rp-05-77.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 1.1441-5: Withholding on Payments to Partnerships, Trusts and Estates

Rev. Proc. 2005-77

SECTION 1. PURPOSE
This revenue procedure modifies the final withholding foreign partnership (“WP”) and
withholding foreign trust (“WT”) agreements, contained in Rev. Proc. 2003-64, 2003-2 C.B.
306, by expanding the availability of certain documentation, reporting, and withholding
procedures. This revenue procedure also makes a conforming change to the portion of
the Qualified Intermediary (“QI”) withholding agreement (the “QI agreement”) contained in
Rev. Proc. 2003-64.

SECTION 2. BACKGROUND
Rev. Proc. 2003-64 contains the WP and WT agreements described in Treasury
Regulation § 1.1441-5(c)(2)(ii) and (e)(5)(v) and sets forth the application procedures for
entering into such agreements. Rev. Proc. 2003-64 also amended the QI agreement,
contained in Rev. Proc. 2000-12, 2000-1 C.B. 387, to add new Section 4A. In Rev. Proc.
2004-21, 2004-1 C.B. 702, the Internal Revenue Service (IRS) and the Treasury
Department amended Section 10.01 of the WP and WT agreements and new Section
4A.01 of the QI agreement to eliminate a $200,000 cap that restricted the application of
those provisions.
Section 10.02 of the WP and WT agreements and new Section 4A.02 of the QI
agreement provide generally that a QI, WP, or WT may apply simplified documentation,
reporting, and withholding procedures to a foreign trust or foreign partnership if certain
conditions are met (the “Agency Provision”). Currently a QI, WP, or WT may apply the
Agency Provision only if, among other things, the QI (or an affiliate), WP or WT is a general
partner of the partnership or a trustee of the trust (the “relatedness requirement”). Upon
consideration of comments received, the IRS and the Treasury Department have concluded
that the relatedness requirement is unnecessary and that its elimination will facilitate

compliance consistent with the objectives of the underlying reporting and withholding
regimes.
SECTION 3. EXPANSION OF AGENCY PROVISION

Appendices 1, 2, and 3 of Rev. Proc. 2003-64, containing the WP and WT
agreements and new Section 4A of the QI agreement, respectively, are amended as
follows. In Appendices 1 and 2, the first paragraph of Section 10.02 of the WP and WT
agreements is amended by inserting “and” before “(2)”, by replacing the semicolon before
“(3)” with a period, and by deleting “and (3) the [WP/WT] is a general partner of the
partnership or a trustee of the trust.” In Appendix 3, the first paragraph of Section 4A.02 of
the QI agreement is amended by inserting “and” before “(2)”, by replacing the semicolon
before “(3)” with a period, and by deleting “and (3) the QI, or an affiliate of the QI, is a
general partner of the partnership or a trustee of the trust.”

SECTION 4. EFFECTIVE DATE

The modifications to Rev. Proc 2003-64 made by this revenue procedure are
effective as of July 10, 2003, the effective date of Rev. Proc. 2003-64. Pursuant to Section
12.02 of the QI agreement, and Section 11.02 of the WP and WT agreements, these
amendments apply to all existing QI, WP, and WT agreements. These amendments will be
incorporated into the text of all QI, WP, and WT agreements entered into on or after the
date this revenue procedure is released.

SECTION 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2003-64, 2003-2 C.B. 306 is modified.

SECTION 6. CONTACT INFORMATION

For further information regarding this revenue procedure contact Kathryn T. Holman
at (202) 622-3840 (not a toll free call).