enters into that are section
871(m) transactions will be deemed to be entered into by the QI as a principal and
therefore within the QDD regime. Until the QDD regime is implemented, the QSL rules
(including the credit-forward rules described in Notice 2010-46) will continue to apply for
substitute dividend payments made pursuant to a securities lending or a sale-
repurchase transaction. For more information about the QSL regime, see Notice 2010-
46.
(G) Coordination with 871(m) regulations. The Treasury Department (Treasury)
and the IRS intend to modify, to the extent necessary, the section 871(m) regulations to
coordinate with provisions of the QI agreement relevant to the requirements of QDDs
and withholding agents making payments to QDDs (as those provisions are finalized).

.02 Periodic Review and Certifications of Compliance.
(A) In general. The 2014 QI agreement replaced the previous external audit
requirement with an internal compliance and review program. As part of this
compliance program, the responsible officer is required to make periodic compliance
certifications and provide certain factual information to the IRS. After the 2014 QI
agreement was issued, commentators raised concerns about the administrability of the
compliance review procedures, including potential costs of implementing and
conducting a compliance program, difficulties in allocating resources to conduct the
periodic review in the last year of the certification period, and the lack of detailed
standards for performance of the QI’s periodic review similar to those provided in Rev.
Proc. 2002-55, 2002-2 C.B. 435.
Under the proposed QI agreement, a QI’s responsible officer will still be required to
make a periodic certification of internal controls as described in section 10.03 and
Appendix I of the proposed QI agreement. In making this certification, the responsible
officer may rely on, in addition to the results of the periodic review, any other processes
or reviews that the responsible officer has determined are necessary in order to make
the certification. This allows the responsible officer to decide, for example, whether to
hire an external reviewer (for example, a law firm or accounting firm) and what the
scope of the engagement should be (for example, whether the external reviewer will
conduct a review of the sufficiency of the QI’s internal controls or whether the review will
be limited to the periodic review discussed below). The responsible officer must,
however, document what he or she has relied upon in making the certification and retain
such documentation for the same period of time for which the compliance review report

and certifications are required to be retained pursuant to section 10.06(D) of the
proposed QI agreement. For example, if the responsible officer relies on an internal or
external reviewer to conduct a review of the internal controls and systems, the
responsible officer must retain any report delivered by the reviewer.
In addition to making the certification of internal controls, the QI is required to
report certain factual information (described in Appendix I) regarding its documentation,
withholding, reporting, and other obligations under the QI agreement, and, in the case of
a QI that is acting as a QDD, certain information related to the determination of its QDD
tax liability (as described in section 3.09 of the proposed QI agreement). This factual
information will be gathered, in part, through the testing of accounts and transactions
required as part of the periodic review, as described in sections 10.04 and 10.05 of the
proposed QI agreement. This review will be focused on the testing of accounts and
transactions rather than a substantive evaluation of the sufficiency of a QI’s policies and
procedures. Section 10.05(A) through (E) of the proposed QI agreement provides the
objectives for performing the review, and Appendix I to the proposed QI agreement
describes the factual information that will be required to be reported to the IRS upon
completion of the review. In order to allow QIs to have some flexibility in determining
how to satisfy the objectives for the review, the IRS does not intend to publish a step-
by-step audit plan as was previously provided in Rev. Proc. 2002-55, but the QI is
expected to create a step–by-step plan to satisfy the objectives for the review contained
in section 10.05(A) through (E) of the proposed QI agreement and to provide the
required factual information. In response to comments requesting a safe harbor method
for determining a sample of accounts for the periodic review, this Notice provides a

stratified statistical sampling methodology in Appendix II to the proposed QI agreement.
In addition, the proposed QI agreement requires that a QI that has 50 accounts or more
review at least 50 accounts as part of the periodic review. If a QI has fewer than 50
accounts, it must review all of its accounts and is not allowed to use the sampling
procedures in Appendix II to the proposed QI agreement.
In addition, section 10 of the proposed QI agreement has been clarified to prevent
unintended inferences that the periodic review must satisfy the standards of a financial
audit or other attestation engagement of a certified public accountant. References to an
“auditor” (in all contexts, whether internal or external) have been replaced with
“reviewer.” The description of the standard of independence required of a reviewer has
also been clarified. The responsible officer can arrange for the review to be conducted
by either an external or an internal reviewer to the extent provided in the proposed QI
agreement. In either case, the reviewer must have sufficient independence to
objectively conduct the review. For example, a reviewer, whether internal or external,
cannot be reviewing his or her own work (for example, systems he or she designed or
documentation he or she validated).
(B) Waiver. Under certain circumstances, section 10.07 of the proposed QI
agreement allows a QI that is a foreign financial institution (FFI) that is not acting as a
QDD and that is not part of a consolidated compliance group to apply for and obtain a
waiver of the requirement to conduct the periodic review and to provide some of the
factual information specified in Appendix I to the proposed QI agreement. In cases
where the QI applies for a waiver, it is still required to provide certain factual information
along with its periodic certification. This information is provided in Appendix I to the

proposed QI agreement.
(C) Periodic review timing. The 2014 QI agreement required that the periodic
review be conducted for the last year of the certification period. In response to
comments regarding potential difficulties with this requirement, including resource
constraints with all QIs needing to conduct periodic reviews at the same time, the
proposed QI agreement allows a QI to choose which year in the certification period to
select for its periodic review. However, if a QI is also acting as a QDD, it must use 2017
for its periodic review for the initial certification period because QDD status is not
applicable for 2015 and 2016.
(D) Compliance obligations and initial certification date. A QI that had a QI
agreement under Rev. Proc. 2000-12, 2000-1 C.B. 387, (as amended) in effect prior to
June 30, 2014, with an audit cycle that would have extended past June 30, 2014, is not
required to complete an audit under the previous QI agreement (Rev. Proc. 2000-12). A
QI with a 2014 QI agreement in effect on or after June 30, 2014, must comply with the
compliance obligations under that agreement as revised in the QI agreement in effect
after December 31, 2016.
For purposes of determining the certification period, the initial certification period is
the period ending on the third full calendar year that the 2014 QI agreement and any
superseding revenue procedure is in effect. Therefore, a QI with a QI agreement with
an effective date of June 30, 2014, must treat the initial certification period as ending on
December 31, 2017, and will be required to make the required certification on or before
July 1, 2018, pursuant to the requirements of the QI agreement in effect after December
31, 2016.

(E) FATCA requirements. As part of the QI agreement, a QI that is an FFI is
required to comply with the FATCA requirements applicable to its chapter 4 status as a
participating FFI, registered deemed-compliant FFI, or registered deemed-compliant
Model 1 IGA FFI, and a QI that is a non-financial foreign entity (NFFE) acting on behalf
of its shareholders is required to comply with the requirements of a direct reporting
NFFE. In addition the proposed QI agreement clarifies that the QI’s responsible officer
can rely on other personnel with oversight or responsibility for the QI’s FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI (as defined in section 2.28 of the proposed QI
agreement) or its requirements as a direct reporting NFFE or sponsoring entity, as
applicable, in making its certifications relating to its FATCA obligations. In conducting
the periodic review, a QI’s requirements relating to its FATCA compliance are limited to
those accounts for which it is acting as a QI.
(F) Consolidated compliance program. The compliance procedure described in the
2014 QI agreement included an allowance for a QI to be a member of a consolidated
compliance program under the supervision of a “compliance QI,” subject to the approval
of the IRS. In order to establish a consolidated compliance program, the responsible
officer of the compliance QI should consult the Financial Intermediaries Team at the
address in section 12.06 of the proposed QI agreement to determine if the proposed
consolidated compliance program is acceptable. If statistical sampling is to be utilized
for the periodic review and testing of accounts and transactions, a sample plan should
also be proposed. In evaluating the consolidated compliance program request, the goal
of the Financial Intermediaries Team is to have an open dialogue concerning any issues

that may materially affect a QI’s ability to fulfill its responsibilities under the QI
agreement. If a QI is part of a consolidated compliance program under section 10.02(B)
of the proposed QI agreement that is approved by the IRS, the compliance QI will be
required to provide factual information for each QI member of the group separately but
can make the certification of internal controls for the entire consolidated compliance
group.
.03 Limited FFIs and Limited Branches. Pursuant to the regulations under chapter 4,
as modified by Notice 2015-66, 2015-41 I.R.B. 541, limited FFI (and limited branch)
status will no longer be available as of January 1, 2017. Accordingly, to conform with
the regulations and Notice 2015-66, the proposed QI agreement removes limited FFI as
a category of entity eligible to enter into the QI agreement.
.04 Substitute Interest. Comments requested that, as the QSL regime is
incorporated into the QDD regime, consideration be given to covering payments of
substitute interest on debt securities under the QI agreement in addition to substitute
dividend payments. In response, the proposed QI agreement allows a QI to assume
primary chapters 3 and 4 withholding responsibility and primary Form 1099 reporting
and backup withholding responsibility for payments of interest and substitute interest it
receives in connection with a sale-repurchase or similar agreement, a securities lending
transaction, or collateral that it holds in connection with its activities as a securities
dealer. This will allow a QI to provide a Form W-8IMY, Certificate of Foreign
Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States
Tax Withholding and Reporting, to a withholding agent certifying that the QI is a QI
assuming primary withholding responsibility without requiring the QI to distinguish

between these payments of interest and substitute interest the QI receives as a
principal and those that it receives as an intermediary. QIs that assume primary
withholding responsibility for payments of interest and substitute interest as described in
this paragraph will be required to assume primary withholding responsibility for all such
payments.
.05 Partnerships or Trusts Applying the Joint Account or Agency Options. In
response to comments received on the 2014 QI agreement, sections 4.05(A)(1) and
4.06(A)(2) of the proposed QI agreement have been modified to allow a QI to apply the
joint account or agency option to partnerships or trusts that are covered as accounts
that are excluded from the definition of financial accounts under Annex II of an
applicable IGA or under §1.1471-5(a). In addition, consistent with the WP and WT
agreements, a QI can apply the joint account or agency option to partnerships or trusts
that are owner-documented FFIs with respect to the QI.
.06 Limitation on Benefits for Treaty Claims. In order to enhance and make more
robust claims for a reduced rate of chapter 3 withholding under an income tax treaty,
Treasury and the IRS intend to modify the chapter 3 regulations to require withholding
agents to collect certain information and certifications regarding a beneficial owner’s
claim for treaty benefits. Form W-8BEN-E, Certificate of Status of Beneficial Owner for
United States Tax Withholding and Reporting (Entities), was revised in April 2016 to
include checkboxes for a beneficial owner to provide information regarding the limitation
on benefits provision of an applicable treaty that it satisfies, and Form 1042-S was
revised in 2016 to include a line for a withholding agent to report the corresponding
limitation on benefits provision code. The proposed QI agreement modifies the

requirements for a QI using documentary evidence to document an entity account
holder claiming a reduced rate of withholding under an income tax treaty to require the
collection of information regarding limitation on benefits on the treaty statement
provided by the account holder. A QI opening an account or obtaining documentation
for an entity account holder on or after January 1, 2017, will be required to collect this
limitation on benefits information. For QIs with pre-existing entity accounts (as
described in section 5.10(A) of the proposed QI agreement) that were documented with
documentary evidence, there will be a two-year transition period provided for the
collection of the appropriate limitation on benefits information (unless there is a change
in circumstances that requires the QI to obtain corrected information). For QIs that
documented entity accounts with Forms W-8, those forms may be relied up on until their
normal expiration period (unless there is a change in circumstances that requires QI to
obtain corrected information). Under the proposed QI agreement, a withholding agent
will be subject to an actual knowledge standard with respect to the limitation on benefits
claims. The chapter 3 regulations also will be similarly amended to apply an actual
knowledge standard for limitation on benefits claims.
.07 Validation of Treaty Claims. In addition to the standard of knowledge for
limitation on benefits claims discussed in section 2.06 of this Notice, the proposed QI
agreement provides that a QI will be considered to have reason to know that a claim for
treaty benefits is unreliable or incorrect if the account holder claims benefits under a
treaty that does not exist or is not in force and thus is not included on the list maintained
at https://www.irs.gov/businesses/international-businesses/united-states-income-tax-
treaties-a-to-z. This reason to know rule will generally apply to pre-existing accounts for

which the QI already holds valid documentation only upon a change in circumstances.
For a pre-existing entity account, this reason to know rule will also apply when the QI
obtains a written limitation on benefits statement. For purposes of applying this rule, a
“pre-existing account” or “pre-existing entity account” is an account for which QI holds
valid documentation prior to January 1, 2017, for a QI with a QI agreement in effect prior
to that date. For a QI that did not have a QI agreement in effect prior to January 1,
2017, it means an account maintained (and for which QI has valid documentation) prior
to the effective date of its QI agreement. For all new accounts, the reason-to-know rule
will apply upon account opening. The chapter 3 regulations will be amended to include
this reason to know rule for all withholding agents.
.08 Conforming Changes and Correction of Errors. In addition to the changes
described in this Notice, additional changes have been made in the proposed QI
agreement that either correct minor errors, further clarify the current rule, conform to
changes made in the WP and WT agreements, or make conforming changes consistent
with changes addressed in other guidance or other IRS correspondence (for example,
e-mails from the IRS to subscribing QIs). An example of a correction is the presumption
rules described in section 5.13(C)(3) of the proposed QI agreement which have been
modified to include U.S. source bank deposit interest not subject to chapter 4
withholding (as well as payments on certain short-term obligations) among those
payments that a QI is required to treat as made to a U.S. non-exempt recipient account
holder under the presumption rules. The application of this presumption rule to such
bank deposit interest was inadvertently omitted in the 2014 QI agreement and is
expected to apply only in limited cases. For the portion of calendar years 2014-2016

that a QI had in effect a 2014 QI agreement, the QI will not be treated as non-compliant
if it does not apply the corrected presumption rule from the proposed QI agreement.
In addition, consistent with the definitions provided in the chapter 3 regulations, the
definition of U.S. person in section 2.91 of the proposed QI agreement has been
clarified for certain individuals who are dual-resident taxpayers.
.09 Effective Date. When the proposed QI agreement provided in section 4 of this
Notice is finalized, it will be effective on or after January 1, 2017. The effective date of
the proposed QI agreement for an applicant will depend on when the QI submits its
application and whether the QI has received any reportable payments prior to when it
submits its application. Beginning on January 1, 2017, a prospective QI that applies for
QI status prior to March 31 of a calendar year, if approved, will have a QI agreement
with an effective date of January 1 of that year. If a prospective QI applies for QI status
after March 31 of a calendar year and has not received a reportable payment prior to
the date it applies for QI status, if approved, it will have a QI agreement with an effective
date of January 1 of that year. If a prospective QI applies for QI status after March 31
and has received a reportable payment prior to the date it applies, if approved, its QI
agreement will have an effective date of the first of the month in which its QI application
is approved and the prospective QI is issued a QI-EIN. A QI that seeks to renew its QI
agreement must renew prior to March 31, 2017, and the renewed QI agreement shall
have an effective date of January 1, 2017.
.10 Term of the QI Agreement. The proposed QI agreement would expire, unless
otherwise terminated, at the end of the third full calendar year the agreement is in effect.
.11 Changes to the WP and WT Agreements. The proposed changes to

requirements for the QI compliance review previewed in this Notice are also intended,
with appropriate modifications, to be incorporated in a revised withholding foreign
partnership agreement (WP agreement) and withholding foreign trust agreement (WT
agreement), revising the WP agreement and WT agreement published in Rev. Proc.
2014-47. Treasury and the IRS will publish the revised WP agreement and WT
agreement with these revisions and a limited number of corrections to the WP
agreement and WT agreement (as published in Rev. Proc. 2014-47), to be effective on
or after January 1, 2017. Beginning January 1, 2017, the WP agreement will also
provide the requirements for a reverse hybrid entity that desires to enter into a WP
agreement with respect to the requirements for documenting and withholding on owners
claiming treaty benefits. These requirements include that such entity meet all of its filing
requirements as a corporation for U.S. tax purposes; prepare and provide for certain
interest holders that are U.S. persons a Passive Foreign Investment Company (PFIC)
Annual Information Statement (described in §1.1295-1(g)(1)) (if the WP is a PFIC for the
year); and prepare and retain for IRS review a reconciliation statement showing the
amount of U.S. source FDAP income allocated to each direct or indirect owner of the
WP that claims treaty benefits during the calendar year. This is to eliminate the need
for the riders that have been used previously for such entities to enter into WP
agreements.
Treasury and the IRS request comments on an allowance for consolidated periodic
reviews and certifications for WPs that are FFIs, similar to what is permitted for QIs.
Treasury and the IRS will consider, if adopted, whether this option would only be
available to WPs that, for chapter 4 purposes, should be considered sponsored FFIs

under a sponsoring entity that implements a compliance program that includes uniform
practices, procedures, and systems, subject to uniform monitoring and control, with
respect to all WPs for which it acts. If this consolidated review approach is adopted, it is
anticipated that the sponsoring entity for purposes of the WP agreement would be jointly
liable (with the WP) for any liability of the WP for failing to withhold and report as
required under the WP agreement. In addition, if this approach is adopted, the chapter
4 regulations will be amended to allow a WP to be a sponsored FFI to the extent
provided in the revised WP agreement and to register under the sponsoring entity.
SECTION 3. APPLICATION FOR QI STATUS
.01 Entities Eligible to Execute a QI Agreement. A QI agreement may be entered
into by persons described in §1.1441-1(e)(5)(ii) (for example, FFIs, foreign clearing
organizations, and foreign branches of U.S. financial institutions or U.S. clearing
organizations). With respect to an FFI, as defined in §1.1471-5(d), the FFI may apply to
enter into a QI agreement if the FFI is able to and agrees to satisfy the requirements
and obligations of (1) a participating FFI (including a reporting Model 2 FFI), (2) a
registered deemed-compliant FFI (including a reporting Model 1 FFI and a nonreporting
Model 2 FFI treated as registered deemed-compliant), or (3) a registered deemed-
compliant Model 1 IGA FFI (as defined in section 2.17(C) of the proposed QI
agreement). See §1.1471-1(b)(91) and (111). An FFI that is a certified deemed-
compliant FFI (including a nonreporting IGA FFI (as defined in §1.1471-1(b)(83)) may
enter into a QI agreement if the FFI meets and agrees to assume the obligations of, and
to be treated as, a participating FFI (including a reporting Model 2 FFI), a registered
deemed-compliant FFI (including a reporting Model 1 FFI or a nonreporting Model 2 FFI

treated as registered deemed-compliant), or a registered deemed-compliant Model 1
IGA FFI with respect to all accounts that it maintains (even if the FFI does not intend to
designate an account as one for which it will act as a QI). A central bank of issue may
enter into a QI agreement provided that it meets and agrees to assume the obligations
of, and to be treated as, a participating FFI (including a reporting Model 2 FFI) or a
registered deemed-compliant FFI (including a reporting Model 1 FFI) with respect to any
account that it maintains and that is held in connection with a commercial financial
activity described in §1.1471-6(h) and for which it receives a withholdable payment (as
defined in §1.1471-1(b)(145)). A foreign branch of a U.S. financial institution may also
apply to enter into a QI agreement provided that either it is a reporting Model 1 FFI or it
agrees to assume the requirements and obligations of a participating FFI (including a
reporting Model 2 FFI). See §1.1441-1(e)(5)(ii).
An entity that is a territory financial institution (territory FI) (as defined in §1.1471-
1(b)(130)) or a nonparticipating FFI (as defined in §1.1471-1(b)(82)) may not apply for a
QI agreement.
The QI agreement may be entered into by a foreign corporation that is an NFFE (as
defined in §1.1471-1(b)(80)) described in §1.1441-1(e)(5)(ii)(C) or that is an eligible
entity seeking to become a QDD. For example, an entity may seek to obtain QI status
to present claims of benefits under an income tax treaty on behalf of its shareholders or
other persons (other than FFIs) for which the foreign corporation acts as an
intermediary. An NFFE that enters into a QI agreement to act on behalf of its
shareholders must meet and agree to assume the obligations of, and to be treated as, a
direct reporting NFFE under §1.1472-1(c)(3). An NFFE that enters into a QI agreement

to act on behalf of persons other than its shareholders will be required to satisfy the
withholding and reporting requirements of §§1.1472-1(a) and 1.1474-1(i) with respect to
any NFFE that is a beneficial owner for whom the QI is acting with respect to a
withholdable payment. The QI agreement does not apply to a foreign partnership or
foreign trust. A foreign partnership or foreign trust may seek to qualify as a withholding
foreign partnership or withholding foreign trust. See §§1.1441-5(c)(2)(ii) and 1.1441-
5(e)(5)(v). In light of the changes that will be made to the WP agreement discussed in
section 2.11 of this Notice, Treasury and the IRS expect to eliminate the allowance for
NFFEs acting on behalf of their shareholders to be QIs. Comments are requested
regarding the types of entities and situations where an NFFE would be seeking to act as
a QI on behalf of its shareholders (other than a reverse hybrid entity described in
section 2.11 of this Notice) and why the WP agreement does not provide a solution for
those entities.
.02 Prospective QI (Including QI Acting as a QDD). Prior to submitting Form 14345,
Qualified Intermediary Application, a prospective QI (other than an NFFE that is not
acting as an intermediary on behalf of its shareholders and certain foreign central banks
of issue) must have submitted the information specified in Form 8957, Foreign Account
Tax Compliance Act (FATCA) Registration, through the FATCA registration website
available at
www.irs.gov/FATCA, and obtained its chapter 4 status as a participating FFI
(including a reporting Model 2 FFI), registered deemed-compliant FFI (including a
reporting Model 1 FFI and a nonreporting Model 2 FFI treated as registered deemed-
compliant), registered deemed-compliant Model 1 IGA FFI (as defined in section
2.17(C) of the proposed QI agreement), direct reporting NFFE, or sponsoring entity of a

direct reporting NFFE, as applicable, along with a global intermediary identification
number (GIIN) to be used to identify itself to withholding agents and to tax
administrators for FATCA reporting (the GIIN is separate from the QI-EIN).
To become a QI, a prospective QI must submit Form 14345, Application for Qualified
Intermediary, Withholding Foreign Partnership, or Withholding Foreign Trust Status, in
the manner provided by the form or accompanying instructions. An application must
also include any additional information and documentation requested by the IRS. The
Form 14345 must establish, to the satisfaction of the IRS, that the applicant has
adequate resources and procedures to comply with the terms of the QI agreement. An
entity that would like to become a QI to act as a QDD must apply to enter into a QI
agreement and include the information relating to QDDs.
If the IRS approves the QI application, it will notify the QI of its approval. The
approval notice will include a QI-EIN for fulfilling the requirements of a QI (including a QI
acting as a QDD if approved for such purpose) under chapters 3, 4, and 61 and
sections 871, 881, and 3406, including making tax deposits and filing Forms 945, 1042,
1042-S, 1099, and 8966.
The IRS will not enter into a QI agreement with an FFI if the IRS has not approved
the “know-your-customer” practices and procedures for opening accounts of the
jurisdiction where the FFI is located because the QI agreement as applicable to an FFI
allows for the use of documentary evidence obtained under a jurisdiction’s “know-your-
customer” practices. A list of jurisdictions for which the IRS has received know-your-
customer information and for which the know-your-customer rules are acceptable
(approved KYC jurisdiction) is available at:

http://www.irs.gov/Businesses/International-Businesses/List-of-Approved-KYC-Rules
.
To request approval of a jurisdiction’s know-your-customer rules, contact the KYC
coordinator in the Foreign Intermediaries Program at the address provided in section
3.03 of this Notice.
A QI that is an NFFE generally is not required to be located in an approved KYC
jurisdiction because an NFFE is required to collect Forms W-8 and W-9 and may not
apply the KYC documentation practices and procedures. See section 5.01(A)(2) of the
proposed QI agreement for the documentation requirements applicable to a QI that is
an NFFE.
.03 Existing QI. An FFI that seeks to renew its QI agreement must do so through the
FATCA registration website available at www.irs.gov/FATCA. An NFFE that is a direct
reporting NFFE or a sponsoring entity of a direct reporting NFFE must also renew its QI
agreement through the FATCA registration website. The QI will retain its QI-EIN to fulfill
the requirements of a QI under chapters 3, 4, and 61 and sections 871, 881, and 3406,
including making tax deposits and filing Forms 945, 1042, 1042-S, 1099, and 8966.
A QI that seeks to renew its QI agreement and also seeks to act as a QDD must
supplement the renewal request by providing a statement containing all information
required by Form 14345 relating to a QDD (but does not have to provide a new Form
14345).
A QI that is an NFFE and that is not acting as a QI on behalf of its shareholders, and
is not a sponsoring entity, must renew its QI agreement by submitting a request for
renewal to the Foreign Intermediaries Program at the following address:
Internal Revenue Service

Foreign Payments Practice
Foreign Intermediaries Program
290 Broadway, 12th Floor NW
New York, New York 10007-1867
Attention: QI Applications

SECTION 4. PROPOSED QUALIFIED INTERMEDIARY AGREEMENT
The text of the proposed QI agreement is set forth below. The IRS will no longer
provide signed copies of the QI agreement. A reporting Model 2 FFI should apply this
Agreement by substituting the term “reporting Model 2 FFI” for “participating FFI”
throughout this Agreement, except in cases where this Agreement explicitly refers to a
reporting Model 2 FFI. A reporting Model 1 FFI and nonreporting Model 2 FFI treated
as a registered deemed-compliant FFI should apply this Agreement by substituting the
term “reporting Model 1 FFI” or “nonreporting Model 2 FFI” (as applicable) for
“registered deemed-compliant FFI” throughout this Agreement, except in cases where
this Agreement explicitly refers to a reporting Model 1 FFI or nonreporting Model 2 FFI
treated as a registered deemed-compliant FFI.

THIS AGREEMENT is made under and in pursuance of sections 1441, 1442, 1471, and
1472 and §§1.1441-1(e)(5) and 1.1441-1(e)(6):

WHEREAS, QI has submitted an application in accordance with this revenue
procedure to be a qualified intermediary;

WHEREAS, QI and the IRS desire to enter into an agreement to establish QI's
rights and obligations regarding documentation, withholding, information reporting, tax
return filing, deposit, and refund procedures under sections 1441, 1442, 1443, 1461,
1471, 1472, 1474, 3406, 6041, 6042, 6045, 6049, 6050N, 6302, 6402, and 6414, and
tax liability under sections 871(a) and 881 for a QI that is acting as a qualified
derivatives dealer (QDD), with respect to certain types of payments;

WHEREAS, QI represents that there are no legal restrictions that prohibit it from
complying with the requirements of this Agreement;

WHEREAS, if QI is a foreign financial institution (FFI), QI represents that, as of
the effective date of this Agreement, it has agreed to comply with the requirements of
the FFI agreement, in the case of a participating FFI (including a reporting Model 2 FFI);
§1.1471-5(f)(1) or the applicable Model 2 IGA, in the case of a registered deemed-
compliant FFI (other than a reporting Model 1 FFI); or the applicable Model 1 IGA, in the
case of a reporting Model 1 FFI or a registered deemed-compliant Model 1 IGA FFI; and

WHEREAS, if QI is an NFFE that desires to enter into this Agreement for
purposes of presenting claims of benefits under an income tax treaty on behalf of its
shareholders, QI represents that it will comply with the requirements of a direct reporting
NFFE under §1.1472-1(c)(3);

NOW, THEREFORE, in consideration of the following terms, representations,
and conditions, the parties agree as follows:

SECTION 1. PURPOSE AND SCOPE

Sec. 1.01. General Obligations. When the IRS enters into a QI Agreement with a
foreign person or a U.S. person to cover a foreign branch, that foreign person (or
foreign branch) becomes a QI. QI is a withholding agent under chapters 3 and 4, and a
payor under chapter 61 and section 3406, for amounts that it pays to its account
holders.

If QI is an FFI, the requirements QI has agreed to as a participating FFI, registered
deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI continue to
apply in addition to the requirements under this Agreement. If QI acts as a QI with
respect to an account, this Agreement will reference QI’s chapter 4 obligations when
necessary to facilitate coordination with a QI’s obligations under chapters 3, 4, and 61,
and section 3406, with respect to such account holders. A participating FFI’s (including
a reporting Model 2 FFI’s) obligations are provided in the FFI agreement, a registered
deemed-compliant FFI’s (other than a reporting Model 1 FFI) obligations are provided in
§1.1471-5(f)(1) or the applicable Model 2 IGA, and the obligations of a reporting Model
1 FFI or a registered deemed-compliant Model 1 IGA FFI are provided in the applicable
Model 1 IGA. For purposes of chapter 4, QI must comply with its FATCA requirements
as a participating FFI, registered deemed-compliant FFI, or registered deemed-
compliant Model 1 IGA FFI (as applicable) with respect to all financial accounts that it
maintains, irrespective of whether QI acts as a QI with respect to an account holder, as
well as the requirements of a withholding agent for any payee that is a nonparticipating
FFI or NFFE that is not an account holder. If QI is an FFI, QI must also, pursuant to this
Agreement, assume primary reporting responsibility for purposes of section 1472, for
certain indirect account holders for which it acts as a QI.

If QI is an NFFE acting as a QI on behalf of its shareholders, the requirements QI has
agreed to as a direct reporting NFFE apply in addition to the requirements under this

Agreement, and, to the extent necessary to facilitate coordination of its direct reporting
NFFE obligations with its obligations as a QI, the direct reporting NFFE obligations are
incorporated into this Agreement. A direct reporting NFFE’s obligations are provided in
§1.1472-1(c)(3). For purposes of chapter 4, if QI is an NFFE acting as a QI on behalf of
its shareholders, QI must comply with the requirements of a direct reporting NFFE with
respect to any shareholder that is a substantial U.S. owner as defined in §1.1473-1(b).
If QI is an NFFE acting on behalf of persons other than its shareholders, QI must
assume primary reporting responsibility for purposes of section 1472 for any person for
which it acts as a QI.

For purposes of chapters 3 and 61 and section 3406, QI must act in its capacity as a QI
pursuant to this Agreement for those accounts that QI holds with a withholding agent
and that QI has designated as accounts for which it acts as a QI. QI is not required to
act as a QI for all accounts that it holds with a withholding agent. However, QI must, as
part of its QI Agreement, materially comply with the requirements of a withholding agent
or payor, as applicable to a nonqualified intermediary (NQI) under chapters 3 and 61
and section 3406, for any account for which it does not (or cannot) act as a QI and for
any payee that is not an account holder. If QI designates an account as one for which it
will act as a QI, it must act as a QI for all payments made to that account and obtain the
documentation required under section 5 of this Agreement for such account.

When QI acts as a QI for an account and assumes primary chapter 3 withholding
responsibility for payments to the account, QI must also assume primary withholding
responsibility for withholdable payments made to such account for chapter 4 purposes.
If QI acts as a QI with respect to payments of substitute interest, as described in section
3.03(A) of this Agreement, it must act as a QI and assume primary withholding
responsibility for all such payments of substitute interest.

If QI acts as a sponsoring entity on behalf of a sponsored FFI (as defined in §1.1471-
1(b)(121)) or sponsored direct reporting NFFE (as defined in §1.1471-1(b)(123)), it must
comply with the due diligence, withholding, reporting, and compliance requirements of a
sponsoring entity in addition to its requirements under this Agreement.

If QI acts as a QDD, it must act as a QDD for all payments made as a principal with
respect to potential section 871(m) transactions and all payments received as a
principal with respect to potential section 871(m) transactions and underlying securities,
excluding any payments received by the QDD to the extent the payment is treated as
income effectively connected with the conduct of a trade or business within the United
States within the meaning of section 864. In addition, a QI must act as a QDD for any
securities lending or sale-repurchase transactions (as defined in §1.871-15(a)(13)) QI
enters into that are section 871(m) transactions. For purposes of this Agreement, a
QDD is deemed to make and receive payments pursuant to those securities lending and
sale-repurchase transactions as a principal. A QI may not act as a QDD when it
receives or makes payments as an intermediary. A QI acting as a QDD must assume
primary chapter 3 and chapter 4 withholding responsibility and primary Form 1099

reporting and backup withholding responsibility under section 3406 for payments made
as a QDD with respect to any potential section 871(m) transaction provided the amount
paid is an amount subject to chapter 3 or 4 withholding or a reportable payment under
chapter 61. A QI acting as a QDD (other than a QDD that is a foreign branch of a U.S.
financial institution) also must satisfy its QDD tax liability as determined under section
3.09 of this Agreement. The QDD (other than a QDD that is a foreign branch of a U.S.
financial institution) must report both its withholding tax liability under chapters 3 and 4
and its QDD tax liability on Form 1042. A U.S. financial institution with a foreign branch
that acts as a QDD must file the appropriate U.S. income tax return (e.g., Form 1120,
U.S. Corporation Income Tax Return) for the tax year covered by the QI Agreement to
report and pay its tax liability under chapter 1 and would not have a separate QDD tax
liability.

Sec. 1.02. Parties to the Agreement. This Agreement applies to:

(A) QI; and

(B) The Internal Revenue Service.

If QI is an FFI, QI can only designate an account that it holds as a QI designated
account if the branch of QI that holds the account operates in a KYC jurisdiction
identified under the QI Agreement. QI may add any jurisdiction in which it operates a
branch that is not initially included in its QI application without prior IRS approval if the
jurisdiction is one for which the IRS will enter into a qualified intermediary agreement
(i.e., the jurisdiction is identified on the IRS’s Approved KYC List) and QI updates its
information on the FATCA registration website with respect to such branch prior to
treating such branch as a qualified intermediary. A branch of a QI that is not subject to
the provisions of this Agreement remains subject to the rules of chapters 3, 4, and 61
and section 3406, as provided in section 1.01 of this Agreement.

SECTION 2. DEFINITIONS
For purposes of this Agreement, except as otherwise provided in this Agreement, the
terms listed below are defined as follows:

Sec. 2.01. Account. “Account” or “Financial Account” has the meaning given to that
term in §1.1471-1(b) with respect to QI’s obligations for chapter 4 purposes. For other
purposes under this Agreement, “account” or “financial account” means any account for
which QI acts as a qualified intermediary. With respect to a QI acting as a QDD,
“account” means any potential section 871(m) transaction or underlying security where
QDD receives payments as a principal and any potential section 871(m) transaction
where QDD makes payments as a principal.

Sec. 2.02. Account Holder. If QI is an FFI, an “account holder” means any person
that is a direct account holder or an indirect account holder of an account that QI has
designated to its withholding agent as an account for which it is acting as a qualified

intermediary. With respect to a QI that assumes primary withholding responsibility for a
substitute interest payment as described in section 3.03(A) of this Agreement, an
“account holder” includes any person that receives such a payment from the QI.
“Account holder” also means any person that enters into or holds a potential section
871(m) transaction with a QI acting as a QDD. If QI is an NFFE acting on behalf of its
shareholders, an “account holder” means each shareholder for whom QI is acting with
respect to an amount subject to chapter 3 withholding or with respect to a withholdable
payment. If QI is an NFFE acting as a qualified intermediary on behalf of persons other
than its shareholders, an “account holder” means any person for whom QI is acting with
respect to a reportable payment or withholdable payment.

(A) Direct Account Holder. A direct account holder is any person who holds an
account directly with QI or holds an ownership interest (i.e., a shareholder) directly in QI
if QI is an NFFE. In the case of an NFFE acting as a qualified intermediary on behalf of
persons other than its shareholders, a direct account holder is any person for whom QI
is acting with respect to a reportable payment regardless of whether such person is the
beneficial owner.

(B) Indirect Account Holder. An indirect account holder is any person who receives
amounts from QI but who does not have a direct relationship with QI. For example, a
person that holds an account with a foreign intermediary or an interest in a foreign flow-
through entity which, in turn, has a direct relationship with QI is an indirect account
holder. A person is an indirect account holder even if there are multiple tiers of
intermediaries or flow-through entities between the person and QI.

Sec. 2.03. Agreement. “Agreement” means this Agreement, and the two Appendices
and any Attachments to this Agreement, and QI's application to become a qualified
intermediary. All such Appendices, Attachments, and QI's application are incorporated
into this Agreement by reference.

Sec. 2.04. Amount Subject to Chapter 3 Withholding. An “amount subject to chapter
3 withholding” is an amount described in §1.1441-2(a) regardless of whether such
amount is withheld upon. An amount subject to chapter 3 withholding shall not include
interest paid as part of the purchase price of an obligation sold between interest
payment dates or original issue discount paid as part of the purchase price of an
obligation sold in a transaction other than the redemption of such obligation, unless the
sale is part of a plan the principal purpose of which is to avoid tax and QI has actual
knowledge or reason to know of such plan.

Sec. 2.05. Amount Subject to Chapter 4 Withholding. An “amount subject to chapter
4 withholding” is a withhholdable payment (as defined in section 2.98 of this Agreement)
for which withholding is required under chapter 4 or an amount for which withholding
was otherwise applied under chapter 4.

Sec. 2.06. Assumption of Withholding Responsibility. An “assumption of

withholding responsibility” refers to a QI that assumes primary chapters 3 and 4
withholding responsibility with respect to payments of U.S. source FDAP income, or
assumes primary Form 1099 reporting and backup withholding responsibility. A QI that
has an assumption of withholding responsibility assumes the primary responsibility for
deducting, withholding, and depositing the appropriate amount from a payment.
Generally, QI's assumption of primary chapters 3 and 4 withholding responsibility or the
assumption of primary backup withholding responsibility relieves the person who makes
a payment to QI from the responsibility to withhold. Under section 3.05 of this
Agreement, QI generally has primary Form 1099 reporting and backup withholding
responsibility with respect to certain payments even though it does not assume such
responsibility for payments not described in that section.

Sec. 2.07. Backup Withholding. “Backup withholding” means the withholding required
under section 3406.

Sec. 2.08. Beneficial Owner. A “beneficial owner” has the meaning given to that term
in §1.1441-1(c)(6).

Sec. 2.09. Broker Proceeds. “Broker proceeds” means gross proceeds (as defined in
§1.6045-1(d)(5)) from a sale that is reportable under §1.6045-1(c).

Sec. 2.10. Chapter 3. Any reference to “chapter 3” means sections 1441, 1442, 1443,
1461, 1463, and 1464.

Sec. 2.11. Chapter 3 Reporting Pool. A “chapter 3 reporting pool” means a reporting
pool described in section 8.03(B) of this Agreement.

Sec. 2.12. Chapter 4. Any reference to “chapter 4” means sections 1471, 1472, 1473,
and 1474.

Sec. 2.13. Chapter 4 Reporting Pool. A “chapter 4 reporting pool” means a reporting
pool described in section 8.03(A) of this Agreement.

Sec. 2.14. Chapter 4 Status. “Chapter 4 status” means the status of a person as a
U.S. person, a specified U.S. person, an individual that is a foreign person, a
participating FFI, a deemed-compliant FFI, a restricted distributor, an exempt beneficial
owner, a nonparticipating FFI, a territory financial institution, an excepted NFFE, or a
passive NFFE.

Sec. 2.15. Chapter 61. Any reference to “chapter 61” means sections 6041, 6042,
6045, 6049, and 6050N.

Sec. 2.16. Dealer. A “dealer” has the meaning given to the term dealer in §1.871-
15(a)(2) (i.e., a dealer in securities within the meaning of section 475(c)(1)).

Sec. 2.17. Deemed-Compliant FFI. “Deemed-compliant FFI” means an FFI that is
treated, pursuant to section 1471(b)(2) and §1.1471-5(f), as meeting the requirements
of section 1471(b).

(A) Certified Deemed-Compliant FFI. “Certified deemed-compliant FFI” means an FFI
described in §1.1471-5(f)(2) and includes a nonreporting IGA FFI, but excludes a
nonreporting Model 2 FFI that is treated as a registered deemed-compliant FFI.

(B) Registered Deemed-Compliant FFI. “Registered deemed-compliant FFI” means
an FFI described in §1.1471-5(f)(1) and includes a reporting Model 1 FFI and a
nonreporting Model 2 FFI that is treated as registered deemed-compliant FFI. For
purposes of this Agreement, a reference to a registered deemed-compliant FFI that is
providing a chapter 4 withholding rate pool of U.S. payees includes a registered
deemed-compliant Model 1 IGA FFI.

(C) Registered Deemed-Compliant Model 1 IGA FFI. “Registered deemed-compliant
Model 1 IGA FFI” means an FFI treated as a deemed-compliant FFI under an applicable
Model 1 IGA that is subject to similar due diligence and reporting requirements with
respect to U.S. accounts as those applicable to a registered deemed-compliant FFI
under §1.1471-5(f)(1), including the requirement to register with the IRS.

Sec. 2.18. Deposit Interest. “Deposit interest” means interest described in section
871(i)(2)(A).

Sec. 2.19. Dividend Equivalent. A “dividend equivalent” has the meaning given to that
term in §1.871-15(c).

Sec. 2.20. Documentary Evidence. “Documentary evidence” means any
documentation obtained under the appropriate know-your-customer rules (as described
in the Attachments to this Agreement), any documentary evidence described in
§1.1441-6 sufficient to establish entitlement to a reduced rate of withholding under an
income tax treaty, or any documentary evidence described in §1.6049-5(c) sufficient to
establish an account holder's status as a foreign person for purposes of chapter 61.
Documentary evidence does not include a Form W-8 or Form W-9 (or an acceptable
substitute Form W-8 or Form W-9).

Sec. 2.21. Documentation. “Documentation” means any valid Form W-8, Form W-9
(or an acceptable substitute Form W-8 or Form W-9), or documentary evidence as
defined in section 2.20 of this Agreement, including all statements or other information
required to be associated with the form or documentary evidence.

Sec. 2.22. Documented Account Holder. A “documented account holder” is an
account holder for whom QI holds valid documentation.

Sec. 2.23. Effective Date of the QI Agreement. For a prospective QI that applies to

be a QI prior to March 31 of a given calendar year, the effective date of the QI
Agreement will be January 1 of that year. For a prospective QI that applies after March
31 of a given calendar year and that has not received any reportable payments prior to
the date the application is submitted, the effective date of the QI Agreement will be
January 1 of that year. For a prospective QI that applies after March 31 of a given
calendar year and that has received a reportable payment in the calendar year prior to
the date the application is submitted, the effective date of the QI Agreement will be the
first of the month in which the QI application is complete and the QI has received its QI-
EIN. For a QI that is renewing its QI Agreement provided in Rev. Proc. 2014-39, 2014-
29 I.R.B. 150, the effective date of the QI Agreement when renewed by March 31, 2017,
will be January 1, 2017.

Sec. 2.24. Eligible Entity. “Eligible entity” for QDD status means a qualified
intermediary that is—

(A) A dealer in securities subject to regulatory supervision as a dealer by a
governmental authority in the jurisdiction in which it was organized or operates;

(B) A bank subject to regulatory supervision as a bank by a governmental authority in
the jurisdiction in which it was organized or operates and that (1) issues potential
section 871(m) transactions to customers, and (2) receives dividends with respect to
stock or dividend equivalent payments pursuant to potential section 871(m) transactions
that hedge potential section 871(m) transactions that it issued;

(C) An entity that is wholly-owned (directly or indirectly) by a bank subject to regulatory
supervision as a bank by a governmental authority in the jurisdiction in which the bank
was organized or operates and that (1) issues potential section 871(m) transactions to
customers, and (2) receives dividends with respect to stock or dividend equivalent
payments pursuant to potential section 871(m) transactions that hedge potential section
871(m) transactions that it issued; or

(D) A foreign branch of a U.S. financial institution, if the foreign branch would meet the
requirements of paragraph (A), (B), or (C), if it were a separate entity.

Sec. 2.25. Excepted NFFE. “Excepted NFFE” means a person described in §1.1471-
1(b)(41).

Sec. 2.26. Exempt Beneficial Owner. “Exempt beneficial owner” means a person
described in §1.1471-1(b)(42) and includes any person that is treated as an exempt
beneficial owner under an applicable Model 1 or Model 2 IGA.

Sec. 2.27. Exempt Recipient. For purposes of Form 1099 reporting and backup
withholding, an “exempt recipient” means a person described in §1.6049-4(c)(1)(ii) (for
interest, dividends, and royalties), a person described in §1.6045-2(b)(2)(i) (for broker
proceeds), and a person described in §1.6041-3(q) (for rents, amounts paid on notional

principal contracts, and other fixed or determinable income), for which no Form 1099
reporting is required. Exempt recipients are not exempt from reporting or withholding
under chapter 3 or 4.

Sec. 2.28. FATCA Requirements as a Participating FFI, Registered Deemed-
Compliant FFI, or Registered Deemed-Compliant Model 1 IGA FFI. “FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI” means—

(A) For a participating FFI or an FFI that agrees to be treated as a participating FFI, the
requirements set forth in the FFI agreement;

(B) For a registered deemed-compliant FFI (other than a reporting Model 1 FFI) or an
FFI that agrees to be treated as a registered deemed-compliant FFI, the requirements
under §1.1471-5(f)(1) or an applicable Model 2 IGA; or

(C) For a registered deemed-compliant Model 1 IGA FFI, reporting Model 1 FFI, or an
FFI that agrees to be treated as a registered deemed-compliant Model 1 IGA FFI or
reporting Model 1 FFI, the requirements under an applicable Model 1 IGA.

Sec. 2.29. Financial Institution (FI). “Financial institution” or “FI” means an entity
described in §1.1471-5(d) and includes a financial institution as defined under an
applicable Model 1 or Model 2 IGA.

Sec. 2.30. Foreign Financial Institution (FFI). “Foreign Financial Institution” or “FFI”
means a foreign entity (as defined in §1.1473-1(e)) that is a financial institution.

Sec. 2.31. FFI Agreement. “FFI Agreement” means an agreement described in
§1.1471-4(a) and provided in Rev. Proc. 2014-3, 2014-3 I.R.B. 419, as revised by Rev.
Proc. 2014-38, 2014-29 I.R.B. 131 (and any superseding revenue procedure).

Sec. 2.32. FFI Withholding Statement. An “FFI withholding statement” means a
withholding statement provided by an FFI that meets the requirements of §1.1471-
3(c)(3)(iii)(B)(1) and (2).

Sec. 2.33. Flow-Through Entity. A flow-through entity is a foreign partnership
described in §301.7701-2 or 3 (other than a withholding foreign partnership), a foreign
trust (other than a withholding foreign trust) that is described in section 651(a), or a
foreign trust if all or a portion of such trust is treated as owned by the grantor or other
person under sections 671 through 679. For an item of income for which a treaty
benefit is claimed, an entity is also a flow-through entity to the extent it is treated as
fiscally transparent under section 894 and the regulations thereunder.

Sec. 2.34. Foreign Person. A “foreign person” is any person that is not a “United
States person” and includes a “nonresident alien individual,” a “foreign corporation,” a

“foreign partnership,” a “foreign trust,” and a “foreign estate,” as those terms are defined
in section 7701. For purposes of chapters 3 and 4, the term foreign person also means,
with respect to a payment by a withholding agent (including a qualified intermediary), a
foreign branch (including a foreign disregarded entity) of a U.S. person that provides a
valid Form W-8IMY on which it represents that it is a qualified intermediary. A foreign
branch of a U.S. person that is a qualified intermediary is, however, a U.S. payor for
purposes of chapter 61 and section 3406.

Sec. 2.35. Foreign TIN. A “foreign TIN” is a taxpayer identification number issued by a
foreign person’s country of residence.

Sec. 2.36. Form W-8. “Form W-8” means IRS Form W-8BEN, Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding (Individuals); IRS Form
W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding
and Reporting (Entities); IRS Form W-8ECI, Certificate of Foreign Person's Claim That
Income is Effectively Connected With the Conduct of a Trade or Business in the United
States; IRS Form W-8EXP, Certificate of Foreign Government or Other Foreign
Organization for United States Tax Withholding and Reporting; and IRS Form W-8IMY,
Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S.
Branches for United States Tax Withholding and Reporting, as appropriate. It also
includes any acceptable substitute Form W-8.

Sec. 2.37. Form W-9. “Form W-9” means IRS Form W-9, Request for Taxpayer
Identification Number and Certification, or any acceptable substitute Form W-9.

Sec. 2.38. Form 945. “Form 945” means IRS Form 945, Annual Return of Withheld
Federal Income Tax.

Sec. 2.39. Form 1042. “Form 1042” means IRS Form 1042, Annual Withholding Tax
Return for U.S. Source Income of Foreign Persons.

Sec. 2.40. Form 1042-S. “Form 1042-S” means IRS Form 1042-S, Foreign Person's
U.S. Source Income Subject to Withholding.

Sec. 2.41. Form 1096. “Form 1096” means IRS Form 1096, Annual Summary and
Transmittal of U.S. Information Returns.

Sec. 2.42. Form 1099. “Form 1099” means IRS Form 1099-B, Proceeds From Broker
and Barter Exchange Transactions; IRS Form 1099-DIV, Dividends and Distributions;
IRS Form 1099-INT, Interest Income; IRS Form 1099-MISC, Miscellaneous Income;
IRS Form 1099-OID, Original Issue Discount; and any other form in the IRS Form 1099
series appropriate to the type of payment required to be reported.

Sec. 2.43. Form 8966. “Form 8966” means IRS Form 8966, FATCA Report.

Sec. 2.44. Form 1099 Reporting. “Form 1099 reporting” means the reporting required
on Form 1099.

Sec. 2.45. Global Intermediary Identification Number (GIIN). “Global intermediary
identification number” or “GIIN” means the identification number that is as assigned to a
participating FFI, registered deemed-compliant FFI, direct reporting NFFE, or
sponsoring entity of a direct reporting NFFE. The term also includes the identification
number assigned to a reporting Model 1 FFI or registered deemed-compliant Model 1
IGA FFI that is a QI for the purpose of identifying itself to withholding agents.

Sec. 2.46. Intermediary. An “intermediary” means any person that acts on behalf of
another person such as a custodian, broker, nominee, or other agent.

Sec. 2.47. Know-Your-Customer Rules. “Know-your-customer rules” refers to the
applicable laws, regulations, rules, and administrative practices and procedures,
identified in the Attachments to this Agreement, governing the requirements of QI to
obtain documentation confirming the identity of QI's account holders.

Sec. 2.48. Marketable Securities. For purposes of this Agreement, the term
“marketable securities” means those securities described in §1.1441-6 for which a U.S.
TIN (or foreign TIN) is not required to obtain treaty benefits.

Sec. 2.49. Non-Consenting U.S. Account. For purposes of a reporting Model 2 FFI,
“non-consenting U.S. account” has the meaning that such term has under an applicable
Model 2 IGA.

Sec. 2.50. Non-Exempt Recipient. A “non-exempt recipient” means a person that is
not an exempt recipient under the definition in section 2.27 of this Agreement.

Sec. 2.51. Non-Financial Foreign Entity (NFFE). A “non-financial foreign entity” or
“NFFE” means a foreign entity that is not a financial institution (including an entity that is
incorporated or organized under the laws of any U.S. territory and that is not a financial
institution). The term also means a foreign entity treated as an NFFE pursuant to a
Model 1 or Model 2 IGA.

Sec. 2.52. Nonparticipating FFI. A “nonparticipating FFI” means an FFI other than a
participating FFI, a deemed-compliant FFI, or an exempt beneficial owner.

Sec. 2.53. Nonqualified Intermediary. A “nonqualified intermediary” is any
intermediary that is not a qualified intermediary. A nonqualified intermediary includes
any intermediary that is a foreign person unless such person enters an agreement to be
a qualified intermediary and acts in such capacity. A nonqualified intermediary also
includes an intermediary that is a territory FI (as defined section 2.83 of this Agreement)
unless such institution agrees to be treated as a U.S. person.

Sec. 2.54. Non-U.S. Payor. A “non-U.S. payor” means a payor other than a U.S. payor
as defined in this section 2.90 of this Agreement.

Sec. 2.55. Nonwithholding Foreign Partnership. A “nonwithholding foreign
partnership” means a foreign partnership other than a withholding foreign partnership as
defined in §1.1441–5(c)(2)(i).

Sec. 2.56. Nonwithholding Foreign Trust. A “nonwithholding foreign trust” means a
foreign trust (as defined in section 7701(a)(31)(B)) that is a foreign simple trust or a
foreign grantor trust and that is not a withholding foreign trust.

Sec. 2.57. Overwithholding. The term “overwithholding” means any amount actually
withheld (determined before application of the adjustment procedures described in
section 9 of this Agreement) from an item of income or other payment that is in excess
of:

(A) The amount required to be withheld under chapter 4 with respect to such item of
income or other payment, if applicable, and,

(B) In the case of an amount subject to chapter 3 withholding, the actual tax liability of
the beneficial owner of the income or payment to which the withheld amount is
attributable, regardless of whether such overwithholding was in error or appeared
correct at the time it occurred.

For purposes of section 3406, the term “overwithholding” means the excess of the
amount actually withheld under section 3406 over the amount required to be withheld.

Sec. 2.58. Participating FFI. A “participating FFI” means an FFI that has agreed to
comply with the requirements of an FFI Agreement, including an FFI described in a
Model 2 IGA that has agreed to comply with the requirements of an FFI Agreement
(reporting Model 2 FFI). The term participating FFI also includes a QI branch of a U.S.
financial institution, unless such branch is a reporting Model 1 FFI.

Sec. 2.59. Payee. For chapter 4 purposes, a “payee” means a person described in
§1.1471-3(a). For purposes of chapter 61, a “payee” means the person to whom a
payment is made. For purposes of chapter 3, a “payee” means a person described in
§1.1441-1(c)(12).

Sec. 2.60. Payment. A “payment” is considered made to a person if that person
realizes income, whether or not such income results from an actual transfer of cash or
other property. See §1.1441-2(e). For example, a payment includes crediting an
amount to an account. For any payment of a dividend equivalent or qualifying dividend
equivalent offsetting payment, a “payment” has the meaning provided in §1.871-15(i).
For any qualifying dividend equivalent offsetting payment (notwithstanding the limitation
in section 2.70(B) of this Agreement), the payment definition in §1.871-15(i) is applied

as if the qualifying dividend equivalent offsetting payment (notwithstanding the limitation
in section 2.70(B) of this Agreement) is a dividend equivalent.

Sec. 2.61. Payor. A “payor” is defined in §31.3406(a)-2 and §1.6049-4(a)(2) and
generally means any person required to make an information return under chapter 61.
The term includes any person that makes a payment, directly or indirectly, to QI and to
whom QI provides information, pursuant to this Agreement, so that such person can
report a payment on Form 1099 and, if appropriate, backup withhold. See sections 3.05
and 3.06 of this Agreement. Also see sections 2.90 and 2.54 of this Agreement for the
definition of U.S. payor and non-U.S. payor.

Sec. 2.62. Permanent Residence Address. A “permanent residence address” means
an address described in §1.1441-1(c)(38).

Sec. 2.63. Potential Section 871(m) Transaction. A “potential section 871(m)
transaction” is any securities lending or sale-repurchase transaction, notional principal
contract (NPC), or equity linked instrument (ELI) that references one or more underlying
securities. For purposes of this definition, securities lending or sale-repurchase
transaction, NPC, ELI, reference, and underlying security have the meaning given to the
terms in §§1.871-15(a)(13), (7), (4), (11), and (15), respectively.

Sec. 2.64. Presume/Presumption. The terms “presume” and “presumption” refer to
the presumption rules set forth in section 5.13(C) of this Agreement.

Sec. 2.65. Private Arrangement Intermediary (PAI). A “private arrangement
intermediary” or “PAI” is an intermediary described in section 4 of this Agreement.

Sec. 2.66. Qualified Derivatives Dealer (QDD). A “qualified derivatives dealer”
(“QDD”) is an eligible entity that agrees to meet the requirements of §1.1441-1(e)(6)(i)
and of this Agreement with respect to payments on potential section 871(m)
transactions and underlying securities that it receives or makes as a principal. In order
to act as a QDD, QI must apply and be approved for QDD status and must represent
itself as a QDD on its Form W-8IMY.

Sec. 2.67. QDD Tax Liability. A “QDD tax liability” is the amount described in section
3.09 of this Agreement.

Sec. 2.68. Qualified Intermediary. A “qualified intermediary” is a person, described in
§1.1441-1(e)(5)(ii), that has in effect an agreement with the IRS to be treated as a
qualified intermediary and acts as a qualified intermediary.

Sec. 2.69. Qualified Intermediary (QI) EIN. A “qualified intermediary EIN” or “QI-EIN”
means the employer identification number assigned by the IRS to a qualified
intermediary. QI's QI-EIN is only to be used when QI is acting as a qualified
intermediary. For example, QI must give a withholding agent its EIN (other than its QI-

EIN), if any, if it is receiving income as a beneficial owner (excluding when it receives
income as a principal when acting as a QDD or as a qualified intermediary assuming
primary withholding responsibility for a substitute interest payment). QI must also use
its non-QI EIN, if any, when acting as a nonqualified intermediary. Each signatory to
this Agreement must have its own QI-EIN (to the extent referenced in this section 2.69).

Sec. 2.70. Qualifying Dividend Equivalent Offsetting Payment.

(A) In General. For purposes of a QI that is acting as a QDD, a “qualifying dividend
equivalent offsetting payment” means:

(1) Any payment made with respect to a potential section 871(m) transaction to a U.S.
person that would be a dividend equivalent payment if the payment were made to a
foreign person or

(2) Any payment made with respect to a potential section 871(m) transaction to a
foreign person that would be a dividend equivalent payment if the payment was not
treated as income effectively connected with the conduct of a trade or business within
the United States within the meaning of section 864.

(B) Exception. To the extent a QI acting as a QDD does not obtain a waiver and
collect and maintain information, as required by section 8.03(C) of this Agreement, from
a U.S. non-exempt recipient described in section 2.70(A)(1), any payment made to such
person is not a qualifying dividend equivalent offsetting payment.

Sec. 2.71. Recalcitrant Account Holder. A “recalcitrant account holder” means an
account holder described in §1.1471-5(g).

Sec. 2.72. Reduced Rate of Withholding. A “reduced rate of withholding” means a
rate of withholding under chapter 3 that is less than 30 percent, including an exemption
from withholding.

Sec. 2.73. Reliably Associating a Payment With Documentation. See section
5.13(B) of this Agreement to determine whether QI can reliably associate a payment
with documentation.

Sec. 2.74. Reportable Amount. A “reportable amount” means U.S. source FDAP
income that is an amount subject to chapter 3 withholding (as defined in section 2.04 of
this Agreement), U.S. source deposit interest (as defined in section 2.18 of this
Agreement), and U.S. source interest or original issue discount paid on the redemption
of short-term obligations (as defined in section 2.81 of this Agreement). The term does
not include payments on deposits with banks and other financial institutions that remain
on deposit for two weeks or less. It also does not include amounts of original issue
discount arising from a sale and repurchase transaction completed within a period of
two weeks or less, or amounts described in §1.6049-5(b)(7), (10), or (11) (relating to

certain foreign targeted registered obligations and certain obligations issued in bearer
form).

Sec. 2.75. Reportable Payment. For purposes of this Agreement, a “reportable
payment” means an amount described in section 2.75(A) of this Agreement, in the case
of a U.S. payor, and an amount described in section 2.75(B) of this Agreement, in the
case of a non-U.S. payor.

(A) U.S. Payor. If QI is a U.S. payor, a “reportable payment” means, unless an
exception to reporting applies under chapter 61,--

(1) Any reportable amount;

(2) Any broker proceeds from a sale reportable under §1.6045-1(c); and

(3) Any foreign source interest, dividends, rents, royalties, or other fixed and
determinable income.

(B) Non-U.S. Payor. If QI is a non-U.S. payor, a “reportable payment” means, unless
an exception to reporting applies under chapter 61, --

(1) Any reportable amount;

(2) Any broker proceeds from a sale effected at an office inside the United States, as
defined in §1.6045-1(g)(3)(iii); and

(3) Any foreign source interest, dividends, rents, royalties, or other fixed and
determinable income if such income is not paid outside the United States as described
under section 5.13(C)(1) of this Agreement.

Sec. 2.76. Reporting Model 1 FFI. A “reporting Model 1 FFI” means an FFI with
respect to which a foreign government or agency thereof agrees to obtain and
exchange information pursuant to a Model 1 IGA, other than an FFI that is treated as a
nonreporting Model 1 FFI (including a registered deemed-compliant Model 1 IGA FFI) or
a nonparticipating FFI under an applicable Model 1 IGA.

Sec. 2.77. Reporting Pool. A “reporting pool” is defined in section 8 of this Agreement.

Sec. 2.78. Responsible Officer. A “responsible officer” of a QI means an officer of the
QI with sufficient authority to fulfill the duties of a responsible officer as described in
section 10 of this Agreement, including the requirements to periodically certify and to
respond to requests by the IRS for additional information to review the QI’s compliance
(or that of a PAI).

Sec. 2.79. Section 871(m) Amount. A “section 871(m) amount” means the sum of the

amounts by which, for each dividend on each underlying security, (A) the dividends on
underlying securities associated with potential section 871(m) transactions and dividend
equivalent payments that QI acting as a QDD receives in its dealer capacity exceed (B)
the dividend equivalent payments and the qualifying dividend equivalent offsetting
payments that QI acting as a QDD makes or is contractually obligated to make with
respect to the same dividend in its dealer capacity.

For purposes of determining the QDD tax liability, a dividend or dividend equivalent is
treated as received by a QDD acting in its non-dealer capacity if the dividend or
dividend equivalent is received by a QDD acting as a proprietary trader. Transactions
properly reflected in a QDD’s dealer book are presumed to be held by a dealer in its
dealer capacity for purposes of determining the QDD tax liability. In addition, for
purposes of determining whether a dealer is acting in its dealer capacity, only the
dealer’s activities as a derivatives dealer are taken into account.

Sec. 2.80. Section 871(m) Transaction. A “section 871(m) transaction” is any
securities lending or sale-repurchase transaction, specified NPC, or specified ELI
described in §1.871-15(a)(13), (d), and (e), respectively.

Sec. 2.81. Short-Term Obligation. A “short-term obligation” is any obligation
described in section 871(g)(1)(B)(i).

Sec. 2.82. Substitute Interest. “Substitute interest” means a substitute interest
payment described in §1.861-2(a)(7).

Sec. 2.83. Territory FI. A “territory FI” means a financial institution that is incorporated
or organized under the laws of any U.S. territory, excluding a territory entity that is an
investment entity but is not a depository institution, custodial institution, or specified
insurance company (as defined in §1.1471-5(e)(1)(i), (ii), and (iv), respectively).

Sec. 2.84. Underlying Security. For purposes of a QI acting as a QDD or any
determination relating to section 871(m), “underlying security” has the meaning provided
in §1.871-15(a)(15).

Sec. 2.85. Underlying Security Associated with Potential Section 871(m)
Transactions. For purposes of a QI acting as a QDD, “underlying security associated
with potential section 871(m) transactions” means any underlying security held by a
QDD to manage risk of price changes with respect to a potential section 871(m)
transactions that the QDD entered into in the normal course of its business as a dealer.

Sec. 2.86. Underwithholding. “Underwithholding” means the excess of the amount
required to be withheld under chapter 3 or 4 or section 3406 over the amount actually
withheld.

Sec. 2.87. Undocumented Account Holder. An “undocumented account holder” is an

account holder for whom QI does not hold valid documentation.

Sec. 2.88. U.S. Account. A “U.S. account” is any financial account maintained by an
FFI that is held by one or more specified U.S. persons or U.S.-owned foreign entities
that such FFI reports or elects to report under the FFI Agreement or §1.1471-5(f), as
applicable.

Sec. 2.89. U.S. Branch Treated as a U.S. Person. A “U.S. branch treated as a U.S.
person” means a U.S. branch of a participating FFI, registered deemed-compliant FFI,
or NFFE that is treated as a U.S. person under §1.1441-1(b)(2)(iv)(A).

Sec. 2.90. U.S. Payor. The term “U.S. payor” has the same meaning as in §1.6049-
5(c)(5).

Sec. 2.91. U.S. Person. A “U.S. person” (or “United States person”) is a person
described in section 7701(a)(30), the U.S. government (including an agency or
instrumentality thereof), a State of the United States (including an agency or
instrumentality thereof), or the District of Columbia (including an agency or
instrumentality thereof). An individual will not be treated as a U.S. person for purposes
of this section for a taxable year or any portion of a taxable year that the individual is a
dual resident taxpayer (within the meaning of §301.7701(b)-7(a)(1)) who is treated as a
nonresident alien pursuant to §301.7701(b)-7 for purposes of computing his or her U.S.
tax liability. The term “U.S. person” or “United States person” also means a foreign
insurance company that has made an election under section 953(d), provided that either
the foreign insurance company is not a specified insurance company (as described in
§1.1471-5(e)(1)(iv)), or the foreign insurance company is a specified insurance
company and is licensed to do business in any State of the United States.

Sec. 2.92. U.S. Reportable Account. A “U.S. reportable account” means a financial
account maintained by a reporting Model 1 FFI or registered deemed-compliant Model 1
IGA FFI that such FFI reports or elects to report under the applicable domestic law for
compliance with and implementation of FATCA.

Sec. 2.93. U.S. Source FDAP. “U.S. source FDAP” means amounts from sources
within the United States that constitute fixed or determinable annual or periodical
income, as defined in §1.1441-2(b)(1).

Sec. 2.94. U.S. TIN. A “U.S. TIN” means a U.S. taxpayer identification number
assigned under section 6109.

Sec. 2.95. Withholding Agent. A “withholding agent” has the same meaning as set
forth in §1.1441-7(a) for purposes of chapter 3 and as set forth in §1.1473-1(d) for
purposes of chapter 4, and includes a payor (as defined in section 2.61 of this
Agreement). As used in this Agreement, the term generally refers to the person making
a payment to a qualified intermediary.

Sec. 2.96. Withholding Foreign Partnership. A “withholding foreign partnership” or
“WP” means a partnership, described in §1.1441-5(c)(2), that has entered into a
withholding agreement with the IRS to be treated as a withholding foreign partnership.

Sec. 2.97. Withholding Foreign Trust. A “withholding foreign trust” or “WT” means a
trust, described in §1.1441-5(e)(5)(v), that has entered into a withholding agreement
with the IRS to be treated as a withholding foreign trust.

Sec. 2.98. Withholdable Payment. A “withholdable payment” means an amount
described in §1.1473-1(a).

Sec. 2.99. Withholding Rate Pool. A “withholding rate pool” is defined in section 6.03
of this Agreement and includes a chapter 3 withholding rate pool and a chapter 4
withholding rate pool.

Sec. 2.100. Withholding Statement. The term “withholding statement” is defined in
section 6.02 of this Agreement.

Sec. 2.101. Other Terms. Any term not defined in this section has the same meaning
that it has under the Code, including the income tax regulations under the Code, any
applicable income tax treaty, or any applicable Model 1 or Model 2 IGA with respect to a
QI’s FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI. Except as expressly provided in this
Agreement, any term relating to a QDD or section 871(m) has the same meaning given
to the term in §1.871-15.

SECTION 3. WITHHOLDING RESPONSIBILITY AND QDD TAX LIABILITY

Sec. 3.01. Chapters 3 and 4 Withholding Responsibilities.

(A) Chapter 4 Withholding. QI is a withholding agent for purposes of chapter 4 and
subject to the withholding and reporting provisions applicable to withholding agents
under sections 1471 and 1472 with respect to its accounts. QI is required to withhold
30 percent of any withholdable payment made after June 30, 2014, to an account holder
that is an FFI unless either QI can reliably associate the payment (or portion of the
payment) with documentation upon which it is permitted to rely to treat the payment as
exempt from withholding under §1.1471-2(a)(4) or the payment is made under a
grandfathered obligation described in §1.1471-2(b). See §1.1471-2(b)(2)(i)(A)(2) for the
definition of grandfathered obligation with respect to an obligation giving rise to a
dividend equivalent. QI is also required to withhold 30 percent of any withholdable
payment made after June 30, 2014, to an account holder that is an NFFE unless either
QI can reliably associate the payment (or portion of the payment) with a certification
described in §1.1472-1(b)(1)(ii) or an exception to withholding under §1.1472-1
otherwise applies.

If QI is a participating FFI or registered deemed-compliant FFI (other than a reporting
Model 1 FFI), QI will satisfy its requirement to withhold under sections 1471(a) and
1472(a) with respect to direct account holders that are entities by withholding on
withholdable payments made to nonparticipating FFIs and recalcitrant account holders
to the extent required under its FATCA requirements as a participating FFI or registered
deemed-compliant FFI. See the FFI Agreement, §1.1471-5(f)(1), or the applicable
Model 2 IGA for the withholding requirements that apply to withholdable payments
made to account holders of the FFI that are individuals treated as recalcitrant account
holders or non-consenting accounts. If QI is a reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI, QI will satisfy its requirement to withhold under
section 1471(a) with respect to direct account holders by withholding on withholdable
payments made to nonparticipating FFIs to the extent required under its FATCA
requirements as a registered deemed-compliant FFI or registered deemed-compliant
Model 1 IGA FFI. QI must, however, withhold in the manner described in sections 3.02
and 3.03 of this Agreement for when QI assumes or does not assume primary
withholding responsibility for purposes of chapters 3 and 4 regardless of its chapter 4
status.

(B) Chapter 3 Withholding. To the extent that QI makes a payment of an amount
subject to chapter 3 withholding, QI is required to withhold 30 percent of the gross
amount of any such payment made to an account holder that is (or is presumed) a
foreign person unless QI can reliably associate the payment with documentation upon
which it can rely to treat the payment as made to a payee that is a U.S. person or as
made to a beneficial owner that is a foreign person entitled to a reduced rate of
withholding. See section 5 of this Agreement regarding documentation requirements.
With respect an amount subject to chapter 4 withholding that is also an amount subject
to chapter 3 withholding, QI may credit any tax withheld under chapter 4 against its
liability for any tax due under chapter 3 with respect to the payment so that no additional
withholding is required on the payment for purposes of chapter 3. Nothing in chapter 4
or the regulations thereunder (including the FFI Agreement) or any applicable IGA
relieves QI of its requirements to withhold under chapter 3 to the extent required in this
Agreement.

Sec. 3.02. Primary Chapters 3 and 4 Withholding Responsibility Not Assumed.
Notwithstanding sections 1.01 and 3.01 of this Agreement, QI is not be required to
withhold with respect to a payment of U.S. source FDAP income if it (a) does not
assume primary withholding responsibility under section 3.03 of this Agreement by
electing to be withheld upon under §1.1471-2(a)(2)(iii) for purposes of chapter 4, (b)
provides the withholding agent from which QI receives the payment with a valid
withholding certificate that indicates that QI does not assume primary withholding
responsibility for chapters 3 and 4 purposes, and (c) provides correct withholding
statements (including information regarding any account holders or interest holders of
an intermediary or flow-through entity that holds an account with QI, other than a
qualified intermediary that assumes primary withholding responsibility, withholding

foreign partnership, or withholding foreign trust) as described in section 6.02 of this
Agreement. However, QI that is acting as a QDD must assume primary withholding
responsibility to the extent required under section 3.03(B) of this Agreement.
Notwithstanding its election not to assume primary withholding responsibility under
chapters 3 and 4, QI shall, however, withhold the difference between the amount of
withholding required under chapter 3 or 4 and the amount actually withheld by another
withholding agent if QI--

(A) Actually knows that the appropriate amount has not been withheld by another
withholding agent; or

(B) Made an error which results in the withholding agent's failure to withhold the correct
amount due (e.g., QI fails to provide an accurate withholding statement with respect to
the payment, including a failure to provide information regarding any account holders or
interest holders of an intermediary or flow-through entity that holds an account with QI
to the extent required in section 6 of this Agreement) and QI has not corrected the
underwithholding under section 9.05 of this Agreement. QI is not required to withhold
on an amount that it pays to another qualified intermediary that has assumed primary
withholding responsibility with respect to the payment or to a withholding foreign
partnership or withholding foreign trust. See section 8 of this Agreement regarding QI's
responsibility to report amounts subject to withholding under chapter 3 or 4 on Form
1042-S.

Sec. 3.03. Assumption of Primary Chapters 3 and 4 Withholding Responsibility.

(A) In General. QI, upon notification to a withholding agent, may assume primary
withholding responsibility for purposes of chapters 3 and 4 by providing a valid
withholding certificate described in section 6 of this Agreement to a withholding agent
that makes a payment of U.S. source FDAP income to QI and by designating on the
withholding statement associated with such certificate the account(s) for which QI
assumes primary withholding responsibility. QI may assume primary withholding
responsibility without informing the IRS. QI is not required to assume primary
withholding responsibility for all accounts it holds with the withholding agent. If QI
assumes primary withholding responsibility for any account, it must assume that
responsibility under chapters 3 and 4 for all withholdable payments and amounts
subject to chapter 3 withholding made by the withholding agent to that account. QI may
assume primary withholding responsibility for U.S. source FDAP payments of substitute
interest as described in §1.861-2(a)(7). If QI assumes primary withholding responsibility
for payments of substitute interest (as described in this paragraph), it must assume
primary withholding responsibility with respect to all such payments. QI assumes
primary withholding responsibility for payments of substitute interest for purposes of this
Agreement when it assumes such responsibility for payments of interest and substitute
interest it receives in connection with a sale-repurchase or similar agreement, a
securities lending transaction, or collateral that it holds in connection with its activities as
a dealer in securities. As a result, QI may represent its status as a qualified

intermediary on the withholding certificate described in section 6.01 of this Agreement
with respect to payments it receives of interest and substitute interest described in the
preceding sentence regardless of whether it acts as an intermediary or as a principal
with respect to these payments.

To the extent that QI assumes primary withholding responsibility, QI shall withhold as
described in section 3.01 of this Agreement. QI is not required to withhold on amounts
it pays to another qualified intermediary that has assumed primary withholding
responsibility with respect to the payment (including a qualified intermediary acting as a
QDD) or to a withholding foreign partnership or a withholding foreign trust. See section
8 of this Agreement regarding QI's responsibility to report amounts subject to
withholding on Form 1042-S.

(B) Assumption of Withholding Responsibility by a QDD. If QI is acting as a QDD,
it must assume primary chapters 3 and 4 withholding responsibility for any dividend
equivalent payment that it makes and must withhold with respect to a dividend
equivalent payment on the dividend payment date for the applicable dividend (as
determined in §1.1441-2(e)(4)). A QDD must also assume primary chapter 3 and
chapter 4 withholding responsibility for payments made with respect to a potential
section 871(m) transaction even if the payment is not a dividend equivalent if the
amount paid is an amount subject to chapter 3 or 4 withholding. A QDD is not required
to withhold under chapter 3 or 4 on amounts it pays to another qualified intermediary
that has assumed primary withholding responsibility with respect to the payment, or to a
withholding foreign partnership or a withholding foreign trust. See section 8 of this
Agreement regarding QDD's responsibility to report dividend equivalent payments and
other amounts subject to withholding on Form 1042-S.

Sec. 3.04. Backup Withholding Under Section 3406 and Form 1099 Reporting
Responsibility.

(A) Backup Withholding. QI is a payor under section 3406 with respect to reportable
payments. Under section 3406, unless an exception to backup withholding applies, a
payor is required to deduct and withhold 28
2
percent from a reportable payment to an
account holder that is a U.S. non-exempt recipient if the U.S. non-exempt recipient has
not provided its U.S. TIN in the manner required under that section; the IRS notifies the
payor that the U.S. TIN furnished by the payee is incorrect; there has been a notified
payee under-reporting described in section 3406(c); or there has been a payee
certification failure described in section 3406(d).

2
See section 3406(a) providing that the current applicable rate of backup withholding is the fourth lowest rate of
tax applicable under section 1(c).

(B) Coordination of Chapter 4 Withholding and Backup Withholding. With respect
to a withholdable payment that is also a reportable payment subject to backup
withholding under section 3406, QI is not required to withhold under section 3406 if QI
withheld on such payment under chapter 4. See §31.3406(g)-1(e). Alternatively, if QI is
a participating FFI or a registered deemed-compliant FFI (other than a reporting Model
1 FFI), it may elect to satisfy its obligation to withhold under chapter 4 (or the FFI
Agreement) on a withholdable payment made to a recalcitrant account holder that is a
U.S. non-exempt recipient by satisfying its backup withholding obligation under section
3406 provided that the payment is also a reportable payment. See section 4 of the FFI
Agreement. Nothing in chapter 4 (including the FFI Agreement) or any applicable IGA
relieves QI of its requirements to backup withhold under section 3406 to the extent
required by this Agreement.

(C) Form 1099 Reporting. If QI applies backup withholding (as described in section
3.04(B) of this Agreement), it must report the amount subject to backup withholding on
Form 1099 and not on Form 1042-S.

Sec. 3.05. Primary Form 1099 Reporting and Backup Withholding Responsibility
for Reportable Payments Other Than Reportable Amounts. QI is responsible for
reporting on Form 1099 and backup withholding on reportable payments other than
reportable amounts to the extent required under this section 3.05 and section 8.06 of
this Agreement, whether or not QI assumes primary Form 1099 reporting and backup
withholding responsibility with respect to reportable amounts under section 3.07 of this
Agreement. Further, no provision of this Agreement which requires QI to provide
another withholding agent with information regarding reportable amounts shall be
construed as relieving QI of its Form 1099 reporting and backup withholding obligations
with respect to reportable payments that are not reportable amounts.

See, however, §31.3406(g)-1(e) providing that a payor (irrespective of whether the
payor is a U.S. or non-U.S. payor) is not required to backup withhold under section
3406 on a reportable payment that is paid and received outside the United States with
respect to an offshore obligation or on gross proceeds from a sale effected outside the
United States, unless the payor has actual knowledge that the payee is a U.S. person.

(A) U.S. Payor. Except as provided in section 3.05(C) of this Agreement, if QI is a U.S.
payor, QI has primary Form 1099 reporting and backup withholding responsibility for
reportable payments other than reportable amounts. For example, if QI is a U.S. payor,
it has primary Form 1099 reporting and backup withholding responsibility for payments
of foreign source income as well as all broker proceeds paid to account holders that are,
or are presumed to be, U.S. non-exempt recipients.

(B) Non-U.S. Payor. If QI is a non-U.S. payor, QI has primary Form 1099 reporting and
backup withholding responsibility for broker proceeds described in section 2.75(B)(2) of
this Agreement and foreign source fixed and determinable income other than income
paid and received outside United States as described in section 2.75(B)(3) of this

Agreement, if such payments are made (or presumed made) to U.S. non-exempt
recipients.

(C) Special Procedure for Broker Proceeds. If QI is a U.S. payor, QI may request
another payor that is either a U.S. financial institution or another qualified intermediary
to report on Form 1099 and, if required, backup withhold with respect to broker
proceeds from a sale that is effected at an office outside the United States (as defined
in §1.6045-1(g)(3)(iii)) that QI is otherwise required to report under section 3.05(A) and
section 8.05 of this Agreement, provided the other payor actually receives the broker
proceeds. In such a case, QI will not be responsible for primary Form 1099 reporting
and backup withholding with respect to broker proceeds, provided that the other payor
agrees to do the reporting and backup withholding and QI provides all of the information
necessary for the other payor to properly report and backup withhold. QI, however,
remains responsible for primary Form 1099 reporting and backup withholding if the
other payor does not agree to report and backup withhold, or if QI knows that the other
payor failed to do so. If, however, QI is a participating FFI or registered deemed-
compliant FFI (other than a reporting Model 1 FFI) that reports an account on Form
1099 in order to satisfy its U.S. account reporting requirement under chapter 4, as
described in section 8.04 of this Agreement, QI is responsible for reporting on Form
1099 with respect to reportable payments made to such U.S. account and must report in
the manner described in the FFI Agreement.

(D) Special Procedure for QDDs. QI acting as a QDD must assume primary Form
1099 reporting and backup withholding responsibility for any payments made with
respect to a potential section 871(m) transaction that are reportable payments. Thus,
for example, if QI acts as a QDD with respect to an NPC that is a potential section
871(m) transaction and makes a payment pursuant to the NPC to a U.S. person that is
a U.S. non-exempt recipient, QI must backup withhold and report any amount paid to
the U.S. person to the extent required under section 3406 and §1.6041-1(d)(5). See
also section 8.03(C) of this Agreement for a QDD’s Form 1042-S reporting requirements
for a qualifying dividend equivalent offsetting payment (notwithstanding the limitation in
section 2.70(B) of this Agreement).

Sec. 3.06. Primary Form 1099 Reporting and Backup Withholding Responsibility
For Reportable Amounts Not Assumed. Notwithstanding sections 1.01 and 3.04 of
this Agreement, QI shall not be required to report on Form 1099 and, if required, backup
withhold with respect to a reportable amount if QI does not assume primary Form 1099
reporting and backup withholding responsibility and it provides a payor from which it
receives a reportable amount the Forms W-9 of its U.S. non-exempt recipient account
holders (or, if a U.S. non-exempt recipient fails to provide a Form W-9, information
regarding the account holder's name, address, and U.S. TIN, if a U.S. TIN is available)
together with the withholding rate pools (as defined in section 6.03(D) of this
Agreement) attributable to U.S. non-exempt recipient account holders so that such
payor may report on Form 1099 and, if required, backup withhold. If QI elects to backup
withhold on withholdable payments that are also reportable amounts made to

recalcitrant account holders that are also U.S. non-exempt recipients, QI shall not be
required to report on Form 1099 and backup withhold with respect to a reportable
amount if it provides a payor from which it receives a reportable amount information
regarding such recalcitrant account holders. See section 6.03 of this Agreement and
section 4 of the FFI Agreement. If QI reports its U.S. accounts on Forms 1099 under its
FATCA requirements as a participating FFI or registered deemed-compliant FFI, see
section 8.04(A) of this Agreement providing that QI cannot delegate to a withholding
agent its requirement to report its U.S. accounts. See sections 3.04 and 8.06 of this
Agreement for QI's obligations regarding Form 1099 reporting and backup withholding
with respect to reportable amounts and see also section 6.03 of this Agreement for
when QI may provide a chapter 4 withholding rate pool of U.S. payees. If QI elects not
to assume primary Form 1099 reporting and backup withholding responsibility, QI must
provide the withholding agent with such information regarding any account holders or
interest holders of an intermediary or flow-through entity that holds an account with QI.
See also sections 3.05(D) and 3.07 of this Agreement requiring a QI acting as a QDD
for payments with respect to potential section 871(m) transactions to assume primary
Form 1099 and backup withholding responsibility for such amounts. Notwithstanding its
election not to assume primary Form 1099 reporting and backup withholding
responsibility, QI shall backup withhold and report a reportable amount to the extent
required under sections 3.04 and 8.06 of this Agreement if--

(A) QI actually knows that a reportable amount is subject to backup withholding and that
another payor failed to apply backup withholding, or

(B) Another payor has not applied backup withholding to a reportable amount because
of an error made by QI (e.g., QI failed to provide the other payor with information
regarding the name, address, U.S. TIN (if available), and withholding rate pool for a
U.S. non-exempt recipient account holder subject to backup withholding, including a
failure to provide information regarding any account holders or interest holders of an
intermediary or flow-through entity that holds an account with QI to the extent required
in section 6 of this Agreement).

QI is not required to backup withhold, however, on a reportable amount that QI makes
to a withholding foreign partnership, withholding foreign trust, or another qualified
intermediary that has assumed primary Form 1099 reporting and backup withholding
responsibility with respect to the payment. QI is also not required to backup withhold on
a reportable amount that QI makes to an intermediary or flow-through entity that is a
participating FFI, registered deemed-compliant FFI, or another qualified intermediary
that does not assume primary Form 1099 reporting and backup withholding
responsibility with respect to the payment provided that such intermediary or flow-
through entity allocates the payment on its withholding statement to a chapter 4
withholding rate pool of U.S. payees and the withholding statement is associated with a
valid Form W-8IMY that provides the applicable certification(s) for allocating the
payment to this pool or allocates the payment on its withholding statement to a chapter
4 withholding rate pool of recalcitrant account holders. See section 3.05 of this

Agreement for backup withholding responsibility for reportable payments other than
reportable amounts. See section 8.06 of this Agreement regarding QI's responsibility to
report reportable payments on Form 1099.

Sec. 3.07. Assumption of Primary Form 1099 Reporting and Backup Withholding
Responsibility. QI may assume primary Form 1099 reporting responsibility and
primary backup withholding responsibility with respect to reportable amounts without
approval from the IRS. See sections 3.04 and 8.06 of this Agreement for QI's
obligations regarding Form 1099 reporting and backup withholding with respect to
reportable amounts. QI that assumes such responsibility is subject to all of the
obligations imposed by chapter 61 and section 3406, as modified by this Agreement,
and QI shall be subject to any applicable penalties for failure to meet those obligations.
QI shall inform a payor from which it receives a reportable amount that it has assumed
primary Form 1099 reporting and backup withholding responsibility by providing the
payor with a valid withholding certificate described in section 6 of this Agreement and by
designating on the withholding statement associated with such certificate the account(s)
for which QI assumes primary Form 1099 reporting and backup withholding
responsibility. QI may assume primary Form 1099 reporting and backup withholding
responsibility without informing the IRS.

QI is not required to assume primary Form 1099 reporting and backup withholding
responsibility for all accounts it holds with a payor. However, if QI assumes primary
Form 1099 reporting and backup withholding responsibility for any account, it must
assume that responsibility for all reportable amounts made by a payor to that account.

If QI is acting as a QDD, it must assume primary Form 1099 reporting and backup
withholding responsibility with respect to any payment made with respect to a potential
section 871(m) transaction, provided that the amount is a reportable payment. In
addition, if QI is assuming primary withholding responsibility for payments of substitute
interest (as described in section 3.03(A) of this Agreement), it must assume primary
Form 1099 reporting and backup withholding responsibility with respect to all such
payments.

QI shall not be required to backup withhold on a reportable amount it makes to a
withholding foreign partnership, withholding foreign trust, or another qualified
intermediary that has assumed primary Form 1099 reporting and backup withholding
responsibility with respect to the reportable amount. QI is also not required to backup
withhold on a reportable amount that QI makes to an intermediary or flow-through entity
that is a participating FFI, registered deemed-compliant FFI, or another qualified
intermediary that does not assume primary Form 1099 reporting and backup
withholding responsibility with respect to the payment provided that such intermediary or
flow-through entity allocates the payment on its withholding statement to a chapter 4
withholding rate pool of U.S. payees and the withholding statement is associated with a
valid Form W-8IMY that provides the applicable certification(s) for allocating the
payment to this pool or allocates the payment on its withholding statement to a chapter

4 withholding rate pool of recalcitrant account holders. See section 8 of this Agreement
regarding QI's responsibility to report reportable payments on Form 1099.

Sec. 3.08. Deposit Requirements. If QI assumes primary withholding responsibility
under chapters 3 and 4 or primary Form 1099 reporting and backup withholding
responsibility, it must deposit amounts withheld under chapter 3 or 4 or section 3406 at
the time and in the manner provided under section 6302 (see §1.6302-2) by electronic
funds transfer as provided under §31.6302-1(h). If QI is a non-U.S. payor that does not
assume primary withholding responsibility under chapters 3 and 4 or primary Form 1099
reporting and section 3406 backup withholding responsibility, QI must deposit amounts
withheld by the 15th day following the month in which the withholding occurred.

If QI is acting as a QDD, it must also make deposits with respect to its QDD tax liability.
At the time the QDD determines that it has a QDD tax liability (as described in section
3.09(D) of this Agreement), it must deposit any tax for which it is liable at the time and in
the manner provided under section 6302 (see §1.6302-2) (substituting the term “QDD”
for “withholding agent” and “sections 871(a) and 881” for “chapter 3” and “due under
sections 871 and 881” for “withheld pursuant to chapter 3”) by electronic funds transfer
as provided in §31.6302-1(h). See section 3.09(D) of this Agreement for the timing for
determining the QDD tax liability. The deposit requirements under section 6302 and
§1.6302-2 apply separately to amounts due for a QDD’s QDD tax liability and any
amounts withheld under chapters 3 and 4.

Sec. 3.09. QDD Tax Liability. In addition to satisfying its withholding tax liability as
described in this Agreement, a QDD must satisfy its QDD tax liability. The QDD’s QDD
tax liability is the sum of its tax liability under sections 871(a) and 881, if any, for:

(A) its section 871(m) amount (as defined in section 2.79 of this Agreement) for
amounts received and made as a QDD in its dealer capacity;

(B) its dividends that are not on underlying securities associated with potential section
871(m) transactions and its dividend equivalent payments received as a QDD in its non-
dealer capacity; and

(C) any payments, such as interest, received as a QDD with respect to potential section
871(m) transactions or underlying securities that are not dividend or dividend equivalent
payments.

A QDD that is a foreign branch of a U.S. financial institution does not have a QDD tax
liability and is not required to report such liability on Form 1042. Instead, such a QDD
must determine and report its tax liability in accordance with chapter 1 and the
appropriate income tax return filing obligations for the U.S. corporation.

(D) Timing for Determining QDD Tax Liability. A QDD must determine its QDD tax
liability due under sections 3.09(A) and (B) for each underlying security and section

871(m) transaction on the date that a dividend is paid on the underlying security, as
provided in §1.1441-2(e)(4). A QDD must determine its QDD tax liability due under
section 3.09(C) at the time such payments are made, as provided in §1.1441-2(e).

See section 7.01(C) of this Agreement regarding QI that is acting as a QDD’s
responsibility to report on Form 1042 its QDD tax liability and to maintain a
reconciliation schedule for its section 871(m) amount and other amounts related to its
QDD tax liability.

SECTION 4. PRIVATE ARRANGEMENT INTERMEDIARIES AND CERTAIN
PARTNERSHIPS AND TRUSTS

Sec. 4.01. Private Arrangement Intermediaries–In General. If QI is an FFI, QI may
enter into a private arrangement with another intermediary under which the other
intermediary agrees to perform all of the obligations of QI under this Agreement, except
as modified in section 4.03 of this Agreement. QI, however, when acting as a QDD may
not enter into a private arrangement under this section 4.01 with any account holder for
which it acts as a QDD. The agreement between QI and the other intermediary shall be
between QI and all the offices of the other intermediary located in a specified
jurisdiction. The specified jurisdiction must be one for which this Agreement is available
(i.e., IRS has approved the know-your-customer practices). Such an intermediary is
referred to in this Agreement as a private arrangement intermediary (PAI). By entering
into a PAI agreement, QI is not assigning its liability for the performance of any of its
obligations under this Agreement. Therefore, QI shall remain liable for any tax,
penalties, interest, and any other sanctions that may result from the failure of the PAI to
meet any of the obligations imposed by its agreement with QI. QI agrees not to assert
any defenses against the IRS for the failures of the PAI or any defenses that the PAI
may assert against QI. For purposes of this Agreement, the PAI's actual knowledge or
reason to know of facts relevant to withholding or reporting shall be imputed to QI. QI's
liability for the failures of the PAI shall apply even though the PAI is itself a withholding
agent under chapters 3 and 4 and a payor under chapter 61 and section 3406 and is
itself separately liable for its failure to meet its obligations under the Code.
Notwithstanding the foregoing, QI shall not be liable for tax, interest, or penalties for
failure to withhold and report under chapters 3, 4, and 61 and section 3406 unless the
underwithholding or the failure to report amounts correctly on Forms 945, 1042, 1042-S,
1099, or 8966 is due to QI's or its PAI's failure to properly perform its obligations under
this Agreement. The PAI is not required to enter into an agreement with the IRS but
must respond (either directly or through QI) to IRS inquiries related to its compliance
described in section 10.08 of this Agreement. The IRS may, however, in its sole
discretion, refuse to permit an intermediary to operate as a PAI by providing notice to QI
at the address provided in section 12.06 of this Agreement. QI may, however, appeal
the IRS's determination by following the notice and cure provisions in section 11.06 of
this Agreement. For purposes of this Agreement, an intermediary shall be considered a
PAI only if the following conditions are met:

(A) The PAI is a certified deemed-compliant FFI (other than a registered deemed-
compliant Model 1 IGA FFI) that acts as an intermediary with respect to reportable
amounts and has provided QI with a certification that it has maintained such certified
deemed-compliant FFI status during each certification period;

(B) The PAI does not act as an intermediary for a direct account holder that is a
qualified intermediary, withholding foreign trust, withholding foreign partnership,
participating FFI, registered deemed-compliant FFI, or a registered deemed-compliant
Model 1 IGA FFI;

(C) The PAI is, pursuant to a written agreement between QI and the PAI (PAI
agreement), subject to all the obligations of QI under this Agreement, except to the
extent modified by sections 4.02 and 4.03 of this Agreement;

(D) For purposes of chapter 4, the PAI agrees to comply with the FATCA requirements
applicable to its chapter 4 status as a certified deemed-compliant FFI, as modified by
sections 4.02 and 4.03 of this Agreement, and is not required to fulfill QI’s FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI;

(E) QI identifies the PAI on the FATCA registration website before the first payment for
which the PAI is operating under the PAI agreement;

(F) PAI agrees, to the extent necessary for QI to satisfy its compliance obligations (e.g.,
if QI does not receive a waiver described in section 10.07 of this Agreement), either to
provide its documentation and other information to QI for inclusion in QI’s periodic
review described in section 10.04 of this Agreement or to conduct an independent
periodic review in accordance with the procedures described in section 10.05 of this
Agreement, and provide QI with the certification required under section 10.03 of this
Agreement for each certification period in order to allow the responsible officer of QI to
make a certification to the IRS regarding PAI’s compliance, and agrees to respond
(either directly or through QI) to IRS inquiries regarding its periodic review described in
section 10.08 of this Agreement, including providing the QI and the IRS with the periodic
review report described in section 10.06 of this Agreement;

(G) The PAI furnishes QI with a Form W-8IMY and withholding statement described in
section 6 of this Agreement as modified by this section 4.01(G). The PAI is required to
provide QI with Forms W-9 (or, in absence of the form, the name, address, and U.S.
TIN (if available)) of the PAI's U.S. non-exempt recipient account holders and the
withholding rate pool information for those account holders as required by section
6.03(D) of this Agreement so that the QI (or the payor) may report on Form 1099 and, if
required, backup withhold. In addition, the PAI is required to disclose to QI any account
holder of PAI that is a passive NFFE with one or more substantial U.S. owners (or one
or more controlling persons that is a specified U.S. person) as defined in §§1.1471-
1(b)(74) and 1.1473-1(b), respectively (or in the applicable IGA), and the account

holders or interest holders of any nonqualified intermediary or flow-through entity,
respectively, which has an account with the PAI, and provide all of the documentation
and other information relating to those account holders and interest holders that is
required for the QI, or another withholding agent, to report the payments made to those
account holders and interest holders to the extent required by sections 8.02(B) and 8.05
of this Agreement. Except to the extent the PAI provides its information to QI for
purposes of performing the periodic review, the PAI is not required to disclose to QI, or
another withholding agent, its direct account holders that are foreign persons other than
a passive NFFE with one or more substantial U.S. owners (or one or more controlling
persons that is a specified U.S. person); and

(H) The PAI agrees to notify QI if the PAI no longer meets the requirements for certified
deemed-compliant status, and upon such notification, the agreement between the PAI
and QI will terminate.

Sec. 4.02. Modification of Obligations for PAI Agreements.

(A) Payments Reportable under Chapters 3 and 4. The agreement between QI and
a PAI must provide that QI shall report all payments of amounts subject to chapter 3 or
4 withholding made by the PAI on QI's Forms 1042 and 1042-S as if QI had made the
payments directly to the PAI's account holders. Therefore, QI shall report payments
made to each of the following types of a PAI's account holders as follows:

(1) A direct account holder of the PAI that is a nonparticipating FFI, QI shall report an
amount subject to chapter 4 withholding using the chapter 4 reporting pool described in
section 8.03 of this Agreement with the PAI reported as the recipient with respect to the
pool.

(2) A direct foreign account holder of the PAI for which no withholding is required under
chapter 4 (other than an intermediary, custodian, nominee, agent, or flow-through entity
described below), QI shall report an amount subject to chapter 3 withholding using the
chapter 3 reporting pools as described in section 8.03 of this Agreement with the PAI
reported as the recipient.

(3) A direct foreign account holder of the PAI that is a nonqualified intermediary or flow-
through entity, QI shall report payments of amounts subject to chapter 4 withholding
with respect to any indirect account holders of the PAI that the nonqualified intermediary
or flow-through entity includes in a chapter 4 withholding rate pool of nonparticipating
FFIs using the chapter 4 reporting pool for such account holders described in section
8.03 of this Agreement with the nonqualified intermediary or flow-through entity reported
as the recipient and shall report payments of amounts subject to chapter 3 withholding
made with respect to indirect foreign account holders of the PAI that are not subject to
chapter 4 withholding by reporting the payments as made to specific recipients under
the rules of section 8.02 of this Agreement.

(B) Form 1099 Reporting and Backup Withholding. The agreement between QI and
a PAI must also provide that QI shall report all reportable payments made by the PAI on
QI's Forms 945 and 1099 to the extent required under this section 4.02(B). QI shall file
Forms 1099 and backup withhold, if required, on reportable payments made by QI
(including by a PAI) to U.S. non-exempt recipients that are direct or indirect account
holders of a PAI in accordance with the terms of this Agreement.

(C) Form 8966 Reporting. The agreement between QI and a PAI must also provide
that QI shall report all withholdable payments made by the PAI on Form 8966 to the
extent required under this section 4.02(C). QI shall file Forms 8966 to report
withholdable payments made by QI (including by a PAI) to passive NFFEs with one or
more substantial U.S. owners (or one or more controlling persons that is a specified
U.S. person) that are direct or indirect account holders of a PAI in accordance with
section 8.05 of this Agreement.

Sec. 4.03. Other Requirements of PAI Agreement. QI shall require a PAI to provide
QI with all the information necessary for QI to meet its obligations under this Agreement.
No provisions shall be contained in the agreement between QI and a PAI that preclude,
and no provisions of this Agreement shall be construed to preclude, the PAI's joint and
several liability for tax, penalties, and interest under chapters 3, 4, and 61 and section
3406 to the extent that underwithholding, penalties, and interest have not been collected
from QI and the underwithholding or failure to report amounts correctly on Forms 945,
1042, 1042-S, 1099, or Form 8966 are due to a PAI's failure to properly perform its
obligations under its agreement with QI. Nothing in the agreement between QI and a
PAI shall be construed to limit the PAI’s requirements under chapter 4 or an applicable
IGA. Further, nothing in the agreement between QI and a PAI shall permit the PAI to
assume primary chapters 3 and 4 withholding responsibility or assume primary Form
1099 reporting and backup withholding responsibility.

Sec. 4.04. Termination of Arrangement. Except as otherwise provided in section
4.01(H) of this Agreement, QI shall cease to treat an intermediary as a PAI within 90
days from the day QI knows that the PAI is in default of its agreement with QI unless the
PAI has cured the event of default prior to the expiration of such 90-day period. QI must
provide the IRS with notice of any PAI agreement that has been terminated within 30
days of the termination by removing the intermediary as a PAI on the FATCA
registration website.

Sec. 4.05. Joint Account Treatment for Certain Partnerships and Trusts.

(A) In General. If QI is an FFI, QI may enter an agreement with a nonwithholding
foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust
described in this section 4.05(A) to apply the simplified joint account documentation,
reporting, and withholding procedures provided in section 4.05(B) of this Agreement.
QI, however, when acting as a QDD, may not enter into an agreement under this
section 4.05 with a nonwithholding foreign partnership or nonwithholding foreign trust

account holder for which it acts as a QDD. QI and a partnership or trust that apply this
section 4.05 to any calendar year must apply these rules to the calendar year in its
entirety. QI and the partnership or trust may not apply this section 4.05 to any calendar
year in which the partnership or trust has failed to make available to QI or QI’s reviewer
the records described in this section 4.05(A) within 90 days after these records are
requested, and the partnership or trust must waive any legal prohibitions against
providing such records to QI. If the partnership or trust has failed to make these records
available within the 90-day period, or if QI and the partnership or trust fail to comply with
any other requirements of this section 4.05, QI must apply the provisions of §§1.1441-
1(c) and 1.1441-5(e) to the partnership or trust as a nonwithholding foreign partnership
or nonwithholding foreign trust, must correct its withholding for the period during which
the failure occurred in accordance with section 9.05 of this Agreement, and cannot
apply this section 4.05 to subsequent calendar years. QI and a partnership or trust that
apply this section 4.05 to any calendar year are not required to apply this section 4.05 to
subsequent calendar years.

A partnership or trust is described in this section 4.05(A) of this Agreement if the
following conditions are met:

(1) The partnership or trust has a chapter 4 status as a certified deemed-compliant FFI
(other than a registered deemed-compliant Model 1 IGA FFI), an owner-documented
FFI with respect to QI, an exempt beneficial owner, or an NFFE or is covered as an
account that is excluded from the definition of financial account under Annex II of an
applicable IGA or under §1.1471-5(a) and has provided QI with a certification that it has
maintained such chapter 4 status during each certification period;

(2) The partnership or trust is a direct account holder of QI;

(3) None of the partnership’s or trust’s partners, beneficiaries, or owners is a flow-
through entity or is acting as intermediary for a payment made by QI to the partnership
or trust;

(4) None of the partnership’s or trust’s partners, beneficiaries, or owners is a U.S.
person and none of its foreign partners, beneficiaries, or owners is subject to
withholding or reporting under chapter 4 (which would include a nonparticipating FFI
and certain passive NFFEs); and

(5) The partnership or trust agrees to make available upon request to QI or QI’s
reviewer for purposes of QI’s periodic review under section 10 of this Agreement
(including to respond to IRS inquiries regarding its compliance review) records that
establish that the partnership or trust has provided QI with documentation for purposes
of chapters 3 and 4 for all of its partners, beneficiaries, or owners.

(B) Modification of Obligations for QI.

(1) QI may rely on a valid Form W-8IMY provided by the partnership or trust and may
rely on a withholding statement that meets the requirements of §1.1441-5(c)(3)(iv) or
(e)(5)(iv), and §1.1471-3(c)(3)(iii)(B), if the payment is a withholdable payment, and that
provides information for all partners, beneficiaries, or owners together with valid Forms
W-8 or, in the case of a partnership or trust that is a certified deemed-compliant FFI,
documentary evidence listed in the know-your-customer (KYC) attachment to this
Agreement from each partner, beneficiary, or owner, and, for a withholdable payment,
documentation that meets the requirements of §1.1471-3(d) to establish the partner’s,
beneficiary’s, or owner’s chapter 4 status. The withholding statement need not provide
any allocation information.

(2) QI must treat payments to the partnership or trust as allocated solely to a partner,
beneficiary, or owner that is subject to the highest rate of withholding under chapter 3
and must withhold at that rate.

(3) QI may pool report amounts distributed to, or included in the distributive share of, the
partnership’s or trust’s direct partners, beneficiaries, or owners in chapter 3 reporting
pools on Form 1042-S as described in section 8.03(B) of this Agreement.

(4) After QI has withheld in accordance with section 4.05(B)(2) of this Agreement, it may
file a separate Form 1042-S for any partner, beneficiary, or owner who requests that it
do so. If QI issues a separate Form 1042-S for any partner, beneficiary, or owner, it
cannot include such partner, beneficiary, or owner in QI’s chapter 3 reporting pool. If QI
has already filed a Form 1042-S and included the partner, beneficiary, or owner in a
chapter 3 reporting pool, it must file an amended return to reduce the amount of the
payment reported to reflect the amount allocated to the recipient on the recipient’s
specific Form 1042-S. QI may file a separate Form 1042-S for a partner, beneficiary, or
owner only if the partnership or trust provides a withholding statement that includes
allocation information for the requesting partner, beneficiary, or owner and only if the
partnership or trust has agreed in writing under section 4.05(A)(5) of this Agreement to
make available to QI or QI’s reviewer the records that substantiate the allocation
information included in its withholding statement.

(5) QI may not include any payments made to a partnership or trust to which QI is
applying the rules of this section 4.05 in any collective refund claim made under section
9.04 of this Agreement.

Sec. 4.06. Agency Option for Certain Partnerships and Trusts. QI may enter an
agreement with a nonwithholding foreign partnership or nonwithholding foreign trust that
is either a simple or grantor trust described in section 4.06(A) of this Agreement under
which the partnership or trust agrees to act as an agent of QI with respect to its
partners, beneficiaries, or owners, and, as QI’s agent, to apply the provisions of the QI
Agreement to the partners, beneficiaries, or owners. QI, however, when acting as a
QDD may not enter an agreement under this section 4.06 with any account holder for
which it acts as a QDD. By entering into an agreement with a partnership or trust as

described in this section 4.06, QI is not assigning its liability for the performance of any
of its obligations under this Agreement. QI and the partnership or trust to which QI
applies the rules of this section 4.06 are jointly and severally liable for any tax,
penalties, and interest that may result from the failure of the partnership or trust to meet
any of the obligations imposed by its agreement with QI. QI and a partnership or trust
that applies the agency option to any calendar year must apply these rules to the
calendar year in its entirety. Generally, QI and a partnership or trust that applies the
agency option to any calendar year is not required to apply the agency option to
subsequent calendar years. If, however, QI withholds and reports any adjustments
required by corrected information in a subsequent calendar year under section
4.06(B)(2) of this Agreement, QI must apply the agency option to that calendar year in
its entirety. QI and a partnership or trust may not apply the agency option to any
calendar year when the partnership or trust has failed to make available to QI or QI’s
reviewer the records described in section 4.06 of this Agreement within 90 days after
these records are requested, and the partnership or trust must waive any legal
prohibitions against providing such records to QI. If, for any calendar year, the
partnership or trust has failed to make these records available within the 90-day period,
or if QI and the partnership or trust fail to comply with any other requirement of this
section 4.06, QI must apply §§1.1441-1(c) and 1.1441-5(e) to the partnership or trust as
a nonwithholding foreign partnership or nonwithholding foreign trust, must correct its
withholding for the period in which the failure occurred in accordance with section 9.05
of this Agreement, and cannot apply the agency option to subsequent calendar years.

(A) A partnership or trust is described in this section 4.06(A) of this Agreement if the
following conditions are met:

(1) The partnership or trust is either a direct account holder of QI or an indirect account
holder of QI that is a direct partner, beneficiary, or owner of a partnership or trust to
which QI also applies the agency option.

(2) The partnership or trust has a chapter 4 status as a certified deemed-compliant FFI
(other than a registered deemed-compliant Model 1 IGA FFI), an owner-documented
FFI, an NFFE, an exempt beneficial owner, or is covered as an account that is excluded
from the definition of financial account under Annex II of an applicable IGA or under
§1.1471-5(a) and has provided QI with a certification that it has maintained such
chapter 4 status during each certification period;

(3) None of the partnership’s or trust’s partners, beneficiaries, or owners is a withholding
foreign trust, withholding foreign partnership, participating FFI, registered deemed-
compliant FFI, registered deemed-compliant Model 1 IGA FFI, or another qualified
intermediary acting as an intermediary for a payment made by QI to the partnership or
trust.

(4) The partnership or trust agrees to permit QI to treat its direct partners, beneficiaries,
or owners as direct account holders of QI under this Agreement and to treat its indirect

partners, beneficiaries, or owners as indirect account holders of QI under this
Agreement.

(5) The partnership or trust agrees, to the extent necessary for QI to satisfy its
compliance obligations (e.g., if the QI does not receive a waiver described in section
10.07 of this Agreement), either to provide its documentation and other information to QI
for inclusion in QI’s periodic review described in section 10.04 of this Agreement or to
conduct an independent periodic review in accordance with the procedures described in
section 10.05 of this Agreement, provide QI with the certification required under section
10.03 of this Agreement for each certification period in order to allow the responsible
officer of QI to make a certification to the IRS regarding the partnership’s or trust’s
compliance with this section 4.06, and respond (either directly or through QI) to IRS
inquiries regarding its compliance review described in section 10.07 of this Agreement,
including providing the QI and the IRS with the results of the reviewer’s testing of
transactions and accounts described in section 10.06 of this Agreement.

(B) Modification of Obligations for QI.

(1) QI may rely on a valid Form W-8IMY provided by the partnership or trust, together
with a withholding statement described in §1.1441-5(c)(3)(iv) or (e)(5)(iv) and §1.1471-
3(c)(3)(iii)(B), if the payment is a withholdable payment, that includes all information
necessary for QI to fulfill its withholding, reporting, and filing obligations under this
Agreement. The withholding statement may include chapter 3 withholding rate pools
described in section 6.03 of this Agreement for partners, beneficiaries, or owners that
are not intermediaries, flow-through entities (or persons holding interests in the
partnership or trust through such entities), U.S. persons, or passive NFFEs with one or
more substantial U.S. owners (or one or more controlling persons that is a specified
U.S. person), and the partnership or trust need not provide to QI documentation for
these partners, beneficiaries, or owners. The withholding statement may also include a
chapter 4 withholding rate pool of nonparticipating FFIs described in section 6.03 of this
Agreement for payments of amounts subject to chapter 4 withholding. Notwithstanding
the preceding sentences of this section 4.06(B)(1), the partnership or trust is required to
disclose to QI any interest holder that is a passive NFFE with substantial U.S. owners
(or controlling persons that are specified U.S. persons) or that is a U.S. non-exempt
recipient, as well as the account holders or interest holders of any nonqualified
intermediary or flow-through entity, respectively, which has an interest in the partnership
or trust, and to provide all of the documentation and other information relating to those
account holders and interest holders that is required for the QI, or another withholding
agent, to report the payments made to those account holders and interest holders to the
extent required by sections 8.02(B) and 8.05 of this Agreement.

(2) Timing of Withholding. QI must withhold on the date it makes a payment to the
partnership or trust based on a withholding statement provided by the partnership or
trust on which QI is permitted to rely. The amount allocated to each partner,
beneficiary, or owner in the withholding statement may be based on a reasonable

estimate of the partner’s, beneficiary’s, or owner’s distributive share of income subject
to withholding for the year. The partnership or trust must correct the estimated
allocations to reflect the partner’s, beneficiary’s, or owner’s actual distributive share and
must provide this corrected information to QI on the earlier of the date that the
statement required under section 6031(b) (i.e., Schedule K-1) or the Beneficiary
Statement or Owner Statement is mailed or otherwise provided to the partner,
beneficiary, or owner, or the due date for furnishing the statement (whether or not the
partnership or trust is required to prepare and furnish the statement). If that date is after
the due date (without regard to extensions) for QI’s Forms 1042 and 1042-S for the
calendar year, QI may withhold and report any adjustments required by the corrected
information in the following calendar year.

(3) Payments Reportable Under Chapters 3 and 4. QI shall report on Form 1042-S
all amounts subject to chapters 3 and 4 withholding distributed to, or included in the
distributive share of, the partnership or trust as follows:

(a) For a direct partner, beneficiary, or owner of the partnership or trust that is a
nonparticipating FFI, QI shall report an amount subject to withholding using the chapter
4 reporting pool described in section 8.03(A) of this Agreement with the partnership or
trust reported as a recipient.

(b) For a direct partner, beneficiary, or owner of the partnership or trust that is a foreign
person for which no withholding is required under chapter 4 (other than an intermediary,
agent, or flow-through entity described below), QI shall report an amount subject to
chapter 3 withholding using the chapter 3 reporting pools described in section 8.03(B) of
this Agreement with the partnership or trust reported as a recipient.

(c) For a direct or indirect partner, beneficiary, or owner of the partnership or trust that is
a nonqualified intermediary or foreign flow-through entity, QI shall report payments of
amounts subject to chapter 4 withholding in a chapter 4 withholding rate pool of
nonparticipating FFIs using the chapter 4 reporting pool for such partner, beneficiary, or
owner with the nonqualified intermediary or foreign flow-through entity reported as the
recipient, and QI shall report payments of amounts subject to chapter 3 withholding for
which no chapter 4 withholding is required by reporting the payments as made to
specific recipients as described in section 8.02 of this Agreement.

(4) Form 1099 Reporting and Backup Withholding. The agreement between QI and
the partnership or trust must also provide that QI shall include all reportable payments
made by the partnership or trust in QI's Forms 945 and 1099 to the extent required
under this section 4.06(B)(4). QI shall file Forms 1099 and backup withhold, if required,
on reportable payments made by QI to U.S. non-exempt recipient that are direct or
indirect partners, beneficiaries, owners of the partnership or trust in accordance with the
terms of this Agreement.

(5) Form 8966 Reporting Requirements. The agreement between QI and the

partnership or trust must also provide that QI shall report all withholdable payments
made by the partnership or trust on Form 8966 to the extent required under this section
4.06(B)(5). If the partnership or trust is itself a passive NFFE and if any of its partners,
beneficiaries, or owners is a passive NFFE with one or more substantial U.S. owners (or
one or more controlling persons that is a specified U.S. person), QI shall file Forms
8966 to report all withholdable payments made by QI to any such passive NFFE in
accordance with sections 8.04 and 8.05 of this Agreement.

(C) Other Requirements of Agency Agreement. QI shall require the partnership or
trust to provide QI with all the information necessary for QI to meet its obligations under
this Agreement. No provisions shall be contained in the agreement between QI and the
partnership or trust that preclude, and no provisions of this Agreement shall be
construed to preclude, the partnership or trust’s joint and several liability for tax,
penalties, and interest under chapters 3, 4, and 61 and section 3406, to the extent that
the underwithholding, penalties, and interest have not been collected from QI and the
underwithholding or failure to report amounts correctly on Forms 945, 1042, 1042-S,
1099, or 8966 is due to the partnership’s or trust’s failure to properly perform its
obligations under its agreement with QI. Nothing in the agreement between QI and the
partnership or trust shall be construed to limit the partnership’s or trust’s requirements
under chapter 4 as a certified deemed-compliant FFI, owner-documented FFI, NFFE, or
exempt beneficial owner. Further, nothing in the agreement between QI and the
partnership or trust shall permit the partnership or trust to assume primary chapters 3
and 4 withholding responsibility or primary Form 1099 reporting and backup withholding
responsibility.

SECTION 5. DOCUMENTATION REQUIREMENTS

Sec. 5.01. Documentation Requirements.

(A) Coordination of Documentation Requirements with Chapter 4.
(1) QI that is an FFI. If QI is an FFI, QI is required to perform the due diligence
procedures for each account holder for whom QI is acting under its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI to determine if the account is a U.S. account (or
U.S. reportable account) and each account holder that is a nonparticipating FFI and, if
applicable, recalcitrant account holder (or non-consenting U.S. account). See QI’s
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI to perform due diligence with respect to
each account that it maintains. If an account holder receiving the payment is not the
payee, QI is also required to establish the chapter 4 status of the payee or payees to
determine whether withholding applies under chapter 4. See section 5.13(B)(1) of this
Agreement for the requirements for QI to reliably associate a withholdable payment with
a Form W-8IMY for chapter 4 purposes. To the extent an account holder receives a
payment with respect to which QI has determined that withholding is not required under
chapter 4, QI shall obtain, unless already collected, documentation that meets the

requirements of this section 5 to determine whether the account holder is a foreign
person for which QI is required to withhold under chapter 3 or a U.S. payee for which QI
is required to backup withhold under section 3406 or report on Form 1099 under
chapter 61. See, however, section 8.06 of this Agreement providing the circumstances
in which reporting of U.S. accounts (or U.S. reportable accounts) under its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI satisfies QI’s Form 1099 reporting responsibilities.
See Notice 2014-33, 2014-21 I.R.B. 1033, which modifies the time in which QI is
required to implement the applicable due diligence procedures under its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI with respect to an obligation held by an entity that
is opened, issued, or executed on or after July 1, 2014, and before January 1, 2015.

(2) QI that is an NFFE. If QI is an NFFE, QI is required to document the chapter 4
status of each account holder for whom QI is acting to determine if withholding and
reporting apply under section 1471 or 1472 on withholdable payments made to the
account holder. QI is required to obtain, unless already collected, a valid Form W-8 or
Form W-9 from each account holder to determine whether QI is required to withhold
under chapter 3 or 4 or report on Form 1099 under chapter 61. Thus, the allowance in
this section 5 for QI to obtain documentary evidence does not apply if QI is an NFFE.
QI may, however, obtain appropriate documentary evidence as additional
documentation to establish the foreign status of an account holder. See §1.1471-
3(e)(4) for when QI will have reason to know that an entity’s claim of chapter 4 status is
unreliable or incorrect and §1.1471-3(c)(6)(ii)(E) for QI’s requirements following a
change in circumstances.

(B) General Documentation Requirements. QI agrees to use its best efforts to obtain
documentation from account holders that receive a reportable payment to determine
whether withholding applies or whether a payment is reportable under this Agreement.
If QI is an FFI obtaining documentary evidence, QI also agrees to adhere to the know-
your-customer rules that apply to QI with respect to the account holder from whom the
documentary evidence is obtained. Unless QI can reliably associate a reportable
payment with valid documentation from the account holder under section 5.13(B) of this
Agreement, QI shall apply the presumption rules described in section 5.13(C) of this
Agreement to any account holder that receives a reportable payment to determine if
withholding is required under chapter 3 or 4 or if backup withholding is required under
section 3406. As set forth in section 11.06 of this Agreement, failure to obtain
documentation from a significant number of direct account holders constitutes an event
of default. QI agrees to review and maintain documentation in accordance with this
section 5 and, in the case of documentary evidence obtained from direct account
holders, in accordance with the know-your-customer rules set forth in the Attachments
to this Agreement. QI also agrees, if the performance of an external review is
requested by IRS as described in section 10.08(D) of this Agreement, to make
documentation (together with any associated withholding statements and other
documents or information) available upon request for inspection by QI's external

reviewer. QI represents that none of the laws to which it is subject prohibits disclosure
of the identity of any account holder or account information to QI's external reviewer. QI
may rely on the documentation it obtains under this section 5 as the basis for the
information it provides to another withholding agent under section 6 of this Agreement,
as well as to determine its own withholding, tax, and reporting obligations.

(C) QI that is a QDD. If QI is acting as a QDD, QI is required to apply the rules of this
section 5 to each account holder of an account for which it is acting as a QDD and to
which it makes a reportable payment or a payment of a qualifying dividend equivalent
offsetting payment (notwithstanding the limitation in section 2.70(B) of this Agreement)
in accordance with the applicable requirements in section 5.01(A) and (B) of this
Agreement.

Sec. 5.02. Documentation for Foreign Account Holders. QI may treat an account
holder as a foreign beneficial owner of an amount if the account holder provides a valid
Form W-8 (other than Form W-8IMY unless provided by a QI that is acting as a QDD or
assuming primary withholding responsibility for a substitute interest payment) or valid
documentary evidence, as described in section 2.20 of this Agreement, that supports
the account holder's status as a foreign person. QI may not treat an account holder that
provides documentation indicating that it is a bank, broker, intermediary, or agent (such
as an attorney) as a beneficial owner unless QI receives a statement, in writing and
signed by a person with authority to sign such a statement, stating that such account
holder is the beneficial owner of the income. Further, QI may not reduce the rate of
withholding with respect to an indirect account holder that is a foreign beneficial owner
unless the certification provided by the direct account holder is a valid Form W-8IMY,
and then only to the extent that QI can reliably associate the payment with valid
documentation that establishes the indirect account holder's entitlement to a reduced
rate of withholding under chapter 3 and establishes that withholding does not apply
under chapter 4 in the case of a withholdable payment made to the account holder.
See section 5.13(B) of this Agreement for rules regarding reliable association with
documentation.

Sec. 5.03. Beneficial Owner’s Claim of Treaty Benefits. To the extent an account
holder receives a payment that is not subject to withholding under chapter 4, QI may not
reduce the rate of withholding under chapter 3 based on a beneficial owner's claim of
treaty benefits unless QI obtains the documentation required by section 5.03(A) of this
Agreement. In addition, QI agrees to establish procedures to inform account holders of
the terms of limitation on benefits provisions of a treaty (whether or not those provisions
are contained in a separate article entitled Limitation on Benefits) under which the
account holder is claiming benefits. For accounts held by an entity opened or
documented on or after January 1, 2017, QI is required to obtain a Form W-8BEN-E
with the appropriate limitation on benefits certification or, if QI is allowed to and obtains
documentary evidence, the written certification accompanying the treaty statement as
described in section 5.03(B) of this Agreement. For accounts maintained by QI prior to
January 1, 2017 that were documented with documentary evidence and for which treaty

benefits are being claimed, QI is required to obtain the appropriate limitation on benefits
statement prior to January 1, 2019.

(A) Treaty Documentation. The documentation required by this section 5.03(A) is as
follows:

(1) The account holder has provided a properly completed Form W-8BEN or Form W-
8BEN-E on which a claim of treaty benefits is made, including for an entity the
appropriate limitation on benefits and section 894 certifications, as provided in §1.1441-
6(b)(1). A U.S. TIN or foreign TIN shall not be required, however, if the beneficial owner
is a direct account holder. An indirect account holder is required to have a either a U.S.
TIN or foreign TIN to claim treaty benefits unless it is claiming treaty benefits on income
from marketable securities;

(2) The account holder has provided documentary evidence that has been obtained
pursuant to the know-your-customer rules that apply to the account holder and the
account holder, if it is an entity, has made the treaty statement (if applicable) required
by section 5.03(B) of this Agreement; or

(3) The account holder provides the type of documentary evidence required under
§1.1441-6 to establish entitlement to a reduced rate of withholding under a treaty and
the account holder, if it is an entity, has made the treaty statement (if applicable)
required by section 5.03(B) of this Agreement.

(B) Treaty Statement. The treaty statement required by an entity account holder under
this section 5.03(B) is as follows:
[Name of entity account holder] meets all provisions of the applicable treaty that are
necessary to claim a reduced rate of withholding, including any limitation on benefits
provisions, and derives the income within the meaning of section 894, and the
regulations thereunder, as the beneficial owner.

The treaty statement must also include a written certification that the entity meets the
appropriate limitation on benefits certification as described on Form W-8BEN-E and its
accompanying instructions and that specifies the category of the limitation on benefits
provision that the entity meets. QI is only required to obtain the treaty statement
required by this section 5.03(B) from an account holder that is an entity. QI shall not be
required to obtain a treaty statement required by this section 5.03(B) from an individual
who is a resident of an applicable treaty country or from the government, or its political
subdivisions, of a treaty country.

Sec. 5.04. Documentation for International Organizations. To the extent an account
holder receives a payment that is not subject to withholding under chapter 4, QI may not
treat the account holder as an international organization entitled to an exemption from
withholding under section 892 unless the name provided on the documentation
(including a Form W-8EXP) is the name of an entity designated as an international

organization by executive order pursuant to 22 United States Code 288 through 288(f)
and the documentation is valid under section 5.10 of this Agreement. If an international
organization is not claiming benefits under section 892 but under another Code
exception, the provisions of section 5.02 of this Agreement shall apply rather than the
provisions of this section 5.04.

Sec. 5.05. Documentation for Foreign Governments and Foreign Central Banks of
Issue.

(A) Documentation From a Foreign Government or Foreign Central Bank of Issue
Claiming an Exemption From Withholding Under Section 892 or Section 895. To
the extent an account holder receives a payment that is not subject to withholding under
chapter 4, QI may not treat an account holder as a foreign government or foreign central
bank of issue exempt from withholding under section 892 or 895 unless--

(1) QI receives from the account holder a Form W-8EXP or documentary evidence
establishing that the account holder is a foreign government or foreign central bank of
issue;

(2) The income paid to the account holder is the type of income that qualifies for an
exemption from withholding under section 892 or 895; and

(3) QI does not know, or have reason to know, that the account holder is a controlled
commercial entity as described in section 892, that the income owned by the foreign
government or foreign central bank of issue is being received from a controlled
commercial entity, or that the income is from the disposition of an interest in a controlled
commercial entity.

(B) Treaty Exemption. To the extent an account holder receives a payment that is not
subject to withholding under chapter 4, QI may treat an account holder as a foreign
government or foreign central bank of issue entitled to a reduced rate of withholding
under an income tax treaty for purposes of chapter 3 if it has valid documentation that is
sufficient to obtain a reduced rate of withholding under a treaty as described in section
5.03 of this Agreement.

(C) Other Code Exception. If a foreign government or foreign central bank of issue is
not claiming benefits under section 892 or under an income tax treaty but under another
Code exception (e.g., the portfolio interest exception under section 871(h) or 881(c)),
the provisions of section 5.02 of this Agreement apply rather than the provisions of this
section 5.05.

Sec. 5.06. Documentation for Foreign Tax-Exempt Organizations. To the extent an
account holder receives a payment that is not subject to withholding under chapter 4, QI
may not treat an account holder as a foreign tax-exempt organization and reduce the
rate of or exempt the account holder from withholding for purposes of chapter 3 unless it

satisfies the requirements provided in section 5.06(A), (B), or (C) of this Agreement.

(A) Reduced Rate of Withholding Under Section 501. QI may not treat an account
holder as a foreign organization described under section 501(c), and therefore exempt
from withholding under chapter 3 (or, if the account holder is a foreign private
foundation, subject to withholding at a 4-percent rate under section 1443(b)) unless QI
obtains a valid Form W-8EXP on which Part IV of the form is completed.

(B) Reduced Rate of Withholding Under Treaty. QI may not treat an account holder
as a foreign organization that is tax-exempt on an item of income pursuant to an income
tax treaty unless QI obtains valid documentation as described under section 5.03 of this
Agreement that is sufficient for obtaining a reduced rate of withholding under the treaty
and the documentation establishes that the account holder is an organization exempt
from tax under the treaty on that item of income.

(C) Other Exceptions. If a tax-exempt entity is not claiming a reduced rate of
withholding because it is a foreign organization described under section 501(c) or under
a treaty article that applies to exempt certain foreign organizations from tax, but is
claiming a reduced rate of withholding under another Code or income tax treaty
exception, the provisions of section 5.02 or 5.03 (as applicable) of this Agreement shall
apply rather than the provisions of this section 5.06.

Sec. 5.07. Documentation from Intermediaries or Flow-Through Entities. QI must
apply the presumption rules to a reportable payment made to a nonqualified
intermediary or flow-through entity that is a direct account holder of QI to the extent QI
fails to obtain the documentation set forth below. If QI receives documentation for the
account holders or interest holders of an intermediary or flow-through entity, as
described in this section 5.07, QI must apply the rules of this section 5 to determine the
validity of such documentation.

(A) Withholdable Payments Made to Nonqualified Intermediaries and Flow-
Through Entities. With respect to a withholdable payment made to a nonqualified
intermediary or flow-through entity—

(1) QI receives a valid Form W-8IMY provided by the nonqualified intermediary or the
flow-through entity receiving the payment that establishes the chapter 4 status of the
intermediary or flow-through entity; and

(2) If the payment is not subject to withholding under chapter 4 based on such entity’s
chapter 4 status (or to the extent the payment is received on behalf of exempt beneficial
owners), QI can reliably associate the payment, within the meaning of section 5.13(B) of
this Agreement, with a withholding statement that meets the requirements of §1.1471-
3(c)(iii)(B) that includes the account holders or interest holders of the intermediary or
flow-through entity in chapter 4 withholding rate pools to the extent permitted or with
valid documentation described in this section 5 provided by account holders or interest

holders of the intermediary or flow-through entity that are not themselves nonqualified
intermediaries or flow-through entities and that QI can treat as not subject to withholding
under chapter 4.

(B) Reportable Payments Other than Withholdable Payments Made to
Nonqualified Intermediaries and Flow-Through Entities. With respect to a
reportable payment that is not a withholdable payment made to a nonqualified
intermediary or flow-through entity (other than a withholding foreign partnership or
withholding foreign trust)—

(1) QI receives a valid Form W-8IMY provided by the nonqualified intermediary or the
flow-through entity regardless of whether the form includes a chapter 4 status of the
nonqualified intermediary or flow-through entity unless such entity provides a
withholding statement allocating a payment to a chapter 4 withholding rate pool of U.S.
payees; and

(2) QI can reliably associate the payment, within the meaning of section 5.13(B) of this
Agreement, with a chapter 4 withholding rate pool of U.S. payees or valid
documentation described in this section 5 provided by account holders or interest
holders of the nonqualified intermediary or flow-through entity that are not themselves
nonqualified intermediaries or flow-through entities.

(C) Reportable Payments Made to Qualified Intermediaries and Withholding
Foreign Partnerships and Withholding Foreign Trusts. With respect to a reportable
payment made to a qualified intermediary, a withholding foreign partnership, or a
withholding foreign trust, QI receives a valid Form W-8IMY provided by the qualified
intermediary, withholding foreign partnership, or withholding foreign trust that includes
the entity’s chapter 4 status for a payment that is a withholdable payment and, for those
payments for which a qualified intermediary has not assumed primary chapters 3 and 4
withholding responsibility or primary Form 1099 reporting and backup withholding
responsibility, QI can reliably associate the payment with withholding rate pools, as
described in section 6.03 of this Agreement.

(D) Payments Made to Qualified Intermediaries Acting as QDDs. For payments with
respect to potential section 871(m) transactions or underlying securities made to a
qualified intermediary acting as a QDD, if QI receives a valid Form W-8IMY provided by
the qualified intermediary acting as a QDD that includes the qualified intermediary’s
chapter 4 status and the required certification that the qualified intermediary is acting as
a QDD and assumes primary withholding responsibility for such payments, then QI can
reliably associate the payments as made to the qualified intermediary acting as a QDD.

(E) Private Arrangement Intermediaries. If QI has an agreement with a PAI (see
section 4.01 of this Agreement), QI obtains from the PAI a Form W-8IMY completed as
if the PAI were a QI that is an FFI (with the exception that the PAI must not provide a
QI-EIN on the Form W-8IMY) and QI can reliably associate the payment with a

withholding statement, as described in section 4.01(G) of this Agreement and the
information described in this section 5.07 for any account holders of the PAI that are
intermediaries or flow-through entities and the documentation for any passive NFFE
with one or more substantial U.S. owners (or one or more controlling persons that is a
specified U.S. person if QI is a reporting Model 1 or reporting Model 2 FFI).

(F) Partnership or Trusts to which QI Applies the Agency Option. If QI has an
agreement with a partnership or trust under which the partnership or trust agrees to act
as an agent of QI (see section 4.06 of this Agreement), QI obtains from the partnership
or trust a Form W-8IMY completed as if the partnership or trust were a QI (with the
exception that the partnership or trust must not provide a QI-EIN on the Form W-8IMY)
and QI can reliably associate the payment with a withholding statement, as described in
section 4.06(B)(1) of this Agreement and the information described in this section 5.07
for any account holders that are intermediaries or flow-through entities and the
documentation for any passive NFFE with one or more substantial U.S. owners (or one
or more controlling persons that is a specified U.S. person if QI is a reporting Model 1 or
reporting Model 2 FFI).

Sec. 5.08. Documentation for U.S. Exempt Recipients. QI shall not treat an account
holder as a U.S. exempt recipient unless QI obtains from the account holder--

(A) A valid Form W-9 on which the account holder includes an exempt payee code to
certify that the account holder is a U.S. exempt recipient for purposes of chapter 4
reporting;

(B) Documentary evidence that is sufficient to establish that the account holder is a U.S.
exempt recipient; or

(C) Documentary evidence that is sufficient to establish the account holder's status as a
U.S. person and QI can treat the person as an exempt recipient under the rules of
§§1.6045-2(b)(2)(i) or 1.6049-4(c)(1)(ii), as appropriate, without obtaining
documentation.

Sec. 5.09. Documentation for U.S. Non-Exempt Recipients. QI shall not treat an
account holder as a U.S. non-exempt recipient unless QI obtains a valid Form W-9 from
the account holder, QI knows an account holder is a U.S. non-exempt recipient, or QI
must presume a person is a U.S. non-exempt recipient to the extent required under
section 5.13(C)(3) or (4) of this Agreement.

Sec. 5.10. Documentation Validity.

(A) In General. QI may not rely on documentation if QI has actual knowledge, or
reason to know as described in section 5.10(B) or 5.10(C) of this Agreement, that there
is a change in circumstances with respect to the information or statements contained in
the documentation or account information that affects the reliability of the account

holder’s claim. See §1.1441-1(e)(4)(ii)(D) for the definition of change in circumstances
for chapter 3 purposes. A change in circumstances affecting withholding information,
including allocation information or withholding rate pools contained in a withholding
statement, will also cause the documentation provided with respect to that information
to no longer be reliable. Once QI knows, or has reason to know, that documentation
provided by an account holder is unreliable or incorrect to establish foreign status or
residency for purposes of claiming benefits under an applicable income tax treaty, it can
no longer reliably associate a payment with valid documentation unless QI obtains the
additional documentation described in this section 5.10. With respect to a beneficial
owner claiming benefits under an applicable income tax treaty, QI cannot rely on the
account holder’s claim of which limitation on benefits provision it satisfies if QI has
actual knowledge that such claim is incorrect. QI will be considered to have reason to
know that a claim for treaty benefits is unreliable or incorrect if the documentation
provided by the account holder claims benefits under a treaty that does not exist or is
not in force (i.e., if the country is not included on the list maintained at
https://www.irs.gov/businesses/international-businesses/united-states-income-tax-
treaties-a-to-z). The rule in the preceding sentence will apply to pre-existing accounts
for which QI held valid documentation upon a change in circumstances or, with respect
to a pre-existing entity account, when it provides a written limitation on benefits
statement (as described in section 5.03(B) of this Agreement). For all new accounts,
this rule will apply on account opening. For purposes of this section 5.10(A), a “pre-
existing account” or “pre-existing entity account” is an account documented by QI prior
to January 1, 2017, for a QI with a QI Agreement in effect prior to that date. For a QI
that did not have a QI Agreement in effect prior to January 1, 2017, a “pre-existing
account” or “pre-existing entity account” means an account maintained (and for which
QI has valid documentation) prior to the effective date of its QI Agreement.

In addition, if QI becomes aware of information resulting in the documentation no longer
being reliable or correct and QI has not assumed primary withholding responsibility
under chapters 3 and 4, QI agrees that it will promptly provide a withholding agent with
corrected information (e.g., corrected withholding rate pools, corrected Forms W-9, or
corrected U.S. TINs) within 30 days after QI knows or has reason to know that the
documentation upon which it has relied is unreliable or incorrect. If QI receives
notification from the IRS that documentation provided by an account holder is unreliable
or incorrect (e.g., that the U.S. TIN provided by an account holder is incorrect), QI shall
follow the procedures set forth in §31.3406(d)-5. See also QI’s FATCA requirements as
a participating FFI, registered deemed-compliant FFI, or registered deemed-compliant
Model 1 IGA FFI or an NFFE’s requirements as a withholding agent under sections
1471 and 1472 following a change in circumstances.

(B) Reason to Know-Direct Account Holders. If QI is a financial institution as defined
in §1.1471-5(e), an insurance company (without regard to whether such company is a
specified insurance company), or a broker or dealer in securities, QI shall be considered
to have reason to know that documentation provided by a direct account holder is
unreliable or incorrect only if one or more of the circumstances described in this section

5.10(B) applies. If an account holder has provided documentation that is unreliable or
incorrect under the rules of this section 5.10(B), QI must request new documentation.
Notwithstanding the preceding sentence, QI may rely on the documentation originally
provided if the rules of this section 5.10(B) permit such reliance and QI obtains the
additional statements and documentation described in this section 5.10(B). If QI is an
NFFE that is required to collect Forms W-8, see §1.1441-7(b)(2) for when QI shall be
considered to have reason to know that a withholding certificate provided by a direct
account holder is unreliable or incorrect.

(1) General Rules.

(i) QI shall not rely on a Form W-9 if it is not permitted to do so under the rules of
§31.3406(h)-3(e) and shall not rely on a Form W-8 if it is not permitted to do so under
the rules of §1.1441-7(b)(4) through (6) except as otherwise provided in this section
5.10(B).

(ii) QI shall not treat documentary evidence provided by an account holder as valid if the
documentary evidence does not reasonably establish the identity of the person
presenting the documentary evidence. For example, documentary evidence is not valid
if it is provided in person by an account holder that is a natural person and the
photograph on the documentary evidence, if any, does not match the appearance of the
person presenting the document.

(iii) QI may not rely on documentation to reduce the withholding rate that would
otherwise apply if—

(a) The account holder's documentation is incomplete or contains information that is
inconsistent with the account holder's claim;

(b) QI has other account information that is inconsistent with the account holder's claim;
or

For example, if an account holder is an entity and provides documentary evidence to
claim treaty benefits and the documentary evidence establishes the account holder's
status as a foreign person and a resident of a treaty country but fails to provide the
treaty statement in section 5.03 of this Agreement, the documentary evidence does not
establish the account holder's entitlement to a reduced rate of withholding. However,
for purposes of establishing an account holder's status as a foreign person or residency
under an income tax treaty, documentation shall be considered inconsistent only if it is
unreliable or incorrect under the rules of section 5.10(B)(2) or (3) of this Agreement.

(2) Rules Regarding Establishment of Foreign Status.

(i) QI shall not treat documentary evidence provided by an account holder before
January 1, 2001, as valid for purposes of establishing an account holder's status as a
foreign person if QI has actual knowledge that the account holder is a U.S. person or if it
has a current mailing or current residence address for the account holder in the United
States.

(ii) QI shall not treat documentation provided by an account holder after December 31,
2000, as valid for purposes of establishing the account holder's foreign status if QI
classified the account holder as a U.S. person in its account information, or if it does not
have a permanent residence address for the account holder. Further, QI shall not treat
documentation provided with respect to an account as valid for purposes of establishing
an account holder's status as a foreign person if QI has a current mailing or permanent
residence address (whether or not on the documentation) for the account holder in the
United States, or if QI has a current telephone number for the person in the United
States and has no telephone number for the person outside of the United States (except
with respect to a preexisting obligation (as defined in §1.1441-1(c)(54)) to the extent the
QI documented the foreign status of the account holder for purposes of chapter 3 or 61
before July 1, 2014). The limit on reason to know described in the preceding sentence
with respect to a preexisting account documented before July 1, 2014, shall not apply,
however, if QI is notified of a change in circumstances and as of the date of such
notification QI shall not treat such documentation as valid for purposes of establishing
the account holder's foreign status.

If QI has classified the account holder as a U.S. person or has an address or sole
telephone number for the account holder in the United States, QI may nevertheless
treat an account holder that is an individual as a foreign person if QI--

(a) Has in its possession, or obtains, additional documentary evidence (which does not
contain a U.S. address) supporting the claim of foreign status and a reasonable
explanation in writing supporting the account holder's foreign status (as defined in
§1.1441-7(b)(12));

(b) Obtains a valid Form W-8, and the Form W-8 contains a permanent residence
address outside the United States and a mailing address, if any, outside the United
States (or if a mailing address is inside the United States, the account holder provides a
reasonable explanation in writing supporting the account holder's foreign status); or

(c) Has classified the account holder as a resident of the country in which the account is
maintained; QI is required to report a payment made to the account holder annually on
a tax information statement that is filed with the tax authority of the country in which the
office that maintains the account is located as part of the country’s resident reporting
requirements; and that country has a tax information exchange agreement or an income
tax treaty in effect with the United States.

(d) Has in its possession, or obtains, documentary evidence that substantiates that the
entity is actually organized or created under the laws of a foreign country;

(e) Obtains a valid Form W-8, and the Form W-8 contains a permanent residence
outside the United States and a mailing address, if any, outside the United States (or if
a mailing address is inside the United States, the account holder provides additional
documentary evidence sufficient to establish the account holder's foreign status); or

(f) Has classified the entity as a resident of the country where the account is
maintained; QI is required to report a payment made to the account holder annually on
a tax information statement filed with the tax authority of the country in which the office
that maintains the account is located as part of the country’s resident reporting
requirements; and that country has a tax information exchange agreement or an income
tax treaty in effect with the United States.

(iii) With respect to an account other than a preexisting obligation (defined in §1.1441-
1(c)(54)) that QI has documented the foreign status of the account holder for purposes
of chapter 3 or 61 before July 1, 2014, QI shall not treat documentation as valid for
purposes of establishing an account holder's status as a foreign person if it has, either
on the documentary evidence or in its current customer account files, an unambiguous
indication of place of birth for the individual in the United States. The limit on reason to
know described in the preceding sentence with respect to a preexisting obligation
documented before July 1, 2014, shall not apply, however, if QI either reviews
documentation that contains a U.S. place of birth or is notified of a change in
circumstances, and, as of the date of such review or notification, QI shall not treat such
documentation as valid for purposes of establishing the account holder's foreign status.

QI may nevertheless treat the account holder with a U.S. place of birth as a foreign
person if QI—

(a) Has in its possession, or obtains, documentary evidence evidencing citizenship in a
country other than the United States and obtains a copy of the individual’s Certificate of
Loss of Nationality of the United States; or

(b) Obtains a valid Form W-8BEN that establishes the account holder’s foreign status,
documentary evidence evidencing citizenship in a country other than the United States,
and a reasonable written explanation of the account holder’s renunciation of U.S.
citizenship or the reason the account holder did not obtain U.S. citizenship at birth.

(iv) QI shall not treat documentation as valid for purposes of establishing an account

holder's status as a foreign person if the account holder has standing instructions
directing QI to pay amounts from its account to an address or an account maintained in
the United States. QI may treat documentation as valid for establishing foreign status
even though the account holder has such standing instructions if the account holder
provides a reasonable explanation in writing supporting the account holder's foreign
status (as defined in §1.1441-7(b)(12)) or has both a valid Form W-8 establishing
foreign status and documentary evidence establishing foreign status.

(3) Rules for Establishing Residency Under an Income Tax Treaty.
(i) QI shall not treat an account holder as a resident under an income tax treaty if the
permanent residence address on a Form W-8 is not in the applicable treaty country or if
the account holder notifies QI of a new permanent residence address that is not in the
treaty country. QI may, however, rely on the Form W-8 if the account holder provides a
reasonable explanation for the permanent residence address outside the treaty country
or if QI has in its possession, or obtains, documentary evidence that establishes the
claim of residency in a treaty country.

(ii) QI shall not treat an account holder as a resident under an income tax treaty if the
permanent residence address on a Form W-8 is in the applicable treaty country but the
Form W-8 contains a mailing address outside the treaty country or QI has a current
mailing address for the account holder outside the applicable treaty country in its
account information. A mailing address that is a P.O. Box, in-care-of address, or
address at a financial institution (if the financial institution is not a beneficial owner) shall
not preclude QI from treating the account holder as a resident of an applicable treaty
country if such address is in the applicable treaty country. If QI has a current mailing
address for the account holder outside the applicable treaty country (whether or not
contained on the Form W-8), QI may nevertheless treat the account holder as a resident
of the applicable treaty country if QI--

(a) Has in its possession, or obtains, additional documentary evidence supporting the
account holder's claim of residence in the applicable treaty country (and the additional
documentation does not contain an address outside the treaty country);

(b) Has in its possession, or obtains, documentary evidence that establishes that the
account holder is an entity organized in a treaty country (or an entity managed and
controlled in a treaty country, if the applicable treaty so requires);

(c) Knows that the address outside the applicable treaty country (other than a P.O. Box,
or in-care-of address) for an entity that is a resident of the applicable treaty country is
the address of a branch of such entity; or

(d) Obtains a written statement from the account holder that reasonably establishes
entitlement to treaty benefits.

(iii) QI shall not treat documentary evidence as valid for purposes of establishing

residency in a treaty country if QI has a current mailing or current permanent residence
address for the account holder (whether or not on the documentary evidence) that is
outside of the applicable treaty country, or QI has no permanent residence address for
the account holder. If QI has a current mailing or current permanent residence address
for the account holder outside of the applicable treaty country, QI may nevertheless rely
on the documentary evidence if QI--

(a) Has in its possession, or obtains, additional documentary evidence supporting the
account holder's claim of residence in the applicable treaty country (and the
documentary evidence does not contain an address outside the applicable treaty
country, a P.O. Box, an in-care-of address, or an address of a financial institution);

(c) Obtains a valid Form W-8 that contains a permanent residence address and a
mailing address in the applicable treaty country.

(iv) QI shall not treat documentation as valid for purposes of establishing an account
holder's residence in an applicable treaty country if the account holder has standing
instructions for QI to pay amounts from its account to an address or an account outside
the treaty country unless the account holder provides a reasonable explanation in
writing establishing the direct account holder's residence in the applicable treaty country
or a valid Form W-8 that contains a permanent residence address and a mailing
address in the applicable treaty country, or, if the account holder initially provided a
Form W-8, documentary evidence establishing the account holder’s residence in the
applicable treaty country.

(C) Reason to Know-Indirect Account Holders. QI shall be considered to have
reason to know that relevant information or statements contained in documentation
provided by an indirect account holder is unreliable or incorrect if a reasonably prudent
person in the position of a qualified intermediary would question the claims made. QI
shall have reason to know that documentation provided by a nonqualified intermediary
or a flow-through entity is unreliable or incorrect if the nonqualified intermediary or flow-
through entity does not provide QI with, to the extent required, the names of the indirect
account holders, their addresses, allocation information allocating payments to each
indirect account holder, and sufficient information for QI to report payments on Forms
1042-S and 1099. In addition, QI shall have reason to believe that an indirect account
holder is not entitled to a reduced rate of withholding under an income tax treaty if the
nonqualified intermediary or flow-through entity has not provided sufficient information
so that QI can verify that the indirect account holder has provided a U.S. TIN or foreign
TIN, if required, and made the necessary statements regarding limitations on benefits
provisions and deriving the income under section 894 and the regulations thereunder.
See §1.1441-7(b)(10) and section 5.03 of this Agreement.

Sec. 5.11. Documentation Validity Period.

(A) Documentation Other than Form W-9. QI may rely on valid documentary
evidence obtained from account holders in accordance with applicable know-your-
customer rules as long as the documentary evidence remains valid under those rules or
until QI knows, or has reason to know, that the information contained in the
documentary evidence is incorrect. QI may rely on the representations described in
section 5.03 of this Agreement obtained in connection with such documentation for the
same period of time as the documentation. For establishing an account holder’s
chapter 3 status (as defined in §1.1441-1(c)(45)) or foreign status for chapter 61
purposes, QI may rely on a Form W-8 until its validity expires under §1.1441-1(e)(4)(ii)
and may rely on documentary evidence (other than documentary evidence obtained
pursuant to applicable know-your-customer rules) until its validity expires under
§1.6049-5(c).

(B) Form W-9. QI may rely on a valid Form W-9 as long as it has not been informed by
the IRS or another withholding agent that the form is unreliable or incorrect. If QI has
primary Form 1099 reporting and backup withholding responsibility, it may rely on a
Form W-9 unless one of the conditions of §31.3406(h)-3(e)(2)(i) through (v) apply.

Sec. 5.12. Maintenance and Retention of Documentation.

(A) Maintaining Documentation. QI shall maintain documentation by retaining the
original documentation, a certified copy, a photocopy, a scanned copy, a microfiche, or
other means that allow reproduction (provided that the QI has recorded receipt of the
documentation and is able to produce a hard copy). For a direct account, if QI is not
required to retain copies of documentary evidence under its know-your-customer rules,
QI may instead retain a notation of the type of documentation reviewed, the date the
documentation was reviewed, the document’s identification number (if any) (e.g., a
passport number), and whether such documentation contained any U.S. indicia. For
direct accounts opened prior to January 1, 2001, if QI was not required under its know-
your-customer rules to maintain originals or copies of documentation, QI may rely on its
account information if it has complied with all other aspects of its know-your-customer
rules regarding establishment of an account holder's identity, it has a record that the
documentation required under the know-your-customer rules was actually examined by
an employee of QI in accordance with the know-your-customer rules, and it has no
information in its possession that would require QI to treat the documentation as invalid
under the rules of section 5.10(B) of this Agreement.

(B) Retention Period. QI shall retain a record of the account holder's documentation
obtained under this section 5 for as long as the documentation is relevant to the
determination of QI’s tax liability or reporting responsibilities under sections 871, 881,
1461, 1474(a), and 3406.

Sec. 5.13. Application of Presumption Rules.

(A) In General. QI shall apply the presumption rules of section 5.13(C) of this
Agreement if QI cannot reliably associate a payment with valid documentation from an
account holder. The presumption rules cannot be used to grant a reduced rate of
withholding. For example, the portfolio interest exception of sections 871(h) and 881(c)
shall not apply to a person that is presumed to be foreign. Further, QI must apply the
presumption rules when required and may not rely on its actual knowledge regarding an
account holder's chapter 4 status or status as a U.S. or foreign person to apply a
reduced rate of withholding. Notwithstanding the preceding sentence, QI must rely on
its actual knowledge regarding an account holder rather than what is presumed under
section 5.13(C) of this Agreement if, based on such knowledge, it should withhold an
amount greater than the withholding rate under the presumption rules or it should report
on Form 1042-S or Form 1099 an amount that would otherwise not be reported. Failure
to follow the presumption rules may result in liability for underwithholding, penalties, and
interest.

(B) Reliably Associating a Payment with Documentation. A payment can be reliably
associated with documentation if it is considered reliably associated with documentation
under the rules of §1.1441-1(b)(2)(vii) and, for a withholdable payment, §1.1471-3(c).
Generally, QI can reliably associate a payment with documentation if, for that payment,
it holds valid documentation, as described in this section 5, from the account holder; it
can reliably determine how much of the payment relates to the valid documentation
provided by such account holder; and it has no actual knowledge or reason to know,
under the requirements of section 5.10 of this Agreement, that any of the information,
certifications, or statements in or associated with the documentation are incorrect.
Sections 5.13(B)(1) through (5) of this Agreement describe when a payment is reliably
associated with documentation if the payment is made to an account holder that is an
intermediary or flow-through entity (other than a nonparticipating FFI that is not acting
on behalf of exempt beneficial owners).

(1) Reliably Associating a Payment with Documentation Provided by a
Nonqualified Intermediary or Flow-Through Entity. Generally, QI can reliably
associate a payment with documentation provided by a nonqualified intermediary or
flow-through entity if it can reliably associate the payment with a valid Form W-8IMY
provided by the nonqualified intermediary or flow-through entity, and it can determine
the portion of the payment that relates to valid documentation associated with the Form
W-8IMY for an account holder or interest holder of the nonqualified intermediary or flow-
through entity that is not itself a nonqualified intermediary or flow-through entity; and the
nonqualified intermediary or flow-through entity provides sufficient information for QI to
report the payments on Form 1042-S, Form 1099, or Form 8966 if reporting is required.

If the payment is a withholdable payment, the Form W-8IMY must provide the
nonqualified intermediary’s or flow-through entity’s chapter 4 status to the extent
required for chapter 4 purposes. In lieu of the nonqualified intermediary or flow-through

entity providing documentation for an account holder that is subject to chapter 4
withholding, QI can reliably associate a withholdable payment with valid documentation
associated with the Form W-8IMY from the nonqualified intermediary or flow-through
entity if it can determine the portion of the payment allocable to a chapter 4 withholding
rate pool (to the extent permissible under §1.1471-3(c)(3)(iii)(B)).

If the payment is a reportable amount, QI can reliably associate such payment with valid
documentation provided by a nonqualified intermediary or a flow-through entity that is a
participating FFI or registered deemed-compliant FFI if, in lieu of providing
documentation for its account holders that are U.S. persons, such nonqualified
intermediary or flow-through entity allocates the payment to a chapter 4 withholding rate
pool of U.S. payees and also certifies on a valid Form W-8IMY that it meets the
requirements of §1.6049-4(c)(4)(iii) with respect to any account holder of an account it
maintains within the meaning of §1.1471-5(d)(5) (i.e., a direct account holder) that
receives a payment included in this pool or allocates a payment that is a withholdable
payment to a chapter 4 withholding rate pool of recalcitrant account holders.

Notwithstanding the preceding sentences in this section 5.13(B)(1), to the extent a
payment is not subject to reporting on Form 1042-S, Form 1099, or Form 8966, QI can
reliably associate the payment with valid documentation if it can determine the portion of
the payment that is allocable to a group of documented account holders (other than
nonqualified intermediaries or flow-through entities) for whom withholding and reporting
is not required. For example, QI can treat a payment of short term OID allocable to a
group of documented foreign account holders as reliably associated with valid
documentation. Further, if the documentation attached to a nonqualified intermediary’s
or flow-through entity's Form W-8IMY is documentation from another nonqualified
intermediary or flow-through entity, then QI must apply the rules of this paragraph to
that other nonqualified intermediary or flow-through entity.

(2) Reliably Associating a Payment with a Withholding Certificate Provided by
Another Qualified Intermediary that Does Not Assume Primary Chapters 3 and 4
Withholding or Primary Form 1099 Reporting and Backup Withholding
Responsibility. Generally, QI can reliably associate a payment with documentation
provided by another qualified intermediary that does not assume either primary chapters
3 and 4 withholding responsibility or primary Form 1099 reporting and backup
withholding responsibility if it can reliably associate the payment with a valid Form W-
8IMY and, if the form is associated with a withholdable payment, it includes the qualified
intermediary’s chapter 4 status to the extent required for chapter 4 purposes.
Additionally, the Form W-8IMY must be associated with a withholding statement that
allocates the withholdable payment among the chapter 4 withholding rate pools (to the
extent permissible under §1.1471-3(c)(3)(iii)(B)), and with respect to a payment of an
amount subject to chapter 3 withholding that is either not a withholdable payment or a
withholdable payment for which no chapter 4 withholding is required, that allocates such
payment among chapter 3 withholding rate pools for foreign account holders as
described in section 6.03(C) of this Agreement.

If the payment is a reportable amount, QI can reliably associate the payment with
documentation provided by another qualified intermediary if the withholding statement
allocates the payment to withholding rate pools attributable to U.S. non-exempt
recipients and the documentation includes a valid Form W-9 for each U.S. non-exempt
recipient account holder for which the other qualified intermediary is required to report
on Form 1099 and, if required, backup withhold. QI can also reliably associate a
reportable amount with valid documentation provided by another qualified intermediary
that is a participating FFI or registered deemed-compliant FFI if, in lieu of providing
documentation for each U.S. non-exempt recipient account holder, the qualified
intermediary allocates the payment to a chapter 4 withholding rate pool of U.S. payees
and provides the applicable certification(s) on a valid Form W-8IMY for allocating the
payment to this pool or allocates a payment that is a withholdable payment to a chapter
4 withholding rate pool of recalcitrant account holders. Notwithstanding the preceding
sentences in this section 5.13(B)(2), the presumption rules shall not apply if a payment
cannot be allocated to each U.S. non-exempt recipient account holder or to a chapter 4
withholding rate pool of U.S. payees to the extent the alternative procedures of section
6.03(D) of this Agreement apply.

(3) Reliably Associating a Payment with Documentation Provided by a Qualified
Intermediary that Assumes Primary Chapters 3 and 4 Withholding Responsibility
and Does Not Assume Primary Form 1099 Reporting and Backup Withholding
Responsibility. Generally, QI can reliably associate a payment with valid
documentation provided by another qualified intermediary that assumes primary
chapters 3 and 4 withholding responsibility, but not primary Form 1099 reporting and
backup withholding responsibility, if it can associate the payment with a valid Form W-
8IMY from the qualified intermediary and, if the form is associated with a withholdable
payment, it includes the qualified intermediary’s chapter 4 status to the extent required
for chapter 4 purposes. Additionally, the Form W-8IMY must be associated with a
withholding statement that allocates a payment that is a withholdable payment or an
amount subject to chapter 3 withholding that is not a withholdable payment among a
single withholding rate pool for all account holders with respect to which the qualified
intermediary assumes primary chapters 3 and 4 withholding responsibility.

certifications on a valid Form W-8IMY for allocating the payment to this pool or allocates
a payment that is a withholdable payment to a chapter 4 withholding rate pool of
recalcitrant account holders. Notwithstanding the preceding sentences in this section
5.13(B)(3), the presumption rules shall not apply if a payment cannot be allocated to
each U.S. non-exempt recipient account holder or to a chapter 4 withholding rate pool of
U.S. payees to the extent the alternative procedures of section 6.03(D) of this
Agreement apply.

(4) Reliably Associating a Payment With Documentation Provided by a Qualified
Intermediary that Assumes Primary Form 1099 Reporting and Backup
Withholding Responsibility. Generally, QI can reliably associate a payment with valid
documentation provided by another qualified intermediary that assumes primary Form
1099 reporting and backup withholding responsibility, but not primary chapters 3 and 4
withholding responsibility, to the extent it can associate the payment with a valid Form
W-8IMY from the qualified intermediary that, if the payment is a withholdable payment,
includes the qualified intermediary’s chapter 4 status to the extent required for chapter 4
purposes. Additionally, the Form W-8IMY must be associated with a withholding
statement that allocates a payment that is a withholdable payment among chapter 4
withholding rate pools (other than a pool of U.S. payees and to the extent permissible
under §1.1471-3(c)(3)(iii)(B)) and, with respect to a payment that is an amount subject
to chapter 3 withholding but is either not a withholdable payment or a withholdable
payment for which no chapter 4 withholding is required, allocates the payment among
chapter 3 withholding rate pools for foreign account holders as described in section
6.03(C) of this Agreement, and identifies the portion of the payment for which QI
assumes primary Form 1099 reporting and backup withholding responsibility.

(5) Reliably Associating a Payment with Documentation Provided by a Qualified
Intermediary that Assumes Both Primary Chapters 3 and 4 Withholding
Responsibility and Primary Form 1099 Reporting and Backup Withholding
Responsibility. Generally, QI can reliably associate a payment with valid
documentation provided by another qualified intermediary that assumes both primary
chapters 3 and 4 withholding responsibility and primary Form 1099 reporting and
backup withholding responsibility if QI can associate the payment with a valid Form W-
8IMY from the qualified intermediary that, if the payment is a withholdable payment,
includes the qualified intermediary’s chapter 4 status. Additionally, the Form W-8IMY
must also designate the accounts for which the other qualified intermediary is acting as
a qualified intermediary and is assuming primary chapters 3 and 4 withholding and
primary Form 1099 reporting and backup withholding responsibility. If the other
qualified intermediary is acting as a QDD, the Form W-8IMY (or withholding statement)
must also designate those accounts for which the QDD is receiving payments with
respect to potential section 871(m) transactions or underlying securities as a QDD. If
the qualified intermediary receiving a payment assumes both primary chapters 3 and 4
withholding responsibility and primary Form 1099 reporting and backup withholding
responsibility for substitute interest payments as described in section 3.03(A), the Form
W-8IMY must indicate that the qualified intermediary is assuming primary withholding

responsibility for all such payments.

(C) Presumption Rules. With respect to a withholdable payment made to a foreign
entity, if QI is an NFFE, it must follow the presumption rules of §1.1471-3(f) when it
cannot reliably associate a withholdable payment with valid documentation. If QI is an
FFI, it must follow its FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI to determine the
chapter 4 status of an account holder when it cannot reliably associate a withholdable
payment with valid documentation.

With respect to a payment that is an amount subject to chapter 3 withholding that is
either not a withholdable payment or a withholdable payment for which no chapter 4
withholding is required, the presumption rules are the rules under §1.1441-1(b)(3) that a
withholding agent must follow to determine the status of a beneficial owner (i.e., as a
U.S. person or foreign person and as an individual or entity (and the entity’s
classification)) when it cannot reliably associate a payment with valid documentation.
With respect to a reportable payment (including a withholdable payment made to an
entity) that is not an amount subject to chapter 3 withholding, the presumption rules are
the rules of §1.6049-5(d) that a payor must follow to determine the status of a payee
(e.g., as a non-exempt recipient) when it cannot reliably associate a payment with valid
documentation. The presumption rules are as follows:

(1) Certain Withholdable Payments Made with Respect to an Offshore Obligation.
A withholdable payment paid outside of the United States as defined under §1.6049-
5(e) with respect to an offshore obligation (as defined in §1.1471-1(b)(88)) that is made
to an entity is presumed made to a nonparticipating FFI for purposes of chapter 4. A
withholdable payment that is not an amount subject to chapter 3 withholding, that is paid
outside the U.S. with respect to an offshore obligation, and that is treated as made to a
payee that is an individual is presumed made to a U.S. person when the payee has any
of the indicia of U.S. status that are described in section 5.10(B)(2) of this Agreement. If
QI is a participating FFI or registered deemed-compliant FFI (other than a reporting
Model 1 FFI), see the rules under its FATCA requirements as a participating FFI or
registered deemed-compliant FFI for classifying account holders as recalcitrant account
holders. If QI is an FFI, see also section 8.06 of this Agreement for whether QI is
required to report such payments on Form 1099.

(2) Amounts Subject to Withholding under Chapter 3 that are Paid with Respect to
an Offshore Obligation. An amount that is subject to chapter 3 withholding that is not
a withholdable payment is presumed made to an undocumented foreign account holder
if the payment is made outside of the United States with respect to an offshore
obligation. If QI is an NFFE or an FFI that is not required to withhold on recalcitrant
account holders pursuant to the terms of an applicable Model 1 or Model 2 IGA, an
amount subject to chapter 3 withholding that is a withholdable payment and that is
treated as made to a payee that is an individual is also presumed made to an
undocumented foreign account holder if the payment is made outside of the United

States with respect to an offshore obligation. QI must treat an amount described in this
section 5.13(C)(2) as subject to withholding under chapter 3 at a rate of 30 percent on
the gross amount of the payment and must report the payment as made to an unknown
recipient on Form 1042-S.

(3) Payments on Certain Short-Term Obligations and Bank Deposit Interest. An
amount of U.S. source original issue discount on the redemption of a short-term
obligation or U.S. source bank deposit interest not subject to chapter 4 withholding is
presumed made to an undocumented U.S. non-exempt recipient account holder
regardless of whether paid to an individual or entity. QI must report an amount
described in this section 5.13(C)(3) on Form 1099. QI must backup withhold at 28
percent
3
and report such amounts on Form 1099 unless it provides sufficient
information to another payor from which it receives such amounts to backup withhold
and report the payments and QI does not know that the other payor has failed to backup
withhold or report.

(4) Foreign Source Income, Broker Proceeds, and Certain Other Amounts Made
with Respect to an Offshore Obligation. A payment of an amount that is not a
withholdable payment and is not an amount subject to chapter 3 withholding (other than
payments of short-term OID and bank deposit interest described in section 5.13(C) of
this Agreement) that is paid outside the United States with respect to an offshore
obligation and that is made to a payee that is an individual is presumed made to a U.S.
non-exempt recipient when the payee has any of the indicia of U.S. status that are
described in section 5.10(B) of this Agreement. If the payment is made to a payee that
is an entity, QI must apply the principles of §1.1441-1(b)(3)(ii), §1.1441-5(d)(2), or
§1.1441-5(e)(6) (as applicable) without regard to §1.1441-1(b)(3)(ii)(D) for purposes of
this paragraph 5.13(C)(4). For a payment of gross proceeds for which QI is a broker
under §1.6045-1, similar rules apply to a payment made with respect to a sale that is
effected at an office outside the United States under §1.6045-1(g)(1)(ii). QI must report
an amount described in this section 5.13(C)(3) as paid to a presumed U.S. non-exempt
recipient on Form 1099 to the extent required under section 8.06 of this Agreement.
Backup withholding shall not be required, however, if the exception provided in
§31.3406(g)-1(e) applies.

(5) Other Payments. For any payment not covered in sections 5.13(C)(1), (2), (3), or
(4) of this Agreement, see the presumption rules provided in §1.1441-1(b)(3) or
§1.6049-5(d)(2) (as applicable).

SECTION 6. QUALIFIED INTERMEDIARY WITHHOLDING CERTIFICATE AND

3
See section 3406(a) providing that the current applicable rate of backup withholding is the fourth lowest rate of
tax applicable under section 1(c).

DISCLOSURE OF ACCOUNT HOLDERS TO WITHHOLDING AGENT

Sec. 6.01. Qualified Intermediary Withholding Certificate. QI agrees to furnish a
qualified intermediary withholding certificate to each withholding agent from which it
receives a reportable amount as a qualified intermediary. The qualified intermediary
withholding certificate is a Form W-8IMY (or acceptable substitute form) that certifies
that QI is acting as a qualified intermediary, contains QI's QI-EIN, and provides all other
information required by the form. If QI is acting as a QDD for payments with respect to
potential section 871(m) transactions or underlying securities, it must certify that it is
acting as a QDD and assumes primary chapters 3 and 4 withholding responsibility and
primary Form 1099 reporting and backup withholding responsibility for payments with
respect to potential section 871(m) transactions that it makes as a principal, and it must
provide all other information required by Form W-8IMY with respect to the certification,
including its QI-EIN. If QI is acting with respect to payments of substitute interest as
described in section 3.03(A) of this Agreement, it must certify that it is assuming primary
chapters 3 and 4 withholding responsibility and primary Form 1099 reporting and
backup withholding responsibility for all such payments, in addition to the other
certifications it makes and information it provides as a qualified intermediary. If QI
receives a withholdable payment, QI must certify to its chapter 4 status, provide its GIIN
(if applicable), and provide the other information and certifications required on the form.
QI must also certify its chapter 4 status as a participating FFI or registered deemed-
compliant FFI when QI provides a Form W-8IMY that certifies that it meets the
requirements of §1.6049-4(c)(4)(iii) with respect to any account holder of an account it
maintains that is included in a chapter 4 withholding rate pool of U.S. payees on QI’s
withholding statement.

Except as otherwise provided in section 6.02 of this Agreement, QI also agrees to
furnish each withholding agent to whom it provides a Form W-8IMY with the withholding
statement described in section 6.02 of this Agreement. QI is not required to disclose, as
part of its Form W-8IMY or its withholding statement, any information regarding the
identity of a direct or indirect account holder that is a foreign person, or a U.S. exempt
recipient or a holder of a U.S. account. To the extent QI does not assume primary Form
1099 reporting and backup withholding responsibility under section 3.04 of this
Agreement or is not excepted from reporting under section 8.06 of this Agreement, for
each U.S. non-exempt recipient account holder on whose behalf QI receives a
reportable amount, QI must provide to a withholding agent the Form W-9, or if any such
account holder has not provided a Form W-9, the name, address, and U.S. TIN (if
available).

Sec. 6.02. Withholding Statement.
(A) In General. QI agrees to provide to each withholding agent from which QI receives
reportable amounts as a qualified intermediary a written statement (withholding
statement) described in this section 6.02. A withholding statement shall not be provided
to a withholding agent if QI assumes both primary chapters 3 and 4 withholding
responsibility and primary Form 1099 reporting and backup withholding responsibility for

all of its accounts. For example, if QI is only acting as a QDD, it does not have to
provide a withholding statement . QI may act as a QDD only with respect to payments
made and received as a principal with respect to potential section 871(m) transactions
and underlying securities. The withholding statement forms an integral part of the Form
W-8IMY. The withholding statement may be provided in any manner, and in any form,
to which QI and the withholding agent mutually agree. For example, QI and the
withholding agent may agree to establish a procedure to furnish withholding statement
information electronically provided that the procedure meets the requirements of
§1.1441-1(e)(3)(iv). In addition, QI and the withholding agent must be capable of
providing upon request a hard copy of all withholding statements provided by QI. The
withholding statement shall be updated as often as necessary for the withholding agent
to meet its reporting and withholding obligations under chapters 3, 4, and 61 and
section 3406.

(B) Content of Withholding Statement. The withholding statement must contain
sufficient information for a withholding agent to apply the correct rate of withholding on
payments allocable to the accounts identified on the statement and to properly report
such payments on Forms 1042-S and Forms 1099, as applicable. The withholding
statement must--

(1) Designate those accounts for which QI acts as a qualified intermediary;

(2) Designate those accounts for which QI assumes primary chapters 3 and 4
withholding responsibility or primary Form 1099 reporting and backup withholding
responsibility (including accounts for which QI is acting with respect to payments of U.S.
source substitute interest (as described in section 3.03(A) of this Agreement));

(3) If applicable, designate the accounts for which QI is acting as a QDD; and

(4) Provide information regarding withholding rate pools, as described in section 6.03 of
this Agreement.

Sec. 6.03. Chapters 3 and 4 Withholding Rate Pools.
(A) In General. QI shall provide as part of its withholding statement withholding rate
pool information in a manner sufficient for the withholding agent to meet its chapters 3
and 4 and backup withholding responsibilities and its Form 1042-S and Form 1099
reporting responsibilities.

(B) Chapter 4 Withholding Rate Pools. If QI receives a withholdable payment on
behalf of its account holders, QI may allocate the payment to a chapter 4 withholding
rate pool. A chapter 4 withholding rate pool is a payment of a single type of income
(e.g., interest or dividends) that is allocated to payees that are nonparticipating FFIs. If
QI is a participating FFI or registered deemed-compliant FFI (other than reporting Model
1 FFI), it may also allocate a witholdable payment to a chapter 4 withholding rate pool of

recalcitrant account holders (if applicable). If QI is a participating FFI or registered
deemed-compliant FFI receiving a reportable amount that is excepted from reporting
under section 8.06(A) of this Agreement (excluding sections 8.06(A)(2) and (A)(3) of this
Agreement when the payment is subject to chapter 4 withholding and section 8.06(A)(4)
of this Agreement), QI may allocate the payment to a chapter 4 withholding rate pool of
U.S. payees. See section 6.03(D) of this Agreement for the alternative procedures that
may be used in this case. Except as otherwise provided in this section 6.03(B), if QI
receives a withholdable payment, QI must provide the information required under
§1.1471-3(c)(3)(iii)(B)(2).

Further, if QI elects under its FATCA requirements as a participating FFI or registered
deemed-compliant FFI to backup withhold instead of withholding under chapter 4 with
respect to certain recalcitrant account holders, QI's withholding statement must indicate
the portion of such payment subject to backup withholding under section 3406 that is
allocated to such account holders and must provide all other information relating to such
account holders that is required under chapter 61 for the withholding agent to report
with respect to the payment.

If QI has an account holder that is another intermediary (whether a qualified
intermediary, a nonqualified intermediary, or a private arrangement intermediary) or a
flow-through entity, QI may combine the account holder information provided by the
intermediary or flow-through entity with QI's direct account holder information to
determine the amounts allocable to each of QI's chapter 4 withholding rate pools
described in this section 6.03(B). If QI is an NFFE that has an account holder that is
another intermediary or flow-through entity that is a participating FFI or registered
deemed-compliant FFI, QI may provide the account holder’s chapter 4 withholding rate
pools of recalcitrant account holders and U.S. payees to the extent applicable.

(C) Chapter 3 Withholding Rate Pools. With respect to any portion of the payment
that is attributable to payees for which no chapter 4 withholding is required but is an
amount subject to chapter 3 withholding, a chapter 3 withholding rate pool is a payment
of a single type of income that is subject to a single rate of withholding (e.g., 0%, 10%,
15%, or 30%) and that is reported under a single chapter 4 exemption code on Form
1042-S. QI shall determine chapter 3 withholding rate pools based on valid
documentation obtained under section 5 of this Agreement or, if a payment cannot be
reliably associated with valid documentation, on the presumption rules of section
5.13(C) of this Agreement. If QI has an account holder that is another intermediary
(whether a qualified intermediary, a nonqualified intermediary, or a private arrangement
intermediary) or a flow-through entity (other than a nonparticipating FFI that is not acting
on behalf of any exempt beneficial owners), QI may combine the account holder
information provided by the intermediary or flow-through entity with QI's direct account
holder information to determine the amounts allocable to each of QI's chapter 3
withholding rate pools with respect to the portion of the payment allocable to an account
holder to which chapter 4 withholding does not apply.

(D) U.S. Non-Exempt Recipients Subject to Backup Withholding or Form 1099
Reporting and Alternative Procedures for Allocating Payments on Withholding
Statements. To the extent QI does not assume primary Form 1099 reporting and
backup withholding responsibility and is not excepted from reporting on Form 1099
under section 8.04 of this Agreement, QI's withholding statement must establish a
separate withholding rate pool for each U.S. non-exempt recipient account holder that
QI is required to report on Form 1099 and has disclosed to the withholding agent. QI
may, by mutual agreement with the withholding agent, establish a single withholding
rate pool (not subject to backup withholding) for all U.S. non-exempt recipient account
holders for whom QI is required to report on Form 1099 and has provided Forms W-9
prior to the withholding agent paying any reportable amounts or, if applicable,
designated broker proceeds to which backup withholding does not apply. QI must
establish a separate withholding rate pool for all U.S. non-exempt recipient account
holders subject to backup withholding prior to the withholding agent paying any
reportable amounts or, if applicable, designated broker proceeds.

Alternatively, QI may include U.S. non-exempt recipients in a zero rate withholding pool
that includes U.S. exempt recipients and foreign persons for which no withholding is
required under chapters 3 and 4 and section 3406 and may include payments allocated
to a chapter 4 withholding rate pool of U.S. payees in this pool to the extent permitted to
be provided by QI under section 6.03(B) of this Agreement. If QI chooses the
alternative procedure of this paragraph, QI must provide sufficient information to the
withholding agent no later than January 15 of the year following the year in which the
reportable amounts and designated broker proceeds, if applicable, are paid in order to
allocate to each U.S. non-exempt recipient account holder or to a chapter 4 withholding
rate pool of U.S. payees (when applicable). Failure to provide such information will
result in the application of penalties to QI under sections 6721 and 6722 and shall
constitute an event of default under section 11.06 of this Agreement.

SECTION 7. TAX RETURN OBLIGATIONS

Sec. 7.01. Form 1042 Filing Requirement.
(A) In general. QI shall file a return on Form 1042, whether or not QI withheld any
amounts under chapter 3 or 4, on or before March 15 of the year following any calendar
year in which QI acts as a qualified intermediary and makes a payment of an amount
subject to chapter 3 or 4 withholding when acting as a qualified intermediary under this
Agreement. A separate Form 1042 must be filed by each legal entity that is a qualified
intermediary covered by this Agreement. Form 1042 shall be filed at the address
indicated on the form, at the address at which the IRS notifies QI to file the return under
the provisions of section 12.06 of this Agreement, or in accordance with the instructions
to file Form 1042 electronically. In addition to the information specifically requested on
Form 1042 and the accompanying instructions, if QI made any overwithholding or
underwithholding adjustments under §§1.1461-2 and 1.1474-2 and sections 9.02 and
9.05 of this Agreement, QI must attach a statement setting forth the amounts of any
overwithholding or underwithholding adjustments and an explanation of the

circumstances that resulted in the over- or underwithholding.

(B) Extensions for Filing Returns. QI may request an extension of the time for filing
Form 1042, or any of the information required to be attached to the form, by submitting
Form 7004, Application for Automatic Extension of Time to File Certain Business
Income Tax, Information, and Other Returns, on or before the due date of the return.

(C) QDD Tax Liability Requirements for QDDs. In addition to its requirements under
section 7.01(A) of this Agreement, a QI that is acting as a QDD (other than a foreign
branch of a U.S. financial institution) also must report on Form 1042 its QDD tax liability,
including separately identifying each part of the QDD tax liability described in section
3.09(A) through (C) of this Agreement. For its section 871(m) amount, a QDD is also
required to separately report the amount of dividends on underlying securities
associated with potential section 871(m) amounts and dividend equivalent payments it
received in its dealer capacity and the amount of dividend equivalent payments and
qualifying dividend equivalent offsetting payments that it makes or is contractually
obligated to make in its dealer capacity. A QDD must also report any other information
required by Form 1042 with respect to its QDD tax liability (including any part thereof).

A QDD must also maintain, and make available to the IRS upon request, a
reconciliation schedule that tracks across calendar years the section 871(m) amount for
each dividend with respect to each underlying security associated with potential section
871(m) transactions or underlying security referenced by a potential section 871(m)
transaction. The reconciliation schedule must separately state total amounts received
as a QDD, as well as the dividends, dividend equivalents, and qualifying dividend
equivalent offsetting payments for each dividend with respect to each underlying
security associated with potential section 871(m) transactions, each dividend that is not
with respect to an underlying security associated with potential section 871(m)
transactions, or each dividend with respect to each underlying security referenced by a
potential section 871(m) transaction received as a QDD or payments that the QDD
makes or is contractually obligated to make, and any adjustments thereto, separated by
payments made as a dealer and as a non-dealer. The reconciliation schedule may be
maintained in any manner or format that permits the IRS to reconcile the amount
reported by the QDD for the calendar year.

Sec. 7.02. Form 945 Filing Requirement. QI shall file a return on Form 945 on or
before January 31 following the calendar year in which QI backup withheld an amount
under section 3406. Separate Forms 945 must be filed by each legal entity that is a
qualified intermediary covered by this Agreement. The form must be filed at the
address specified in the instructions for Form 945, at the address at which the IRS
notifies QI to file the return under the provisions of section 12.06 of this Agreement, or in
accordance with the instructions to file Form 945 electronically.

Sec. 7.03. Retention of Returns. QI shall retain Forms 945 and 1042 (including, with
respect to QI acting as a QDD, its reconciliation schedule) for the applicable statute of

limitations on assessment under section 6501.

SECTION 8. INFORMATION REPORTING OBLIGATIONS

Sec. 8.01. Form 1042-S Reporting. Except as otherwise provided in section 8.02 of
this Agreement, QI is not required to file Forms 1042-S for amounts paid to each
separate account holder for whom such reporting would otherwise be required. Instead,
QI shall file a Form 1042-S reporting the pools of income (reporting pools) as
determined in section 8.03 of this Agreement. QI must file its Forms 1042-S in the
manner required by the regulations under chapters 3 and 4 (or in the case of a
participating FFI, in the manner required under the FFI Agreement) and the instructions
to the form, including any requirement to file the forms magnetically or electronically.
Separate Forms 1042-S must be filed by each legal entity that is a qualified
intermediary covered by this Agreement. Each QI covered by this Agreement may,
however, allow its individual branches to file Forms 1042-S provided that all Forms
1042-S contain the QI-EIN of the legal entity of which the branch forms a part and (to
the extent required for chapter 4 purposes) the GIIN of the branch. Any Form 1042-S
required by this section 8 shall be filed on or before March 15 following the calendar
year in which the payment reported on the form was made. QI may request an
extension of time to file Forms 1042-S by submitting Form 8809, Application for
Extension of Time to File Information Returns, by the due date of Forms 1042-S in the
manner required by (and extent permitted on) Form 8809.

Sec. 8.02. Recipient Specific Reporting. QI (whether or not it assumes primary
chapters 3 and 4 withholding responsibility) is required to file separate Forms 1042-S for
amounts paid to each separate account holder as described in this section 8.02. QI
must file separate Forms 1042-S by income code, exemption code, recipient code,
chapter 3 or 4 withholding rate pool, and withholding rate.

(A) QI must file a separate Form 1042-S for each account holder that is a qualified
intermediary, to the extent such payment is required to be reported under §1.1461-1,
withholding foreign partnership, or withholding foreign trust that receives from QI an
amount subject to withholding under chapter 3 or 4, regardless of whether such account
holder is a direct or indirect account holder of QI.

(B) QI must file a separate Form 1042-S for each account holder that is a nonqualified
intermediary or flow-through entity that is a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI and that receives an
amount subject to chapter 4 withholding from QI that is allocable to each of such FFI’s
chapter 4 withholding rate pools of recalcitrant account holders, nonparticipating FFIs,
and pool of U.S. payees, if applicable, regardless of whether such FFI is a direct or
indirect account holder of QI.

(C) QI must file a separate Form 1042-S for each account holder that is a nonqualified
intermediary or flow-through entity that is not described in section 8.02(B) of this

Agreement (other than a nonparticipating FFI) that receives from QI an amount subject
to chapter 4 withholding allocable to such entity’s chapter 4 withholding rate pool of
payees that are nonparticipating FFIs, regardless of whether such intermediary or flow-
through entity is a direct or indirect account holder of QI.

(D) QI must file a separate Form 1042-S for each account holder of QI that is a PAI or a
partnership or trust to which QI applies the agency option that receives from QI an
amount subject to chapter 4 withholding allocable to such entity’s chapter 4 withholding
rate pool of payees that are nonparticipating FFIs or an amount subject to chapter 3
withholding that is either not a withholdable payment or a withholdable payment for
which no chapter 4 withholding is required and that is allocable to such entity’s chapter
3 withholding rate pools.

(E) QI must file a separate Form 1042-S for each account holder of QI that is a
partnership or trust to which QI applies the joint account option that receives from QI an
amount subject to chapter 3 withholding and is allocable to such entity’s chapter 3
withholding rate pools.

(F) QI must file a separate Form 1042-S for each unknown recipient with respect to an
account holder that is a nonqualified intermediary, flow-through entity, or qualified
intermediary that does not assume primary chapters 3 and 4 withholding responsibility
and that receives an amount subject to chapter 4 withholding from QI that QI must
presume is allocable to such entity’s chapter 4 withholding rate pool of payees that are
nonparticipating FFIs under the presumption rule of §1.1471-3(f)(5).

(G) QI must file a separate Form 1042-S for each foreign account holder (or interest
holder) of a nonqualified intermediary or flow-through entity that is a nonparticipating
FFI that is receiving a payment on behalf of an exempt beneficial owner (regardless of
whether the nonqualified intermediary or flow-through entity is a direct or indirect
account holder of QI) to the extent QI can reliably associate such amounts with valid
documentation from such nonqualified intermediary or flow-through entity as to the
payment allocable to one or more exempt beneficial owners. In addition, QI must file
separate Forms 1042-S in the same manner for each foreign account holder (or interest
holder) of a nonqualified intermediary or flow-through entity that is described in the
preceding sentence and that is a direct or indirect account holder (or interest holder) of
a PAI of QI or a partnership or trust to which QI applies the agency option.

(H) QI must file separate Forms 1042-S for each foreign account holder (or interest
holder) of a nonqualified intermediary or flow-through entity that is receiving an amount
subject to chapter 3 withholding that is either not a withholdable payment or a
withholdable payment for which no chapter 4 withholding is required to the extent QI
can reliably associate such amounts with valid documentation from an account holder
that is not itself a nonqualified intermediary or flow-through entity. In addition, QI must
file separate Forms 1042-S in the same manner for each foreign account holder (or
interest holder) of a nonqualified intermediary or flow-through entity that is described in

the preceding sentence and that is a direct or indirect account holder (or interest holder)
of a PAI of QI or a partnership or trust to which QI applies the agency option.

(I) QI must file a separate Form 1042-S for each direct account holder that establishes
its status as a passive NFFE but fails to provide the information regarding its owners as
required under §1.1471-3(d)(12)(iii) unless such information was reported by the
withholding agent.

(J) If QI is acting as a QDD, QI must file a separate Form 1042-S for any amount
subject to chapter 3 withholding with respect to a potential section 871(m) transaction
made to another QDD.

Sec. 8.03. Reporting Pools for Form 1042-S Reporting.

(A) Chapter 4 Reporting Pools. Except for amounts required to be reported under
section 8.02 of this Agreement, if QI is an FFI, QI shall report all amounts subject to
chapter 4 withholding by reporting pools on a Form 1042-S if those amounts are paid to
direct account holders of QI. A separate Form 1042-S shall be filed for each type of
reporting pool. A chapter 4 reporting pool is a payment of a single type of income (e.g.,
interest, dividends), determined in accordance with the categories of income reported
on Form 1042-S, that is allocable to a chapter 4 withholding rate pool consisting of
either recalcitrant account holders or payees that are nonparticipating FFIs. QI must
report recalcitrant account holders in pools based upon a recalcitrant account holder’s
particular status described in §1.1471-4(d)(6), with a separate Form 1042-S issued for
each such pool.

If QI is an FFI, it may report in a chapter 4 withholding rate pool of U.S. payees an
account holder that is (or is presumed) a U.S. person and that QI reports as a U.S.
account under its applicable FATCA requirements as a participating FFI or registered
deemed-compliant FFI provided that QI is excepted from Form 1099 reporting with
respect to the payment under section 8.06(A)(1) of this Agreement or section 8.06(A)(2)
and (A)(3) of this Agreement if the payment is both excepted from Form 1099 reporting
and not subject to withholding under chapter 4.

If QI is an NFFE, QI shall report all amounts subject to chapter 4 withholding by
reporting pools on a Form 1042-S if those amounts are paid to direct account holders
that are nonparticipating FFIs in a chapter 4 reporting pool of nonparticipating FFIs.

(B) Chapter 3 Reporting Pools. Except for amounts required to be reported under
section 8.02 of this Agreement, QI shall report an amount subject to chapter 3
withholding that is either not a withholdable payment or a withholdable payment for
which no chapter 4 withholding is required and that is paid to a foreign account holder
by reporting pools on a Form 1042-S if those amounts are paid to direct account holders
of QI or to direct account holders of a PAI of QI or a partnership or trust described in
section 4 of this Agreement. A separate Form 1042-S shall be filed for each type of

reporting pool. A chapter 3 reporting pool is a payment of a single type of income that
falls within a particular withholding rate, chapter 3 exemption code, and, if the payment
is a withholdable payment, chapter 4 exemption code as determined on Form 1042-S.
QI may use a single chapter 3 pool reporting code (e.g., QI- withholding rate pool-
general) for all reporting pools except for amounts paid to foreign tax-exempt recipients,
for which a separate chapter 3 pool reporting code (e.g., QI- withholding rate pool-
exempt organization) must be used. For this purpose, a foreign tax-exempt recipient
includes any organization that is not subject to chapter 3 withholding and is not liable to
tax in its jurisdiction of residence because it is a charitable organization, a pension fund,
or a foreign government.

(C) Qualifying Dividend Equivalent Offsetting Payment Reporting Pools. In
addition to the reporting required under sections 8.02 and 8.03 of this Agreement for
dividend equivalents that are amounts subject to chapter 3 or 4 withholding, a QI acting
as a QDD shall report on separate Forms 1042-S (as required by the form and its
accompanying instructions) the amount of the qualifying dividend equivalent offsetting
payments that represent (a) payments made to U.S. persons that would be dividend
equivalent payments if made to foreign persons and (b) the effectively connected
income (described in section 2.70(A)(2) of this Agreement). For purposes of
determining when a qualifying dividend equivalent offsetting payment is made, apply the
timing rule in §1.1441-2(e)(4) (substituting “qualifying dividend equivalent offsetting
payment” for “dividends” and “dividend payment date” for “payment date” in the first
sentence).

A QI acting as a QDD must also provide, upon request by the IRS, the name, address,
and TIN of any U.S. non-exempt recipient to whom the QI acting as a QDD makes a
qualifying dividend equivalent offsetting payment described in section 2.70(A)(1) and
shall require such person to waive any prohibition on disclosure of such information to
the IRS. If a QI acting as a QDD does not obtain a waiver or collect and maintain such
information for any U.S. non-exempt recipient described in the preceding sentence, any
payment made to such person is not a qualifying dividend equivalent offsetting
payment. A QI acting as a QDD shall report those payments made to U.S. non-exempt
recipients that are not qualifying dividend equivalent offsetting payments in a pool on a
separate Form 1042-S (as required by the form and its accompanying instructions).

Sec. 8.04. FATCA U.S. Account Reporting.

(A) QI that is an FFI. If QI is an FFI, QI is required to report each U.S. account (or, in
the case of an FFI that is a reporting Model 1 FFI or a registered deemed-compliant
Model 1 IGA FFI, each U.S. reportable account) that it maintains and for whom QI is
acting consistent with its FATCA requirements as a participating FFI, registered
deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI. See QI’s
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI to report each account that is a U.S.
account (or U.S. reportable account) that it maintains. If QI is a participating FFI or

registered deemed-compliant FFI (other than a reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI), QI must report its U.S. accounts on Form 8966,
FATCA Report, in the time and manner required under its FATCA requirements as a
participating FFI or registered deemed-compliant FFI except to the extent QI is reporting
under §1.1471-4(d)(5) on Form 1099 with respect to its U.S. accounts. If QI is a
reporting Model 1 FFI or registered deemed-compliant Model 1 IGA FFI, QI must report
each U.S. reportable account on Form 8966 as required under the applicable Model 1
IGA. QI cannot delegate to its withholding agent its requirements to report U.S.
accounts (or U.S. reportable accounts) under its applicable FATCA requirements as a
participating FFI, registered deemed-compliant FFI, or registered deemed-compliant
Model 1 IGA FFI (regardless of whether QI does or does not assume primary Form
1099 reporting and backup withholding responsibility under section 3 of this
Agreement). See section 8.06 of this Agreement for when the reporting described in
this section 8.04 satisfies QI’s Form 1099 reporting responsibilities with respect to
reportable payments under chapter 61.

(B) QI that is an NFFE. If QI is an NFFE acting as a qualified intermediary on behalf of
its shareholders, QI shall file Forms 8966 to report information about any substantial
U.S. owners of QI. QI must report on Form 8966 to the extent required of a direct
reporting NFFE in the time and manner provided in the instructions to the form. Such
report must include the name, address, and U.S. TIN of each substantial U.S. owner of
QI; the total of all payments made to each substantial U.S. owner (including gross
amounts paid or credited to the substantial U.S. owner with respect to such owner’s
equity interest in the QI during the calendar year, which includes payments in
redemption or liquidation (in whole or in part) of the substantial U.S. owner’s equity
interest in QI); and any other information as required by the form and its accompanying
instructions.

If QI is an NFFE acting as a qualified intermediary on behalf of persons other than its
shareholders, QI shall file Form 8966 to report withholdable payments made to an
account holder that is an NFFE (other than an excepted NFFE) with one or more
substantial U.S. owners if the NFFE is the beneficial owner of the withholdable payment
received by QI. See §1.1471-1(b)(8) for the definition of beneficial owner. QI must
report on Form 8966 in accordance with the form and its accompanying instructions.
Such report must include the name of the NFFE that is owned by a substantial U.S.
owner; the name, address, and U.S. TIN of each substantial U.S. owner; the total of all
withholdable payments made to the NFFE during the calendar year; and any other
information as required by the form and its accompanying instructions. If QI is acting as
a sponsoring entity on behalf of an NFFE for chapter 4 purposes, QI is not required to
report as described in this paragraph if QI reports the NFFE as part of QI’s requirements
as a sponsoring entity. See section 1.1472-1(c)(5)(ii) for the reporting requirements of a
sponsoring entity.

Sec. 8.05. Form 8966 Reporting for Payees that are NFFEs. QI shall file Form 8966
to report withholdable payments made to an intermediary or flow-through entity that

provides information regarding an account holder (or interest holder) that is an NFFE
other than an excepted NFFE with one or more substantial U.S. owners (or one or more
controlling persons that is a specified U.S. person under an applicable IGA). QI must
report on Form 8966 in the time and manner provided in §1.1474-1(i)(2). Such report
must include the name of the NFFE that is owned by a substantial U.S. owner (or
controlling person); the name, address, and U.S. TIN of each substantial U.S. owner;
the total of all withholdable payments made to the NFFE during the calendar year (or
reportable period under the applicable IGA); and any other information as required by
the form and its accompanying instructions. QI is not required to report, however, if
such information is reported pursuant to section 8.04 of this Agreement or if the
intermediary or flow-through entity certifies on its withholding statement that it is
reporting the account holder (or interest holder) as a U.S. account pursuant to its
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI.

Sec. 8.06. Form 1099 Reporting Responsibility. QI shall file Forms 1099 and, unless
filing magnetically, Form 1096, Annual Summary and Transmittal of U.S. Information
Returns, for reportable payments made to persons described in this section 8.06.
Forms 1099 shall be filed on or before the date prescribed for the particular Form 1099
under chapter 61 and in the manner required by regulations under chapter 61 and the
instructions to the forms (including the requirements for filing the forms magnetically or
electronically). Extensions of the time to file Forms 1099 may be requested by
submitting Form 8809 in the manner required by the form. If QI is required to file Forms
1099, it must file the appropriate form for the type of income paid (e.g., Form 1099-DIV
for dividends, Form 1099-INT for interest, Form 1099-B for broker proceeds). QI must
file Forms 1099 to report a reportable payment other than in the situations listed in
sections 8.06(A) and (B) of this Agreement.

(A) Reportable Amount. QI must file a Form 1099 in accordance with the instructions
to the form for the aggregate amount of a particular type of reportable amount paid to an
account holder that is (or is presumed) a U.S. non-exempt recipient (whether a direct or
indirect account holder). However, QI is not required to file a Form 1099 on a
reportable amount if--

(1) QI is a non-U.S. payor reporting the account holder of a U.S. account under its
FATCA requirements as a participating FFI or registered deemed-compliant FFI
(including a reporting Model 1 FFI) and the other conditions of §1.6049-4(c)(4)(i) are
satisfied;

(2) QI reports the account holder’s account as held by a recalcitrant account holder or,
in the case of a QI that is a reporting Model 2 FFI or nonreporting Model 2 FFI treated
as registered deemed-compliant, as a non-consenting account under its FATCA
requirements as a participating FFI or registered deemed-compliant FFI and the other
conditions of §1.6049-4(c)(4)(ii) are satisfied;

(3) QI is a non-U.S. payor that is a reporting Model 1 FFI or registered deemed-
compliant Model 1 IGA FFI and determines that the account has U.S. indicia for which
appropriate documentation sufficient to treat the account as held by a specified U.S.
person has not been provided and reports the account as a U.S. reportable account and
the other conditions of §1.6049-4(c)(4)(ii) are satisfied;

(4) QI has not assumed primary Form 1099 reporting and backup withholding
responsibility with respect to the account holder’s account and has provided a Form W-
9 to a withholding agent or has provided withholding rate pool information with respect
to such account holder to a withholding agent to apply backup withholding and QI does
not know that the withholding agent has failed to report or backup withhold as required;

(5) With respect to an account holder of an intermediary or flow-through entity (other
than a qualified intermediary) that is a direct or indirect account holder of QI, the
intermediary or flow-through entity allocates the payment to a chapter 4 withholding rate
pool of U.S. payees and provides a Form W-8IMY containing a certification that the
entity meets the requirements of §1.6049-4(c)(4)(iii); or

(6) With respect to an account holder of another qualified intermediary that is a direct or
indirect account holder of QI, the qualified intermediary allocates the payment to a
chapter 4 withholding rate pool of U.S. payees and provides the applicable certification
on a valid Form W-8IMY for allocating the payment to this pool.

(B) Reportable Payments other than Reportable Amounts. QI must file a Form
1099 for a reportable payment (other than a reportable amount) paid to each U.S. non-
exempt recipient (whether a direct or indirect account holder), or to any account holder
that is presumed to be a U.S. non-exempt recipient under section 5.13(C) of this
Agreement. Notwithstanding the previous sentence, QI is not required to file a Form
1099 for a reportable payment (other than a reportable amount) paid to a direct account
holder that is (or is presumed) a U.S. non-exempt recipient if—

person has not been provided and reports the account as a U.S. reportable account and
the other conditions of §1.6049-4(c)(4)(ii) are satisfied; or

(4) With respect to a reportable payment that is broker proceeds paid to a U.S. non-
exempt recipient, QI has applied the procedures of section 3.05(C) of this Agreement
and QI does not know that the other payor has failed to report or backup withhold on the
payment as required.

SECTION 9. ADJUSTMENTS FOR OVER- AND UNDER- WITHHOLDING; REFUNDS
Sec. 9.01. Adjustments for Overwithholding by Withholding Agent When QI Does
Not Assume Primary Withholding Responsibility. QI may request that a withholding
agent make an adjustment for amounts paid to QI when the withholding agent has
overwithheld under chapter 3 or 4 by applying either the reimbursement procedure
described in section 9.01(A) of this Agreement or the set-off procedure described in
section 9.01(B) of this Agreement within the time period prescribed for those
procedures. Nothing in this section shall be interpreted to require a withholding agent to
apply the reimbursement or set off procedures under sections 9.01(A) or (B) of this
Agreement. See §1.1474-2(a)(2) for the definition of overwithholding that applies for
purposes of this section 9 with respect to an amount withheld under chapter 4.

(A) Reimbursement Procedure. QI may request a withholding agent to repay QI for
any amount overwithheld and for the withholding agent to reimburse itself under the
reimbursement procedures described in §§1.1461-2(a)(2)(i) and 1.1474-2(a)(3) by
making the request before the earlier of the due date (without regard to extensions) for
the withholding agent to file Form 1042 and Form 1042-S for the calendar year of
overwithholding or the date the Form 1042-S is actually filed with the IRS.

(B) Set-off Procedure. QI may request a withholding agent to repay QI by applying the
amount overwithheld against any amount which otherwise would be required to be
withheld under chapter 3 or 4 from income paid by the withholding agent to QI under the
set-off procedures of §§1.1461-2(a)(3) and 1.1474-2(a)(4). QI must make the request
before the earlier of the due date (without regard to extensions) for the withholding
agent to file Form 1042-S for the calendar year of overwithholding or the date that the
Form 1042-S is actually filed with the IRS.

Sec. 9.02. Adjustments for Overwithholding by QI Assuming Primary Withholding
Responsibility. QI may make an adjustment for amounts paid to its account holders
when QI has overwithheld by applying either the reimbursement or set-off procedures
described in this section 9.02 within the time period prescribed for those procedures.

(A) Reimbursement Procedure. QI may repay its account holders for an amount
overwithheld under chapter 3 or 4 and reimburse itself by reducing, by the amount of tax
actually repaid to the account holders, the amount of any subsequent deposit of tax
required to be made by QI under section 3.08 of this Agreement. For purposes of this
section 9.02(A), an amount that is overwithheld shall be applied in order of time (i.e.,

sequentially) to each of the QI's subsequent deposit periods in the same calendar year
to the extent that the withholding taxes required to be deposited for a subsequent
deposit period exceed the amount actually deposited. An amount overwithheld in a
calendar year may be applied to deposit periods in the calendar year following the
calendar year of overwithholding only if:

(1) The repayment occurs before the earlier of the due date (without regard to
extensions) for filing Form 1042-S for the calendar year of overwithholding or the date
that the Form 1042-S is actually filed by QI with the IRS;

(2) QI states on a Form 1042-S (issued, if applicable, to the account holder or otherwise
to a chapter 3 or 4 reporting pool), filed by March 15 of the calendar year following the
calendar year of overwithholding, the amount of tax withheld and the amount of any
actual repayments; and

(3) QI states on a Form 1042, filed by March 15 of the calendar year following the
calendar year of overwithholding, that the filing of the Form 1042 constitutes a claim for
credit in accordance with §1.6414-1.

(B) Set-Off Procedure. QI may repay its account holders by applying the amount
overwithheld against any amount which otherwise would be required under chapter 3 or
4 to be withheld from a payment made by QI to the account holders before the earlier of
March 15 of the calendar year following the calendar year of overwithholding or the date
that the Form 1042-S is actually filed with the IRS. For purposes of making a return on
Form 1042 or 1042-S for the calendar year of overwithholding, and for purposes of
making a deposit of the amount withheld, the reduced amount shall be considered the
amount required to be withheld from such income under chapter 3 or 4.

Sec. 9.03. Repayment of Backup Withholding. If QI erroneously withholds, as
defined under §31.6413(a)-3, an amount under section 3406 from an account holder, QI
may refund the amount erroneously withheld as provided in §31.6413(a)-3.

Sec. 9.04. Collective Credit or Refund Procedures for Overwithholding. If there has
been overwithholding on amounts subject to chapter 3 or 4 withholding paid to QI's
account holders during a calendar year and the amount has not been recovered under
the reimbursement or set-off procedures as described in section 9.01 or 9.02 of this
Agreement, QI may request a credit or refund of the total amount overwithheld by
following the procedures of this section 9.04. QI shall follow the procedures set forth
under sections 6402 and 6414, and the regulations thereunder, to claim the credit or
refund. No credit or refund will be allowed after the expiration of the statutory period of
limitation for refunds under section 6511. If there has been an overwithholding and QI
does not apply for a collective refund, it must provide a Form 1042-S for the payment
that was subject to the overwithholding if requested by the account holder receiving the
payment.

(A) Payments for which a Collective Refund is Permitted. Except as otherwise
provided in this section 9.04, QI may use the collective refund procedures with respect
to all amounts subject to chapters 3 and 4 withholding. With respect to amounts
withheld under chapter 3 or 4, QI shall not include in its collective refund claim tax
withheld on payments made to an indirect account holder or a direct account holder of
QI that is a nonqualified intermediary or flow-through entity, and with respect to amounts
withheld under chapter 4, if QI is a participating FFI or registered deemed-compliant
FFI, QI shall not include in its collective refund claim tax withheld on payments made to
any account holder described in the FFI agreement or in §1.1471-4(h)(2).

(B) Requirements for Collective Refund. QI may use the collective refund
procedures under this section 9.04 only if the following conditions are met:

(1) QI must not have issued Forms 1042-S to the account holders that received the
payment that was subject to overwithholding;

(2) QI must submit together with its amended Form 1042 on which it provides a
reconciliation of amounts withheld and claims a credit or refund, a copy of the Form
1042-S furnished to QI by its withholding agent reporting the taxes withheld to which the
claim relates (if applicable) and a statement that includes the following information and
representations—

(i) The reason(s) for the overwithholding;

(ii) QI deposited the tax for which a refund is being sought under section 6302 or
received a Form 1042-S from its withholding agent showing the amount of tax withheld,
and neither QI nor its withholding agent has applied the reimbursement or set-off
procedure of §§1.1461-2 and 1.1474-2 to adjust the tax withheld to which the claim
relates;

(iii) QI has repaid or will repay the amount for which refund is sought to the appropriate
account holders;

(iv) QI retains a record showing the total amount of tax withheld, credits from other
withholding agents, tax assumed by QI, adjustments for underwithholding, and
reimbursements for overwithholding as its relates to each account holder and also
showing the repayment (if applicable) to such account holders for the amount of tax for
which a refund is being sought;

(v) QI retains valid documentation that meets the requirements of chapter 3 or 4 (as
applicable) to substantiate the amount of overwithholding with respect to each account
holder for which the refund is being sought; and

(vi) QI has not issued and will not issue a Form 1042-S (or such other form as the IRS
may prescribe) to any account holder with respect to the payments for which the refund
is being sought.

Sec. 9.05. Adjustments for Underwithholding. If QI knows that an amount should
have been withheld under chapter 3 or 4 from a previous payment made to an account
holder but was not withheld, QI may either withhold from future payments made
pursuant to chapter 3 or chapter 4 to the same account holder or payee or satisfy the
tax from property that it holds in custody for such person or property over which it has
control. The additional withholding or satisfaction of the tax owed described in the
previous sentence must be made before the due date (not including extensions) of the
Form 1042 for the calendar year in which the underwithholding occurred. QI's
responsibilities under this section 9.05 will be met if it informs a withholding agent from
which it received the payment of the underwithholding and the withholding agent
satisfies the underwithholding.

Sec. 9.06. Underwithholding After Form 1042 Filed. If, after a Form 1042 has been
filed for a calendar year, QI, QI's reviewer, or the IRS determines that QI has
underwithheld tax for such year, QI shall file an amended Form 1042 to report and pay
the underwithheld tax. QI shall pay the underwithheld tax, the interest due on the
underwithheld tax, and any applicable penalties at the time of filing the amended Form
1042. If QI fails to file an amended return, the IRS shall make such return under section
6020 and assess such tax under the procedures set forth in the Code.

SECTION 10. COMPLIANCE PROCEDURES

Sec. 10.01.

(A) In General. QI is required to adopt a compliance program under the authority of a
responsible officer or, if QI adopts a consolidated compliance program, under the
authority of a responsible officer of a Compliance QI (as described in section 10.02(B)
of this Agreement). QI’s compliance program must include policies, procedures, and
processes sufficient for QI to satisfy the documentation, reporting, and withholding
requirements of this Agreement and sufficient for a responsible officer of QI (or
Compliance QI) to make the certifications required under section 10.03 of this
Agreement. If QI is acting as a QDD, QI’s compliance program must also include
policies, procedures, and processes sufficient for it to satisfy and report its QDD tax
liability and other reporting required as a condition of its status as a QDD. QI must also
perform or arrange for the performance of a periodic review described in section 10.04
of this Agreement to the extent required by that section. As part of the responsible
officer’s certification, QI must provide to the IRS the factual information referenced in
sections 10.04 and 10.05 of this Agreement and in Appendix I to this Agreement. QI
must also satisfy the requirements of section 10.06 of this Agreement with respect to
the report covering the periodic review, and must comply with the IRS review described
in section 10.08 of this Agreement. With respect to QI that, prior to January 1, 2017,

was a limited FFI (as defined in §1.1471-1(b)(77) (or a limited branch, as defined in
§1.1471-1(b)(76)), references in this section 10 (and in Appendix I to this Agreement) to
QI’s FATCA Requirements as a Participating FFI, Registered Deemed-Compliant FFI,
or Registered Deemed-Compliant Model 1 IGA FFI include its requirements under
§1.1471-4(e)(4) for purposes of its initial certification period.

(B) Coordination with FATCA Requirements as a Participating FFI, Registered
Deemed-Compliant FFI, or Registered Deemed-Compliant Model 1 IGA FFI and,
for a Direct Reporting NFFE, the Requirements of §1.1472-1(c)(3). As a condition
for maintaining QI status, QI must comply with its FATCA requirements as applicable to
its chapter 4 status (including any applicable compliance procedure) with respect to
each branch of QI operating under this Agreement. Therefore, QI must, as part of the
compliance procedures described in this section 10 (including in conducting the periodic
review described in section 10.04 of this Agreement and in making the periodic
certification described in section 10.03 of this Agreement) determine whether it is
compliant with its FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI and, in the case of a
direct reporting NFFE, its requirements under §1.1472-1(c)(3), with respect to accounts
for which it acts as a qualified intermediary. See the compliance procedures, if any,
applicable to QI’s FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI and, in the case of a
direct reporting NFFE with respect to all accounts that it maintains or all of its
shareholders. If QI is a participating FFI or direct reporting NFFE, QI will be able to
make the certification described in section 10.03 of this Agreement, and the certification
described in the FFI Agreement, to the extent provided in future published guidance or
other instructions.

10.02. Responsible Officer. QI must appoint an individual as a responsible officer as
defined in section 2.78 of this Agreement. The responsible officer must be identified on
the FATCA registration website as QI’s responsible party, and such person may, but is
not required to, be the same responsible officer for purposes of compliance with QI’s
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI and, in the case of a direct reporting
NFFE, its requirements under §1.1472-1(c)(3). The responsible officer (or the
responsible officer’s designee) must establish a compliance program that meets the
requirements of this section 10.02 and must make the periodic certifications to the IRS
described in section 10.03 of this Agreement. The responsible officer of QI must be an
officer of QI with sufficient authority to fulfill the duties of a responsible officer described
in this section 10. The responsible officer (or a delegate appointed by the responsible
officer) must also serve as the point of contact for the IRS for all issues related to this
Agreement and for complying with IRS requests for information or additional review
procedures under section 10.07 of this Agreement.

(A) Compliance Program. The responsible officer (or the responsible officer’s
designee) must establish a program for QI to comply with the requirements of this

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Agreement that includes the following--

(1) Written Policies and Procedures. The responsible officer (or designee) must
ensure the drafting and updating, as necessary, of written policies and procedures
sufficient for QI to satisfy the documentation, withholding, reporting, and other
obligations of this Agreement, including, with respect to QI that is acting as a QDD, its
QDD tax liability. Such written policies and procedures must include a process for
employees of QI to raise issues to the responsible officer (or the responsible officer’s
designee) that concern QI’s compliance with this Agreement.

(2) Training. The responsible officer (or designee) must communicate such policies
and procedures to any line of business of QI that is responsible for obtaining, reviewing,
and retaining a record of documentation under the requirements of section 5 of this
Agreement; making payments subject to withholding under section 3 of this Agreement;
reporting payments and accounts as required under sections 7 and 8 of this Agreement;
or entering into potential section 871(m) transactions in the case of QI that is acting as a
QDD.

(3) Systems. The responsible officer (or designee) must ensure that systems and
processes are in place that will allow QI to fulfill its obligations under this Agreement.
For example, in order to fulfill QI’s obligations to report on Forms 1042-S, 1099, and
8966 under section 8 of this Agreement, QI must establish systems for documenting
account holders and for recording the information with respect to each such account
that QI is required to report under that section.

(4) Monitoring of Business Changes. The responsible officer (or designee) must
monitor business practices and arrangements that affect QI’s compliance with this
Agreement, including, for example, QI’s acquisition of lines of businesses or accounts
that give rise to documentation, withholding, or reporting obligations under this
Agreement.

(5) QDD Tax Liability Determinations. If QI is acting as a QDD, the responsible
officer must ensure that the QDD has appropriate systems in place to make the
necessary determinations and calculations to identify section 871(m) transactions,
potential section 871(m) transactions, underlying securities associated with potential
section 871(m) transactions, the amount of dividend or dividend equivalent payments
received, and the amount of dividend equivalent or qualifying dividend equivalent
offsetting payments made and contractually obligated to be made by the QDD, as well
as whether a transaction is as a principal or non-principal and in a dealer or non-dealer
capacity. This includes appropriate systems to, where required, calculate the delta for a
potential section 871(m) transaction, perform the substantial equivalence test described
in §1.871-15(h), calculate the amount of a dividend equivalent or qualifying dividend
equivalent offsetting payment, determine any QDD tax liability amount (or part thereof)
and its timing, and determine what payments are received, made, or contractually
obligated to be made with respect to potential section 871(m) transactions, underlying

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securities associated with potential section 871(m) transactions, and other underlying
securities as a principal and whether in its dealer capacity or non-dealer capacity. The
systems must also take into account information received pursuant to §1.871-15(p).

(6) Periodic Review. Unless QI receives a waiver (the requirements of which are
described in section 10.07(B) of this Agreement), the responsible officer (or designee)
must designate a reviewer that meets the qualifications described in section 10.04(A) of
this Agreement to perform the periodic review as described in section 10.05 of this
Agreement, to the extent required by that section.

(7) Certification of Internal Controls. The responsible officer (or designee) must
make the periodic certification as described in section 10.03 of this Agreement,
including ensuring that corrective actions are taken in response to any material failures
(as defined in section 10.03(D) of this Agreement) of QI’s compliance with this
Agreement and its FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI and, in the case of a
direct reporting NFFE, its requirements under §1.1472-1(c)(3). The responsible officer
may rely on any reasonable procedure, process, or review that enables the responsible
officer to make the certification described in this section 10.03.

(B) Consolidated Compliance Program. The IRS, in its discretion, may permit a
consolidated compliance program that includes two or more QIs that are members of a
group of entities under common ownership when the QIs: (i) operate under a uniform
compliance program for purposes of this Agreement; (ii) share practices, procedures,
and systems subject to uniform monitoring and control; and (iii) are subject to a
consolidated periodic review that includes a review of internal controls and testing of
transactions relevant to this Agreement with respect to each QI in the consolidated
compliance program. Each QI that is a member of a consolidated compliance program
must designate a Compliance QI to act on its behalf, and the responsible officer of the
Compliance QI must identify itself as such when making its periodic certification and
must comply with the identification, certification of internal controls, and periodic review
requirements for the QI consolidated compliance program as the IRS may prescribe.
The Compliance QI must also agree to be jointly and severally liable for the obligations
and liabilities of any QI in its consolidated compliance program relating to the QI’s
obligations under this Agreement.

10.03. Certification of Internal Controls by Responsible Officer. On or before July 1
of the calendar year following the certification period, QI must make the certification
described in either section 10.03(A) or (B) of this Agreement. The initial certification
period is the period ending on the third full calendar year that this Agreement is in effect
(including renewals of this Agreement). Subsequent certification periods will be every
three calendar years following the initial certification period (including renewals of this
Agreement). The certification of internal controls required by this section 10.03 applies
only to the internal controls related to QI’s compliance with this Agreement and its
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or

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registered deemed-compliant Model 1 IGA FFI and, in the case of a direct reporting
NFFE, its requirements under §1.1472-1(c)(3), with respect to accounts for which it acts
as a qualified intermediary, and does not relate to any other obligations or requirements.
The responsible officer may rely on any reasonable procedure, process, or review that
enables the responsible officer to make the certification described in this section 10.03.
If the responsible officer relies on an internal or external review for this purpose, the
internal or external reviewer must be independent, as described in section 10.04 of this
Agreement. The responsible officer must document the procedure, process, or review
relied upon in making the certification. QI (or its Compliance QI) must make the
certifications of compliance in such manner as the IRS may prescribe.

(A) Certification of Effective Internal Controls. The responsible officer must certify to
the following and disclose any material failures that occurred during the certification
period or during any prior period if the material failure was not disclosed as part of a
prior certification or written disclosure made by QI to the IRS—

(1) QI has established a compliance program that meets the requirements described in
section 10.02(A) or (B) (if applicable) of the QI Agreement that is in effect as of the date
of the certification and during the certification period;

(2) Based on the information known (or information that reasonably should have been
known) to the responsible officer, including the findings of any procedure, process, or
review undertaken in preparation for the responsible officer’s certification of internal
controls, QI maintains effective internal controls over its documentation, withholding,
and reporting obligations under the QI Agreement and according to its applicable
FATCA requirements, with respect to accounts for which it acts as a qualified
intermediary, and, if QI is acting as a QDD, it maintains effective internal controls over
its computation and tax obligations under the QI Agreement and the regulations under
section 871(m);

(3) Based on the information known (or information that reasonably should have been
known) to the responsible officer, including the findings of any procedure, process, or
review undertaken in preparation for the responsible officer’s certification of internal
controls, there are no material failures, as defined in section 10.03(D) of the QI
Agreement, or, if there are any material failures, they have been corrected as of the
date of this certification, and such failures are identified as part of this certification as
well as the actions taken to remediate such failures and to prevent their reoccurrence by
the date of this certification;

(4) With respect to any failure to withhold, deposit, or report to the extent required under
the QI Agreement, or, with respect to QI that is acting as a QDD, any failure to pay its
QDD tax liability, QI has corrected such failure by paying any taxes due (including
interest and penalties) and filing the appropriate return (or amended return);

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(5) All PAIs of QI and partnerships and trusts to which QI applies the agency option
have either (a) provided (or will provide, to the extent QI does not obtain a waiver under
section 10.07 of the QI Agreement) documentation and other necessary information for
inclusion in QI’s periodic review or (b) provided the responsible officer of QI with a
certification of effective internal controls meeting the requirements of this section
10.03(A) of the QI Agreement and have represented to QI that there are no material
failures, as defined in section 10.03(D) of the QI Agreement, or, if there are such
failures, they have been corrected as of the time of this certification, and the PAIs,
partnerships, or trusts have disclosed any such failures to QI together with the actions
taken by the PAI, partnership, or trust to remediate such failures;

(6) QI’s policies, procedures, and processes are applied consistently to all branches
covered by the QI Agreement (except as otherwise required by a jurisdiction’s
AML/KYC procedures, as applicable);

(7) If QI is acting as a QDD, it has acted as a QDD for all payments with respect to
potential section 871(m) transactions and underlying securities for which it is required to
act as a QDD and no other transactions or underlying securities;

(8) If QI is acting as a QI and has assumed primary withholding responsibility with
respect to payments of substitute interest (as described in section 3.03(A) of the QI
Agreement), QI has assumed primary withholding responsibility for all such payments
covered by the QI Agreement;

(9) A periodic review was conducted for the certification period in accordance with
section 10.04 of the QI Agreement, and the results of such review are reported to the
extent required in sections 10.05 and 10.06 of the QI Agreement.

(B) Qualified Certification. If the responsible officer has identified an event of default
or a material failure that QI has not corrected as of the date of the certification, the
responsible officer must certify to the following statements—

(1) The responsible officer (or designee) has identified an event of default as defined in
section 11.06 of the QI Agreement, or has determined that, as of the date of the
certification, there are one or more material failures as defined in section 10.03(D) of the
QI Agreement with respect to QI’s compliance, its PAI’s compliance, or the compliance
of a partnership or trust to which QI applies the agency option and that appropriate
actions will be taken to prevent such failures from reoccurring;

(2) With respect to any failure to withhold, deposit, or report to the extent required under
the QI Agreement, or with respect to QI that is acting as a QDD, a failure to pay its QDD
tax liability, QI will correct such failure by paying any taxes due (including interest and
penalties) and filing the appropriate return (or amended return); and

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(3) The responsible officer (or an officer of the PAI or partnership or trust to which QI
applies the agency option if the PAI or partnership or trust performs its own periodic
review) will respond to any notice of default (if applicable) or will provide (either directly
or through QI) to the IRS, to the extent requested, a description of each material failure
and a written plan to correct each such failure.

(C) PAIs and Partnership or Trust to which QI applies the Agency Option. Unless
QI has received a waiver of the periodic review requirement, any PAI with which QI has
an agreement and any partnership or trust to which QI applies the agency option must
provide its documentation and other information to QI for inclusion in QI’s periodic
review or conduct an independent periodic review and provide a written certification to
QI as described in section 10.03 of this Agreement regarding its compliance with the
requirements of the PAI or agency agreement. Such certification must be available to
the IRS upon a request made as part of the review described in section 10.07 of this
Agreement (with a certified translation into English if the certification is not in English).

(D) Material Failures.

(1) Material Failures Defined. A material failure is generally a failure of QI to fulfill the
requirements of this Agreement or its FATCA requirements as a participating FFI,
registered deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI
and, in the case of a direct reporting NFFE, its requirements under §1.1472-1(c)(3). For
purposes of the certifications described in section 10.03(A) and (B) of this Agreement, a
material failure is limited to the following:

(i) QI’s establishing of, for financial statement purposes, a tax reserve or provision for a
potential future tax liability related to QI’s failure to comply with this Agreement,
including its FATCA requirements as a participating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model 1 IGA FFI, or, in the case of a direct
reporting NFFE, its requirements under §1.1472-1(c)(3), and with respect to QI that is
acting as a QDD, failure to satisfy its QDD tax liability and its obligations pursuant to
section 871(m) and the regulations under that section.

(ii) QI’s failure to establish written policies, procedures, or systems sufficient for the
relevant personnel of QI to take actions consistent with QI’s obligations under this
Agreement, including, its FATCA requirements as a participating FFI, registered
deemed-compliant FFI, registered deemed-compliant Model 1 IGA FFI, or, in the case
of a direct reporting NFFE, its requirements under §1.1472-1(c)(3), or if QI is acting as a
QDD, its obligations as a QDD under this Agreement or pursuant to section 871(m) and
the regulations under that section.

(iii) A criminal or civil penalty or sanction imposed on QI (or any branch or office
thereof) by a regulator or other governmental authority or agency with oversight over
QI’s compliance with AML/KYC procedures to which QI (or any branch or office thereof)

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is subject and that is imposed due to QI’s failure to properly identify account holders
under the requirements of those procedures.

(iv) A finding (including a finding noted in the periodic review report described in section
10.06 of this Agreement) for one or more years covered by this Agreement that QI failed
to—

(a) Withhold an amount that QI was required to withhold under chapter 3 or 4 or under
section 3406 as required under section 3 of this Agreement or, if QI is acting as a QDD,
failing to timely pay its QDD tax liability;

(b) Provide information sufficient for another withholding agent to perform withholding
and reporting to the extent required when QI does not assume primary chapters 3 and 4
withholding responsibility or primary Form 1099 reporting and backup withholding
responsibility;

(c) Provide allocation information as described in section 6.03(D) of this Agreement
(regarding U.S. non-exempt recipient account holders) by January 15 as required by
that section when QI applies the alternative withholding rate pool procedures;

(d) Make deposits in the time and manner required by section 3.08 of this Agreement or
make adequate deposits to satisfy its withholding obligations, or, if QI is acting as a
QDD, satisfy its QDD tax liability, taking into account the procedures under section 9 of
this Agreement;

(e) Report or report accurately on Forms 1099 as required under section 8.06 of this
Agreement or provide information to the extent QI does not assume primary Form 1099
reporting and backup withholding responsibilities;

(f) Report or report accurately on Forms 1042 and 1042-S under sections 7 and 8 of this
Agreement, or, if QI is acting as a QDD, obtain any necessary waiver from reporting or
maintain the name, address, and TIN of a significant number of U.S. non-exempt
recipients to whom the QDD makes a payment that otherwise would be a qualifying
dividend equivalent offsetting payment but for the limitation in section 2.70(B) of this
Agreement; or

(g) Report or report accurately on Form 8966 under sections 8.04 and 8.05 of this
Agreement.

(2) Limitations on Material Failures. A failure described in section 10.03(D)(1)(iv) of
this Agreement is a material failure only if the failure was the result of a deliberate action
on the part of one or more employees of QI to avoid the requirements of this Agreement
with respect to one or more account holders of QI, or was an error attributable to a
failure of QI to establish or implement internal controls sufficient for QI to meet the
requirements of this Agreement. Regardless of these limitations for certification

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purposes, QI is required to correct a failure to withhold or deposit tax under section 3 of
this Agreement, or to report under section 7 or 8 of this Agreement, or, for a QI that is
acting as a QDD, to pay its QDD tax liability, by depositing the amount of tax required to
have been withheld and by filing the appropriate return (or amended return).

Sec. 10.04. Periodic Review Absent Waiver. Unless the QI receives a waiver (the
requirements of which are described in section 10.07(B) of this Agreement), at the time
QI provides the certification of internal controls, provided in section 10.03 of this
Agreement, QI must also provide certain factual information regarding its accounts,
withholdable payments, amounts subject to chapter 3 withholding, and, if QI is acting as
a QDD, section 871(m) transactions, potential section 871(m) transactions, and its QDD
tax liability based on the results of a periodic review. The factual information requested
is included in Appendix I to this Agreement. The IRS will prescribe the manner in which
the information must be reported in additional published guidance or other instructions.

(A) Independent Reviewer. The periodic review may be performed by an internal
reviewer (such as an internal auditor) that is an employee of QI (“internal reviewer”), an
internal reviewer that is an employee of a Compliance QI in the case of a consolidated
compliance program, or a certified public accountant, attorney, or third-party consultant
(“external reviewer”), or any combination thereof.

(1) Internal Reviewer. QI may designate an internal reviewer to perform the periodic
review (or a portion of the periodic review) only when the internal reviewer is competent
with respect to the requirements of this Agreement. The internal reviewer must also be
able to report findings that reflect the independent judgment of the reviewer. The
internal reviewer must not be reviewing its own work, procedures, or results (e.g., the
internal reviewer, in reviewing QI’s documentation cannot be part of the team primarily
responsible for collecting and validating documentation). The results of the periodic
review and the internal reviewer’s reporting of such results to the responsible officer
cannot influence or affect the compensation, bonus, employment status, or employee
review of the internal reviewer. The IRS has the right to request the performance of the
periodic review by an alternative reviewer if the IRS, in its sole discretion, reasonably
believes that the reviewer selected by QI was not independent, as described in this
Agreement, or did not perform an effective periodic review under this Agreement.

(2) Internal Reviewer of the Compliance QI. The Compliance QI may designate an
internal reviewer to perform the consolidated periodic review (or a portion of the
consolidated periodic review). See section 10.02(B) of this Agreement. The internal
reviewer of the Compliance QI must meet the requirements of section 10.04(A)(1) of
this Agreement with respect to both the Compliance QI and each QI that is a member of
the consolidated compliance program.

(3) External Reviewer. QI may engage an external reviewer that is a certified public
accountant, attorney, or third-party consultant that is regularly engaged in the practice of
performing reviews of clients’ policies, procedures, and processes for complying with

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accounting, tax, or regulatory requirements (including assisting clients in determining
such compliance). The external reviewer cannot be reviewing systems, policies, or
procedures or the results thereof that it was involved in designing, implementing, or
maintaining. The external reviewer must be in good standing with and comply with any
applicable professional standards for maintaining its license as an accountant or
attorney (or other third-party consultant). The external reviewer is not required to make
an attestation or render an opinion regarding QI’s compliance with this Agreement or
QI’s compliance with its FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI and, in the case of a
direct reporting NFFE, its requirements under §1.1472-1(c)(3), but the reviewer must be
able to perform the periodic review as specified in section 10.05 of this Agreement. QI
must permit the external reviewer to have access to all relevant records of QI for
purposes of performing the review, including information regarding specific account
holders. Additionally, the engagement between the external reviewer and QI must
impose no restrictions on QI’s ability to provide the results of the review to the IRS.
However, the external reviewer is not required to divulge the identity of QI's account
holders to the IRS, except as otherwise provided under QI’s FATCA requirements as a
participating FFI, registered deemed-compliant FFI, or registered deemed-compliant
Model 1 IGA FFI. QI must permit the IRS to communicate directly with the external
reviewer, and any legal prohibitions that prevent the IRS from communicating directly
with the reviewer must be waived.

Sec. 10.05. Scope and Timing of Review. The responsible officer of QI (or of the
Compliance QI) must require the reviewer to test accounts related to QI’s
documentation, withholding, reporting, and other obligations under this Agreement,
including its QDD tax liability with respect to QI that is acting as a QDD, and its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI and, in the case of a direct reporting NFFE, its
requirements under §1.1472-1(c)(3) for accounts for which it is acting as a qualified
intermediary, and to identify deficiencies in meeting these obligations. Any PAI with
which QI has an agreement and any partnership or trust to which QI applies the agency
option must provide the information necessary for QI to test accounts and transactions
of such entity as part of QI’s periodic review unless such entity conducts an its own
periodic review and provides QI with the report documenting the results of such review
as described in section 10.06 of this Agreement. Unless otherwise approved by the
IRS, the review must include the steps described in section 10.05(A) of this Agreement.

QI is required to arrange for the performance of one review for the certification period to
evaluate QI’s documentation, withholding, and reporting practices. If QI is acting as a
QDD, this should also include a review of its determination as to whether transactions
are section 871(m) transactions, its computations and determinations of dividend
equivalent amounts and qualifying dividend equivalent offsetting payments, and its
calculation of its QDD tax liability. The review may be conducted for any calendar year
covered by the certification period. However, all results of the review must relate to one
calendar year. If QI is acting as a QDD and has an initial certification period ending

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December 31, 2017, it must use calendar year 2017 for its review of its QDD accounts
and activities for the initial certification period. QI may conduct a review for a particular
calendar year if, on the due date for reporting the factual information relating to the
periodic review (provided in section 10.04 of this Agreement), there are 15 or more
months available on the period for assessment under section 6501(a) of the calendar
year for which the review is to be conducted or the QI’s submits, upon request, a Form
872, Consent to Extend the Time to Assess Tax, that will satisfy the 15-month
requirement. The Form 872 must be submitted to the IRS at the address provided in
section 12.06 of this Agreement.

QI may use a sample to test accounts if there are more than 50 accounts to review. If
QI has fewer than 50 accounts, it must review all accounts and cannot use a sample to
test accounts. To the extent applicable, the reviewer must separately review its QI
activities (when not acting in its QDD capacity), QI acting as a QDD activities, and
substitute interest payments for which QI assumed primary withholding responsibility
(as described in section 3.03(A) of this Agreement). The reviewer is required to record
its sampling procedures and to maintain the ability to reconstruct the sample. Further,
the review is not required to include statistical sampling procedures for testing
transactions, but the reviewer must document its methodology for sampling
determinations. A safe harbor methodology and additional information on the use of
statistical sampling is provided in Appendix II to this Agreement.

If the reviewer determines that underwithholding has occurred, QI shall report and pay
any amount due. QI must also notify the IRS Foreign Intermediaries Team at the
address provided in section 12.06 of this Agreement of the underwithholding discovered
as a result of the review. If the reviewer used a sampling method for its review, see
Appendix II to this Agreement for an allowance in certain cases to use a projection
method to determine the amount of underwithholding.

(A) Documentation. The reviewer must--

(1) Review QI’s accounts, to ensure that QI obtained documentation that meets the
requirements described in sections 5.01 through 5.09 of this Agreement;

(2) Review QI’s accounts for which treaty benefits are claimed, to ensure that QI
obtained the treaty statements and limitation on benefits information required by section
5.03(B) of this Agreement;

(3) Review information contained in account holder files to determine if the
documentation validity standards of section 5.10 of this Agreement have been met. For
example, the reviewer must verify that changes in account holder information (e.g., a
change of address to a U.S. address or change of account holder status from foreign to
U.S. or a change in chapter 4 status from participating FFI to non-participating FFI) are
being conveyed to QI's withholding agents;

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(4) Review the accounts for which QI is acting as a QI to ensure that QI is obtaining,
reviewing, and maintaining documentation in accordance with its FATCA requirements
as a participating FFI, registered deemed-compliant FFI, or registered deemed-
compliant Model 1 IGA FFI and, in the case of a direct reporting NFFE, its requirements
under §1.1472-1(c)(3);

(5) Review accounts held by U.S. non-exempt recipient account holders, to determine if
QI obtained Forms W-9, and, if QI does not assume primary Form 1099 reporting and
backup withholding responsibility, that QI transmitted those forms to a withholding agent
consistent with this Agreement;

(6) For a QI that is a QDD, review accounts for which QI is acting as a QDD and that
received a reportable payment or a qualified dividend equivalent offsetting payment
(notwithstanding the limitation in section 2.70(B) of this Agreement) to determine
whether QI has documented the status of account holders under the requirements
described in sections 5.01 through 5.09 of this Agreement; and

(7) For a QI that makes payments of U.S. source substitute interest and assumes
primary chapters 3 and 4 withholding responsibility for such amounts, review accounts
of persons to which QI pays U.S. source substitute interest to determine whether QI has
documented the status of such persons under the requirements described in sections
5.01 through 5.09 of this Agreement.

(B) Withholding Rate Pools. The reviewer must--

(1) Perform checks using account holders assigned to each withholding rate pool, and
cross check that assignment against the documentation provided by, or the presumption
rules applied to, the account holder, the type of income earned, and the withholding rate
applied;

(2) Verify, if QI is using the procedure for U.S. non-exempt recipients described in
section 6.03(D) of this Agreement, that QI is providing sufficient and timely information
to withholding agents that allocates reportable payments to U.S. non-exempt recipients;
and

(3) With respect to a partnership or trust described in section 4.05 of this Agreement, if
applicable, perform test checks, using account holder documentation for the selected
partners, beneficiaries, or owners and records of each type of reportable amount paid
by QI to the entity, to determine whether the highest rate of withholding applicable to
each type of reportable amount was applied.

(1) To the extent QI has assumed primary chapters 3 and 4 withholding responsibilities,
perform test checks, using recalcitrant account holders and nonparticipating FFIs, to

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verify that QI withheld the proper amounts under chapter 4;

(2) To the extent QI has assumed primary chapters 3 and 4 withholding responsibility,
perform test checks, using foreign account holders for which no withholding is required
under chapter 4 based on the payees chapter 4 status, to verify that QI withheld the
proper amounts under chapter 3 and properly applied the exemptions from chapter 4
withholding;

(3) To the extent QI has not assumed primary chapters 3 and 4 withholding
responsibility, verify that QI has fulfilled its responsibilities under section 3.02 of this
Agreement (including withholding if QI failed to provide the required information to a
withholding agent to withhold on payments);

(4) To the extent QI has assumed primary Form 1099 reporting and backup withholding
responsibility, perform checks using U.S. non-exempt recipient account holders to verify
that QI backup withheld when required;

(5) To the extent QI has not assumed primary Form 1099 reporting and backup
withholding responsibility, perform test checks using U.S. non-exempt account holders
to verify that QI fulfilled its backup withholding responsibilities under sections 3.04
through 3.06 of this Agreement;

(6) Verify that amounts withheld by QI were timely deposited in accordance with section
3.08 of this Agreement;

(7) To the extent that QI is acting as a QDD, determine that QI withheld when required
on payments that it made with respect to potential section 871(m) transactions; and

(8) To the extent that QI makes payments of U.S. source substitute interest and
assumes chapter 3 and 4 withholding responsibility for such amounts, determine that QI
withheld when required on such payments.

(D) Return Filing and Information Reporting. The reviewer must--

(1) Obtain copies of original and amended Forms 1042 and 945, and any schedules,
statements, or attachments required to be filed with those forms, verify that the forms
have been filed, and determine whether the amounts of income, taxes, and other
information reported on those forms are accurate by--

(i) Reviewing copies of Forms 1042-S that withholding agents have provided QI to
determine whether QI properly reported the amount of taxes withheld by other
withholding agents on Form 1042;

(ii) Reviewing account statements and correspondence from withholding agents;

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(iii) Determining that adjustments to the amount of tax shown on Form 1042 (and any
claim by QI for refund or credit) properly reflect the adjustments to withholding made by
QI using the reimbursement or set off procedures under section 9.02 of this Agreement
and are supported by sufficient documentation;

(iv) Reconciling amounts shown on Forms 1042 with amounts shown on Form 1042-S
(including the amount of taxes reported as withheld);

(v) If QI is acting as a QDD, reviewing the reconciliation schedule described in section
7.01(c) of this Agreement and any information used to prepare such schedule or
compute its QDD tax liability, including information received pursuant to §1.871-15(p),
reviewing the amounts required to determine its section 871(m) amounts and its QDD
tax liability over the applicable period, and reviewing such information to determine
whether the section 871(m) amounts and QDD tax liability have been properly
calculated;

(vi) If QI is acting as a QDD, reviewing amounts shown on Forms 1042 (including the
reconciliation schedule) and Forms 1042-S, as well as any information received
pursuant to §1.871-15(p), to determine whether the QDD properly took the information
into account (e.g., to calculate its QDD tax liability);

(vii) In the case of collective credits or refunds, reviewing the statements attached to
amended Forms 1042 filed to claim a collective refund, determine whether those forms
are accurate, and—

(a) Determine the causes of any overwithholding reported and ensure QI did not issue
Forms 1042-S to persons whom it included as part of its collective credit or refund;

(b) Determine that QI repaid the appropriate account holders and that the amount of the
claim is accurate and supported by adequate documentation; and

(c) Determine that QI did not include payments made to a partnership or trust described
in section 4.05 of this Agreement.

(2) Obtain copies of original and corrected Forms 1042-S and Forms 1099 filed by QI
together with the work papers used to prepare those forms, and determine whether the
amounts reported on those forms are accurate by--

(i) Reconciling payments and tax reported on Forms 1042-S received from withholding
agents with amounts (including characterization of income) and taxes reported by QI as
withheld on Forms 1042-S and determining the reason(s) for any variance;

(ii) Reviewing the Forms W-8IMY, and the associated withholding statements, that QI
has provided withholding agents;

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(iii) Reviewing account statements issued by QI to account holders;

(iv) Determining, in the case in which QI utilized the reimbursement or set-off
procedure, that QI satisfied the requirements of section 9.02 of this Agreement and that
the adjusted amounts of tax withheld are properly reflected on Forms 1042-S.

(3) Obtain copies of original and amended Forms 8966 of accounts for which QI is
acting as a qualified intermediary, and determine whether the amounts of income and
other information reported on Forms 8966 are accurate by—

(i) Reviewing U.S. accounts (or U.S. reportable accounts for which QI acts as a
qualified intermediary) to determine that such accounts were reported in accordance
with QI’s FATCA requirements as a participating FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1 IGA FFI;

(ii) If QI is an NFFE acting as a qualified intermediary on behalf of its shareholders,
confirming that any direct or indirect shareholders that are substantial U.S. owners were
reported in accordance with §1.1472-1(c)(3);

(iii) If QI is an NFFE acting as a qualified intermediary on behalf of persons other than
its shareholders, confirming that if QI is acting on behalf of a passive NFFE with
substantial U.S. owners, withholdable payments made to the passive NFFE and the
information regarding its substantial U.S. owners were reported;

(iv) Confirming with respect to any nonqualified intermediary or flow-through entity that
provides information regarding an account holder (or interest holder) that is an NFFE
(other than an excepted NFFE) with one or more substantial U.S. owners that such
substantial U.S. owners were reported to the extent required under section 8.04(B) of
this Agreement;

(v) Reviewing the documentation provided by a PAI or a partnership or trust to which QI
applied the agency option to determine that QI reported on Form 8966 to the extent
required under section 4 of this Agreement; and

(vi) Reviewing work papers used to prepare these forms.

(4) If QI is acting as a QDD, the reviewer must also review accounts designated as
accounts for which QI acted as a QDD to determine whether QI is acting as a QDD with
respect to all potential section 871(m) transactions and underlying securities for which it
is required to act as a QDD and not any other transactions or underlying securities and
whether the section 871(m) amount includes the amounts in its dealer capacity and not
amounts in its non-dealer capacity.

(E) Significant Change in Circumstances. The reviewer must verify that in the course
of the review it has not discovered any significant change in circumstances, as

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described in section 11.04(A), (D), (E), or (J) of this Agreement.

Sec. 10.06 Periodic Review Report.

(A) In General. The results of the periodic review must be documented in a written
report addressed to the responsible officer of QI and must be available to the IRS upon
request (with a certified translation into English if the report is not in English). The
report must describe the scope of the review and the actions performed to satisfy each
requirement of section 10.05(A) through (E), including the methodology for sampling
determinations. The report may include explanatory footnotes to clarify the results of
the report. Recommendations may be included but are not required to be provided in
the report. The periodic review report should form the basis for the factual information
provided by QI that is set forth in Appendix I.

In addition to the findings of section 10.05 of this Agreement, the periodic review report
should also include details regarding the documentation and tax deposit and payment
failures identified by the reviewer but then cured before the periodic review report is
finalized. While the curing of inadequate documentation is permissible, the factual
information reported (as set forth in Appendix I) should report the results upon initial
review (i.e., not reflecting the results after curing) and the curing process should not
delay certification of internal controls or factual information required in Appendix I to this
Agreement. To the extent necessary, the periodic review report should include the
dates on (or time period during) which curative documentation was received for
accounts with respect to which the reviewer determined that underwithholding had
occurred, the number of accounts for which curative documentation was obtained and a
revised calculation of the underwithholding or additional backup withholding.

(B) Periodic Review Report for QDDs. If QI is acting as a QDD, the periodic review
report should also include the number of accounts that were not correctly treated as (i)
principal accounts (except accounts that are effectively connected with the conduct or a
trade or business within the United States within the meaning of section 864), (ii) non-
principal accounts, (iii) principal accounts that are effectively connected with the conduct
or a trade or business within the United States within the meaning of section 864, (iv)
dealer accounts, and (v) non-dealer accounts. The report should also include any other
issues related to the QDD tax liability (e.g., incorrect determination of whether an
account is a potential section 871(m) transaction or a section 871(m) transaction, the
dividend equivalent payment amount, the qualifying dividend equivalent offsetting
payment amount, the amount of such payments made or contractually obligated to be
made, or any other amounts subject to tax (or required to compute the tax liability)
under section 871(a) and 881 (including the QDD tax liability)).

(C) PAI Certification and Partnership or Trust to which QI Applies the Agency
Option. Any PAI with which QI has an agreement and any partnership or trust to which
QI applies the agency option that does not provide its documentation and other
information to QI for inclusion in QI’s periodic review described in section 10.04 of this

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Agreement, must conduct an independent periodic review in accordance with the
compliance procedures described in section 10.05 of this Agreement. The performance
results of the periodic review must be documented in a written report addressed to the
responsible officer of QI and must be available to the IRS upon request (with a certified
translation into English if the report is not in English).

(D) Retention of Report and Certifications. The report and certifications described in
this section 10.06 must be retained by QI (or the Compliance QI) for as long as this
Agreement is in effect.

Sec. 10.07. Waiver of Periodic Review Requirement.

(A) In General. A QI that is not acting as a QDD and that is an FFI that meets the
requirements of section 10.07(B) may apply for a waiver of the periodic review
requirement. QI must request a waiver of the periodic review requirement under this
section 10.07 at the time the responsible officer makes the periodic certification of
internal controls described in section 10.03 of this Agreement. QI’s application for such
a waiver must be approved by the IRS, and the waiver does not apply automatically. QI
must apply for a waiver for each certification period for which a waiver is requested. If
QI’s request for a waiver of the periodic review requirement is granted, such approval is
only to waive QI’s obligations under sections 10.04 and 10.05 of this Agreement. The
approval does not relieve QI of making the certification of internal controls described in
section 10.03 of this Agreement. The approval also does not preclude the IRS from
requesting information or conducting a correspondence review as described in section
10.07 of this Agreement. QI must include the information of any PAI with which QI has
an agreement and any partnership or trust to which QI applies the agency option in its
waiver application which is set forth in Part III of Appendix I
to this Agreement.

(B) Eligibility. QI is eligible to apply for a waiver of the periodic review requirement if it
meets the following requirements—

(1) QI must be an FFI that is not also acting as a QDD;

(2) QI cannot be part of a consolidated compliance program;

(3) For each calendar year covered by the certification period, the reportable amounts
received by QI do not exceed $5 million;

(4) QI must have timely filed its Forms 1042, 1042-S, 945, 1099, and 8966, as
applicable, for all calendar years covered by the certification period, including for the
year to which the periodic review would be applied;

(5) QI must have made all periodic certifications and reviews required by sections 10.02
and 10.03 of this Agreement as well as all certifications required pursuant to QI’s
FATCA requirements as a participating FFI, registered deemed-compliant FFI, or

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registered deemed-compliant Model 1 IGA FFI; and

(6) QI must have made the certification of effective internal controls in section 10.02(A).

(C) Documentation Required with Waiver Application. When applying for a waiver
under this section 10.07, QI must include the information described in Appendix I to this
Agreement using the most recent calendar year covered by the certification period and
reporting such results as of QI’s initial review (not following any subsequent
remediation).

(D) Approval. If QI’s request for a waiver of the periodic review requirement is
approved, the IRS will notify QI. If QI requests a waiver but such request is not
approved, QI will be granted a six month extension from the date of denial of the waiver
to complete the periodic review. Such extension will not be granted if QI has made the
request for waiver in bad faith.

Sec. 10.08. Periodic Review.

(A) In General. Based upon the certifications made by the responsible officer and the
disclosure of material failures, the information reported on Forms 945, 1042, 1042-S,
1099, and 8966 filed with the IRS during the certification period, or otherwise at the
IRS’s discretion for compliance purposes, the IRS may initiate requests of QI under this
section 10.08. The IRS may preemptively request remediation or the conduct of a
limited periodic review earlier than the time period provided in section 10.03 of this
Agreement if, based upon the information described above, the IRS identifies, in its
discretion, a presence of factors indicating systemic or significant compliance failures by
QI. The IRS may also request that QI designate a replacement responsible officer if
QI’s responsible officer has not complied with its responsibilities (including responding
to requests by the IRS for additional information) or the IRS has information that
indicates the responsible officer may not be relied upon to comply with its
responsibilities.

(B) Periodic Review Report. The IRS may request, through written correspondence to
the responsible officer of QI (or the Compliance QI), a copy of the results of QI’s
periodic review for any prior certification period or the periodic review report of any PAI
or partnership or trust to which QI applied the agency option that QI has an agreement
during the current certification period (with a certified translation into English if the report
is not in English). QI is required to provide the results within 30 calendar days of such
request.

(C) Correspondence Review. The IRS may, in its discretion, conduct additional fact
finding through a correspondence review. In such a review, the IRS will contact the
responsible officer of QI (or the Compliance QI) in writing and request information about
QI’s compliance with this Agreement or the compliance of a PAI or a partnership or trust
to which QI applied the agency option, including, for example, information about

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documentation, withholding, or reporting processes, its periodic review, and information
about any material failures that were disclosed to the IRS (including remediation plans).
The IRS may request phone or video interviews with employees of QI (and the
Compliance QI), PAI, or a partnership or trust to which QI applied the agency option as
part of the IRS’s correspondence review. QI is required to respond in a reasonable time
to any such requests.

(D) Additional Review Procedures. In limited circumstances, the IRS may direct QI
(or the Compliance FFI) or any PAI, partnership, or trust described in section 4 of this
Agreement with which QI has an agreement to perform additional, specified review
procedures. The IRS reserves the right to require QI (or the Compliance QI) or a PAI,
or a partnership or trust to which QI applied the agency option to engage an external
reviewer to perform the additional review procedures regardless of whether such
reviewer performed the periodic review. The IRS will provide the responsible officer of
the QI with a written plan describing the additional review procedures and will provide a
due date of not more than 120 days for the QI to provide to the IRS a report covering
the reviewer’s findings.

SECTION 11. EXPIRATION, TERMINATION, MERGER AND DEFAULT

Sec. 11.01. Term of Agreement. This Agreement begins on the effective date of the
QI Agreement and expires at the end of the third full calendar year the Agreement is in
effect, unless terminated under section 11.02 of this Agreement. This Agreement may
be renewed as provided in section 11.08 of this Agreement.

Sec. 11.02. Termination of Agreement. This Agreement may be terminated by either
the IRS or QI prior to the end of its term by delivery of a notice, in accordance with
section 12.06 of this Agreement, of termination to the other party. The IRS, however,
shall not terminate this Agreement unless there has been a significant change in
circumstances, as defined in section 11.04 of this Agreement, or an event of default has
occurred, as defined in section 11.06 of this Agreement, and the IRS determines, in its
sole discretion, that the significant change in circumstances or the event of default
warrants termination of this Agreement. The IRS shall not terminate this Agreement if
QI can establish to the satisfaction of the IRS that all events of default for which it has
received notice have been cured within the time period agreed upon. The IRS shall
notify QI, in accordance with section 11.06 of this Agreement, that an event of default
has occurred and that the IRS intends to terminate the Agreement unless QI cures the
default or establishes that no event of default occurred. A notice of termination sent by
either party shall take effect on the date specified in the notice, and QI is required to
notify its withholding agent of the date that its status as a QI is terminated.

The termination of the Agreement shall not affect any of QI’s reporting, tax filing,
withholding, depositing, or payment responsibilities arising in the calendar years and
portion of the calendar year in which termination is requested and for which this
Agreement was in effect. The IRS shall revoke QI’s QI-EIN within a reasonable time

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after the reporting, tax filing, and depositing requirements for such years are satisfied.
The termination of this Agreement is not intended to affect any other federal income tax
consequences.

Sec. 11.03. Loss of QDD Status. If QI is acting as a QDD and fails to qualify as an
eligible entity during the term of this Agreement, QI shall lose its QDD status
immediately upon QI failing to qualify as an eligible entity and as of that date can no
longer act as a QDD. QI is required to notify its withholding agent of the date that it
failed to qualify as an eligible entity and no longer was permitted to act as a QDD. QI’s
loss of QDD status shall not affect any of QI’s QDD reporting, tax filing, withholding,
depositing, or payment responsibilities for the period QI was acting as a QDD as
provided in this Agreement, including paying its QDD tax liability.

Sec. 11.04. Significant Change in Circumstances. For purposes of this Agreement,
a significant change in circumstances includes, but is not limited to--

(A) An acquisition of all, or substantially all, of QI's assets in any transaction in which QI
is not the surviving legal entity;

(B) A change in U.S. federal law or policy, or applicable foreign law or policy, that
affects the validity of any provision of this Agreement, materially affects the procedures
contained in this Agreement, or affects QI's ability to perform its obligations under this
Agreement;

(D) A material change in the know-your-customer rules and procedures set forth in any
Attachment to this Agreement;

(E) A significant change in QI's business practices that affects QI's ability to meet its
obligations under this Agreement;

(G) If QI is an FFI, QI fails to maintain its status as a participating FFI, registered
deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI;

(H) If QI is an NFFE acting as a QI on behalf of its shareholders, if it fails to meet its
requirements as a direct reporting NFFE under §1.1472-1(c)(3);

(I) If QI is acting as a sponsoring entity on behalf of a sponsored FFI or sponsored direct
reporting NFFE, if it fails to comply with the due diligence, withholding, reporting, and
compliance requirements of a sponsoring entity; or

(J) If QI is acting as a QDD, QI ceases to qualify as an eligible entity, including as a
result of a change in its business or regulatory status (see section 11.02).

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Sec. 11.05. Merger. If QI merges with or is acquired by another QI and the successor
QI assumes all the rights, debts, and obligations of the predecessor QI as it relates to
such QI’s QI agreement, the predecessor or acquired QI must notify the IRS that it
intends to terminate this Agreement prior to the end of its term by delivery of a notice of
termination and merger, in accordance with section 12.06 of this Agreement. A notice
of termination and merger shall take effect on the date specified in the notice, and QI is
required to notify its withholding agent of the date that its status as a QI is terminated
and designate the successor QI to receive payments in its capacity as a QI for any
accounts previously covered by predecessor QI’s QI Agreement.

The successor QI must ensure that all reporting and tax filing obligations are fulfilled
and any withholding is deposited, in accordance with the procedures outlined in Rev.
Proc. 99-50, 1999-2 C.B. 757, when applicable, that arose in the calendar years and
portion of the calendar year in which termination is requested and for which this
Agreement was in effect (including for Form 1042-S filed to report withholding under
chapter 4). To the extent QI is acting as a QDD, it must use the standard procedure
outlined in Rev. Proc. 99-50 and cannot use the alternative procedures. See QI’s
FATCA Requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI for the procedures, if any, for reporting
on Form 8966 in the case of a merger or acquisition. The IRS shall revoke QI’s QI-EIN
within a reasonable time after once the reporting, tax filing, and depositing requirements
for such years are satisfied. The termination of this Agreement is not intended to affect
any other federal income tax consequences

Sec. 11.06. Event of Default. For purposes of this Agreement, an event of default
occurs if QI fails to perform any material duty or obligation required under this
Agreement and the responsible officer had actual knowledge or should have known of
the facts relevant to the failure to perform any material duty. An event of default
includes, but is not limited to, the occurrence of any of the following:

(A) QI fails to implement adequate procedures, accounting systems, and internal
controls to ensure compliance with this Agreement;

(B) QI underwithholds a material amount of tax that QI is required to withhold under
chapter 3 or 4 or backup withhold under section 3406 and fails to correct the
underwithholding or to file an amended Form 1042 or 945 reporting, and paying, the
appropriate tax;

(D) Documentation described in section 5 of this Agreement is lacking, incorrect, or
unreliable for a significant number of direct account holders;

(E) QI files Forms 945, 1042, 1042-S, 1099, or 8966 that are materially incorrect or

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fraudulent;

(F) If QI is an FFI, QI fails to materially comply with its FATCA requirements as a
participating FFI, registered deemed-compliant FFI, or registered deemed-compliant
Model 1 IGA FFI;

(G) If QI is an NFFE acting as a QI on behalf of its shareholders, QI fails to materially
comply with its requirements as a direct reporting NFFE under §1.1472-1(c)(3); or if QI
is a sponsoring entity, QI fails to materially comply with the due diligence, withholding,
reporting, and compliance requirements of a sponsoring entity;

(H) QI fails to materially comply with the requirements of a nonqualified intermediary
under chapters 3 and 61, and section 3406 with respect to any account for which QI
does not act as a QI.

(I) QI fails to perform a periodic review when required or document the findings of such
review in a written report;

(J) QI fails to cooperate with the IRS on its compliance review described in section
10.08 of this Agreement;

(K) QI fails to inform the IRS of any change in the know-your-customer rules described
in any Attachment to this Agreement within 90 days of the change becoming effective;

(L) QI fails to inform the IRS within 90 days of any significant change in its business
practices to the extent that change affects QI's obligations under this Agreement;

(M) QI fails to inform the IRS of any PAI of QI, as described in section 4 of this
Agreement;

(N) QI fails to cure a material failure identified in the qualified certification described in
section 10.03 of this Agreement or identified by the IRS;

(O) QI makes any fraudulent statement or a misrepresentation of material fact with
regard to this Agreement to the IRS, a withholding agent, or QI's reviewer;

(P) The IRS determines that QI's reviewer is not sufficiently independent, as described
in this Agreement, to adequately perform its review function, and QI fails to arrange for
a periodic review conducted by a reviewer approved by the IRS;

(Q) An intermediary with which QI has a PAI agreement is in default with that
agreement and QI fails to terminate that agreement within the time period specified in
section 4.04 of this Agreement;

(R) A partnership or trust to which QI applies the agency option is in default with that

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agreement and QI fails to terminate that agreement within the time period specified in
section 4.06 of this Agreement; and

(S) If QI is acting as a QDD, QI fails to timely pay a material amount of its QDD tax
liability and fails to correct the underpayment and pay the appropriate tax amount.

Sec. 11.07. Notice and Cure. Upon the occurrence of an event of default, the IRS will
deliver to QI a notice of default specifying each event of default. QI must respond to the
notice of default within 60 days (60-day response) from the date of the notice of default.
The 60-day response shall contain an offer to cure the event of default and the time
period in which to cure or shall state why QI believes that no event of default occurred.
If QI does not provide a 60-day response, the IRS will deliver a notice of termination as
provided in section 11.02 of this Agreement. If QI provides a 60-day response, the IRS
shall either accept or reject QI's statement that no default has occurred or QI's proposal
to cure the event of default. If the IRS rejects QI's contention that no default has
occurred or rejects QI's proposal to cure the event of default, the IRS may offer a
counter-proposal to cure the event of default with which QI will be required to comply
within 30 days. If QI fails to provide a 30-day response, the IRS will send a notice of
termination in accordance with section 11.02 of this Agreement to QI, which QI may
appeal within 30 days of the date of the notice by sending a written appeal to the
address specified in section 12.06 of this Agreement. If QI appeals the notice of
termination, this Agreement shall not terminate until the appeal has been decided. If an
event of default is discovered in the course of a review, the QI may cure the default,
without following the procedures of this section 11.07, if the external reviewer’s report
describes the default and the actions that QI took to cure the default and the IRS
determines that the cure procedures followed by QI were sufficient. If the IRS
determines that QI's actions to cure the default were not sufficient, the IRS shall issue a
notice of default and the procedures described in this section 11.07 shall be followed.

Sec. 11.08. Renewal. If QI (including a QI that is renewing its QDD status) is an FFI,
an NFFE acting on behalf of its shareholders, or an NFFE that is a sponsoring entity
and intends to renew this Agreement, it must submit a registration for renewal to the
IRS on the FATCA registration website in accordance with the instructions to Form 8957
or as otherwise provided in published guidance. This Agreement will be renewed only
upon the agreement of both QI and the IRS. A QI that seeks to renew its QI agreement
and also seeks to become a QDD must supplement the renewal request by providing a
statement containing all information required by Form 14345 relating to a QDD.

A QI not described in the preceding paragraph must renew its QI agreement by
submitting a request for renewal to the Foreign Intermediaries Program at the address
provided in section 12.06 of this Agreement.

SECTION 12. MISCELLANEOUS PROVISIONS

Sec. 12.01. QI's application to become a qualified intermediary, all Appendices and

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Attachments to this Agreement, and, the following are hereby incorporated into and
made an integral part of this Agreement:

(a) If QI is an FFI, its FATCA requirements as a participating FFI, registered deemed-
compliant FFI, or registered deemed-compliant Model 1 IGA FFI; or

(b) If QI is an NFFE acting as a QI on behalf of its shareholders, its requirements as a
direct reporting NFFE under §1.1472-1(c)(3).

This Agreement, QI's application, and the Appendices and Attachments to this
Agreement constitute the complete agreement between the parties.

Sec. 12.02. This Agreement may be amended by the IRS if the IRS determines that
such amendment is needed for the sound administration of the internal revenue laws or
internal revenue regulations. This Agreement will only be modified through published
guidance issued by the IRS and U.S. Treasury Department. Any such modification
imposing additional requirements will in no event become effective until the later of 90
days after the IRS provides notice of such modification or the beginning of the next
calendar year following the publication of such guidance.

Sec. 12.03. Any waiver of a provision of this Agreement is a waiver solely of that
provision. The waiver does not obligate the IRS to waive other provisions of this
Agreement or the same provision at a later date.

Sec. 12.04. This Agreement shall be governed by the laws of the United States. Any
legal action brought under this Agreement shall be brought only in a United States court
with jurisdiction to hear and resolve matters under the internal revenue laws of the
United States. For this purpose, QI agrees to submit to the jurisdiction of such United
States court.

Sec. 12.05. QI's rights and responsibilities under this Agreement cannot be assigned to
another person.

Sec. 12.06. Except as otherwise provided in the instructions to Form 8957, notices
provided under this Agreement shall be mailed registered, first class airmail. All notices
sent to the IRS must include the QI's name, QI-EIN, GIIN (if applicable), and the name
of its responsible officer. Such notices shall be directed as follows:

To the IRS:
Internal Revenue Service
Foreign Payments Practice
Foreign Intermediaries Program
290 Broadway, 12th Floor NW
New York, New York 10007-1867

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To the QI:
The QI’s responsible officer. Such notices shall be sent to the address indicated in the
QI’s registration or application (as may be amended).

Sec. 12.07. QI, acting in its capacity as a qualified intermediary or in any other
capacity, does not act as an agent of the IRS, nor does it have the authority to hold itself
out as an agent of the IRS.

SECTION 5. EFFECTIVE DATE
The effective date of the QI agreement contained in section 4 of this notice (as modified
and superseded by any future published guidance) is January 1, 2017.
SECTION 6. DRAFTING INFORMATION
The principal author of this notice is Leni C. Perkins of the Office of Associate
Chief Counsel (International). For further information regarding this notice contact Ms.
Perkins at (202) 317-6942 (not a toll free call) or, with respect to QDDs, Peter Merkel or
Karen Walny at (202) 317-6938 (not a toll free call).

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APPENDIX I

General Instructions: QIs must provide the information and certifications described in
this Appendix as applicable to their QI status and activities. The following Parts must be
completed by the specified QIs:

Part I: All QIs.
Part II: All QIs.
Part III: QIs eligible pursuant to section 10.07(A) and (B) of the QI Agreement to
apply for a waiver of the periodic review requirement (as described in
section 10.07 of the QI Agreement) and who wish to apply for such a
waiver. Under section 10.071(A) and (B) of the QI Agreement, the
following QIs are not eligible for a waiver: (a) QIs that are NFFEs, (b) QIs
that are acting as QDDs, and (c) QIs that are part of a consolidated
compliance program.
Part IV.A: All QIs that have not applied for or have not been approved for a waiver.
Part IV.B-F: All QIs, excluding QIs that are only acting as QDDs and have no other QI
activities, that have not applied for or have not been approved for a
waiver.
Part V: All QIs that are acting as QDDs.
Part VI: All QIs that assume primary withholding responsibility for payments of
substitute interest.

A Compliance QI may complete Parts I and II for the QI members of its consolidated
compliance group. However, the factual information provided in Parts IV through VI
must be completed separately for each QI member in the consolidated compliance
group.

PART I. GENERAL INFORMATION

A. Did QI assume primary chapters 3 and 4 withholding responsibility for any calendar
year covered by the certification period? Y/N

B. Did QI assume primary Form 1099 reporting and backup withholding responsibility
for any calendar year covered by the certification period? Y/N

C. Is QI the Compliance QI for a consolidated compliance program? Y/N

1. If yes, provide the names and QI-EINs of the members of the consolidated
compliance group.

D. PAIs and partnerships and trusts to which QI applied the joint account or agency
option during any time within the certification period:

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1. The number of PAIs with whom QI has a PAI Agreement (if none enter 0).

a. Provide the names and addresses of those PAIs.

b. Each PAI has provided QI with a certification that it has maintained status
as a certified deemed-compliant FFI (other than a registered deemed-
compliant Model 1 IGA FFI) for the certification period, as required under
section 4.01 of the QI Agreement. Y/N

c. Each PAI has provided QI with either (1) its information for inclusion in
QI’s periodic review (as described in section 4.01(F) of the QI Agreement)
or (2) a periodic certification as described under section 10.03 of the QI
Agreement and a periodic review report as described under section 10.06
of the QI Agreement for the certification period. Y/N

2. The number of partnerships or trusts to which QI applies the agency option
(if none enter 0).

a. Provide the names and addresses of those partnerships or trusts.

b. Each partnership or trust to which QI applies the agency option has
provided QI with a certification that it has maintained status as a certified
deemed-compliant FFI (other than a registered deemed-compliant Model
1 IGA FFI), an owner-documented FFI with respect to QI, an NFFE, or an
exempt beneficial owner, or that it is covered as an account that is
excluded from the definition of financial account under Annex II of an
applicable IGA or under Treas. Reg. § 1.1471-5(a), as required under
section 4.06(A)(2) of the QI Agreement. Y/N

c. Each partnership or trust to which QI applies the agency option pursuant
to section 4.06 of the QI Agreement has provided QI with either (1) its
information for inclusion in QI’s periodic review (as described in section
4.06(A)(5) of the QI Agreement) or (2) a periodic certification required
under section 10.03 of the QI Agreement and a periodic review report as
required under section 10.06 of the QI Agreement for the certification
period. Y/N

3. The number of partnerships or trusts to which QI applies the joint account
option (if none enter 0).

a. Provide the names and addresses of those partnerships or trusts.

b. Each partnership or trust to which QI applies the joint account option has
provided QI with a certification that it has maintained status as a certified
deemed-compliant FFI (other than a registered deemed-compliant Model

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1 IGA FFI), an owner-documented FFI with respect to QI, an exempt
beneficial owner, or an NFFE or that it is covered as an account that is
excluded from the definition of financial account under Annex II of an
applicable IGA or under Treas. Reg. § 1.1471-5(a), as required under
section 4.05(A)(1) of the QI Agreement. Y/N

PART II: CERTIFICATION OF INTERNAL CONTROLS AND GENERAL
INFORMATION —To be Completed by All QIs. Complete Either A (Certification of
Effective Internal Controls) or B (Qualified Certification).

A. Certification of Effective Internal Controls
If the responsible officer has identified: (1) an event of default or (2) a material failure
that QI has not corrected as of the date of this certification (or such an event of default
or material failure has otherwise been identified), QI cannot make the certification of
effective internal controls under this Part A and must make the qualified certification
under Part B, below.

The responsible officer certifies to the following, check each statement to confirm:

1. QI has established a compliance program that meets the requirements described
in section 10.02(A) or 10.02(B) (if applicable) of the QI Agreement that is in effect
as of the date of the certification and during the certification period.

2. Based on the information known (or information that reasonably should have
been known) to the responsible officer, including the findings of any procedure,
process, or review undertaken in preparation for the responsible officer’s
certification of internal controls, QI maintains effective internal controls over its
documentation, withholding, and reporting obligations under the QI Agreement
and according to its applicable FATCA requirements, with respect to accounts for
which it acts as a qualified intermediary, and, if QI is acting as a QDD, it
maintains effective internal controls over its computation and tax obligations
under the QI Agreement and the regulations under section 871(m).

3. Based on the information known (or information that reasonably should have
been known) to the responsible officer, including the findings of any procedure,
process, or review undertaken in preparation for the responsible officer’s
certification of internal controls, there are no material failures, as defined in
section 10.03(D) of the QI Agreement, or, if there are any material failures, they
have been corrected as of the date of this certification, and such failures are
identified as part of this certification as well as the actions taken to remediate
them and to prevent their reoccurrence by the date of this certification. See Part
II.D.3.A.

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4. With respect to any failure to withhold, deposit, or report to the extent required
under the QI Agreement, or, with respect to QI that is acting as a QDD, any
failure to pay its QDD tax liability , QI has corrected such failure by paying any
taxes due (including interest and penalties) and filing the appropriate return (or
amended return).

5. All PAIs of QI and partnerships and trusts to which QI applies the agency option
have either (a) provided (or will provide, to the extent QI does not obtain a waiver
under section 10.07 of the QI Agreement) documentation and other necessary
information for inclusion in the QI’s periodic review or (b) provided the
responsible officer of QI with a certification of effective internal controls meeting
the requirements of section 10.03(A) of the QI Agreement and have represented
to QI that there are no material failures, as defined in section 10.03(D) of the QI
Agreement, or, if there are such failures, they have been corrected as of the time
of this certification, and the PAIs, partnerships, or trusts have disclosed any such
failures to QI together with the actions taken by the PAI, partnership, or trust to
remediate such failures.

6. QI’s policies, procedures, and processes are applied consistently to all branches
covered by the QI Agreement (except as otherwise required by a jurisdiction’s
AML/KYC procedures, as applicable).

7. If QI is acting as a QDD, it has acted as a QDD for all payments with respect to
potential section 871(m) transactions and underlying securities for which it is
required to act as a QDD and no other transactions or underlying securities.

8. If QI is acting as a QI and has assumed primary withholding responsibility with
respect to payments of substitute interest (as described in section 3.03(A) of the
QI Agreement), QI has assumed primary withholding responsibility for all such
payments covered by the QI Agreement.

9. A periodic review was conducted for the certification period in accordance with
section 10.04 of the QI Agreement, and the results of such review are reported to
the extent required in sections 10.05 and 10.06 of the QI Agreement.

B. Qualified Certification

If the responsible officer has identified an event of default or a material failure that QI
has not corrected as of the date of this certification, check the applicable statements to
confirm:

1. The responsible officer (or designee) has identified an event of default, as
defined in section 11.06 of the QI Agreement, or has determined that, as of the
date of the certification, there are one or more material failures as defined in
section 10.03(D) of the QI Agreement with respect to QI’s compliance, its PAI’s

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compliance, or the compliance of a partnership or trust to which QI applies the
agency option and that appropriate actions will be taken to prevent such failures
from reoccurring.

2. With respect to any failure to withhold, deposit, or report to the extent required
under the QI Agreement, or with respect to QI that is acting as a QDD, a failure
to pay its QDD tax liability, QI will correct such failure by paying any taxes due
(including interest and penalties) and filing the appropriate return (or amended
return).

3. The responsible officer (or an officer of the PAI or partnership or trust to which
QI applies the agency option if the PAI or partnership or trust performs its own
periodic review) will respond to any notice of default (if applicable) or will provide
(either directly or through QI) to the IRS, to the extent requested, a description of
each material failure and a written plan to correct each such failure

C. Amended Form 1042

1. QI filed an amended Form 1042 to report additional tax liability based on the
results of the periodic review or the findings of any other procedure, process, or
review undertaken by the responsible officer in preparation for his or her
certification of internal controls. Y/N

a. If Yes, QI used a projection method in determining the amount of the
additional tax liability. Y/N
Note: If QI is acting as a QDD, it may not use a projection method in determining the
amount of any additional QDD tax liability.

i. If Yes, QI used the safe harbor projection method under Appendix II
to the QI Agreement. Y/N

ii. If No, describe the projection method used.

D. Material Failures or Event of Default

Check the applicable statements to confirm. If QI is a compliance QI and identifies a
material failure or event of default, it should also indicate which QI in the consolidated
compliance group is associated with the material failure or event of default.

1. The responsible officer has determined that as of the date of the review, there
are no material failures with respect to QI’s compliance with the QI Agreement.

2. The responsible officer has determined that as of the date of the review, there
are one or more material failures with respect to QI’s compliance with the QI

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Agreement and that appropriate actions have been or will be taken to prevent
such failures from reoccurring.

a. The following material failures were identified:

i. QI’s establishment of, for financial statement purposes, a tax
reserve or provision for a potential future tax liability related to QI’s
failure to comply with the QI Agreement, including its FATCA
requirements as a participating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model 1 IGA FFI, or, in the
case of direct reporting NFFE, its requirements under Treas. Reg. §
1.1472-1(c)(3), and with respect to QI that is acting as a QDD,
failure to satisfy its QDD tax liability and its obligations pursuant to
section 871(m) and the regulations under that section.

ii. QI’s failure to establish written policies, procedures, or systems
sufficient for the relevant personnel of QI to take actions consistent
with QI’s obligations under the QI Agreement, including its FATCA
requirements as a participating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model 1 IGA FFI, or, in the
case of a direct reporting NFFE, its requirements under Treas. Reg.
§ 1.1472-1(c)(3), or if QI is acting as a QDD, its obligations as a
QDD under the QI Agreement and pursuant to section 871(m) and
the regulations under that section.

iii. A criminal or civil penalty or sanction imposed on QI (or any branch
or office thereof) by a regulator or other governmental authority or
agency with oversight over QI’s compliance with AML/KYC
procedures to which QI (or any branch or office thereof) is subject
and that is imposed due to QI’s failure to properly identify account
holders under the requirements of those procedures.

iv. A finding (including a finding noted in the periodic review report
described in section 10.06 of the QI Agreement) that, for one or
more years covered by the QI Agreement, QI failed to:

1. Withhold an amount that QI was required to withhold under
chapter 3 or 4 or under section 3406 as required under
section 3 of the QI Agreement or, if QI is acting as a QDD,
failing to timely pay its QDD tax liability;

2. Provide information sufficient for another withholding agent
to perform withholding and reporting to the extent required
when QI does not assume primary chapters 3 and 4

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withholding responsibility or primary Form 1099 reporting
and backup withholding responsibility;

3. Provide allocation information as described in section
6.03(D) of the QI Agreement (regarding U.S. non-exempt
recipient account holders) by January 15, as required by that
section when QI applies the alternative withholding rate pool
procedures;

4. Make deposits in the time and manner required by section
3.08 of the QI Agreement or make adequate deposits to
satisfy its withholding obligations or, if QI is acting as a QDD,
satisfy its QDD tax liability, taking into account the
procedures under section 9 of the QI Agreement

5. Report or report accurately on Forms 1099 as required
under section 8.06 of the QI Agreement or provide
information to the extent QI does not assume primary Form
1099 reporting and backup withholding responsibilities;

6. Report or report accurately on Forms 1042 and 1042-S
under sections 7 and 8 of the QI Agreement or, if QI is acting
as a QDD, obtain any necessary waiver from reporting or
maintain the name, address, and TIN of a significant number
of U.S. non-exempt recipients to whom the QDD made a
payment that otherwise would be a qualifying dividend
equivalent offsetting payment but for the limitation in section
2.70(B) of the QI Agreement ; or

7. Report or report accurately on Form 8966 under sections
8.04 and 8.05 of the QI Agreement.

v. Other (include a detailed explanation).

3. The material failure identified in the review has been corrected by the time of this
certification. Y/N/NA

a. If yes, describe the steps taken to correct the material failure.

b. If no, describe the proposed steps to be taken to correct the material
failure and the time frame for completing such steps.

4. Did any PAI of QI inform QI that it has had a material failure with respect to its
agreement with QI? Y/N/NA

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a. If yes, provide name of PAI and, based on the information provided by
PAI, describe the steps taken to correct the material failure or the
proposed steps to be taken to correct the material failure and the
timeframe for completing such steps.

5. Did any partnerships or trusts to which QI applies the agency and/or joint account
option inform QI that it has had a material failure with respect to its obligations as
described in the QI Agreement? Y/N/NA

a. If yes, provide name of the partnership or trust and, based on the
information provided by the partnership or trust, describe the steps taken
to correct the material failure or the proposed steps to be taken to correct
the material failure and the timeframe for completing such steps.

6. An event of default as defined in section 11.06 of the QI Agreement has been
identified. Y/N

a. If yes, identify the event of default:

i. QI failed to implement adequate procedures, accounting systems,
and internal controls to ensure compliance with the QI Agreement;

ii. QI underwithheld a material amount of tax that QI was required to
withhold under chapter 3 or 4 or backup withhold under section
3406 and failed to correct the underwithholding or to file an
amended Form 1042 or 945 reporting, and paying, the appropriate
tax;

iii. QI made excessive refund claims;

iv. Documentation described in section 5 of the QI Agreement was
lacking, incorrect, or unreliable for a significant number of direct
account holders;

v. QI filed Forms 945, 1042, 1042-S, 1099, or 8966 that are materially
incorrect or fraudulent;

vi. If QI is an FFI, QI failed to materially comply with its FATCA
requirements as a participating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model 1 IGA FFI;

vii. If QI is an NFFE acting as a QI on behalf of its shareholders, QI
failed to materially comply with its requirements as a direct
reporting NFFE under §1.1472-1(c)(3); or if QI is a sponsoring
entity, QI failed to materially comply with the due diligence,

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withholding, reporting, and compliance requirements of a
sponsoring entity;

viii. QI failed to materially comply with the requirements of a
nonqualified intermediary under chapters 3 and 61, and section
3406 with respect to any account for which QI does not act as a QI;

ix. QI failed to perform a periodic review when required or document
the findings of such review in a written report;

x. QI failed to cooperate with the IRS on its compliance review
described in section 10.08 of the QI Agreement;

xi. QI failed to inform the IRS of any change in the know-your-
customer rules described in any Attachment to the QI Agreement
within 90 days of the change becoming effective;

xii. QI failed to inform the IRS within 90 days of any significant change
in its business practices to the extent that change affects QI’s
obligations under the QI Agreement;

xiii. QI failed to inform the IRS of any PAI of QI, as described in section
4 of the QI Agreement;

xiv. QI failed to cure a material failure identified in the qualified
certification described in section 10.03 of the QI Agreement or
identified by the IRS;

xv. QI made any fraudulent statement or a misrepresentation of
material fact with regard to the QI Agreement to the IRS, a
withholding agent, or QI’s reviewer;

xvi. The IRS determined that QI’s reviewer is not sufficiently
independent, as described in the QI Agreement, to adequately
perform its review function, and QI failed to arrange for a periodic
review conducted by a reviewer approved by the IRS;

xvii. An intermediary with which QI has a PAI agreement was in default
with that agreement and QI failed to terminate that agreement
within the time period specified in section 4.04 of the QI Agreement;

xviii. A partnership or trust to which QI applied the agency option was in
default with that agreement and QI failed to terminate that
agreement within the time period specified in section 4.06 of the QI
Agreement;

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xix. If QI is acting as a QDD, QI failed to timely pay a material amount
of its QDD tax liability and failed to correct the underpayment and
pay the appropriate tax amount; or

xx. Other (please describe).

E. Significant Change in Circumstances

Check the applicable statements to confirm.

1. For the most recent certification period, the periodic review has not identified any
significant change in circumstances, as described in section 11.04(A), (D), (E), or
(J) of the QI Agreement.

2. For the most recent certification period, the periodic review has identified the
following significant change(s) in circumstances:

a. An acquisition of all, or substantially all, of QI’s assets in any transaction in
which QI is not the surviving legal entity.

b. A material change in the know-your-customer rules and procedures set
forth in any attachment to the QI Agreement.

c. A significant change in QI’s business practices that affects QI’s ability to
meet its obligations under the QI Agreement.

d. If QI is acting as a QDD, QI ceases to qualify as an eligible entity,
including as a result of a change in its business or regulatory status.

e. Other.

3. Describe any significant changes in circumstances identified in Question 2 (and,
if 2.d is selected, include the date on which the QI ceased to qualify as an eligible
entity).

F. Chapter 4 Status

Complete the applicable section and check the applicable statement to confirm.

Participating FFIs

1. For the most recent certification period under the QI Agreement, QI (or a branch
of QI) has obtained status as a participating FFI and made the following
certification of compliance with respect to its FFI agreement for the most recent

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certification period under the FFI agreement (check one). Note: You may only
check N/A if, during the certification period, your chapter 4 status changed from
one of the other applicable chapter 4 statuses to participating FFI.

a. Certification of Effective Internal Controls

b. Qualified Certification

c. N/A

Registered Deemed-Compliant FFIs

1. For the most recent certification period under the QI Agreement, QI certified as
required under Treas. Reg. § 1.1471-5(f)(1)(ii)(B) or Annex II of an applicable
Model 2 IGA that it has satisfied the requirements for the deemed-compliant FFI
status claimed.

Registered Deemed-Compliant Model 1 IGA FFIs

1. For the most recent certification period under the QI Agreement, QI (or a branch
of QI) has been resident in or organized under the laws of a jurisdiction that has
in place a Model 1 IGA with the United States (or in the case of a branch of QI,
the branch operates in the jurisdiction) and has met the requirements under the
IGA to be treated as a deemed-compliant FFI.

Direct Reporting NFFEs

1. For the most recent certification period under the QI Agreement, QI has been a
direct reporting NFFE and has met the requirements of Treas. Reg. § 1.1472-
1(c)(3).

PART III. WAIVER OF PERIODIC REVIEW

For Parts B.1 through 6, while the curing of inadequate documentation is
permissible, the information reported in this section of the Appendix must be
based on the initial review and not the results obtained after curing.

Note: In order to be eligible for a waiver, QI must be able to confirm all of the
eligibility requirements in Part A are met.

For purposes of this Part, “account” means, unless otherwise specified, any account for
which QI acts as a QI.

A. Eligibility for Waiver (check each statement to confirm)

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1. QI is an FFI that is not also acting as a QDD.

2. QI is not part of a consolidated compliance program.

3. For each calendar year covered by the certification period, the reportable
amounts received by QI do not exceed $5 million.

4. QI timely filed its Forms 1042, 1042-S, 945, 1099, and 8966 (as required for
chapter 4 purposes or the reporting required under an applicable IGA), as
applicable, for all calendar years covered by the certification period.

5. QI made all periodic certifications and reviews required by sections 10.02 and
10.03 of the QI Agreement as well as all certifications required pursuant to QI’s
FATCA requirements as a participating FFI or registered deemed-compliant FFI.

6. QI made the certification of internal controls in Part II.A.

B. Information required (provided for the most recent calendar year within the
certification period)

1. The total number of accounts

a. Total number of direct account holders

i. Foreign persons

ii. U.S. exempt recipients

iii. U.S. non-exempt recipients

iv. Intermediaries and flow-through entities

b. Total number of indirect account holders

i. Foreign persons

ii. U.S. exempt recipients

iii. U.S. non-exempt recipients

iv. Intermediaries and flow-through entities

2. The total number of account holders that received reportable payments.

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3. The total number of account holders that received reportable amounts.

4. The total number of such accounts that have valid documentation.

5. The total number of accounts that have no documentation or invalid
documentation.

6. The total number of Forms 1042-S filed by QI.

7. The aggregate amount of tax withheld under chapter 3 and chapter 4 (by QI or
QI’s withholding agent(s)).

8. The total number of Forms 1099 filed by QI.

9. The aggregate amount of backup withholding under section 3406 by QI or QI’s
payor(s).

PART IV. PERIODIC REVIEW: QI FACTUAL INFORMATION—To be Completed by
All QIs that have not Applied for or Obtained a Waiver. If QI acts solely as a QDD
and has no other QI activities, QI is not required to complete Part IV.B through F.

A. General Information

1. Did QI use an external reviewer to conduct any portion of its periodic review? Y/N

a. If yes, provide name(s) of reviewer(s).

2. Did QI use an internal reviewer to conduct any portion of its periodic review? Y/N

a. If yes, provide a brief description of the internal reviewer, such as their
department and other roles and responsibilities with respect to the QI’s QI
activities.

3. Calendar year reviewed for periodic review.

Caution: On the due date for reporting the factual information relating to the periodic
review (provided in section 10.04 of the QI Agreement), there must be 15 or more
months available on the statutory period for assessment for taxes reportable on Form
1042 of the calendar year for which the review was conducted or the QI must submit,
upon request by the IRS, a Form 872, Consent to Extend the Time to Assess Tax, that
will satisfy the 15-month requirement. The Form 872 must be submitted to the IRS at
the address provided in section 12.06 of the QI Agreement.

B. General Information on Accounts and Review of Accounts

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For Parts B through F, while the curing of inadequate documentation is
permissible, unless otherwise indicated, the information reported shall be based
on the initial review and not the results obtained after curing. For purposes of
this Part, “account” means, unless otherwise specified, any account for which QI
acts as a QI. However, do not include accounts for which QI is acting as a QDD
or accounts receiving substitute interest payments for which QI has assumed
primary withholding responsibility.

1. Did QI assume primary chapters 3 and 4 withholding responsibility for any
accounts for the calendar year provided in Question 3 in Part A, above? Y/N

2. Did QI assume primary Form 1099 reporting and backup withholding
responsibility for any accounts for the calendar year provided in Question 3 in
Part A, above? Y/N

3. Total accounts reviewed for periodic review.

4. Did QI use a statistical sampling method in conducting the review of its
accounts? Y/N/NA

a. If yes, was it the safe harbor method under Appendix II to the QI
Agreement?

b. If no, describe the method used.

5. Total accounts reviewed that received reportable amounts.

6. Total accounts reviewed that received withholdable payments that are not
reportable amounts.

C. Documentation

1. Total accounts reviewed held by direct account holders.

2. Total accounts reviewed held by indirect account holders.

3. Total accounts reviewed with valid documentation.

4. Total accounts reviewed with invalid documentation or no documentation.

5. Total accounts reviewed with invalid documentation or no documentation for
which valid documentation or additional valid documentation was obtained after
initial review.

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6. Total accounts reviewed for which treaty benefits were claimed.

7. Total accounts reviewed for which treaty benefits were claimed where QI did not
obtain sufficient documentation to establish the payee’s entitlement to treaty
benefits (including, where applicable, the treaty statement and limitation on
benefits information required by section 5.03(B) of the QI Agreement).

8. Total accounts reviewed held by U.S. non-exempt recipient account holders.

9. Total accounts held by U.S. non-exempt recipient account holders reviewed for
which QI has obtained a valid Form W-9.

10. If QI has not assumed primary Form 1099 reporting and backup withholding
responsibility, total accounts held by U.S. non-exempt recipient account holders
reviewed for which QI has transmitted Forms W-9 to a withholding agent.

11. Total accounts reviewed assigned to chapter 3 or chapter 4 withholding rate
pools.

12. Total accounts reviewed assigned to chapter 3 or chapter 4 withholding rate
pools where QI did not correctly report withholding rate pool information to a
withholding agent.

13. Total accounts reviewed that are U.S. accounts (or U.S. reportable accounts
under an applicable IGA) (if applicable) or, in the case of an NFFE acting on
behalf of its shareholders, held by substantial U.S. owners.

14. Total accounts reviewed that are U.S. accounts (or U.S. reportable accounts
under an applicable IGA) (if applicable) for which QI has obtained a valid Form
W-9 or, if applicable, self-certification.

15. If QI is an NFFE acting as a qualified intermediary on behalf of persons other that
its shareholders, total accounts reviewed held by passive NFFEs with substantial
U.S. owners.

D. Withholding

1. The aggregate amount reported as withheld under chapter 3 by QI on Forms
1042-S.

2. Number of accounts for which amounts were withheld under chapter 3.

3. The aggregate amount reported as withheld under chapter 4 by QI on Forms
1042-S.

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4. Number of accounts for which amounts were withheld under chapter 4.

5. The aggregate amount reported as withheld by QI on Forms 1099.

6. Number of accounts for which amounts were backup withheld under section
3406.

7. Additional withholding required under chapter 4 based on results of periodic
review.

8. Additional withholding required under chapter 3 based on results of periodic
review.

9. Additional backup withholding required under section 3406 based on results of
periodic review.

10. The aggregate amount of deposits made in accordance with section 3.08 of the
QI Agreement.

11. Number of partnerships or trusts to which the joint account treatment of section
4.05 of the QI Agreement was applied (if applicable).

a. Total accounts to which joint account treatment applied for which
appropriate documentation was obtained and the appropriate rate of
withholding was applied.

b. Total accounts to which joint account treatment applied for which
appropriate documentation was obtained and the appropriate rate of
withholding was not applied.

c. Total accounts to which joint account treatment applied for which
appropriate documentation was not obtained and the appropriate rate of
withholding was not applied.

d. Aggregate amount of underwithholding resulting from the appropriate rate
of withholding not being applied with respect to an account to which the
joint account treatment applied.

E. Reconciliation of Reporting on Payments of Reportable Amounts

1. The aggregate amount reported paid to QI on all Forms 1042-S issued to QI.

2. The aggregate amount reported paid to QI on the Forms 1099 issued to QI
(unknown recipient).

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3. Total of Questions 1 and 2.

4. The aggregate amount reported paid by QI on Forms 1042-S to QI’s chapter 4
reporting pools (other than the U.S. payee pool) (including a chapter 4 reporting
pool of a PAI or a partnership or trust to which QI applies the agency option).

5. The aggregate amount reported paid by QI on Forms 1042-S to QI’s chapter 4
reporting pool- U.S. payee pool.

6. The aggregate amount reported paid by QI on Forms 1042-S to QI’s chapter 3
reporting pools (including chapter 3 reporting pools of a PAI or partnership or
trust to which QI applies the joint account or agency option).

7. The aggregate amount reported paid by QI on Forms 1042-S to other QIs
(excluding QIs that are acting as QDDs) and WPs and WTs as a class.

8. The aggregate amount reported paid by QI on Forms 1042-S to QIs that are
acting as QDDs.

9. The aggregate amount reported paid by QI on Forms 1042-S to participating
FFIs, registered deemed-compliant FFIs, and registered deemed-compliant
Model 1 IGA FFIs that are intermediaries or flow-through entities as a class and
with respect to their chapter 4 reporting pools.

10. The aggregate amount reported paid by QI on Forms 1042-S to indirect account
holders (not included in Question 9 above and including an account holder of an
intermediary or flow through entity reported by QI as made to an unknown
recipient on Form 1042-S).

11. The aggregate amount paid by QI to U.S. non-exempt recipients as a class not
includable in a chapter 4 withholding rate pool of QI.

12. The aggregate amount paid by QI to U.S. exempt recipients as a class not
includable in a chapter 4 withholding rate pool of QI.

13. Total of questions 4 through 12

14. The amount of any unreconciled variances (if Question 3 minus Question 13 is
other than 0)

15. The aggregate amount paid by QI to its direct account holders (including account
holders of any PAI or partner, beneficiary, or owner of a partnership or trust to
which QI applies the joint account or agency option) that requested individual
Form(s) 1042-S.

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F. Reconciliation of Withholding on Reportable Amounts

1. The aggregate amount reported as withheld by another withholding agent on
Forms 1042-S issued to QI.

2. The aggregate amount reported as backup withheld by another withholding agent
on Forms 1099 issued to QI (unknown recipient).

3. The aggregate amount reported by QI as amounts it withheld on Forms 1042-S.

4. The aggregate amount reported by QI as amounts it backup withheld on Forms
1099.

5. If QI did not assume primary withholding responsibility and amounts are entered
for questions 3 or 4, explain any underwithholding that occurred by the
withholding agent.

6. If QI assumed primary withholding responsibility and amounts are entered for
questions 1 or 2, explain the amount withheld by others.

7. The aggregate amount of any collective claims for refund or credit made by QI.

Part V. Qualified Derivatives Dealers

Complete only if QI is acting as a QDD and only for accounts for which QI is acting in its
QDD capacity. See section 2.01 of the QI Agreement for the definition of “account” with
respect to QI acting as a QDD. If QI is acting as a QDD and is a foreign branch of a
U.S. financial institution, it is not required to complete questions in this Part relating to
the QDD tax liability (Parts A.3, A.5, and D).

A. General Information-Check to Confirm

1. QI has established procedures to ensure that it is acting as a QDD for all
payments received by QI with respect to potential section 871(m) transactions
and underlying securities when acting as a principal and for all payments made
by QI with respect to potential section 871(m) transactions when acting as a
principal, except payments specifically excluded from QDD activities in the QI
Agreement, and that it is not acting as a QDD for any other payments.

2. QI has established procedures to determine whether a payment is a dividend
equivalent payment and the amount of the dividend equivalent, including taking
into account information received pursuant to Treas. Reg. § 1.871-15(p), where
appropriate.

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3. QI has established procedures to determine its QDD tax liability, including
whether a transaction is a dealer or non-dealer transaction.

4. QI has properly filed Form 1042 (including all information required to be reported
by a QDD).

5. QI has satisfied its QDD tax liability.

6. Did QI use a statistical sampling method in conducting the review of its accounts
for which QI acted as a QDD? Y/N/NA

a. If yes, was it the safe harbor method under Appendix II to the QI
Agreement?

b. If no, describe the method used.

7. Total number of accounts for which QI acted as a QDD.

8. Total number of accounts for which QI acted as a QDD reviewed as part of the
periodic review.

B. Documentation

1. Total accounts reviewed with valid documentation.

2. Total accounts reviewed with invalid documentation or no documentation.

3. Total accounts reviewed with invalid documentation or no documentation for
which valid documentation or additional valid documentation was obtained after
the initial review.

4. Total accounts reviewed for which treaty benefits were claimed.

5. Total accounts reviewed for which treaty benefits were claimed where QI did not
obtain sufficient documentation to establish the payee’s entitlement to treaty
benefits (including, where applicable, the treaty statement and limitation on
benefits information required by section 5.03(B) of the QI Agreement).

6. Total accounts reviewed held by U.S. non-exempt recipient account holders.

7. Total accounts held by U.S. non-exempt recipient account holders reviewed for
which QI has obtained a valid Form W-9.

C. Withholding

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1. The aggregate amount reported as withheld under chapter 3 by QI on Forms
1042-S for payments with respect to potential section 871(m) transactions it
made when acting as a QDD.

2. Number of accounts for which amounts were withheld under chapter 3 for
payments with respect to potential section 871(m) transactions it made when
acting as a QDD.

3. The aggregate amount reported as withheld under chapter 4 by QI on Forms
1042-S for payments with respect to potential section 871(m) transactions it
made when acting as a QDD.

4. Number of accounts for which amounts were withheld under chapter 4 for
payments with respect to potential section 871(m) transactions it made when
acting as a QDD.

5. Aggregate amount reported as withheld on Forms 1099 for payments with
respect to potential section 871(m) transactions made to U.S. persons.

6. Number of accounts for which amounts were backup withheld under section
3406 for payments with respect to potential section 871(m) transaction made to
U.S. persons.

7. Additional withholding required under chapter 4 based on results of periodic
review.

8. Additional withholding required under chapter 3 based on results of periodic
review.

9. Additional backup withholding required based on results of periodic review.

10. The aggregate amount of deposits made in accordance with section 3.08 of the
QI Agreement with respect to payments made when acting as a QDD.

D. Reconciliation of QDD Tax Liability

1. Total amount of dividend and dividend equivalent payments received in a dealer
capacity.

2. Total amount of dividend equivalent payments made by QI acting as a QDD in its
dealer capacity.

3. Total amount of qualifying dividend equivalent offsetting payments made by QI
acting as a QDD in its dealer capacity.

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4. Total amount of dividend equivalent payments or qualifying dividend equivalent
offsetting payments made or contractually obligated to be made by QI acting as a
QDD in its dealer capacity.

5. Total amount of dividend and dividend equivalent payments received by QI
acting as a QDD in its non-dealer capacity.

6. Total amount of dividend equivalent payments made by QI acting as a QDD in its
non-dealer capacity.

7. Total section 871(m) amount (difference between line 1 and the sum of lines 2-
4).

8. Total amount of payments with respect to potential 871(m) transactions and
underlying securities received as a principal.

9. Total amount of other payments received with respect to potential section 871(m)
transactions and underlying securities as a principal that are not dividend or
dividend equivalent payments received in a dealer capacity (difference between
line 8 and line 1)

E. Reporting

1. Total amount of dividend equivalent payments reported on Form 1042-S.

2. Total amount of payments that are not dividend equivalent payments reported on
Form 1042-S.

3. Total amount of payments of qualifying dividend equivalent offsetting payments
made to U.S. persons, as described in section 2.70(A)(1) of the QI Agreement,
reported in a pool on Form 1042-S.

4. Total amount of payments of qualifying dividend equivalent offsetting payments
that are effectively connected with the conduct of a trade or business in the
United States, as described in section 2.70(A)(2) of the QI Agreement, reported
in a pool on Form 1042-S.

5. Total amount of payments of amounts that otherwise would be qualifying
dividend equivalent offsetting payments but for the limitation in section 2.70(B) of
the QI Agreement.

6. Total amount of payments reported on Form 1099.

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7. Aggregate amount of any claims for credit or refund made by QI acting as a QDD
with respect to payments with respect to potential section 871(m) transactions.

Part VI. Substitute Interest

Complete only if a qualified intermediary that has assumed primary withholding
responsibility for payments of substitute interest (as described in section 3.03(A) of the
QI Agreement).

A. General Information

1. Total number of accounts receiving substitute interest payments.

2. Total number of accounts receiving substitute interest reviewed as part of the
periodic review.

3. Did QI use a statistical sampling method in conducting the review of substitute
interest transactions for which QI assume primary withholding responsibility?
Y/N/NA

a. If yes, was it the safe harbor method under Appendix II to the QI
Agreement?

b. If no, describe the method used.

B. Documentation

1. Total accounts reviewed with valid documentation.

2. Total accounts reviewed with invalid documentation or no documentation for
which documentation or additional documentation was obtained after the initial
review.

3. Total accounts reviewed for which treaty benefits were claimed.

4. Total accounts reviewed for which treaty benefits were claimed where QI did not
obtain sufficient documentation to establish the payee’s entitlement to treaty
benefits (including, where applicable, the treaty statement and limitation on
benefits information required by section 5.03(B) of the QI Agreement).

5. Total accounts reviewed held by U.S. non-exempt recipient account holders.

6. Total accounts held by U.S. non-exempt recipient account holders reviewed for
which QI has obtained a valid Form W-9.

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C. Withholding

1. The aggregate amount reported as withheld under chapter 3 by QI on Forms
1042-S with respect to substitute interest payments.

2. Number of accounts for which amounts were withheld under chapter 3 with
respect to substitute interest payments.

3. The aggregate amount reported as withheld under chapter 4 by QI on Forms
1042-S with respect to substitute interest payments.

4. Number of accounts for which amounts were withheld under chapter 4 with
respect to substitute interest payments.

5. Additional withholding required under chapter 4 based on results of periodic
review.

6. Additional withholding required under chapter 3 based on results of periodic
review.

7. Aggregate amount reported as withheld on Forms 1099 on reportable payments
(including reportable amounts) subject to backup withholding.

8. Additional backup withholding required based on results of periodic review.

9. The aggregate amount of deposits made in accordance with section 3.08 of the
QI Agreement with respect to substitute interest payments.

D. Reporting

1. Total amount of interest or substitute interest payments received for which QI
represented itself as assuming primary withholding responsibility.

2. Aggregate amount of substitute interest payments made.

3. Total amount of payments in Question 2 that were reported on Forms 1099.

4. Total amount of payments in Question 2 that were amounts subject to chapter 4
reporting reported on Form 1042-S.

5. Total amount of payments in Question 2 that were amounts subject to chapter 3
reporting reported on Form 1042-S.

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6. Aggregate amount of any claims for credit or refund made by QI with respect to
payments of substitute interest.

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APPENDIX II

Section 1. Background. As provided in section 10.05 of the QI Agreement, the reviewer
is permitted to use a sampling methodology to perform the periodic review. This
Appendix includes safe harbor procedures covering basic sample design parameters
and methodologies, including sample size, strata allocation, and projection. QI may use
another sampling technique provided it documents its parameters and methodologies
for the IRS to review, as described in section 10.05 of the QI Agreement. Sampling
should only be used whenever an examination of all accounts within a particular class of
accounts would be prohibitive in terms of time and expense. If it is reasonable to
examine all accounts in connection with a particular part of the periodic review,
sampling techniques should not be used. Except as otherwise provided herein, the
terms used in this Appendix are as defined in section 2 of the QI Agreement.
Generally, sampling should only be used if there are more than 50 accounts to review.
To the extent applicable, the reviewer must separately review accounts for which QI
acts as a qualified intermediary (excluding accounts for which QI is acting as a QDD
and accounts to which QI made substitute interest payments for which QI assumed
primary withholding responsibility) (“QI accounts”), accounts for which QI is acting as a
QDD, and accounts receiving substitute interest payments for which QI assumed
primary withholding responsibility. If PAI accounts are also included in the QI’s review
(because the PAI did not perform its own compliance review), the PAI accounts should
be included in the sample of QI accounts by adding additional strata, replicating the
strata prescribed in section 2.C of this Appendix as applicable, that contain only PAI
accounts. For purposes of the QI’s periodic review, a QI account, an account for which
QI is acting as a QDD, or an account receiving substitute interest payments for which QI
assumed primary withholding responsibility is referred to as a “sample unit” (and
collectively as the “sample”) with respect to each review. For any of the three reviews
with populations containing 50 or fewer sample units, all sample units for that population
must be reviewed.
The statistical sampling methodologies used in this Appendix are not intended to be and
cannot be used for any other tax purpose. A reviewer may request approval to modify
the safe harbor or approval of another sampling methodology in order to select more
than the three sample units or to use multistage, cluster, or other sampling
methodologies including additional stratifications. To obtain IRS approval, contact the
Financial Intermediaries Program in accordance with section 12.06 of the QI
Agreement.
Section 2. Safe Harbor Methodology.
A. Populations.
The population of the first sample must consist of QI accounts, taking into account each
of the strata described in section 2.C(a) of this Appendix. If QI acts as a QDD, the
population of the second sample must consist of accounts for which QI is acting as a

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QDD, taking into account each of the strata described in section 2.C(b) of this Appendix.
If QI assumes primary withholding responsibility for substitute interest payments, the
population of the third sample must consist of accounts receiving such substitute
interest payments, taking into account each of the strata described in section 2.C(c) of
this Appendix.
(a) Sample of QI Accounts. The reviewer selects a random sample of accounts from a
portion of the population of all QI accounts. The portion of the population will consist of
(1) all accounts held by U.S. persons (or account holders presumed to be U.S. persons)
that received a reportable payment and (2) all accounts held by non-U.S. persons (or
account holders presumed to be non-U.S. persons) that received a reportable amount.
If QI is acting as a QDD, accounts for which QI is acting as a QDD are not to be
considered in determining the population for this sample. If QI assumes primary
withholding responsibility for substitute interest payments, accounts receiving such
substitute interest payments are also not are to be considered in determining the
population for this sample.
(b) Sample of QDD Accounts. The reviewer selects a random sample of accounts from
the population consisting of accounts for which QI is acting as a QDD.
(c) Sample of Accounts Receiving Substitute Interest Payments. The reviewer selects a
random sample of accounts from the population consisting of accounts receiving
substitute interest payments for which QI assumes primary withholding responsibility.
B. Sample Sizes.
(a) The sample sizes for each of the three samples are calculated independently. If
PAI accounts have been added to the sample of QI accounts because the PAI did not
perform its own periodic review, a separate sample size calculation should also be
performed for the PAI accounts as if they were part of a separate sample. The sample
size for each of the three samples, and for any additional PAI accounts, is the lesser of
(i) the number of sample units determined using the sample formula in paragraph (c) of
this section, or (ii) 25 percent of the total number of sample units in the population.
However, in determining the sample size, the reviewer must adhere to the guidelines for
minimum stratum sample sizes in sections 2.C and 2.D of this Appendix. This may
result in a sample size greater than the maximum sample size resulting from using the
formula in paragraphs (b) and (c) of this section. The minimum sample size of any
sample shall not be less than 50.
(b) Sample Size Adjustments. The variable P "error rate" should be set equal to (1) 5
percent for the sample of QI accounts, resulting in a maximum sample size of 321; (2) 4
percent for the sample of QDD accounts, resulting in a maximum sample size of 259;
and (3) 1.5 percent for the sample of accounts receiving substitute interest payments,
resulting in a maximum sample size of 100.
(c) Sample Formula. The number of sample units to be reviewed is determined using
the sample formula is as follows:

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t
2
PQ
d
2
Sample Size =
___________________________
1

(

t
2
PQ _
1)

N d
2

where t= 1.645 (confidence coefficient at 95 percent one-sided)
P= 5 percent (error rate) for the QI account sample, 4 percent for the QDD
sample, and 1.5 percent for the substitute interest sample.
Q= 1-P
d = 2 percent (precision level)
N= total population

C. Strata.
(a) Sample of QI Accounts. The reviewer must segregate all of the QI accounts into
the following strata. If QI makes payments to a single account that result in the account
meeting the qualifications for more than one stratum, the account should be treated as
multiple accounts, with each newly redefined account consisting of the payments
received for each relevant stratum. Further substratification by dollar amounts may be
used in accordance with section 2.H of this Appendix.
(1) A stratum of accounts held by recalcitrant account holders and non-participating FFI
account holders.
(2) A stratum of accounts not included in the previously defined stratum of
nonwithholding foreign partnerships and nonwithholding foreign trusts to which the QI
applied the joint account option or the agency option.
(3) A stratum of all accounts held by direct account holders that are not U.S. non-
exempt recipients and are not included in any previously defined strata.
(4) A stratum of all accounts that are held by direct account holders that are U.S. non-
exempt recipients that are not included in any of the previously defined strata.
(5) A stratum of all accounts held by indirect account holders not included in any
previously defined strata.
(b) Sample of QDD Accounts. The reviewer must segregate all of the accounts for
which QI is acting as a QDD into the following strata:
(1) A stratum of all accounts where the QDD makes or is contractually obligated to
make a dividend equivalent payment to recalcitrant account holders and non-
participating FFIs.

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(2) A stratum of all accounts where the QDD makes or is contractually obligated to
make a dividend equivalent payment to foreign recipients that are not included in the
previously defined stratum.
(3) A stratum of all accounts where the QDD makes or is contractually obligated to
make a payment of a qualifying dividend equivalent offsetting payment that are not
included in any of the previously defined strata.
(4) A stratum of all accounts where the QDD makes reportable payments with respect to
potential section 871(m) transactions that are not dividend equivalents to foreign
recipients that are recalcitrant account holders and non-participating FFIs.
(5) A stratum of all accounts where the QDD makes reportable payments to foreign
recipients with respect to potential section 871(m) transactions that are not dividend
equivalents that are not included in any of the previously defined strata.
(6) A stratum of all accounts where the QDD makes payments to U.S. persons with
respect to potential section 871(m) transactions that are not qualifying dividend
equivalent offsetting payments and that are not included not included in any of the
previously defined strata.
(7) A stratum of all accounts not included in any of the previously defined strata.
(c) Sample of Accounts Receiving Payments of Substitute Interest. The reviewer must
segregate all of the accounts receiving payments of substitute interest for which QI has
assumed primary withholding responsibility into the following strata:
(1) A stratum of accounts held by recalcitrant account holders and non-participating FFI
account holders.
(2) A stratum of all accounts held by account holders that are not U.S. non-exempt
recipients and are not included in the previously defined stratum.
(3) A stratum of all accounts held by account holders that are U.S. non-exempt
recipients and are not included in any of the previously defined strata.
D. Allocation of Sample Size to Each Stratum.
The reviewer must allocate the number of sample units for each sample, and for any
PAI accounts added to the sample of QI accounts, independently of the other samples.
For example, the reviewer must allocate the number of sample units in the sample
determined under section 2.B of this Appendix to each stratum described in section
2.C(a) by multiplying the number of sample units in the sample, as determined under
section 2.B, by a fraction, the numerator of which is the total number of sample units in
the stratum and the denominator of which is the total number of sample units in the
population. The same allocation should also be made for each stratum described in
sections 2.C(b) and (c) of this Appendix, respectively. The minimum allocation to each
stratum is the lesser of (1) 50 sample units or (2) the total number of sample units in the

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stratum. If there are fewer than 50 sample units in any stratum, all sample units in that
stratum must be examined, and the difference between 50 and the number of sample
units in the stratum must be reallocated to the remaining strata on a pro rata basis. If
there are 50 or more sample units in the stratum, but the allocation, as determined
under the fraction above, is less than 50 sample units, the number of sample units to be
used in the sample from that stratum is 50.
E. Number Generator. The reviewer must select for review sample units from each
stratum identified in section 2.C for each of the (a) sample of QI accounts; (b) sample of
accounts for which QI is acting as a QDD; and (c) sample of accounts receiving
substitute interest payments for which QI assumes primary withholding responsibility by
using a random number generator. Random numbers should be drawn separately for
each sample including the use of separate seeds. Information regarding the random
number generator used must be included in the records required in section 3.E of this
Appendix. This information must be sufficient to allow the IRS to replicate the random
numbers. This information must include the name and version of the random number
generator, the seed numbers used or generated, specification of any options selected,
and the computer equipment on which it was run.

G. Selection of Accounts for Review. For purposes of reviewing and testing accounts in
accordance with section 10.05 of the QI Agreement, the reviewer must review accounts
from every stratum in all three applicable samples that meet the requirements for the
review, taking into account the applicable presumption rules where documentation is
missing, invalid, or cannot be relied upon (and any reclassification after applying the
presumption rules).

To the extent the number of sample units listed above from the sample (or in the
population, if the reviewer has not used statistical sampling) in any stratum is less than
20, the reviewer must also select for review (in the order selected by the random
number generator under section 2.E of this Appendix or, if the reviewer has not used
statistical sampling, in the order used by the QI for its record keeping) an additional
number of sample units drawn from that stratum that equal the difference between 20
and the number of sample units from the sample in that stratum.

H. Optional Further Stratification by Dollar Amounts. For any of the three samples, the
reviewer may further stratify by dollar amounts for that sample without submitting a
request for approval when the reviewer is otherwise selecting the sample in accordance
with this Appendix. For the QI account sample, reportable amounts for foreign
recipients and reportable payments for U.S. recipients are to be considered in the
substratification. If the reviewer chooses to substratify under this section, the reviewer
must comply with the following rules:

(a) The strata consisting of sample units that have received payments of the
highest dollar amounts during the audit year shall not consist of more than
25 accounts. All items in these strata shall be reviewed.

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(b) The remaining strata shall be randomly selected to contain approximately
equal amounts in each substratum.
(c) The minimum strata size shall not be less than 25 sample units.

I. Determining Rate of Withholding for Partnerships and Trusts for Which the QI has
Utilized Joint Account Treatment

When reviewing documentation of partners, beneficiaries, or owners to determine the
rate of withholding QI should have applied to a partnership or trust, the reviewer may
limit the review to the number of partners, beneficiaries, or owners by referring to the
table below.

Number of partners,
beneficiaries, or owners Number to be reviewed

0 - 10 all
11 - 14 10
15 - 19 13
20 - 24 16
25 - 29 18
30 - 34 20
35 - 39 21
40 - 49 22
50 - 74 24
75 - 99 26
100 - 199 27
200 - 499 29
500 - 4,999 31
> 4,999 32

Section 3. Additional Requirements Regarding the Use of Sampling

A. Reporting of Sample Plan for Samples not Utilizing the Safe Harbor.
When not utilizing the safe harbor statistical sampling plan in this Appendix, the
reviewer should provide in its periodic review report a description of the sampling
methodology used. If the reviewer used a statistical sampling plan other than the safe
harbor statistical sampling plan described in this Appendix, the reviewer should provide
the information described in Rev. Proc 2011-42 Appendix A) Sampling Plan Standards
and Appendix B) Sampling Documentation Standards for Sample Execution
Documentation, in addition to any information required by this Appendix.

B. Determination of Underwithholding. If the reviewer determines that underwithholding
has occurred with respect to the sampled accounts, QI shall report and pay, in

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accordance with the requirements of the QI Agreement, the underwithheld tax
determined under the IRS projection method described in section 3.D. The QI will also
notify the IRS Financial Intermediaries Program at the address provided in section
12.06 of the QI Agreement of any underwithholding discovered as a result of the review.
Alternatively, the QI can propose to the IRS another amount of underwithholding based
on section 3.B of this Appendix. For this purpose, QI agrees to provide the IRS with the
information (e.g., number of accounts, associated amounts, stratum locations of
adjusted items, etc.) required to project the underwithholding. If the IRS does not agree
with the amount proposed by QI, the IRS shall assess a tax under the procedures set
forth in the Code.
C. QDD Tax Liability. If the reviewer determines that QI acting as a QDD has not fully
satisfied its QDD tax liability (as described in section 3.09 of the QI Agreement),QI must
report and pay the amount owed in accordance with the requirements of the QI
Agreement. A QI acting as a QDD may not use a projection method to determine the
amount of underpayment of its QDD tax liability.
D. Projection. If the reviewer has determined that underwithholding has occurred with
respect to the sample, based on the original assessment of the reviewer without regard
to any remediation or curing after the selection of the sample units for review, then the
reviewer will determine the total amount of underwithheld tax by utilizing a projection
method, except as provided in section 3.C of this Appendix. If the reviewer is using a
method other than the safe harbor statistical sampling plan described in this Appendix,
QI shall contact the Financial Intermediaries Team to agree to a projection method. If
the review is using the safe harbor statistical sampling plan, then the reviewer may
determine the amount of underwithheld tax by projecting the underwithholding over the
entire stratum of similar sampling units using the following method:

(a) Divide the amount of underwithholding for the stratum (as originally
determined by the reviewer without regard to any remediation or curing
after the reviewer selected the sample units to be reviewed) by the
number of sampling units in the sample;
(b) Multiply the result in (a) by the total number of sampling units in the
stratum; and
(c) Subtract from (b) the actual amount of any cured underwithholding.
(d) Total all amounts for (c) for all strata.

If the reviewer has determined that overwithholding has occurred with respect to the
sample, the reviewer may not project the amount of overwithholding in order to claim a
refund. The reviewer may offset any underwithholding against any overwithholding in
the sample, provided that QI enters into a closing agreement (Form 906) that QI will not
file a claim for refund for any overwithholding that the reviewer has discovered.

If after reviewing the periodic review report, the IRS determines that further action is
necessary with respect to underwithholding, the IRS may request that QI have the

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reviewer conduct a full review of the entire sample or may determine that it is not
appropriate to project an amount of underwithholding. In making such determination,
the IRS will consider whether: (1) the amount is the consequence of an identified error;
(2) the error was not repeated throughout the population over which it would be
projected; (3) QI has corrected the error; (4) QI has established safeguards to prevent
reoccurrence of the error; and (5) facts as corrected show that there was actually no
underwithholding during the compliance period.

The QI may also propose an alternative projected underwithholding tax adjustment
based on facts and circumstances.

E. Reporting of Sample Results. At a minimum, the reviewer should note the following
separately for each sample by stratum in its periodic review report:

(1) The steps taken to construct the sample population and the steps taken to ensure
all accounts subject to review were included in the populations of accounts and subject
to sampling under the procedures outlined in this Appendix;

(2) Original population and sample statistics as follows:

(1) Total number of sample units in the population;

(2) Total number of sample units in the sample;

(3) Total reportable amounts for foreign recipients for the population;

(4) Total reportable payments for U.S. recipients for the population;

(5) Total reportable amounts for foreign recipients for the sample;

(6) Total reportable payments for U.S. recipients for the sample;

(7) Total chapter 3 withholding for the population;

(8) Total backup withholding for the population;

(9) Total chapter 4 withholding for the population;

(10) Total chapter 3 withholding for the sample;

(11) Total backup withholding for the sample; and

(12) Total chapter 4 withholding for the sample.

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Additionally, the reviewer should note a reconciliation of amounts included in the sample
population to payments and withholdings of reportable amounts as detailed in Part IV
sections E (Reconciliations of Reporting on Payments of Reportable Amounts) and F
(Reconciliation of Withholding on Reportable Amounts) of Appendix I to the QI
Agreement.

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