Internal Revenue Bulletin 2017-6 (PDF rendition): IRS Notices

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# INTERNAL REVENUE BULLETIN

IRS

Bulletin No. 2017-6
February 6, 2017

## HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

## INCOME TAX

### Rev. Rul. 2017-4, page 776.

Federal rates; adjusted federal rates; adjusted federal long-
term rate and the long-term exempt rate. For purposes of
sections 382, 642, 1274, 1288, 7872, and other sections of
the Code, tables setforth the rates for February 2017.

### Rev. Proc. 2017-13, page 787.

This revenue procedure provides safe harbor conditions under
which a management contract does not result in private busi-
ness use of property financed with governmental tax-exempt
bonds under section 141(b) of the Internal Revenue Code or
cause the modified private business use test for property
financed with qualified 501(c)(3) bonds under section
145(a)(2)(B) to be met.

### Notice 2017-14, page 783.

This notice provides that the hardship exemption from the
individual shared responsibility payment under § 5000A, de-
scribed by the Department of Health and Human Services, for
an individual who is not enrolled in health insurance coverage
that qualifies for the health coverage tax credit (HCTC) allowed
by § 35 for one more months between July 2016 and Decem-
ber 2016, but who would have been eligible for the HCTC under
§ 35 if enrolled, may be claimed on a Federal income tax return
without obtaining a hardship exemption certification from the
Marketplace.

### Rev. Proc. 2017-21, page 791.

This revenue procedure updates the agreements entered into
by withholding foreign partnerships (WPs) and withholding for-
eign trusts (WTs), as provided in Revenue Procedure 2014-
47. These agreements were to expire on December 31, 2016,
but were extended in Revenue Procedure 2017-15 in antici-
pation of the new agreements being issued in January 2017.
This revenue procedure will apply to WP and WT agreements
effective on or after the date of issuance of this revenue

procedure. The WP and WT agreements are updated consis-
tent with recently published guidance, including the qualified
intermediary withholding agreement, which was published in
Revenue Procedure 2017-15. The revenue procedure also
provides information on submitting an application or request
for renewal of a WP or WT agreement.

### T.D. 9810, page 775.

In general, S corporations, regulated investment companies
("RICs"), and real estate investment trusts ("REITs") are not
taxed at the corporate level (in the case of S corporations) or
rarely incur corporate-level tax (in the case of RICs and REITs).
An exception to this general rule occurs when an S corporation,
a RIC, or a REIT disposes of certain property previously held by
a C corporation within a specified period of time, known as the
"recognition period." The length of the recognition period for S
corporations is provided by statute, while the length of the
recognition period for RICs and REITs is provided by regula-
tions. These final regulations will conform the length of the
recognition period for RICs and REITs to the length of the
recognition period for S corporations.

## EMPLOYEE PLANS

### REG-131643-15, page 865.

These proposed regulations would amend the regulations un-
der section 401(k) to provide that amounts used to fund
qualified matching contributions and qualified nonelective con-
tributions must satisfy certain nonforfeitability and distribution
requirements when they are allocated to participants' ac-
counts, and not when they are first contributed to the plan.

(Continued on the next page)

Finding Lists begin on page ii.

### Notice 2017-13, page 780.

This notice sets forth updates on the corporate bond monthly
yield curve, the corresponding spot segment rates for January
2017 used under § 417(e)(3)(D), the 24-month average segment
rates applicable for January 2017, and the 30-year Treasury
rates. These rates reflect the application of § 430(h)(2)(C)(iv),
which was added by the Moving Ahead for Progress in the 21 st
Century Act, Public Law 112-141 (MAP-21) and amended by
section 2003 of the Highway and Transportation Funding Act of
2014 (HATFA).

## ESTATE TAX

### Notice 2017-15, page 783.

The notice provides special administrative procedures for al-
lowing certain taxpayers and the executors of certain taxpay-
ers' estates to recalculate a taxpayer's remaining applicable
exclusion amount and remaining GST exemption to the extent
an allocation of that exclusion or exemption was made to
certain transfers made while the taxpayer was married to a
person of the same sex.

## GIFT TAX

### Notice 2017-15, page 783.

## EXCISE TAX

### Notice 2017-5, page 779.

Notice 2017-5 provides interim definitions of the terms "chas-
sis" and "body" for purposes of section 4051(a)(1) and for
purposes of applying the safe harbor provision in section
4052(f)(1). This notice also requests comments on the interim
definitions.

## ADMINISTRATIVE

Rev. Proc. 2017-22, page 863.

This procedure clarifies Rev. Proc. 2010-46, 2010-49 I.R.B.
814, which provides a safe harbor under section 118(a) of the
Code for certain amounts received by corporate taxpayers
under certain Department of Transportation programs. Rev.
Proc. 2010-46 is clarified.

## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.

Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.

Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

### Part I .- 1986 Code.

This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.

### Part II .- Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.

Part III .- Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury's Office of the Assistant Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

T.D. 9810
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1

Certain Transfers of Property
to Regulated Investment
Companies [RICs] and Real
Estate Investment Trusts
[REITs]

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Final regulations.

SUMMARY: This document contains fi-
nal regulations effecting the repeal of the
General Utilities doctrine by the Tax Re-
form Act of 1986. The final regulations
address the length of time during which a
RIC or a REIT may be subject to corpo-
rate level tax on certain dispositions of
property. The final regulations affect RICs
and REITs.

DATES: Effective Date: These regula-
tions are effective January 18, 2017.

Applicability Dates: For dates of appli-
cability, see § 1.337(d)-7(g)(2)(iii).

FOR FURTHER INFORMATION CON-
TACT:Austin M. Diamond-Jones, (202)
317-5363 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

### Background

This document contains amendments
to 26 CFR part 1. On June 8, 2016, the
Department of the Treasury (Treasury
Department) and the IRS published tem-
porary regulations (TD 9770) under sec-
tion 337(d) (temporary regulations) in
the Federal Register (81 FR 36793)
concerning certain transfers of property
to regulated investment companies
(RICs) and real estate investment trusts
(REITs). A notice of proposed rulemak-
ing cross-referencing the temporary reg-
ulations (REG-126452-15) (proposed
regulations) was published in the Fed-

eral Register (81 FR 36816) on the
same day. A correction to the temporary
regulations was published in the Fed-
eral Register (81 FR 41800) on June
28, 2016. The Treasury Department and
the IRS received one written comment
in response to the proposed regulations.
The comment requested a public hear-
ing, and a hearing was held on Novem-
ber 9, 2016. After consideration of the
written comment and the comments
made at the public hearing, the proposed
regulations are adopted in part and as
amended by this Treasury decision, and
the corresponding temporary regulations
are removed in part. The revisions ad-
opted by this Treasury decision are dis-
cussed below.

### Summary of Comments and Explanation of Revisions

The comment requested that the tem-
porary regulations and the proposed reg-
ulations with respect to the recognition
period be immediately withdrawn and the
recognition period with respect to REITs
be defined with reference to the recogni-
tion period of section 1374(d)(7), which is
currently a five-year period as a result of
section 127(a) of the Protecting Ameri-
cans Against Tax Hikes Act of 2015
(PATH Act), enacted as Division Q of the
Consolidated Appropriations Act, 2016,
Public Law 114-113, 129 Stat. 2422. The
comment asserted that the change to
the length of the recognition period in the
temporary regulations and the proposed
regulations was inconsistent with Con-
gress's intent in the PATH Act and with
prior administrative guidance. On October
18, 2016, the Chairmen and Ranking
Members of the Ways and Means Com-
mittee of the U.S. House of Representa-
tives and the Finance Committee of the
U.S. Senate addressed a letter to the Sec-
retary of the Treasury stating that the rec-
ognition period in the temporary regula-
tions and the proposed regulations was
inconsistent with congressional intent and
the longstanding practice of treating RE-
ITs and RICs as having the same built-in
gain recognition period as S corporations,
currently five years. The Chairmen and

Ranking Members also asked that the
temporary regulations and the proposed
regulations be modified to provide that
REITs, RICs and S corporations are all
subject to the same five-year built-in gain
recognition period in order to be consis-
tent with congressional intent and long-
standing practice.

The Treasury Department and the
IRS decline to withdraw the temporary
regulations and the proposed regulations
relating to the recognition period but
agree with the comment relating to the
length of the recognition period. Ac-
cordingly, these final regulations pro-
vide that the term recognition period
means the recognition period described
in section 1374(d)(7), beginning, in the
case of a conversion transaction that is a
qualification of a C corporation as a RIC
or a REIT, on the first day of the RIC's
or the REIT's first taxable year, and, in
the case of other conversion transac-
tions, on the day the RIC or the REIT
acquires the property. The final regula-
tions will apply prospectively from Feb-
ruary 17, 2017, but taxpayers may
choose to apply the definition of recog-
nition period in the final regulations,
instead of the 10-year recognition pe-
riod in the temporary regulations, for
conversion transactions occurring on or
after August 8, 2016, and on or before
February 17, 2017.

The Treasury Department and the IRS
continue to study the other issues ad-
dressed in the temporary regulations and
the proposed regulations, including other
issues raised by the comment, and wel-
come further comment on those issues.

### Special Analyses

Certain IRS regulations, including this
one, are exempt from the requirements of
Executive Order 12866, as supplemented
by Executive Order 13653. Therefore, a
regulatory assessment is not required. Pur-
suant to the Regulatory Flexibility Act (5
U.S.C. chapter 6), it is hereby certified
that this regulation will not have a signif-
icant economic impact on a substantial
number of small entities. This certification
is based on the fact that this regulation

will primarily affect large corporations
with a substantial number of shareholders.
Accordingly, a regulatory flexibility anal-
ysis is not required. Pursuant to section
7805(f) of the Internal Revenue Code, the
notice of proposed rulemaking preceding
this regulation was submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small business, and no com-
ments were received.

### Drafting Information

The principal author of these regula-
tions is Austin M. Diamond-Jones, Office
of Associate Chief Counsel (Corporate).
However, other personnel from the Trea-
sury Department and the IRS participated
in their development.

* * * * *

### Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended
as follows:

#### PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read as follows:

Authority: 26 U.S.C. 7805 *
* * * * *

Par. 2. Section 1.337(d)-7 is amended
by revising paragraphs (b)(2)(iii) and (g)
(2)(iii) to read as follows:

§ 1.337(d)-7 Tax on property owned by
a C corporation that becomes property
of a RIC or REIT.

* * * * *

(b) * * *

(2) * * *

(iii) Recognition period. For purposes
of applying the rules of section 1374 and
the regulations thereunder, as modified by
paragraph (b) of this section, the term
recognition period means the recognition
period described in section 1374(d)(7),
beginning-

(A) In the case of a conversion transac-
tion that is a qualification of a C corporation
as a RIC or a REIT, on the first day of the
RIC's or the REIT's first taxable year; and

(B) In the case of other conversion
transactions, on the day the RIC or the
REIT acquires the property.
* * * * *

(g) * * *

(2) * * *

(iii) Recognition period. Paragraphs
(b)(1)(ii) and (d)(2)(iii) of this section
apply to conversion transactions that oc-
cur on or after August 8, 2016. Para-
graph (b)(2)(iii) of this section applies
to conversion transactions that occur af-
ter February 17, 2017. For conversion
transactions that occurred on or after
August 8, 2016 and on or before Febru-
ary 17, 2017, see § 1.337(d)-
7T(b)(2)(iii) in effect on August 8,
2016. However, taxpayers may apply
paragraph (b)(2)(iii) of this section to
conversion transactions that occurred on
or after August 8, 2016 and on or before
February 17, 2017. For conversion
transactions that occurred on or after
January 2, 2002 and before August 8,
2016, see § 1.337(d)-7 as contained in
26 CFR part 1 in effect on April 1, 2016.

Par. 3. Section 1.337(d)-7T is amended
by revising paragraphs (b)(1) through (3)
and (g)(2)(iii) to read as follows:

§ 1.337(d)-7T Tax on property owned
by a C corporation that becomes
property of a RIC or REIT.

* * * * *

(b)(1) through (3) [Reserved]. For fur-
ther guidance, see § 1.337(d)-7(b)(1)
through (3).
* * * * *

(g) * * *

(2) * * *

(iii) [Reserved]. For further guidance,
see § 1.337(d)-7(g)(2)(iii).

* * * * *

John Dalrymple,
Deputy Commissioner for
Services and Enforcement.

Approved: December 30, 2016.

Mark J. Mazur,
Assistant Secretary of the
Treasury (Tax Policy).

(Filed by the Office of the Federal Register on January 17,
2017, 8:45 a.m., and published in the issue of the Federal
Register for January 18, 2017, 82 F.R. 5387)

## Section 1274 .- Determina- tion of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,
642, 1288, 7520, 7872.)

## Rev. Rul. 2017-4

This revenue ruling provides various
prescribed rates for federal income tax
purposes for February 2017 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Internal
Revenue Code. Table 2 contains the short-
term, mid-term, and long-term adjusted
applicable federal rates (adjusted AFR)
for the current month for purposes of sec-
tion 1288(b). Table 3 sets forth the ad-
justed federal long-term rate and the long-
term tax-exempt rate described in section
382(f). Table 4 contains the appropriate
percentages for determining the low-
income housing credit described in sec-
tion 42(b)(1) for buildings placed in ser-
vice during the current month. However,
under section 42(b)(2), the applicable per-
centage for non-federally subsidized new
buildings placed in service after July 30,
2008, shall not be less than 9%. Finally,
Table 5 contains the federal rate for de-
termining the present value of an annuity,
an interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.

REV. RUL. 2017-4 TABLE 1 Applicable Federal Rates (AFR) for February 2017 Period for Compounding

Annual

Semiannual Short-term

Quarterly

Monthly

AFR

1.04%

110% AFR

1.14%

120% AFR

1.25%

130% AFR

1.35%

Mid-term

AFR

2.10%

2.09%

2.08%

110% AFR

2.31%

2.30%

2.29%

120% AFR

2.53%

2.51%

2.50%

130% AFR

2.74%

2.72%

2.71%

2.70%

150% AFR

3.16%

3.14%

3.13%

3.12%

175% AFR

3.69%

3.66%

3.64%

3.63%

Long-term

AFR

2.81%

2.79%

2.78%

2.77%

110% AFR

3.09%

3.07%

3.06%

3.05%

120% AFR

3.38%

3.35%

3.34%

3.33%

130% AFR

3.66%

3.63%

3.61%

3.60%

REV. RUL. 2017-4 TABLE 3 Rates Under Section 382 for February 2017

Short-term adjusted AFR

REV. RUL. 2017-4 TABLE 2 Adjusted AFR for February 2017 Period for Compounding

Annual

Semiannual

Quarterly

Monthly

.77%

Mid-term adjusted AFR

1.56%

1.55%

Long-term adjusted AFR

2.09%

2.08%

2.07%

Adjusted federal long-term rate for the current month

2.09%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)

2.09%

# REV. RUL. 2017-4 TABLE 4 Appropriate Percentages Under Section 42(b)(1) for February 2017

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in
service after July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.56%

Appropriate percentage for the 30% present value low-income housing credit

3.24%

# REV. RUL. 2017-4 TABLE 5 Rate Under Section 7520 for February 2017

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest

2.6%

## Section 42 .- Low-Income Housing Credit

The applicable federal short-term, mid-term, and
long-term rates are set forth for the month of Feb-
ruary 2017. See Rev. Rul. 2017-4, page 776.

### Section 280G .- Golden Parachute Payments

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2017.
See Rev. Rul. 2017-4 , page 776.

### Section 382 .- Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted applicable federal long-term rate is
set forth for the month of February 2017. See Rev.
Rul. 2017-4 , page 776.

#### Section 467 .- Certain Payments for the Use of Property or Services

The applicable federal short-term, mid-term,
and long-term rates are set forth for the month

of February 2017. See Rev. Rul. 2017-4, page
776.

## Section 468 .- Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The applicable federal short-term, mid-term, and
long-term rates are set forth for the month of Feb-
ruary 2017. See Rev. Rul. 2017-4, page 776.

## Section 482 .- Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2017.
See Rev. Rul. 2017-4, page 776.

## Section 483 .- Interest on Certain Deferred Payments

The applicable federal short-term, mid-term, and
long-term rates are set forth for the month of Feb-
ruary 2017. See Rev. Rul. 2017-4, page 776.

## Section 642 .- Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2017.
See Rev. Rul. 2017-4, page 776.

## Section 1288 .- Treatment of Original Issue Discount on Tax-Exempt Obligations

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2017. See Rev. Rul. 2017-4, page 776.

## Section 7520 .- Valuation Tables

The applicable federal short-term, mid-term, and
long-term rates are set forth for the month of Feb-
ruary 2017. See Rev. Rul. 2017-4, page 776.

## Section 7872 .- Treatment of Loans With Below- Market Interest Rates

The applicable federal short-term, mid-term, and
long-term rates are set forth for the month of Feb-
ruary 2017. See Rev. Rul. 2017-4, page 776.

# Part III. Administrative, Procedural, and Miscellaneous

Interim Guidance and
Request for Comments on
Definitions of Chassis and
Body; Retail Excise Tax on
Heavy Trucks, Trailers, and
Tractors

## Notice 2017-5

## SECTION 1. PURPOSE

This notice provides interim guidance
relating to the excise tax imposed by
§ 4051 of the Internal Revenue Code on
the first retail sale of heavy trucks, trailers,
and tractors. Specifically, this notice pro-
vides interim definitions of the terms
"chassis" and "body" for purposes of
§ 4051(a)(1) and for purposes of applying
the safe harbor provision in § 4052(f)(1).
This notice also requests comments on the
interim definitions.

## SECTION 2. BACKGROUND

Section 4051(a)(1) imposes a 12-percent
tax on the first retail sale of automobile
truck chassis and bodies, truck trailer and
semitrailer chassis and bodies, and trac-
tors of the kind chiefly used for highway
transportation in combination with a
trailer or semitrailer. Section 145.4051-
1(e)(1)(i) of the Temporary Excise Tax
Regulations Under The Highway Revenue
Act of 1982 defines "tractor" as a highway
vehicle primarily designed to tow a vehi-
cle, such as a trailer or a semitrailer, but
does not carry cargo on the same chassis
as the engine.

Generally, the § 4051 tax applies to the
first retail sale of an article. Section
4052(a)(1) defines "first retail sale" as the
first sale, for a purpose other than for
resale or leasing in a long-term lease, after
production, manufacture, or importation.
The safe harbor provision in § 4052(f)(1)
excludes from the definition of "manufac-
tured" or "produced" an article that is
repaired or modified (including any mod-
ification that changes the transportation
function of the article or restores a
wrecked article to a functional condition)
if the cost of such repairs and modifica-
tions does not exceed 75 percent of the
retail price of a comparable new article.

Neither the Code nor the regulations
define the terms "chassis" or "body" for
purposes of determining articles that are
subject to tax under § 4051(a)(1). Like-
wise, there is no definition of "chassis" or
"body" for determining whether an article
satisfies the safe harbor provision in
§ 4052(f)(1).

The Treasury Department and the IRS
recognize that taxpayers would benefit
from having definitions of "chassis" and
"body" in order to identify chassis and
bodies that are subject to tax under
§ 4051(a)(1) and in order to apply the safe
harbor provision in § 4052(f)(1). Accord-
ingly, the Treasury Department and the
IRS have adopted interim definitions of
"chassis" and "body" for these purposes.
The interim definitions are set forth in
Section 3 of this notice. In crafting these
definitions, the Treasury Department and
the IRS consulted numerous sources, in-
cluding the Society of Automotive Engi-
neers (SAE) Glossary of Automotive
Terms and Title 49 of the Code of Federal
Regulations (Transportation).

## SECTION 3. DEFINITIONS OF CHASSIS AND BODY

.01 A "chassis" is a vehicle's frame
and supporting structure and all those
components that are attached to it, except
those components that are exempt from
tax, such as certain idling reduction de-
vices described in § 4053(9).

For purposes of § 4051(a)(1)(A) and
(E), the following is a nonexclusive list of
components that are attached to and,
therefore, part of a chassis:

· engine

· axles

· transmission

· drive train

· suspension

· exhaust aftertreatment system (includ-
ing, but not limited to, a diesel partic-
ulate filter)

· cab

For purposes of § 4051(a)(1)(E), a
chassis includes a chassis cab within the
meaning of § 145.4051-1(e)(1)(ii)(A), (B)
and (D).

A chassis does not include a vehicle's
body, as defined in Section 3.02 of this notice.

.02 A "body" is the cargo or load car-
rying structure of a truck, trailer, or semi-
trailer. Examples of a body include, but
are not limited to, a flatbed body, a tanker
body, and a box body.

## SECTION 4. APPLICATION OF CHASSIS AND BODY DEFINITIONS TO SECTION 4052(f)(1)

Section 4052(f)(1) provides that an
article taxed under § 4051(a)(1) is not
treated as manufactured or produced solely
by reason of repairs or modifications to the
article if the cost of the repairs and mod-
ifications does not exceed 75 percent of
the retail price of a comparable new arti-
cle. The safe harbor provision in § 4052
(f)(1) applies only to a § 4051(a)(1) article
that has been previously taxed. See § 4052
(f)(2). The § 4051(a)(1) articles are: truck
chassis and bodies, truck trailer and semi-
trailer chassis and bodies, and highway
tractors. Therefore, a taxpayer must repair
or modify one of the seven articles iden-
tified in § 4051(a)(1) in order to use the
safe harbor provision in § 4052(f)(1).

For purposes of § 4052(f)(1), the IRS
will use the definitions of chassis and body
in Section 3 of this notice to determine the
threshold issue of whether a § 4051(a)(1)
article has been repaired or modified. In
other words, the § 4052(f)(1) safe harbor
provision may be applied to a chassis or
body only if the chassis or body being re-
paired or modified is identifiable as such
within the meaning of Section 3 of this
notice.

## SECTION 5. REQUEST FOR COMMENTS

The Treasury Department and the IRS
request comments on the interim defini-
tions of "chassis" and "body" set forth in
Section 3 of this notice. The deadline for
submission of comments is May 9, 2017.

Written comments should be submitted
to: Internal Revenue Service, CC:PA:
LPD:PR (Notice 2017-5), Room 5203,
Internal Revenue Service, P.O. Box 7604,
Ben Franklin Station, Washington, DC
20224. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8 a.m. and 4 p.m. to

CC:PA:LPD:PR (Notice 2017-5), Couri-
er's Desk, Internal Revenue Service, 1111
Constitution Ave., NW, Washington, DC.

Alternatively, comments may be submitted
electronically via the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Please include "Notice 2017-5" in the sub-
ject line of an electronic communication.

All submissions will be available for
public inspection and copying in room
1621, 1111 Constitution Avenue, NW,
Washington, DC, from 9 a.m. to 4 p.m.

## SECTION 6. EFFECTIVE DATE

This notice is effective on and after
January 9, 2017.

## SECTION 7. DRAFTING INFORMATION

The principal author of this notice is
Celia Gabrysh of the Office of the Asso-
ciate Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this notice, please contact Celia
Gabrysh or Amanda Dunlap at (202) 317-
6855 (not a toll-free number).

## Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

## Notice 2017-13

This notice provides guidance on the
corporate bond monthly yield curve, the

corresponding spot segment rates used un-
der § 417(e)(3), and the 24-month average
segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the interest
rate on 30-year Treasury securities under
§ 417(e)(3)(A)(ii)(II) as in effect for plan
years beginning before 2008 and the 30-
year Treasury weighted average rate un-
der § 431(c)(6)(E)(ii)(I).

## YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans un-
der sections 104 and 105 of the Pension
Protection Act of 2006 and CSEC plans
under § 414(y), § 430 of the Code speci-
fies the minimum funding requirements
that apply to single-employer plans pursu-
ant to § 412. Section 430(h)(2) specifies
the interest rates that must be used to
determine a plan's target normal cost and
funding target. Under this provision, pres-
ent value is generally determined using
three 24-month average interest rates
("segment rates"), each of which applies
to cash flows during specified periods. To
the extent provided under § 430(h)(2)
(C)(iv), these segment rates are adjusted
by the applicable percentage of the 25-
year average segment rates for the period
ending September 30 of the year preced-
ing the calendar year in which the plan
year begins.1 However, an election may
be made under § 430(h)(2)(D)(ii) to use
the monthly yield curve in place of the
segment rates.

Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consis-
tent with the methodology specified in
Notice 2007-81, the monthly corporate
bond yield curve derived from December
2016 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of December
2016 are, respectively, 2.04, 4.03, and
4.82.

The 24-month average segment rates
determined under § 430(h)(2)(C)(i) through
(iii) must be adjusted pursuant to § 430(h)
(2)(C)(iv) to be within the applicable min-
imum and maximum percentages of the
corresponding 25-year average segment
rates. For plan years beginning before
2021, the applicable minimum percentage
is 90% and the applicable maximum per-
centage is 110%. The 25-year average
segment rates for plan years beginning in
2015, 2016, and 2017 were published
in Notice 2014-50, 2014-40 I.R.B. 590,
Notice 2015-61, 2015-39 I.R.B. 408, and
Notice 2016-54, 2016-40 I.R.B. 429, re-
spectively.

## 24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate
bond segment rates applicable for January
2017 without adjustment for the 25-year
average segment rate limits are as follows:

Applicable Month

First Segment

Second Segment

Third Segment

January 2017

1.57

3.77

4.73

Based on § 430(h)(2)(C)(iv), the 24-
month averages applicable for January

2017 adjusted to be within the applicable
minimum and maximum percentages of

the corresponding 25-year average seg-
ment rates, are as follows:

1Pursuant to § 433(h)(3)(A), the 3rd segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

For Plan Years Beginning In

Adjusted 24-Month Average Segment Rates

Applicable Month

First Segment

Second Segment

Third Segment

2015

January

2017

4.72

6.11

6.81

2016

January

2017

4.43

5.91

6.65

2017

January

2017

4.16

5.72

6.48

## 30-YEAR TREASURY SECURITIES INTEREST RATES

Generally for plan years beginning af-
ter 2007, § 431 specifies the minimum
funding requirements that apply to mul-
tiemployer plans pursuant to § 412. Sec-
tion 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation de-
scribed in § 431(c)(6)(A), based on the
plan's current liability. Section 431(c)(6)

(E)(ii)(I) provides that the interest rate
used to calculate current liability for this
purpose must be no more than 5 percent
above and no more than 10 percent below
the weighted average of the rates of inter-
est on 30-year Treasury securities during
the four-year period ending on the last day
before the beginning of the plan year.
Notice 88-73, 1988-2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The rate of interest

on 30-year Treasury securities for Decem-
ber 2016 is 3.11 percent. The Service de-
termined this rate as the average of the
daily determinations of yield on the 30-
year Treasury bond maturing in Novem-
ber 2046. For plan years beginning in the
month shown below, the weighted aver-
age of the rates of interest on 30-year
Treasury securities and the permissible
range of rate used to calculate current
liability are as follows:

For Plan Years Beginning in

30-Year Treasury Weighted Average

Permissible Range

Month

Year

90%

105%

January

2017

2.90

2.61

3.05

# MINIMUM PRESENT VALUE SEGMENT RATES

In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month
average. Notice 2007-81 provides guide-
lines for determining the minimum pres-
ent value segment rates. Pursuant to that
notice, the minimum present value seg-

ment rates determined for December 2016
are as follows:

First Segment

Second Segment

Third Segment

2.04

4.03

4.82

DRAFTING INFORMATION

ate Chief Counsel (Tax Exempt and Gov- ernment Entities). However, other person-

information regarding this notice, contact Mr. Morgan at 202-317-6700 or Tony

The principal author of this notice is

nel from the IRS participated in the

Montanaro at 202-317-8698 (not toll-free

Tom Morgan of the Office of the Associ-

development of this guidance. For further

numbers).

# Table I Monthly Yield Curve for December 2016 Derived from December 2016 Data

Maturity

Yield

Maturity

Yield

Maturity

Yield

Maturity

Yield

Maturity

Yield

0.5

1.12

20.5

4.60

40.5

4.85

60.5

4.93

80.5

4.98

1.0

1.41

21.0

4.62

41.0

4.85

61.0

4.94

81.0

4.98

1.5

1.67

21.5

4.63

41.5

4.85

61.5

4.94

81.5

4.98

2.0

1.88

22.0

4.64

42.0

4.86

62.0

4.94

82.0

4.98

2.5

2.06

22.5

4.65

42.5

4.86

62.5

4.94

82.5

4.98

3.0

2.21

23.0

4.65

43.0

4.86

63.0

4.94

83.0

4.98

3.5

2.34

23.5

4.66

43.5

4.86

63.5

4.94

83.5

4.98

4.0

2.46

24.0

4.67

44.0

4.87

64.0

4.94

84.0

4.98

4.5

2.58

24.5

4.68

44.5

4.87

64.5

4.94

84.5

4.98

5.0

2.71

25.0

4.69

45.0

4.87

65.0

4.95

85.0

4.98

5.5

2.83

25.5

4.69

45.5

4.88

65.5

4.95

85.5

4.99

6.0

2.96

26.0

4.70

46.0

4.88

66.0

4.95

86.0

4.99

6.5

3.08

26.5

4.71

46.5

4.88

66.5

4.95

86.5

4.99

7.0

3.20

27.0

4.72

47.0

4.88

67.0

4.95

87.0

4.99

7.5

3.32

27.5

4.72

47.5

4.89

67.5

4.95

87.5

4.99

8.0

3.44

28.0

4.73

48.0

4.89

68.0

4.95

88.0

4.99

8.5

3.55

28.5

4.74

48.5

4.89

68.5

4.95

88.5

4.99

9.0

3.65

29.0

4.74

49.0

4.89

69.0

4.96

89.0

4.99

9.5

3.75

29.5

4.75

49.5

4.89

69.5

4.96

89.5

4.99

10.0

3.84

30.0

4.75

50.0

4.90

70.0

4.96

90.0

4.99

10.5

3.92

30.5

4.76

50.5

4.90

70.5

4.96

90.5

4.99

11.0

4.00

31.0

4.77

51.0

4.90

71.0

4.96

91.0

4.99

11.5

4.07

31.5

4.77

51.5

4.90

71.5

4.96

91.5

4.99

12.0

4.13

32.0

4.78

52.0

4.91

72.0

4.96

92.0

4.99

12.5

4.19

32.5

4.78

52.5

4.91

72.5

4.96

92.5

4.99

13.0

4.24

33.0

4.79

53.0

4.91

73.0

4.96

93.0

5.00

13.5

4.29

33.5

4.79

53.5

4.91

73.5

4.97

93.5

5.00

14.0

4.33

34.0

4.80

54.0

4.91

74.0

4.97

94.0

5.00

14.5

4.37

34.5

4.80

54.5

4.91

74.5

4.97

94.5

5.00

15.0

4.40

35.0

4.81

55.0

4.92

75.0

4.97

95.0

5.00

15.5

4.43

35.5

4.81

55.5

4.92

75.5

4.97

95.5

5.00

16.0

4.45

36.0

4.81

56.0

4.92

76.0

4.97

96.0

5.00

16.5

4.48

36.5

4.82

56.5

4.92

76.5

4.97

96.5

5.00

17.0

4.50

37.0

4.82

57.0

4.92

77.0

4.97

97.0

5.00

17.5

4.52

37.5

4.83

57.5

4.92

77.5

4.97

97.5

5.00

18.0

4.54

38.0

4.83

58.0

4.93

78.0

4.97

98.0

5.00

18.5

4.55

38.5

4.83

58.5

4.93

78.5

4.97

98.5

5.00

19.0

4.57

39.0

4.84

59.0

4.93

79.0

4.98

99.0

5.00

19.5

4.58

39.5

4.84

59.5

4.93

79.5

4.98

99.5

5.00

20.0

4.59

40.0

4.84

60.0

4.93

80.0

4.98

100.0

5.00

# Individual Shared Responsibility Payment Hardship Exemption that May Be Claimed on a Federal Income Tax Return Without Obtaining a Hardship Exemption Certification from the Marketplace

Notice 2017-14
PURPOSE

This notice supplements Notice 2014-
76, 2014-50 I.R.B. 946, by identifying an
additional hardship exemption from the
individual shared responsibility payment
under § 5000A of the Internal Revenue
Code that a taxpayer may claim on a Fed-
eral income tax return without obtaining a
hardship exemption certification from the
Health Insurance Marketplace (Market-
place).

## BACKGROUND

For each month beginning after De-
cember 31, 2013, § 5000A requires indi-
viduals to have minimum essential health
coverage for themselves and any nonex-
empt family member whom the taxpayer
may claim as a dependent, to qualify for
an exemption, or to include an individual
shared responsibility payment with their
Federal income tax return.

Section 5000A(e)(5) and § 1.5000A-
3(h) of the Income Tax Regulations pro-
vide that, in general, an individual is ex-
empt from § 5000A for a month if he or
she has in effect a hardship exemption
certification issued by the Marketplace
certifying that the individual has suffered
a hardship (as that term is defined in 45
CFR 155.605(d)) affecting the individu-
al's capability to obtain minimum essential
coverage in that month. Section 1.5000A-
3(h)(3) provides that an individual may
claim a hardship exemption on the indi-
vidual's Federal income tax return with-
out obtaining a hardship exemption certi-
fication from the Marketplace if the
individual is eligible for a hardship ex-
emption described in guidance released by
the Department of Health and Human Ser-
vices (HHS) and the exemption is allowed

to be claimed on the individual's Federal
income tax return without obtaining a
hardship exemption certification from the
Marketplace pursuant to guidance pub-
lished by the Treasury Department and the
Internal Revenue Service. Notice 2014-
76 provides a list of hardship exemptions
that may be claimed on a Federal income
tax return without obtaining a hardship
exemption certification. See also 45 CFR
155.605(e) (providing a partial list of
hardship exemptions that may be claimed
on a tax return without obtaining an ex-
emption certification). This notice ex-
pands that list by providing an additional
hardship exemption that may be claimed
on a Federal income tax return without
obtaining a hardship exemption certifica-
tion.

## DISCUSSION

This notice recognizes the following
hardship identified by HHS and allows a
qualifying individual (or the taxpayer who
may claim a qualifying individual as a
dependent) to claim a hardship exemption
on a Federal income tax return without
obtaining a hardship exemption certifica-
tion from the Marketplace. Accordingly,
the Discussion section of Notice 2014-76
is supplemented by adding the following
paragraph:

G. Individuals eligible for the Health
Coverage Tax Credit (HCTC) but not en-
rolled in HCTC-qualifying health coverage.
In guidance released on August 12, 2016,
HHS provides that any individual who is not
enrolled in HCTC-qualifying health insur-
ance coverage for one or more months be-
tween July 2016 and December 2016, but
who would have been eligible for the HCTC
under § 35 if enrolled, is entitled to a hard-
ship exemption for the months during that
period when he or she was HCTC-eligible.
This exemption applies to eligible individu-
als (within the meaning of § 35(c)) and
qualifying family members (within the
meaning of § 35(d)). See HHS Centers for
Medicare & Medicaid Services, Guidance
on Health Coverage Tax Credit Hardship
Exemption (Aug. 12, 2016) (available
at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/Final-
Guidance-for-5000A-HCTC.pdf). An indi-
vidual meeting the requirements described
above may claim a hardship exemption on
a Federal income tax return without ob-

taining a hardship exemption certification
for any month or months between July
2016 and December 2016 for which that
individual (or qualifying family member)
would have been eligible for the HCTC if
he or she enrolled in HCTC-qualifying
coverage.

Individuals seeking a hardship exemp-
tion that is not described in this notice or
listed in Notice 2014-76 can apply for an
exemption through the Marketplace.

## EFFECT ON OTHER DOCUMENTS

Notice 2014-76 is supplemented.

## EFFECTIVE DATE

This notice applies to taxable years
ending after June 30, 2016.

## DRAFTING INFORMATION

The principal author of this notice is
James Beatty of the Office of Associate
Chief Counsel (Income Tax & Account-
ing). For further information regarding
this notice contact Mr. Beatty at (202)
317-7006 (not a toll-free number).

## Notice 2017-15

## PURPOSE

This notice provides guidance on the
application of the decision in United
States v. Windsor, 570 U.S. __ , 133 S.
Ct. 2675 (2013), and the holdings of Rev-
enue Ruling 2013-17, 2013-38 I.R.B.
201, to the rules regarding the applicable
exclusion amount under §§ 2010(c) and
2505 of the Internal Revenue Code
(Code), and the generation-skipping trans-
fer (GST) exemption under § 2631, as
they relate to certain gifts, bequests, and
generation-skipping transfers by (or to)
same-sex spouses. In particular, this no-
tice provides special administrative proce-
dures allowing certain taxpayers and the
executors of certain taxpayers' estates to
recalculate a taxpayer's remaining appli-
cable exclusion amount and remaining
GST exemption to the extent an allocation
of that exclusion or exemption was made
to certain transfers made while the tax-
payer was married to a person of the same
sex.

With respect to the applicable exclu-
sion amount applied to a transfer between
spouses that did not qualify for the marital
deduction for federal estate or gift tax
purposes at the time of the transfer, based
solely on the application of the Defense of
Marriage Act (DOMA), Public Law 104-
199 (110 Stat. 2419), taxpayers will be
permitted to establish that transfer's qual-
ification for the marital deduction and to
recover the applicable exclusion amount
previously applied on a return by reason
of such a transfer, even if the limitations
period applicable to that return for the
assessment of tax or for claiming a credit
or refund of tax under §§ 6501 or 6511,
respectively, has expired. If, however,
qualification for the marital deduction or a
reverse qualified terminable interest prop-
erty (QTIP) election would require a
QTIP, qualified domestic trust (QDOT),
or reverse QTIP election, such taxpayers
will have to request relief pursuant to
§ 301.9100-3 of the Procedure and Ad-
ministration Regulations to make such an
election.

With respect to a taxpayer's GST ex-
emption that was allocated to transfers
made, prior to the recognition of same-sex
marriages for federal tax purposes, to or
for the benefit of one or more persons in a
same-sex marriage and/or any other per-
son(s) whose generation assignment is de-
termined under § 2651 with reference to a
same-sex spouse, certain exemption allo-
cations to transfers to persons now recog-
nized to be non-skip persons as defined in
§ 2613(b) will be deemed void. Accord-
ingly, taxpayers who made such a transfer
will be permitted to recalculate the
amount of their remaining GST exemp-
tion.

## BACKGROUND

Prior to the decision of the Supreme
Court in Windsor, the Internal Revenue
Service (IRS) interpreted section 3 of
DOMA as prohibiting it from recognizing
same-sex marriages for federal tax pur-
poses. Specifically, section 3 of DOMA
provided that:

In determining the meaning of any
Act of Congress, or of any ruling,
regulation, or interpretation of the
various administrative bureaus and
agencies of the United States, the
word 'marriage' means only a legal

union between one man and one
woman as husband and wife, and
the word 'spouse' refers only to a
person of the opposite sex who is a
husband or a wife.

1 U.S.C. § 7.

As a result, taxpayers in a same-sex
marriage were not treated as married for
purposes of gift, estate, and GST taxes
and were not entitled to claim a marital
deduction for gifts or bequests to each
other. Those taxpayers were required to
use their applicable exclusion amount un-
der § 2505 or § 2010(c) to defray any gift
or estate tax imposed on the transfer or
were required to pay gift or estate taxes, to
the extent the taxpayer's exclusion previ-
ously had been exhausted. Further, tax-
payers in a same-sex marriage were not
allowed to determine generation assign-
ments for GST tax purposes based on a
familial relationship with the spouse
rather than on age.

In Windsor, the Supreme Court held
that section 3 of DOMA is unconstitu-
tional because it violates the principles of
equal protection. Subsequently, the IRS
issued Revenue Ruling 2013-17, which
provides that, for federal tax purposes, the
terms "spouse," "husband and wife,"
"husband," and "wife" include an individ-
ual married to a person of the same sex if
the individuals are lawfully married under
state law, and the term "marriage" in-
cludes such a marriage between individu-
als of the same sex. Revenue Ruling
2013-17 also provides a general rule rec-
ognizing a marriage of same-sex individ-
uals that was validly entered into in a state
whose laws authorize the marriage of two
individuals of the same sex even if the
married couple is domiciled in a state that
does not recognize the validity of same-
sex marriages. In addition, the terms
"spouse," "husband and wife," "husband,"
and "wife" do not include individuals
(whether of the opposite sex or the same
sex) who have entered into a registered
domestic partnership, civil union, or other
similar formal relationship recognized un-
der state law that is not denominated as a
marriage under the laws of that state, and
the term "marriage" does not include such
formal relationships.

Revenue Ruling 2013-17 provides that
its holdings will be applied prospectively

as of September 16, 2013, the date of its
publication in the Internal Revenue Bul-
letin. Taxpayers in a same-sex marriage
recognized under state law may rely upon
the revenue ruling to file original,
amended, or adjusted returns, or claims
for credits or refunds for any overpayment
of tax resulting from the holdings in the
revenue ruling, provided that the applica-
ble limitations period for filing such a
claim under § 6511 has not expired.

On September 2, 2016, the Department
of the Treasury (Treasury Department)
and the IRS published in the Federal Reg-
ister (81 FR 60609-01) final regulations
(T.D. 9785) amending the regulations un-
der § 7701 to provide that, for federal tax
purposes, the terms "spouse," "husband,"
and "wife" mean an individual lawfully
married to another individual, and the
term "husband and wife" means two indi-
viduals lawfully married to each other.
See also § 301.7701-18. In addition, the
final regulations provide that a marriage
of two individuals will be recognized for
federal tax purposes if that marriage
would be recognized by the state, posses-
sion, or territory of the United States in
which the marriage is entered into, regard-
less of the domicile of the parties to the
marriage or, for a foreign marriage, if the
relationship would be recognized as mar-
riage by at least one state, possession, or
territory of the United States, regardless of
the domicile of the parties. Finally, the
final regulations clarify that the term
"marriage" does not include registered do-
mestic partnerships, civil unions, or other
similar relationships recognized under
state law that are not denominated as a
marriage under that state's law, and the
terms "spouse," "husband and wife,"
"husband," and "wife" do not include in-
dividuals who have entered into such a
relationship.

## SPECIAL ADMINISTRATIVE PROCEDURES

1\. Marital Deduction and Applicable
Exclusion Amount

Section 2001(a) imposes an estate tax
on the transfer of the taxable estate of
every decedent who is a citizen or resident
of the United States. Section 2010(a) pro-
vides that a credit of the applicable credit
amount is allowed to the estate of every

decedent against the tax imposed by
§ 2001. Section 2010(c)(1) defines the
applicable credit amount as the amount of
the tentative tax that would be determined
under § 2001(c) if the amount with respect
to which such tentative tax is to be com-
puted were equal to the applicable exclu-
sion amount. Section 2010(c)(2) defines
the applicable exclusion amount as the
sum of the basic exclusion amount of
$5,000,000 (as increased for inflation) and
the deceased spousal unused exclusion
amount. Section 2056(a) provides that,
except as limited for certain terminable
interests, the value of the decedent's tax-
able estate is determined by deducting
from the value of the gross estate the
value of all interests in property passing
from the decedent to the surviving spouse
(estate tax marital deduction), assuming
all requirements for that deduction are sat-
isfied.

Section 2501 imposes a gift tax for
each calendar year on the transfer of prop-
erty by gift during such calendar year by
any individual. Section 2502 provides that
the tax imposed by § 2501 for each cal-
endar year is an amount equal to the ex-
cess of (1) a tentative tax, computed under
§ 2001(c), on the aggregate sum of the
taxable gifts for such calendar year and
for each of the preceding calendar periods,
over (2) a tentative tax, computed under
such section, on the aggregate sum of the
taxable gifts for each of the preceding
calendar periods. Under section 2505(a),
in the case of a citizen or resident of the
United States, a credit is allowed against
the tax imposed by § 2501 for each cal-
endar year in an amount equal to (1) the
applicable credit amount in effect under
§ 2010(c) that would apply if the donor
died at the end of the calendar year, re-
duced by (2) the sum of the amounts al-
lowable as a credit to the individual under
§ 2505 for all preceding calendar periods.
Section 2523(a) provides that, when a do-
nor transfers an interest in property by gift
to a donee who is then the donor's spouse,
the amount of the donor's taxable gifts for
that calendar year is reduced by the total
value of such gifts to the donor's spouse
(gift tax marital deduction), assuming that
the other requirements for that deduction
are satisfied.

For example, when a married individ-
ual (A) makes a gift or bequest to A's

spouse (B), A is entitled to claim a gift or
estate tax marital deduction for the gift or
bequest under § 2523 or § 2056 if the
requirements of those sections are satis-
fied. Because of this marital deduction, A
does not have to use any of A's applicable
exclusion amount to exclude that spousal
transfer from tax, thus preserving A's ap-
plicable exclusion amount for other gifts
and bequests. Prior to the decision in
Windsor, if A and B were of the same sex,
A was not allowed to claim the marital
deduction for a transfer to B, and A's
applicable exclusion amount (if any)
would have been applied automatically to
reduce the amount of the gift or estate tax
due.

Applicable law provides that, as long
as the limitations period for filing claims
of credits or refunds under § 6511 has not
expired, a taxpayer may file an amended
Form 709 (United States Gift (and
Generation-Skipping Transfer) Tax Re-
turn) or a supplemental Form 706 (United
States Estate (and Generation-Skipping
Transfer) Tax Return) to claim the marital
deduction for a gift or bequest to the tax-
payer's same-sex spouse and to restore the
applicable exclusion amount allocated to
that transfer. If the limitations period has
expired, this notice allows the taxpayer to
recalculate the taxpayer's remaining ap-
plicable exclusion amount as a result of
recognizing the taxpayer's marriage to the
taxpayer's spouse. However, once the
limitations period on assessment of tax
has expired, neither the value of the trans-
ferred interest nor any position concerning
a legal issue (other than the existence of
the marriage) related to the transfer can be
changed pursuant to this notice. See
§§ 2001(f), 2504(c), 6501(c)(9) and the
regulations thereunder. Similarly, no
credit or refund of the tax paid on that
marital gift can be given once the limita-
tions period on claims for credit or refund
has expired.

In the interest of providing certainty
and to ease the administrative burden on
both the taxpayer and IRS, a taxpayer
must recalculate the taxpayer's remaining
applicable exclusion amount, in accor-
dance with IRS forms and instructions, on
a Form 709 (preferably, the first Form 709
required to be filed by the taxpayer after
the issuance of this notice), on an
amended Form 709 (if the limitations pe-

riod under § 6511 has not expired), or on
the Form 706 for the taxpayer's estate if
not reported on a Form 709. Unless a
taxpayer has predeceased this notice, it is
not necessary to file an amended or sup-
plemental return solely to report the in-
crease in available applicable exclusion
amount as a result of this administrative
guidance. The taxpayer should include a
statement at the top of the Form 706 or
Form 709 that the return is "FILED PUR-
SUANT TO NOTICE 2017-15." More-
over, the taxpayer must attach a statement
supporting the claim for the marital de-
duction and detailing the recalculation of
the taxpayer's remaining applicable ex-
clusion amount as directed in forms and
instructions issued by the IRS. If a QTIP
or QDOT election is required in order to
obtain the marital deduction, a separate
request for relief pursuant to § 301.9100-
3 must be submitted. The IRS will provide
on www.irs.gov a worksheet and instruc-
tions to the Form 706 and Form 709 to
properly compute and report the recalcu-
lated applicable exclusion amount.

The provisions of this section 1 apply
both to the recalculation of the remaining
applicable exclusion amount of a taxpayer
(whether living or deceased), as well as to
the recalculation of any deceased spousal
exclusion amount allowed to be included
in the applicable exclusion amount of that
taxpayer's surviving spouse.

While this notice allows taxpayers to
recalculate their remaining applicable ex-
clusion amount as a result of the allow-
ance of a marital deduction, it does not
extend the applicable time limits on elect-
ing to split gifts made by a spouse under
§ 2513. In addition, any claims for credit
or refund of gift or estate tax filed after the
expiration of the limitations period under
§ 6511 will be denied. Any unrefunded
gift tax paid on a gift to a same-sex
spouse, for which the limitations period
under § 6511 has expired, will continue to
be recognized as gift tax paid or payable
for purposes of the computation of the
estate tax under § 2001.

### 2. GST Exemption and Generation Assignments

Section 2601 imposes a tax on all
generation-skipping transfers. Section
2611(a) provides that a "generation-
skipping transfer" is a taxable distribution,

a taxable termination, or a direct skip, all
of which are transfers to or for the benefit
of one or more skip persons. Section
2613(a) provides that a skip person is (1)
a person assigned to a generation that is
two or more generations below the gener-
ation assignment of the transferor, or (2) a
trust (A) if all interests in such trust are
held by skip persons, or (B) if (i) there is
no person holding an interest in such trust,
and (ii) at no time after such transfer may
a distribution (including distributions on
termination) be made from such trust to a
non-skip person.

A person's generation is determined
under § 2651 based on the transferee's
familial relationship to the transferor or
the transferor's spouse, or if there is no
such relationship, then based on the dif-
ference in age between the transferor and
transferee. For purposes of the GST gen-
eration assignment rules, family members
of the transferor include the transferor's
spouse and each lineal descendant of a
grandparent of the transferor or the trans-
feror's spouse. The generation assignment
of each family member other than a
spouse is determined by comparing the
number of generations between the trans-
feree and a grandparent of the transferee
(or of the transferee's spouse or former
spouse) with the number of generations
between that grandparent and the trans-
feror (or the transferor's spouse or former
spouse). Spouses are assigned to the same
generation: an individual who has been
married at any time to the transferor is
assigned to the transferor's generation,
and an individual who has been married at
any time to a lineal descendant of a grand-
parent of the transferor (or of the transfer-
or's spouse or former spouse) is assigned
to the generation of that lineal descendant.
Finally, a relationship by legal adoption or
by the half-blood is treated as a relation-
ship by blood.

Section 2651(d) provides that an indi-
vidual who is not assigned to a generation
by reason of the family relationships de-
scribed in the preceding paragraph shall
be assigned to a generation on the basis of
the date of such individual's birth. An
individual born not more than 121/2 years
after the date of birth of the transferor is
assigned to the transferor's generation. An
individual born more than 121/2 years but
not more than 371/2 years after the trans-

feror is assigned to the first generation
younger than the transferor. A new gen-
eration begins every 25 years thereafter.

Under § 2631, every individual is al-
lowed a GST exemption amount which
may be allocated by such individual to
any property with respect to which such
individual is the transferor.

Section 26.2632-1(b)(4)(i) of the
Generation-Skipping Transfer Tax Regu-
lations provides that an allocation of GST
exemption to a trust is void to the extent
that the amount allocated exceeds the
amount necessary to obtain an inclusion
ratio of zero with respect to the trust. An
allocation also is void if the allocation is
made with respect to a trust that, at the
time of the allocation, has no GST poten-
tial with respect to the transferor whose
exemption was allocated. For this pur-
pose, a trust has GST potential even if the
possibility of a GST is so remote as to be
negligible. Under this rule, an allocation
made to a trust with one or more skip
persons as beneficiaries is not void.

Prior to the decision in Windsor, if a
married individual (A) made a gift to A's
same-sex spouse (B) or to a lineal descen-
dant of B, B and B's descendants would be
assigned to a generation for GST tax pur-
poses based upon their ages, because they
had no familial relationship to A that was
recognized for federal tax purposes. If
those generation assignments resulted in B
or any of B's descendants being skip per-
sons, A's gift could be subject to GST tax
except to the extent A allocated A's GST
exemption to the gift (or to the recipient
trust). One result of the Windsor decision,
however, is that the generation assign-
ments of B and B's lineal descendants
instead are established based on their fa-
milial relationship with A by reason of A
and B's marriage. Accordingly, B is in the
same generation as A, so neither B nor any
of B's children are skip persons, A's gifts
(or transfers on death) to them are not
subject to GST tax, and any of A's GST
exemption allocated to such transfers (or
made to a trust solely for those individu-
als) is void.

In light of the Windsor decision, the
Treasury Department and the IRS con-
clude that any allocation of GST exemp-
tion to a transfer also is void if the transfer
is a direct skip not in trust to B or to a
lineal descendant of B (or such descen-

dant's spouse) who is not a skip person
with regard to transfers from A.

These rules apply to allocations of a
taxpayer's GST exemption made on a re-
turn filed, or by operation of law as of a
date, before the issuance of this notice,
whether or not the limitations period on
claims for credits or refunds under § 6511
has expired. This notice also permits a
taxpayer to reduce his or her GST exemp-
tion allocated to transfers that were made
to or for the benefit of transferees whose
generation assignment is changed as a re-
sult of the Windsor decision. This notice is
limited to the recalculation of the taxpay-
er's GST exemption that was allocated to
a transfer to (or to a trust for the sole
benefit of) one or more transferees whose
generation assignment for purposes of that
exemption allocation should have been
determined on the basis of a familial re-
lationship as the result of the Windsor
decision, and who therefore are non-skip
persons.

In the interest of providing certainty
and to ease the administrative burden on
both the taxpayer and IRS, a taxpayer
should recalculate (also taking into ac-
count the GST implications of any interim
transfers), in accordance with IRS forms
and instructions, and report such taxpay-
er's available GST exemption based upon
that recalculation, on a Form 709 (prefer-
ably, the first Form 709 required to be
filed by the taxpayer after the issuance of
this notice), on an amended Form 709 (if
the limitations period under § 6511 has
not expired), or on the Form 706 for the
taxpayer's estate if not reported on a Form
709. Unless a taxpayer has predeceased
this notice, it is not necessary to file an
amended or supplemental return solely to
report the increase in available GST ex-
emption as a result of this notice. Chapter
13 of the Code, and the regulations there-
under, shall apply to the allocation of a
taxpayer's newly recalculated GST ex-
emption. A request for relief under
§ 301.9100-3 is not required. Rather, the
taxpayer should include a statement at the
top of the Form 706 or Form 709 that the
return is "FILED PURSUANT TO NO-
TICE 2017-15." Moreover, the taxpayer
should attach a statement that the taxpay-
er's allocation of GST exemption in a
prior year is void pursuant to this notice
and a copy of the computation of the

resulting exemption allocation(s) and the
amount of exemption remaining available
to that taxpayer. The IRS will provide on
www.irs.gov a worksheet and instructions
to the Form 706 and Form 709 to be used
to properly recalculate the remaining ex-
emption amount.

Notwithstanding the recalculation of
GST exemption under this notice, a claim
for a credit or refund resulting from this
notice will be denied if the claim is not
filed within the applicable period of limi-
tations under § 6511.

## DRAFTING INFORMATION

The principal authors of this notice are
Juli Ro Kim and Mayer Samuels of the
Office of Associate Chief Counsel (Pass-
throughs & Special Industries). For fur-
ther information regarding this notice,
contact Ms. Kim or Mr. Samuels at (202)
317-6859 (not a toll-free number).

26 CFR 601.601: Rules and regulations.(Also:
§§ 141, 145, 1.141-3, 1.145-2)

## Rev. Proc. 2017-13 SECTION 1. PURPOSE

This revenue procedure provides safe
harbor conditions under which a manage-
ment contract does not result in private
business use of property financed with
governmental tax-exempt bonds under
§ 141(b) of the Internal Revenue Code or
cause the modified private business use
test for property financed with qualified
501(c)(3) bonds under § 145(a)(2)(B) to
be met. This revenue procedure modifies,
amplifies, and supersedes Rev. Proc.
2016-44, 2016-36 IRB 316, to address
certain types of compensation, the timing
of payment of compensation, the treat-
ment of land, and methods of approval of
rates. Sections 2.11 through 2.14 of this
revenue procedure generally describe the
modifications and amplifications made to
Rev. Proc. 2016-44 by this revenue pro-
cedure.

## SECTION 2. BACKGROUND

.01 Section 103(a) provides that, ex-
cept as provided in § 103(b), gross income
does not include interest on any State or
local bond. Section 103(b)(1) provides
that § 103(a) shall not apply to any private

activity bond that is not a qualified bond
(within the meaning of § 141). Section
141(a) provides that the term "private ac-
tivity bond" means any bond issued as
part of an issue (1) that meets the private
business use test and private security or
payment test, or (2) that meets the private
loan financing test.

.02 Section 141(b)(1) provides gener-
ally that an issue meets the private busi-
ness use test if more than 10 percent of the
proceeds of the issue are to be used
for any private business use. Section
141(b)(6) defines "private business use"
as use (directly or indirectly) in a trade or
business carried on by any person other
than a governmental unit. For this pur-
pose, any activity carried on by a person
other than a natural person must be treated
as a trade or business.

.03 Section 1.141-3(a)(1) of the In-
come Tax Regulations provides, in part,
that the 10 percent private business use
test of § 141(b)(1) is met if more than 10
percent of the proceeds of an issue is used
in a trade or business of a nongovernmen-
tal person. For this purpose, the use of
financed property is treated as the direct
use of proceeds. Section 1.141-3(a)(2)
provides that, in determining whether an
issue meets the private business use test, it
is necessary to look at both indirect and
direct use of proceeds. Proceeds are
treated as used in the trade or business of
a nongovernmental person if a nongovern-
mental person, as a result of a single trans-
action or a series of related transactions,
uses property acquired with the proceeds
of an issue.

.04 Section 1.141-3(b)(1) provides that
both actual and beneficial use by a non-
governmental person may be treated as
private business use. In most cases, the
private business use test is met only if a
nongovernmental person has special legal
entitlements to use the financed property
under an arrangement with the issuer. In
general, a nongovernmental person is
treated as a private business user as a
result of ownership; actual or beneficial
use of property pursuant to a lease, a man-
agement contract, or an incentive payment
contract; or certain other arrangements
such as a take or pay or other output-type
contract.

.05 Section 1.141-3(b)(3) provides
generally that the lease of financed prop-

erty to a nongovernmental person is pri-
vate business use of that property. For this
purpose, any arrangement that is properly
characterized as a lease for federal income
tax purposes is treated as a lease. Section
1.141-3(b)(3) further provides that, in de-
termining whether a management contract
is properly characterized as a lease, it is
necessary to consider all the facts and
circumstances, including the following
factors: (1) the degree of control over the
property that is exercised by a nongovern-
mental person; and (2) whether a nongov-
ernmental person bears the risk of loss of
the financed property.

.06 Section 1.141-3(b)(4)(i) provides
generally that a management contract with
respect to financed property may result in
private business use of that property,
based on all of the facts and circum-
stances. A management contract with re-
spect to financed property generally re-
sults in private business use of that
property if the contract provides for com-
pensation for services rendered with com-
pensation based, in whole or in part, on a
share of net profits from the operations of
the facility. Section 1.141-3(b)(4)(iv) pro-
vides generally that a management con-
tract with respect to financed property re-
sults in private business use of that
property if the service provider is treated
as the lessee or owner of financed prop-
erty for federal income tax purposes.

.07 Section 1.141-3(b)(4)(ii) defines
"management contract" as a management,
service, or incentive payment contract be-
tween a governmental person and a ser-
vice provider under which the service pro-
vider provides services involving all, a
portion, or any function, of a facility. For
example, a contract for the provision of
management services for an entire hospi-
tal, a contract for management services for
a specific department of a hospital, and an
incentive payment contract for physician
services to patients of a hospital are each
treated as a management contract.

.08 Section 1.141-3(b)(4)(iii) provides
that the following arrangements generally
are not treated as management contracts
that give rise to private business use: (A)
contracts for services that are solely inci-
dental to the primary governmental func-
tion or functions of a financed facility (for
example, contracts for janitorial, office
equipment repair, hospital billing, or sim-

ilar services); (B) the mere granting of
admitting privileges by a hospital to a
doctor, even if those privileges are condi-
tioned on the provision of de minimis
services if those privileges are available to
all qualified physicians in the area, con-
sistent with the size and nature of the
hospital's facilities; (C) a contract to pro-
vide for the operation of a facility or sys-
tem of facilities that consists primarily of
public utility property, if the only com-
pensation is the reimbursement of actual
and direct expenses of the service pro-
vider and reasonable administrative over-
head expenses of the service provider; and
(D) a contract to provide for services, if
the only compensation is the reimburse-
ment of the service provider for actual and
direct expenses paid by the service pro-
vider to unrelated parties.

.09 Section 141(e) provides, in part,
that the term "qualified bond" includes a
qualified 501(c)(3) bond if certain require-
ments stated therein are met. Section
145(a) provides generally that "qualified
501(c)(3) bond" means any private activ-
ity bond issued as part of an issue if (1) all
property that is to be provided by the net
proceeds of the issue is to be owned by a
501(c)(3) organization or a governmental
unit, and (2) such bond would not be a
private activity bond if (A) 501(c)(3) or-
ganizations were treated as governmental
units with respect to their activities that do
not constitute unrelated trades or busi-
nesses, determined by applying § 513(a),
and (B) § 141(b)(1) and (2) were applied
by substituting "5 percent" for "10 per-
cent" each place it appears and by substi-
tuting "net proceeds" for "proceeds" each
place it appears. Section 1.145-2 provides
that, with certain exceptions and modifi-
cations, §§ 1.141-0 through 1.141-15 ap-
ply to § 145(a).

.10 Rev. Proc. 2016-44 provides safe
harbor conditions under which a manage-
ment contract does not result in private
business use of property financed with
governmental tax-exempt bonds under
§ 141(b) or cause the modified private
business use test for property financed
with qualified 501(c)(3) bonds under
§ 145(a)(2)(B) to be met. Rev. Proc.
2016-44 modified and superseded Rev.
Proc. 97-13, 1997-1 C.B. 632; Rev. Proc.
2001-39, 2001-2 C.B. 38; and section

3.02 of Notice 2014-67, 2014-46 I.R.B.
822.

.11 Section 5.02 of Rev. Proc. 2016-
44 sets forth general financial require-
ments for management compensation ar-
rangements eligible for the safe harbor.
Sections 5.02(2) and 5.02(3) of Rev. Proc.
2016-44 provide that the contract must
neither provide to the service provider a
share of net profits nor impose on the
service provider the burden of bearing any
share of net losses from the operation of
the managed property. Before the publi-
cation of Rev. Proc. 2016-44, previously
applicable revenue procedures expressly
treated certain types of compensation, in-
cluding capitation fees, periodic fixed
fees, and per-unit fees (as defined therein),
as not providing a share of net profits.
Questions have arisen regarding whether
these common types of compensation
continue to be treated in a similar manner
under Rev. Proc. 2016-44. Related ques-
tions have arisen about whether a service
provider's payment of expenses of the op-
eration of the managed property without
reimbursement from the qualified user (as
defined in section 4.04 of Rev. Proc.
2016-44) affects the treatment of these
types of compensation. To provide conti-
nuity with the previous safe harbors, this
revenue procedure clarifies that these
types of compensation and certain incen-
tive compensation will not be treated as
providing a share of net profits or requir-
ing the service provider to bear a share of
net losses.

.12 Sections 5.02(2) and 5.02(3) of
Rev. Proc. 2016-44 also provide that the
timing of payment of compensation can-
not be contingent upon net profits or net
losses from the operation of the managed
property. Questions have arisen about the
effect of these restrictions on the timing of
payment of compensation. This revenue
procedure clarifies that compensation sub-
ject to an annual payment requirement and
reasonable consequences for late payment
(such as interest charges or late payment
fees) will not be treated as contingent
upon net profits or net losses if the con-
tract includes a requirement that the qual-
ified user will pay the deferred compen-
sation within five years of the original due
date of the payment.

.13 Section 5.03 of Rev. Proc. 2016-
44 provides that the term of the contract,

including all renewal options (as defined
in § 1.141-1(b)), must be no greater than
the lesser of 30 years or 80 percent of the
weighted average reasonably expected
economic life of the managed property.
For this purpose, under Rev. Proc. 2016-
44, economic life is determined in the
same manner as under § 147(b), but with-
out regard to § 147(b)(3)(B)(ii), as of the
beginning of the term of contract. Section
147(b)(3)(B)(i) provides that generally
land is not taken into account, but
§ 147(b)(3)(B)(ii) provides that if 25 per-
cent or more of the net proceeds of any
issue is to be used to finance the acquisi-
tion of land, such land shall be taken into
account and treated as having an eco-
nomic life of 30 years. Questions have
arisen about excluding land when the cost
of the land accounts for a significant por-
tion of the managed property. This reve-
nue procedure provides that economic life
is determined in the same manner as under
§ 147(b) as of the beginning of the term of
the contract. Thus, land will be treated as
having an economic life of 30 years if 25
percent or more of the net proceeds of the
issue that finances the managed property
is to be used to finance the costs of such
land.

.14 Section 5.04 of Rev. Proc. 2016-
44 provides that the qualified user must
exercise a significant degree of control
over the use of the managed property.
Section 5.04 of Rev. Proc. 2016-44 fur-
ther provides that this requirement is met
if the contract requires the qualified user
to approve, among other things, the rates
charged for use of the managed property.
Section 5.04 of Rev. Proc. 2016-44 also
provides that a qualified user may show
approval of rates charged for use of the
managed property by either expressly ap-
proving such rates (or the methodology
for setting such rates) or by including in
the contract a requirement that service
provider charge rates that are reasonable
and customary as specifically determined
by an independent third party. Questions
have arisen about the requirement to ap-
prove the rates in various circumstances in
which it may not be feasible to approve
each specific rate charged, such as for a
physician's professional services at a
§ 501(c)(3) hospital or hotel room rates at
a governmentally-owned hotel. This rev-
enue procedure clarifies that a qualified

user may satisfy the approval of rates re-
quirement by approving a reasonable gen-
eral description of the method used to set
the rates or by requiring that the service
provider charge rates that are reasonable
and customary as specifically determined
by, or negotiated with, an independent
third party.

## SECTION 3. SCOPE

This revenue procedure applies to a
management contract (as defined in sec-
tion 4.03 of this revenue procedure) in-
volving managed property (as defined in
section 4.04 of this revenue procedure)
financed with the proceeds of an issue
of governmental bonds (as defined in
§ 1.141-1(b)) or qualified 501(c)(3) bonds
(as defined in § 145).

## SECTION 4. DEFINITIONS

For purposes of this revenue proce-
dure, the following definitions apply:

.01 Capitation fee means a fixed peri-
odic amount for each person for whom the
service provider or the qualified user as-
sumes the responsibility to provide all
needed services for a specified period so
long as the quantity and type of services
actually provided to such persons varies
substantially. For example, a capitation
fee includes a fixed dollar amount payable
per month to a medical service provider
for each member of a health maintenance
organization plan for whom the provider
agrees to provide all needed medical ser-
vices for a specified period. A fixed peri-
odic amount may include an automatic
increase according to a specified, objec-
tive, external standard that is not linked to
the output or efficiency of the managed
property. For example, the Consumer
Price Index and similar external indices
that track increases in prices in an area or
increases in revenues or costs in an indus-
try are objective, external standards. A
capitation fee may include a variable com-
ponent of up to 20 percent of the total
capitation fee designed to protect the ser-
vice provider against risk such as risk of
catastrophic loss.

.02 Eligible expense reimbursement ar-
rangement means a management contract
under which the only compensation con-
sists of reimbursements of actual and di-
rect expenses paid by the service provider

to unrelated parties and reasonable related
administrative overhead expenses of the
service provider.

.03 Management contract means a
management, service, or incentive pay-
ment contract between a qualified user
and a service provider under which the
service provider provides services for a
managed property. A management con-
tract does not include a contract or portion
of a contract for the provision of services
before a managed property is placed in
service (for example, pre-operating ser-
vices for construction design or construc-
tion management).

.04 Managed property means the por-
tion of a project (as defined in § 1.141-
6(a)(3)) with respect to which a service
provider provides services.

.05 Periodic fixed fee means a stated
dollar amount for services rendered for a
specified period of time. For example, a
stated dollar amount per month is a peri-
odic fixed fee. The stated dollar amount
may automatically increase according to a
specified, objective external standard that
is not linked to the output or efficiency of
the managed property. For example, the
Consumer Price Index and similar exter-
nal indices that track increases in prices in
an area or increases in revenues or costs in
an industry are objective external stan-
dards. Capitation fees and per-unit fees
are not periodic fixed fees.

.06 Per-unit fee means a fee based on a
unit of service provided specified in the
contract or otherwise specifically deter-
mined by an independent third party, such
as the administrator of the Medicare pro-
gram, or the qualified user. For example, a
stated dollar amount for each specified
medical procedure performed, car parked,
or passenger mile is a per-unit fee. Sepa-
rate billing arrangements between physi-
cians and hospitals are treated as per-unit
fee arrangements. A fee that is a stated
dollar amount specified in the contract
does not fail to be a per-unit fee as a result
of a provision under which the fee may
automatically increase according to a
specified, objective, external standard that
is not linked to the output or efficiency of
the managed property. For example, the
Consumer Price Index and similar exter-
nal indices that track increases in prices in
an area or increases in revenues or costs in

an industry are objective, external stan-
dards.

.07 Qualified user means, for projects
(as defined in § 1.141-6(a)(3)) financed
with governmental bonds, any govern-
mental person (as defined in § 1.141-1(b))
or, for projects financed with qualified
501(c)(3) bonds, any governmental per-
son or any 501(c)(3) organization with
respect to its activities which do not con-
stitute an unrelated trade or business, de-
termined by applying § 513(a).

.08 Service provider means any person
other than a qualified user that provides
services to, or for the benefit of, a quali-
fied user under a management contract.

.09 Unrelated parties means persons
other than either: (1) a related party (as
defined in § 1.150-1(b)) to the service
provider or (2) a service provider's em-
ployee.

## SECTION 5. SAFE HARBOR CONDITIONS UNDER WHICH MANAGEMENT CONTRACTS DO NOT RESULT IN PRIVATE BUSINESS USE

.01 In general. If a management con-
tract meets all of the applicable conditions
of sections 5.02 through section 5.07 of
this revenue procedure, or is an eligible
expense reimbursement arrangement, the
management contract does not result in
private business use under § 141(b) or
145(a)(2)(B). Further, under section 5.08
of this revenue procedure, use function-
ally related and subordinate to a manage-
ment contract that meets these conditions
does not result in private business use.

.02 General financial requirements.

(1) In general. The payments to the
service provider under the contract must
be reasonable compensation for services
rendered during the term of the contract.
Compensation includes payments to reim-
burse actual and direct expenses paid by
the service provider and related adminis-
trative overhead expenses of the service
provider.

(2) No net profits arrangements. The
contract must not provide to the service
provider a share of net profits from the
operation of the managed property. Com-
pensation to the service provider will not
be treated as providing a share of net
profits if no element of the compensation
takes into account, or is contingent upon,

either the managed property's net profits
or both the managed property's revenues
and expenses (other than any reimburse-
ments of direct and actual expenses paid
by the service provider to unrelated third
parties) for any fiscal period. For this pur-
pose, the elements of the compensation
are the eligibility for, the amount of, and
the timing of the payment of the compen-
sation. Incentive compensation will not be
treated as providing a share of net profits
if the eligibility for the incentive compen-
sation is determined by the service pro-
vider's performance in meeting one or
more standards that measure quality of
services, performance, or productivity,
and the amount and the timing of the
payment of the compensation meet the
requirements of this section 5.02(2).

(3) No bearing of net losses of the
managed property.

(a) The contract must not, in sub-
stance, impose upon the service provider
the burden of bearing any share of net
losses from the operation of the managed
property. An arrangement will not be
treated as requiring the service provider to
bear a share of net losses if:

(i) The determination of the amount
of the service provider's compensation and
the amount of any expenses to be paid by
the service provider (and not reimbursed),
separately and collectively, do not take into
account either the managed property's net
losses or both the managed property's rev-
enues and expenses for any fiscal period;
and

(ii) The timing of the payment of
compensation is not contingent upon the
managed property's net losses.

(b) For example, a service provider
whose compensation is reduced by a
stated dollar amount (or one of multiple
stated dollar amounts) for failure to keep
the managed property's expenses below a
specified target (or one of multiple speci-
fied targets) will not be treated as bearing
a share of net losses as a result of this
reduction.

(4) Treatment of certain types of com-
pensation. Without regard to whether the
service provider pays expenses with re-
spect to the operation of the managed
property without reimbursement by the
qualified user, compensation for services
will not be treated as providing a share of
net profits or requiring the service pro-

vider to bear a share of net losses under
sections 5.02(2) and 5.02(3) of this reve-
nue procedure if the compensation for ser-
vices is: (a) based solely on a capitation
fee, a periodic fixed fee, or a per-unit fee;
(b) incentive compensation described in
the last sentence of section 5.02(2) of this
revenue procedure; or (c) a combination
of these types of compensation.

(5) Treatment of timing of payment of
compensation. Deferral due to insufficient
net cash flows from the operation of the
managed property of the payment of com-
pensation that otherwise meets the re-
quirements of sections 5.02(2) and 5.02(3)
of this revenue procedure will not cause
the deferred compensation to be treated
as contingent upon net profits or net losses
under sections 5.02(2) and 5.02(3) of this
revenue procedure if the contract includes
requirements that:

(a) The compensation is payable at
least annually;

(b) The qualified user is subject to
reasonable consequences for late pay-
ment, such as reasonable interest charges
or late payment fees; and

(c) The qualified user will pay such
deferred compensation (with interest or
late payment fees) no later than the end of
five years after the original due date of the
payment.

.03 Term of the contract and revisions.
The term of the contract, including all
renewal options (as defined in § 1.141-
1(b)), must not be greater than the lesser
of 30 years or 80 percent of the weighted
average reasonably expected economic
life of the managed property. For this pur-
pose, economic life is determined in the
same manner as under § 147(b) as of the
beginning of the term of the contract. A
contract that is materially modified with
respect to any matters relevant to this sec-
tion 5 is retested under this section 5 as a
new contract as of the date of the material
modification.

.04 Control over use of the managed
property. The qualified user must exercise
a significant degree of control over the use
of the managed property. This control re-
quirement is met if the contract requires
the qualified user to approve the annual
budget of the managed property, capital
expenditures with respect to the managed
property, each disposition of property that
is part of the managed property, rates

charged for the use of the managed prop-
erty, and the general nature and type of
use of the managed property (for example,
the type of services). For this purpose, for
example, a qualified user may show ap-
proval of capital expenditures for a man-
aged property by approving an annual
budget for capital expenditures described
by functional purpose and specific maxi-
mum amounts; and a qualified user may
show approval of dispositions of property
that is part of the managed property in a
similar manner. Further, for example, a
qualified user may show approval of rates
charged for use of the managed property
by expressly approving such rates or a
general description of the methodology
for setting such rates (such as a method
that establishes hotel room rates using
specified revenue goals based on compa-
rable properties), or by requiring that the
service provider charge rates that are rea-
sonable and customary as specifically de-
termined by, or negotiated with, an inde-
pendent third party (such as a medical
insurance company).

.05 Risk of loss of the managed prop-
erty. The qualified user must bear the risk
of loss upon damage or destruction of the
managed property (for example, due to
force majeure). A qualified user does not
fail to meet this risk of loss requirement as
a result of insuring against risk of loss
through a third party or imposing upon the
service provider a penalty for failure to
operate the managed property in accor-
dance with the standards set forth in the
management contract.

.06 No inconsistent tax position. The
service provider must agree that it is not
entitled to and will not take any tax posi-
tion that is inconsistent with being a ser-
vice provider to the qualified user with
respect to the managed property. For ex-
ample, the service provider must agree not
to claim any depreciation or amortization
deduction, investment tax credit, or de-
duction for any payment as rent with re-
spect to the managed property.

.07 No circumstances substantially lim-
iting exercise of rights.

(1) In general. The service provider
must not have any role or relationship
with the qualified user that, in effect, sub-
stantially limits the qualified user's ability
to exercise its rights under the contract,
based on all the facts and circumstances.

(2) Safe harbor. A service provider
will not be treated as having a role or
relationship prohibited under section
5.07(1) of this revenue procedure if:

(a) No more than 20 percent of the
voting power of the governing body of the
qualified user is vested in the directors,
officers, shareholders, partners, members,
and employees of the service provider, in
the aggregate;

(b) The governing body of the
qualified user does not include the chief
executive officer of the service provider or
the chairperson (or equivalent executive)
of the service provider's governing body;
and

(c) The chief executive officer of
the service provider is not the chief exec-
utive officer of the qualified user or any of
the qualified user's related parties (as de-
fined in § 1.150-1(b)).

(3) For purposes of section 5.07(2)
of this revenue procedure, the phrase "ser-
vice provider" includes the service pro-
vider's related parties (as defined in
§ 1.150-1(b)) and the phrase "chief exec-
utive officer" includes a person with
equivalent management responsibilities.

.08 Functionally related and subordi-
nate use. A service provider's use of a
project (as defined in § 1.141-6(a)(3))
that is functionally related and subordi-
nate to performance of its services under a
management contract for managed prop-
erty that meets the conditions of this sec-
tion 5 does not result in private business
use of that project. For example, use of
storage areas to store equipment used to
perform activities required under a man-
agement contract that meets the require-
ments of this section 5 does not result in
private business use.

## SECTION 6. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2016-44 is modified, am-
plified, and superseded.

## SECTION 7. DATE OF APPLICABILITY

This revenue procedure applies to any
management contract that is entered into
on or after January 17, 2017, and an issuer
may apply this revenue procedure to any
management contract that was entered
into before January 17, 2017. In addition,

an issuer may apply the safe harbors in
Rev. Proc. 97-13, as modified by Rev.
Proc. 2001-39 and amplified by Notice
2014-67, to a management contract that
is entered into before August 18, 2017 and
that is not materially modified or extended
on or after August 18, 2017 (other than
pursuant to a renewal option as defined in
§ 1.141-1(b)).

## SECTION 8. DRAFTING INFORMATION

The principal authors of this revenue
procedure are Johanna Som de Cerff and
David White of the Office of Associate
Chief Counsel (Financial Institutions &
Products). For further information regard-
ing this revenue procedure, contact David
White on (202) 317-6980 (not a toll-free
number).

## Updated Withholding Foreign Partnership Agreement and Withholding Foreign Trust Agreement

### Rev. Proc. 2017-21

### SECTION 1. PURPOSE

This revenue procedure sets forth the
withholding foreign partnership agree-
ment (WP agreement) and withholding
foreign trust agreement (WT agreement)
entered into under § 1.1441-5(c)(2)(ii)
and (e)(5)(v). In general, the WP and WT
agreements allow a foreign partnership or
foreign trust to assume the withholding
and reporting obligations under chapters 3
and 4 of the Internal Revenue Code
(Code) for certain payments of U.S.
source income (such as interest, divi-
dends, and royalties) made to its direct
partners, beneficiaries, or owners, and in
some cases, persons holding interests in
the partnership or trust through one or
more foreign intermediaries or flow-
through entities (indirect partners, benefi-
ciaries, or owners). This revenue proce-
dure also provides guidance to foreign
partnerships and foreign trusts for how to
apply to enter into, or renew, the WP or
WT agreement.

The WP agreement and WT agreement
provided in Revenue Procedure 2014-47,
2014-35 I.R.B. 393 (the 2014 WP agree-

ment and 2014 WT agreement), were
scheduled to expire on December 31,
2016, but on December 30, 2016, the De-
partment of the Treasury (Treasury De-
partment) and the Internal Revenue
Service (IRS) announced in Revenue Pro-
cedure 2017-15, 2017-03 I.R.B. 437, that
the 2014 WP and WT agreements would
be treated as in effect until the updated
agreements are issued in January 2017.
The WP and WT agreements in this rev-
enue procedure apply to withholding for-
eign partnerships (WPs) and withholding
foreign trusts (WTs) with a WP or WT
agreement effective on or after the date of
issuance of this revenue procedure (but
see section 12 of the WP or WT agree-
ment for when the terms of the WP or WT
agreement applies).

Section 2 of this revenue procedure
provides background on the withholding
and reporting requirements of chapters 3
and 4 of the Code. Section 3 of this rev-
enue procedure describes the scope of this
revenue procedure, and section 4 of this
revenue procedure highlights changes to
the WP and WT agreements. Section 5 of
this revenue procedure provides the appli-
cation procedures for becoming a WP or
WT and for renewing a WP or WT agree-
ment. Section 6 of this revenue procedure
provides the WP agreement and section 7
of this revenue procedure provides the
WT agreement. Section 8 of this revenue
procedure provides the effective date; sec-
tion 9 provides the effect on other docu-
ments; section 10 describes the collection
of information burdens under the Paper-
work Reduction Act; and section 11 pro-
vides drafting information.

### SECTION 2. BACKGROUND

.01 Withholding and Reporting under
Chapter 4 of the Code. On March 18,
2010, the Hiring Incentives to Restore
Employment Act of 2010, Pub. L. 111-
147, added chapter 4 of Subtitle A (chap-
ter 4 or FATCA) of the Code, comprised
of sections 1471 through 1474. On Janu-
ary 28, 2013, the Treasury Department
and the IRS published final regulations
(TD 9610) under chapter 4 (78 FR 5874),
and, on September 10, 2013, published
corrections to those final regulations (78
FR 55202) (collectively, the 2013 chapter
4 regulations). On March 6, 2014, the
Treasury Department and the IRS pub-

lished temporary regulations (TD 9657)
providing clarifications and modifications
to the 2013 final regulations, and, on July
1, 2014, and November 18, 2014, pub-
lished corrections to those temporary reg-
ulations (79 FR 37175 and 78 FR 68619,
respectively) (collectively, the 2014 chap-
ter 4 regulations). On January 6, 2017, the
Treasury Department and the IRS pub-
lished regulations finalizing the 2014
chapter 4 regulations with certain modifi-
cations (final chapter 4 regulations) and
published temporary regulations provid-
ing additional rules under chapter 4 (tem-
porary chapter 4 regulations) (TD 9809,
82 FR 2124).

Section 1471(a) requires a withholding
agent to deduct and withhold a tax equal
to 30 percent on any withholdable pay-
ment made to a foreign financial institu-
tion (FFI), unless the FFI agrees to and
complies with the terms of an FFI agree-
ment (published in Revenue Procedure
2017-16, 2017-03 I.R.B. 501 (as updated
or superseded by any subsequent revenue
procedure)) to satisfy the obligations
specified in section 1471(b) (a participat-
ing FFI), is deemed to meet these require-
ments under section 1471(b) (a deemed-
compliant FFI), or is treated as an exempt
beneficial owner under § 1.1471-6. Sec-
tion 1472(a) requires a withholding agent
to deduct and withhold a tax equal to 30
percent on any withholdable payment
made to a non-financial foreign entity
(NFFE), other than an excepted NFFE,
unless such entity provides information
regarding its substantial U.S. owners or
certifies that it does not have any such
owners.

.02 Withholding and Reporting under
Chapter 3 of the Code. Under sections
1441 and 1442, a withholding agent is
required to deduct and withhold a tax
equal to 30 percent on any payment of
U.S. source fixed or determinable, annual
or periodical (FDAP) income that is an
amount subject to withholding (as defined
in § 1.1441-2(a)) made to a foreign per-
son. A reduced rate of withholding may
apply under the Code (for example, sec-
tion 1443) or an income tax treaty. Gen-
erally, a withholding agent must report the
payments on Forms 1042-S, regardless of
whether withholding is required. See
§ 1.1461-1(c).

.03 Coordination of Withholding and
Reporting Requirements under Chapters 3
and 4 of the Code. On March 6, 2014, the
Treasury Department and the IRS pub-
lished temporary regulations (TD 9658,
79 FR 12726) providing rules under chap-
ters 3, 61, and section 3406 of the Code to
coordinate with the requirements provided
in the 2013 and 2014 chapter 4 regula-
tions, and, on July 1, 2014, published cor-
rections to those temporary regulations
(79 FR 37181) (collectively, the tempo-
rary coordination regulations). On Janu-
ary 6, 2017, the Treasury Department and
the IRS published regulations finalizing
certain temporary regulations under chap-
ters 3 and 61 and sections 3406 and 6402
(final chapter 3 regulations) and published
temporary regulations providing addi-
tional rules under chapter 3 (temporary
chapter 3 regulations) (TD 9808, 82 FR
2046).

With respect to a payment that is sub-
ject to withholding under chapter 4, a
withholding agent may credit any tax
withheld under chapter 4 against its liabil-
ity for any tax due with respect to the
payment under chapter 3. A withholding
agent is required to use a single Form
1042-S to report information required un-
der both chapters 3 and 4 with respect to a
payment subject to withholding under
both chapters 3 and 4 for which a credit
against the beneficial owner's chapter 3
liability, if any, may be claimed. With
respect to a withholdable payment that is
not subject to withholding under chapter 4
and that is an amount subject to withhold-
ing under chapter 3, a withholding agent is
also required to report the applicable
chapter 4 exemption code for the payment
and the recipient's chapter 4 status.

.04 Reporting Regarding Certain U.S.
Persons by Foreign Partnerships and
Foreign Trusts. If a foreign partnership
has U.S. partners, the foreign partnership
is generally required to file Form 1065
with a Schedule K-1 to report each U.S.
partner. See § 1.6031(a)-1. If a U.S. per-
son is treated as the owner of any portion
of a foreign trust under the grantor trust
rules (sections 671 through 679 of the
Code), the foreign trust is required to file
Form 3520-A, "Annual Information Re-
turn of a Foreign Trust with a U.S.
Owner," and to provide statements to each
U.S. owner, as well as to each U.S. person

who is not an owner and receives a distri-
bution. See section 6048(b); see also the
Instructions for Form 3520-A.

## SECTION 3. SCOPE

.01 Entities Eligible to Execute a WP
or WT Agreement. The WP agreement
may be entered into by a foreign partner-
ship described in § 1.1441-5(c)(2)(ii), and
the WT agreement may be entered into by
a foreign trust described in § 1.1441-
5(e)(5)(v). With respect to an FFI, the WP
or WT agreement may only be entered
into by an FFI that agrees to satisfy the
requirements and obligations of a partici-
pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI. An FFI that is a retire-
ment fund (as defined in section 2.69 of
the WP or section 2.67 of the WT agree-
ment) or a NFFE may also apply to enter
into a WP or WT agreement. A partner-
ship or trust that is a territory financial
institution (as defined in § 1.1471-1(b)
(130)) may not enter into a WP or WT
agreement. An FFI that is a foreign re-
verse hybrid entity (as defined in section
2.31 of the WP agreement) may apply to
enter into a WP agreement, provided that
the FFI is a participating FFI, a registered
deemed-compliant FFI, or a registered
deemed-compliant Model 1 IGA FFI. See
section 4.03 of this revenue procedure for
a summary of the requirements in the WP
agreement applicable to a foreign reverse
hybrid entity.

.02 Chapter 4 Requirements with Re-
spect to Financial Accounts. Certain FFIs
have withholding and reporting obliga-
tions under chapter 4 with respect to the
FFI's financial accounts. Under § 1.1471-
5(b)(1), a financial account is defined
broadly, and includes, for example, non-
publicly traded equity interests in an FFI
that is an investment entity (as defined in
§ 1.1471-4(e)(4)(i)). Therefore, if a WP
or WT is an FFI, WP's or WT's direct
partners, beneficiaries, or owners are con-
sidered account holders for purposes of
chapter 4, and the WP or WT will be
required to comply with the withholding
and reporting requirements with respect to
such partners, beneficiaries, or owners un-
der WP's or WT's FATCA requirements.

.03 Assumption of Primary Chapters 3
and 4 Withholding Responsibilities. The
WP and WT agreements require a foreign

partnership or foreign trust to assume pri-
mary withholding responsibilities under
chapters 3 and 4 with respect to the WP's
or WT's direct partners, beneficiaries, or
owners, and permit the WP or WT to
assume primary withholding responsibili-
ties under chapters 3 and 4 for certain
indirect partners, beneficiaries, or owners.
Section 2.09 of the WP and WT agree-
ments defines chapter 3 to mean sections
1441, 1442, 1443, 1461, 1463, and 1464.
The WP and WT agreements do not per-
mit a WP or WT to assume primary with-
holding responsibility under section 1445
or 1446.

.04 Indirect Partners, Beneficiaries, or
Owners That Are U.S. Non-Exempt Recip-
ients. A WP or WT must act in its capacity
as a WP or WT for reportable amounts
that are distributed to, or included in the
distributive share of, the WP's or WT's
direct partners, beneficiaries, or owners. A
WP or WT may also act as a WP or WT
for reportable amounts that are distributed
to, or included in the distributive share of,
certain indirect partners, beneficiaries, or
owners. Although § 1.1441-5(c)(2)(ii)
and (e)(5)(v) authorize the IRS to enter
into an agreement with a WP or WT to
permit it to act as a withholding agent or
payor under chapters 3, 4, and 61, and
section 3406, the WP and WT agreements
do not cover chapter 61 or section 3406.
Accordingly, a WP or WT may only act as
a WP or WT for an indirect partner, ben-
eficiary, or owner that is a U.S. non-
exempt recipient if the indirect partner,
beneficiary, or owner is included in a
chapter 4 withholding rate pool of the
passthrough partner, beneficiary, or owner
(as defined in section 2.56 of the WP
agreement and 2.54 of the WT agree-
ment). If the indirect partner, beneficiary,
or owner that is a U.S. non-exempt recip-
ient is not included in the passthrough
partner's, beneficiary's, or owner's chap-
ter 4 withholding rate pool, the WP or WT
cannot act as a WP or WT for such indi-
rect partner, beneficiary, or owner, and
must provide specific documentation on
such indirect partner, beneficiary, or
owner to the withholding agent paying the
reportable amount. See section 9.03 of the
WP or WT agreement on the treatment of
indirect partners, beneficiaries, or owners
under each of these agreements.

## SECTION 4. SIGNIFICANT CHANGES TO THE WP AND WT AGREEMENTS

This section summarizes the significant
changes to the WP and WT agreements.
Several of these changes are made to con-
form with the final and temporary chapter
3 regulations, the final and temporary
chapter 4 regulations, Notice 2016-42,
2016-29 I.R.B. 67, and Revenue Proce-
dure 2017-15.

.01 Compliance Procedures (In Gen-
eral). Notice 2016-42 sets forth a draft
qualified intermediary (QI) agreement
with proposed updates and modifications,
and announced that the proposed changes
to the QI compliance review are intended,
with appropriate modifications, to be in-
corporated in the WP and WT agreements.
Revenue Procedure 2017-15 sets forth the
final QI agreement for QIs with a QI
agreement effective on or after January 1,
2017 (the 2017 QI agreement). Accord-
ingly, the compliance procedures in the
WP and WT agreements are updated to
include compliance review procedures
similar to the compliance procedures in
the 2017 QI agreement. For example, the
WP and WT agreements allow the respon-
sible officer to make the certification of
internal controls based on, in addition to
the periodic review (if required), any other
reasonable processes, procedures, re-
views, or certifications made by other per-
sons that the responsible officer has deter-
mined are necessary in order to make the
responsible officer's periodic certification
of compliance. The WP and WT agree-
ments also provide that the periodic re-
view may be conducted for any calendar
year covered by the certification period,
rather than the most recent calendar year.
If a WP or WT chooses to review the last
year of the certification period for its pe-
riodic review, the WP or WT will also
have an extended six-month period of
time to make the certification on or before
December 31 of the calendar year follow-
ing the certification period (rather than
July 31 of the calendar year following the
certification period). The WP and WT
agreements also permit certain WPs and
WTs that meet the requirements in section
8.07 of the WP or WT agreement to apply
for a waiver from the periodic review re-
quirement. A WP or WT that is a NFFE

and a WP that is a member of a consoli-
dated compliance program may not apply
for a waiver from the periodic review re-
quirement. As in the 2017 QI agreement,
the WP and WT agreements require that
the reviewer have sufficient independence
to objectively conduct the review and can-
not review his or her own work. See the
preamble to the 2017 QI agreement for
additional discussion of the standard of
independence required of a reviewer,
which also applies to the WP and WT
agreements. The Appendix to the WP and
WT agreements provides the certification
of internal controls, waiver request, and
factual information.

Under the 2014 WP and WT agree-
ments, the initial certification period of the
WP or WT agreement is the period ending
on the third full calendar year that the WP
or WT agreement is in effect, and subse-
quent certification periods are every three
years following the initial certification pe-
riod, other than for a WP or WT that is a
NFFE or a retirement fund that does not
make a pooled reporting election under
section 6.02(D) of the WP or WT agree-
ment, in which case subsequent certifica-
tion periods are every six years for such
NFFE or retirement fund. To make the
WP and WT agreements more administra-
ble for the IRS, the WP and WT agree-
ments are revised to provide a three-year
subsequent certification period for all
WPs or WTs. In addition, the WP and WT
agreements are revised to clarify that the
certification period under the WP or WT
agreement may not necessarily be the
same as the certification period that ap-
plies to the WP's or WT's FATCA re-
quirements as a participating FFI or reg-
istered deemed-compliant FFI. Therefore,
a WP or WT may have a different review
cycle and certification due date for the
certification required under its FATCA re-
quirements than under its WP or WT
agreement, and should comply with the
requirements for both. In the certification
of internal controls in the Appendix to the
WP and WT agreements, a WP or WT
must certify that it has maintained its
chapter 4 status during the certification
period under the WP or WT agreement
(not the WP's or WT's certification period
under its FATCA requirements, if any).

The 2017 QI agreement allows the use
of statistical sampling of a QI's accounts

for purposes of the periodic review for
certain QIs, and includes a safe harbor
method in Appendix II of the 2017 QI
agreement for determining a statistical
sample of accounts for the periodic re-
view. Section 8.05 of the WP and WT
agreements provides that if a WP or WT
has more than 60 partners, beneficiaries,
or owners for which the WP or WT acts
for the year of the periodic review, the
WP's or WT's reviewer may use statisti-
cal sampling procedures by applying the
principles set forth in Appendix II of the
2017 QI Agreement in Revenue Proce-
dure 2017-15 for its periodic review.

.02 Consolidated Compliance Pro-
gram. In response to a comment to the
2014 WP agreement, section 8.02(C) of
the WP agreement provides an allowance
for consolidated compliance program for
WPs, similar to the allowance for QIs.
Under this option, a Compliance Entity
must implement a compliance program
that includes uniform practices, proce-
dures, and systems, subject to uniform
monitoring and control, with respect to all
WPs in the consolidated compliance pro-
gram for purposes of meeting the require-
ments of section 8 of the WP agreement.
The Compliance Entity must agree to be
jointly and severally liable for each WP's
obligations under its WP agreement. A
WP in a consolidated compliance program
may not request a waiver of the periodic
review requirement. The responsible offi-
cer of the Compliance Entity must per-
form a consolidated periodic review de-
scribed in sections 8.04 and 8.05 of the
WP agreement that includes each WP in
the consolidated compliance program, but
is permitted to make one certification for
all WPs in the consolidated compliance
program. The responsible officer of the
Compliance Entity must submit factual
information (described in Part IV of the
Appendix to the WP agreement) for each
WP. The Compliance Entity must be the
sponsoring entity for chapter 4 purposes
for each WP in the consolidated compli-
ance program unless the IRS Foreign In-
termediaries Program approves the use of
a different entity.

A comment to Notice 2016-42 sug-
gested that a consolidated compliance
program for WPs should not include a
requirement that the program have "uni-
form" practices, procedures, and systems

because this may be interpreted to mean
"identical" practices, procedures, and sys-
tems. This comment is not adopted be-
cause "uniform" does not necessarily
mean identical, but can also mean "con-
sistent in approach," which is the intended
meaning here.

.03 Foreign Reverse Hybrid Entities.
The WP agreement is revised to include
requirements for a WP that is a foreign
reverse hybrid entity. Under the 2014 WP
agreement, a foreign reverse hybrid entity
could only act as a WP if it obtained a
rider that modified the terms of the WP
agreement. A foreign reverse hybrid entity
is defined in section 2.31 of the WP agree-
ment as an entity organized or incorpo-
rated outside of the United States that is
treated as a corporation for U.S. federal
income tax purposes but is fiscally trans-
parent (within the meaning of § 1.894-
1(d)(3)(ii)) under the laws of the country
in which it is organized with respect to the
items of income paid to the entity. A WP
that is a foreign reverse hybrid entity must
be a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. The WP
agreement only allows a foreign reverse
hybrid entity to obtain reduced rates of
withholding under tax treaties for foreign
interest holders, and requires the foreign
reverse hybrid entity to comply with the
requirements in section 6.03(C) of the WP
agreement. Since a foreign reverse hybrid
entity is treated as a corporation for U.S.
tax purposes, and therefore is not required
to file Form 1065 or Schedule K-1, sec-
tion 6.03(C) of the WP agreement does
not require a WP that is a foreign reverse
hybrid entity to file a Form 1065 or
Schedule K-1, and instead the WP must
prepare the reconciliation statement de-
scribed in section 6.03(C)(3) of the WP
agreement to support the WP's allocations
of U.S. source FDAP income to each part-
ner that claims treaty benefits and issue
PFIC Annual Information Statements to
the extent required in section 6.03(C)(4)
of the WP agreement. The reconciliation
statement and the PFIC Annual Informa-
tion Statements must be reviewed for ac-
curacy as part of a WP's periodic review.

.04 Additional Changes to Coordinate
with the 2017 QI Agreement and the Tem-
porary Chapter 3 Regulations. The WP
and WT agreements are updated consis-

tent with the 2017 QI agreement and the
temporary chapter 3 regulations. For ex-
ample, the WP and WT agreements re-
quire a WP or WT to obtain information
regarding limitation on benefits on a treaty
statement obtained from an entity that is a
beneficial owner claiming treaty benefits.
A transitional rule permits a WP or WT to
obtain the information on limitation on
benefits for certain partners, beneficiaries,
or owners by January 1, 2019. In addition,
section 6.02(B)(6) of the 2014 WP and
WT agreements, which required specific
reporting of each partnership or trust to
which the joint account option is applied,
is removed because section 9.01(B)(3) of
the WP and WT agreements permits a WP
or WT to 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 re-
porting pools on Form 1042-S. See the
preamble to the 2017 QI agreement for
additional information on these changes.

.05 Changes to Coordinate with the
Temporary and Final Chapter 4 Regula-
tions. In section 2 of the WP and WT
agreements, the definition of participating
FFI is revised to cross-reference § 1.1471-
1(b)(91) to incorporate the definition in
the final chapter 4 regulations, and the
definition of U.S. person is updated to
incorporate revisions to the definition in
the final chapter 4 regulations. Section
6.05(A)(2) of the WP agreement incorpo-
rates rules in the temporary chapter 4 reg-
ulations regarding account reporting re-
quirements for participating FFIs that are
partnerships. A WP that is a participating
FFI or registered deemed-compliant FFI
(other than a reporting Model 1 FFI) re-
porting a U.S. account or an account held
by an owner-documented FFI on Form
8966 must report the partner's distributive
share of the partnership's income or loss
for the calendar year, without regard to
whether any such amount is distributed to
the partner during the year, and any guar-
anteed payments for the use of capital.
The amount required to be reported with
respect to a partner may be determined
based on the WP's tax returns or, if the tax
returns are unavailable by the due date for
filing Form 8966, the WP's financial state-
ments or any other reasonable method
used by the WP for calculating the part-

ner's share of partnership income and loss
by such date.

.06 Additional Changes and Correc-
tions. The 2014 WP and WT agreements
provide that a WP or WT that is an FFI
may obtain documentary evidence in ac-
cordance with the know-your-customer
(KYC) rules set forth in an attachment to
the WP or WT agreement. The KYC rules
that have been approved for each jurisdic-
tion are available at http://www.irs.gov/
Businesses/International-Businesses/List-
of-Approved-KYC-Rules. Because the
KYC rules are readily accessible online,
and because the IRS no longer provides
signed copies of a WP or WT agreement,
the applicable KYC rules will no longer
be attached to a WP or WT agreement and
references to an attachment to the WP or
WT agreement are removed.

The WP and WT agreements include
revisions and corrections to several defi-
nitions in section 2 of the WP or WT
agreement. The definition of financial in-
stitution is revised to correct a cross-
reference and conform to the definition in
§ 1.1471-1(b)(50), and the definition of
foreign financial institution is revised to
conform to the definition in § 1.1471-
1(b)(47). Definitions of the terms non-
qualified intermediary, nonreporting Model
1 FFI, nonreporting Model 2 FFI, and (in
the WP agreement only) foreign reverse
hybrid entity are added. The definition of
certified deemed-compliant FFI is moved
to section 2.08 of the WP or WT agree-
ment and revised to exclude registered
deemed-compliant Model 1 IGA FFIs be-
cause when the term certified deemed-
compliant FFI was used in the 2014 WP
and WT agreements, registered deemed-
compliant Model 1 IGA FFIs were ex-
cluded by a parenthetical. The definition
of registered deemed-compliant FFI is
moved to section 2.63 of the WP agree-
ment and section 2.61 of the WT agree-
ment and revised to exclude registered
deemed-compliant Model 1 IGA FFIs
providing a chapter 4 withholding rate
pool of U.S. payees. The inclusion of reg-
istered deemed-compliant Model 1 IGA
FFIs in the definition of registered
deemed-compliant FFI was unnecessary
because section 6.02(C) of the 2014 WP
or WT agreement already specifically
identified registered deemed-compliant
Model 1 IGA FFIs as a category of FFIs

that may provide a U.S. payee pool. Fi-
nally, the definition of registered deemed-
compliant Model 1 IGA FFI is moved to
section 2.64 of the WP agreement and
section 2.62 of the WT agreement.

In the 2014 WP and WT agreements, a
passthrough partner or passthrough bene-
ficiary or owner is defined as a direct or
indirect partner, beneficiary, or owner of a
WP or WT that is a foreign intermediary
or foreign flow-through entity, and an in-
termediary is defined as any person that
acts as a custodian, broker, nominee, or
agent with respect to a payment. How-
ever, a passthrough partner or passthrough
beneficiary or owner should not include 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. There-
fore, the definition of passthrough partner
or passthrough beneficiary or owner is
corrected to exclude a QI that assumes
primary chapters 3 and 4 withholding re-
sponsibility with respect to payments of
U.S. source FDAP income or primary
Form 1099 reporting and backup with-
holding responsibility.

Section 3.03 of the WP and WT agree-
ments provides the general rule for with-
holding on amounts subject to chapter 3
withholding and withholdable payments
that are distributed to, or included in the
distributive share of, a foreign partner,
beneficiary, or owner. The 2014 WP and
WT agreements do not provide a rule for
when to report withholding on a distribu-
tive share when the withholding occurs
after the due date (including extensions)
for filing Forms 1042-S. Section 3.03 of
the WP and WT agreements is revised to
provide that if the date that is the earlier of
the due date for filing Schedule K-1 (or
the statement required under section
6048(b)) or the date that the Schedule K-1
(or the statement required under section
6048(b)) is actually furnished to the part-
ner, beneficiary, or owner, is after the due
date (including extensions) for filing the
WP's or WT's Forms 1042-S for the cal-
endar year, the WP or WT must withhold
and report the withholding on the distrib-
utive share that relates to the prior calen-
dar year as if it arises in the subsequent
calendar year.

Under section 3.04 of the WP and WT
agreements, a WP or WT may determine
the amount of withholding on a distribu-
tion based on an estimate of a partner's,
beneficiary's, or owner's distributive
share of income, provided that the WP or
WT corrects the withholding to reflect the
partner's, beneficiary's, or owner's actual
distributive share on the earlier of the due
date for filing Schedule K-1 (or the state-
ment required under section 6048(b)) or
the date that the Schedule K-1 (or the
statement required under section 6048(b))
is actually furnished to the partner, bene-
ficiary, or owner. Section 3.04 of the WP
and WT agreements is revised to require a
WP or WT that makes corrections after
the earlier of the due date (including ex-
tensions) for filing Forms 1042-S or the
date that Forms 1042-S are actually filed
to report such corrections on Forms
1042-S for the subsequent calendar year.
This revision is made to ensure that a WP
or WT that has already filed Forms
1042-S reports the corrections for the
subsequent year rather than amending the
prior year Forms 1042-S.

.07 Effective Date and Term of the WP
and WT Agreements. In Revenue Proce-
dure 2017-15, the Treasury Department
and the IRS announced that because the
updated WP and WT agreements would
not be published before December 31,
2016, WPs and WTs with agreements in
effect on December 31, 2016, may con-
tinue to treat those agreements as in effect
until the updated WP and WT agreements
are issued.

Section 12.01(A) of the WP and WT
agreements provides that, in general, the
effective date of a WP or WT agreement
depends on when the WP or WT applica-
tion is submitted. If a WP or WT applies
on or before March 31 of the calendar
year and is approved for WP or WT status,
the WP or WT agreement will be effective
January 1 of such calendar year. If a WP
or WT applies after March 31 and is ap-
proved in the same calendar year and re-
ceives reportable amounts between Janu-
ary 1 of the year in which the application
is submitted and the date of approval, the
WP or WT agreement will be effective
January 1 of the following calendar year.
If a WP or WT that applies after March 31
does not receive any reportable amounts
between January 1 of the year in which

the application is submitted and the date
of approval, the WP or WT agreement
will be effective on the date the WP or
WT is issued a WP-EIN or WT-EIN.

A special rule for calendar year 2017
provides that if a WP or WT is approved
for WP or WT status during calendar year
2017, the rules described in section
12.01(A) of the WP or WT agreement
apply, except that the terms of the WP or
WT agreement effective from January 1,
2017, to the date of issuance of this rev-
enue procedure will be the terms in the
WP or WT agreement in Revenue Proce-
dure 2014-47, and the terms of the WP or
WT agreement provided in this revenue
procedure will apply beginning on the
date of issuance of this revenue procedure.

The WP and WT agreements in sec-
tions 6 and 7 of this revenue procedure
expire upon the earlier of the date the WP
or WT terminates under its partnership
agreement or trust instrument (as applica-
ble) or the end of the sixth full calendar
year the WP or WT agreement is in effect,
unless the WP or WT agreement is termi-
nated under section 10.02 or 10.03 of the
WP or WT agreement.

## SECTION 5. APPLICATION PROCEDURES FOR WP OR WT AGREEMENTS

.01 Prospective WP or WT. An entity
seeking to enter into a WP or WT agree-
ment must submit Form 14345, "Applica-
tion for Qualified Intermediary, Withhold-
ing Foreign Partnership, or Withholding
Foreign Trust Status," online through the
QI/WP/WT Application and Account
Management System accessible through
the QI/WP/WT landing page available at
https://www.irs.gov/businesses/corporations/
qualified-intermediary-system. The applica-
tion must also include any additional in-
formation and documentation requested
by the IRS. The application must estab-
lish, to the satisfaction of the IRS, that the
applicant has adequate resources and has
established appropriate practices and pro-
cedures to comply with the terms of the
WP or WT agreement. Questions regard-
ing WP and WT applications may be sent
to lbi.fi.qiwpissues@irs.gov.

Prior to submitting Form 14345, a pro-
spective WP or WT (other than an FFI
that is a retirement fund or an NFFE that
is not a sponsoring entity) must submit

Form 8957, "Foreign Account Tax
Compliance Act (FATCA) Registration,"
through the FATCA registration website
available at www.irs.gov/FATCA to ob-
tain a chapter 4 status of participating FFI,
registered deemed-compliant FFI, regis-
tered deemed-compliant Model 1 IGA
FFI, or sponsoring entity. Upon comple-
tion of the registration process, a WP or
WT described in the preceding sentence
will be issued a GIIN (which is separate
from its WP-EIN or WT-EIN) to be used
to identify its chapter 4 status to withhold-
ing agents and to tax administrators, if
applicable, and for FATCA reporting to
the extent required under its FATCA re-
quirements.

If the IRS approves the WP's or WT's
application, the IRS will send the WP or
WT an approval notice and the WP-EIN
or WT-EIN assigned to the entity for ful-
filling the requirements of a WP or WT
under the WP or WT agreement. A WP or
WT that has been issued a GIIN must,
within 90 days of the date of approval of
its WP or WT application, update its
FATCA registration on the FATCA reg-
istration website to include its WP-EIN or
WT-EIN.

The IRS will not enter into a WP or
WT agreement with an FFI that provides
for the use of documentary evidence ob-
tained under a jurisdiction's know-your-
customer rules if it has not approved that
jurisdiction's know-your-customer prac-
tices and procedures. A list of jurisdic-
tions with know-your-customer rules that
the IRS has approved is available at
http://www.irs.gov/Businesses/International-
Businesses/List-of-Approved-KYC-Rules.
To request IRS approval of a jurisdiction's
know-your-customer rules, contact the
KYC coordinator in the IRS Foreign Inter-
mediaries Program at lbi.fi.qiwpissues@
irs.gov.

.02 Existing WP or WT. A WP or WT
that has executed a WP or WT agreement
and seeks to renew its WP or WT agree-
ment must do so online through the QI/
WP/WT Application and Account Man-
agement System and include the information
requested for renewal of its WP or WT
status. A WP or WT will retain its previ-
ously issued WP-EIN or WT-EIN for ful-
filling the requirements of a WP or WT
under chapters 3 and 4.

.03 Contact Information. For questions
regarding the WP and WT application
process, contact the Foreign Intermediar-
ies Program at lbi.fi.qiwpissues@irs.gov.

## SECTION 6. WITHHOLDING FOREIGN PARTNERSHIP AGREEMENT

Section 1. PURPOSE AND SCOPE

Section 2. DEFINITIONS

Section 3. WITHHOLDING RESPON-
SIBILITY

Section 4. DOCUMENTATION RE-
QUIREMENTS

Section 5. WITHHOLDING FOREIGN
PARTNERSHIP WITHHOLDING CER-
TIFICATE

Section 6. TAX RETURN AND IN-
FORMATION REPORTING OBLIGA-
TIONS

Section 7. ADJUSTMENTS FOR OVER-
AND
UNDERWITHHOLDING; RE-
FUNDS

Section 8. COMPLIANCE PROCE-
DURES

Section 9. CERTAIN PARTNERSHIPS
AND TRUSTS AND INDIRECT PART-
NERS

Section 10. EXPIRATION, TERMI-
NATION AND DEFAULT

Section 11. MISCELLANEOUS PRO-
VISIONS

Section 12. EFFECTIVE DATE OF
AGREEMENT

The text of the WP agreement is set forth
below. The IRS will not provide signed
copies of the WP agreement. A reporting
Model 2 FFI should interpret this Agree-
ment by substituting the term "reporting
Model 2 FFI" for "participating FFI"
throughout this Agreement, except in
cases where this Agreement explicitly re-
fers to a reporting Model 2 FFI. A report-
ing Model 1 FFI and a 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 ex-
plicitly refers to a reporting Model 1 FFI or
nonreporting Model 2 FFI treated as a reg-
istered deemed-compliant FFI.

WHEREAS, WP has submitted an
application in accordance with this reve-
nue procedure to be a withholding foreign

partnership for purposes of § 1.1441-
5(c)(2);

WHEREAS, WP and the IRS desire
to enter into an agreement to establish
WP's rights and obligations regarding
documentation, withholding, information
reporting, tax return filing, deposits, and
refund procedures under sections 1441,
1442, 1443, 1461, 1471, 1472, 1474,
6031, 6302, 6402, and 6414 with respect
to certain types of payments;

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

WHEREAS, if WP is a foreign fi-
nancial institution (other than a retirement
fund), WP represents that 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 an applicable Model 1
IGA, in the case of a reporting Model 1
FFI or a registered deemed-compliant
Model 1 IGA FFI beginning on the effec-
tive date of this Agreement;

NOW, THEREFORE, in consider-
ation of the following terms, representa-
tions, and conditions, the parties agree as
follows:

## Section 1. PURPOSE AND SCOPE

Sec. 1.01. General Obligations. When
the IRS enters into a WP agreement with
a foreign person, that foreign person be-
comes a WP. Except as otherwise pro-
vided in this Agreement, WP's obligations
with respect to income distributed to, or
included in the distributive shares of, its
partners are governed by the Internal Rev-
enue Code and the regulations thereunder.
WP must act in its capacity as a withhold-
ing foreign partnership pursuant to this
Agreement for reportable amounts that are
distributed to, or included in the distribu-
tive share of, WP's direct partners. Not-
withstanding the preceding sentence, this
Agreement only allows a WP that is a
foreign reverse hybrid entity (as defined in
section 2.31 of this Agreement) to obtain
reduced rates of withholding under tax
treaties for foreign interest holders, and
requires the foreign reverse hybrid entity
to comply with the requirements of sec-

tion 6.03(C) of this Agreement. WP may
also act as a withholding foreign partner-
ship for reportable amounts that are dis-
tributed to, or included in the distributive
share of, a partner, beneficiary, or owner
of a passthrough partner (i.e., an indirect
partner of WP) if such indirect partner is
not a U.S. non-exempt recipient. Notwith-
standing the preceding sentence, a WP
may act as a withholding foreign partner-
ship for an indirect partner that is a U.S.
non-exempt recipient if such partner is
included in the passthrough partner's
chapter 4 withholding rate pool (as de-
fined in section 2.15 of this Agreement) of
U.S. payees or recalcitrant account hold-
ers provided on the FFI withholding state-
ment (as defined in section 2.26 of this
Agreement) of the passthrough partner.
WP is not required to act as a withholding
foreign partnership for payments that it
distributes to, or includes in the distribu-
tive share of, a passthrough partner or
indirect partner. With respect to an indi-
rect partner for which WP does not (or
cannot) act as a withholding foreign part-
nership, WP must, as part of its WP agree-
ment, comply with the requirements of a
withholding agent, as applicable to a non-
withholding foreign partnership under
chapters 3 and 4. WP (regardless of
whether it is an FFI or NFFE) must also,
pursuant to this Agreement, assume pri-
mary reporting responsibility for purposes
of section 1472.

If WP is an FFI, the requirements WP has
agreed to as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI ap-
ply in addition to the requirements under
this Agreement except to the extent spe-
cifically modified by this Agreement. This
Agreement references WP's FATCA re-
quirements when necessary to facilitate
coordination with a WP's obligations un-
der this Agreement with respect to its
partners. A participating FFI's obligations
are provided in the FFI agreement, a reg-
istered deemed-compliant FFI's (other
than a reporting Model 1 FFI's) obliga-
tions are provided in § 1.1471-5(f)(1) or
the applicable Model 2 IGA, and the ob-
ligations of a reporting Model 1 FFI or a
registered deemed-compliant Model 1
IGA FFI are provided in the applicable
Model 1 IGA.

If WP is an NFFE, WP must comply with

the requirements of a withholding agent
under sections 1471 and 1472, which are
provided in this Agreement.

If a WP acts as a sponsoring entity on
behalf of a sponsored FFI or sponsored
direct reporting NFFE, it must comply
with the due diligence, withholding, re-
porting, and compliance requirements of a
sponsoring entity in addition to its re-
quirements under this Agreement.

Sec. 1.02. Parties to the Agreement.
This Agreement applies to WP and the
IRS.

## Section 2. DEFINITIONS

For purposes of this Agreement, unless
otherwise specified in this Agreement, the
terms listed in this section 2 are defined
herein. Any term not defined in this sec-
tion has the same meaning that it has
under the Code, including the income tax
regulations under the Code, any applica-
ble income tax treaty, or any applicable
Model 1 IGA or Model 2 IGA with re-
spect to WP's FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI.

Sec. 2.01. Account. "Account" has the
meaning given to that term in § 1.1471-
1(b)(1) with respect to WP's FATCA re-
quirements.

Sec. 2.02. Account Holder. "Account
holder" has the meaning given to that term
in § 1.1471-1(b)(2) with respect to WP's
FATCA requirements with respect to an
account that it maintains within the mean-
ing of § 1.1471-5(b)(5).

Sec. 2.03. Agreement. "Agreement"
means this Agreement between WP and
the IRS, the Appendix to this Agreement
and WP's application to become a with-
holding foreign partnership. The Appen-
dix to this Agreement and WP's applica-
tion 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 de-
scribed in § 1.1441-2(a), regardless of
whether such amount is withheld upon.

Sec. 2.05. Amount Subject to Chapter 4
Withholding. An "amount subject to
chapter 4 withholding" is a withholdable
payment (as defined in section 2.81 of this
Agreement) for which withholding is re-
quired under chapter 4 or an amount for

which withholding was otherwise applied
under chapter 4.

Sec. 2.06. Assuming Primary Withhold-
ing Responsibility. "Assuming primary
withholding responsibility" refers to when
a WP assumes primary chapters 3 and 4
withholding responsibility with respect to
amounts subject to chapter 3 or 4 with-
holding under the terms of the WP agree-
ment. Generally, a WP assuming primary
chapters 3 and 4 withholding responsibil-
ity relieves the person who makes a pay-
ment to the WP from the responsibility to
withhold. See sections 3.03 and 3.04 of
this Agreement for when WP is required
to withhold under this Agreement.

Sec. 2.07. Beneficial Owner. A "benefi-
cial owner" has the meaning given to that
term in § 1.1441-1(c)(6).

Sec. 2.08. Certified Deemed-Compliant
FFI. "Certified deemed-compliant FFI"
means an FFI described in § 1.1471-
5(f)(2), and includes a nonreporting
Model 1 FFI and a nonreporting Model 2
FFI that is treated as a certified deemed-
compliant FFI.

Sec. 2.09. Chapter 3. Any reference to
"chapter 3 of the Code" or "chapter 3"
means sections 1441, 1442, 1443, 1461,
1463, and 1464.

Sec. 2.10. Chapter 3 Reporting Pool. A
chapter 3 reporting pool means a reporting
pool described in section 6.02(D) of this
Agreement.

Sec. 2.11. Chapter 3 Status. The term
"chapter 3 status" refers to the attributes
of a payee (and a partner of WP for pur-
poses of this Agreement) relevant for de-
termining the rate of withholding with re-
spect to a payment made to the payee for
purposes of chapter 3.

Sec. 2.12. Chapter 4. Any reference to
"chapter 4 of the Code" or "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 6.02(C) of this
Agreement.

Sec. 2.14. Chapter 4 Status. "Chapter
4 status" means the status of a person as a
U.S. person, specified U.S. person, an in-
dividual that is a foreign person, a partic-
ipating 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 4 Withholding Rate
Pool. A "chapter 4 withholding rate pool"
means a pool of payees that are nonpar-
ticipating FFIs provided on a chapter 4
withholding statement (as described in
§ 1.1471-3(c)(3)(iii)(B)(3)) to which a
withholdable payment is allocated. The
term chapter 4 withholding rate pool also
means a pool of payees provided on an
FFI withholding statement (as described
in § 1.1471-3(c)(3)(iii)(B)(2)) to which a
withholdable payment is allocated to -
(A) A pool of payees consisting of each
class of recalcitrant account holders de-
scribed in § 1.1471-4(d)(6) (or with re-
spect to an FFI that is a QI, a single pool
of recalcitrant account holders that is not
subdivided into classes of recalcitrant ac-
count holders described in § 1.1471-
4(d)(6)), including a separate pool of ac-
count holders to which the escrow
procedures for dormant accounts apply; or
(B) A pool of payees that are U.S. persons
as described in § 1.1471-3(c)(3)(iii)
(B)(2).

Sec. 2.16. Deemed-Compliant FFI.
"Deemed-compliant FFI" means a certi-
fied deemed-compliant FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI that
is treated, pursuant to section 1471(b)(2)
and § 1.1471-5(f), as meeting the require-
ments of section 1471(b). For the defini-
tion of certified deemed-compliant FFI,
see section 2.08 of this Agreement. For
the definition of registered deemed-
compliant FFI, see section 2.63 of this
Agreement. For the definition of regis-
tered deemed-compliant Model 1 IGA
FFI, see section 2.64 of this Agreement.
Sec. 2.17. Direct Partner. A "direct part-
ner" means a partner that is not an indirect
partner (as defined in section 2.40 of this
Agreement).

Sec. 2.18. Documentary Evidence.
"Documentary evidence" means any doc-
umentation obtained under the appropriate
know-your-customer rules (as defined in
section 2.42 of this Agreement), or any
documentary evidence described in
§ 1.1441-6 sufficient to establish entitle-
ment to a reduced rate of withholding
under an income tax treaty. 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. 2.19. Documentation. "Documenta-
tion" means any valid Form W-8, Form
W-9 (or acceptable substitute Form W-8
or Form W-9), or documentary evidence,
as defined in section 2.18 of this Agree-
ment, including all statements or other
information required to be associated with
the form or documentary evidence.

Sec. 2.20. Excepted NFFE. "Excepted
NFFE" means a person described in
§ 1.1471-1(b)(41).

Sec. 2.21. Exempt Beneficial Owner.
"Exempt beneficial owner" means a per-
son described in § 1.1471-1(b)(42) and
includes any person that is treated as an
exempt beneficial owner under an appli-
cable Model 1 IGA or Model 2 IGA.

Sec. 2.22. Exempt Recipient. An "ex-
empt recipient" means a person described
in § 1.6049-4(c)(1)(ii) (for interest, divi-
dends, and royalties), a person described
in § 1.6045-2(b)(2)(i) (for broker pro-
ceeds), and a person described in § 1.6041-
3(p) (for rents, amounts paid on notional
principal contracts, and other fixed or deter-
minable income), for which no Form 1099
reporting is required. Exempt recipients are
not exempt from reporting or withholding
under chapter 3 or 4.

Sec. 2.23. FATCA Requirements as a
Participating FFI, Registered Deemed-
Compliant FFI, or Registered Deemed-
Compliant Model 1 IGA FFI. "FATCA
requirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI"
means:

(A) For a participating FFI, the require-
ments set forth in the FFI agreement;

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

(C) For a reporting Model 1 FFI and a
registered deemed-compliant Model 1
IGA FFI, the requirements under applica-
ble foreign law to implement the applica-
ble Model 1 IGA.

Sec. 2.24. Financial Institution (FI). "Fi-
nancial institution" or "FI" has the mean-
ing set forth in § 1.1471-5(e) and includes
a financial institution as defined under an
applicable Model 1 IGA or Model 2 IGA.
Sec. 2.25. FFI Agreement. "FFI agree-
ment" means an agreement of a participat-

ing FFI described in § 1.1471-4(a) and
published in Revenue Procedure 2017-16,
2017-03 I.R.B.501 (as updated or super-
seded by any subsequent revenue proce-
dure).

Sec. 2.26. 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. 2.27. Flow-Through Entity. A
"flow-through entity" is a foreign partner-
ship described in § 301.7701-2 or 3 (other
than a withholding foreign partnership), a
foreign trust that is described in section
651(a) (other than a withholding foreign
trust), 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. With respect to an item of
U.S. source FDAP 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 sec-
tion 894 and the regulations thereunder.

Sec. 2.28. Foreign Financial Institution
(FFI). "Foreign financial institution" or
"FFI" has the meaning set forth in
§ 1.1471-5(d).

Sec. 2.29. Foreign TIN. A "foreign TIN"
is a taxpayer identification number issued
by a foreign person's country of resi-
dence.

Sec. 2.30. Foreign Person. A "foreign
person" is any person that is not a U.S.
person and includes a nonresident alien
individual, a foreign corporation, a for-
eign partnership, a foreign trust, and a
foreign estate, as those terms are defined
in section 7701 of the Code. For purposes
of chapters 3 and 4, the term "foreign
person" also means, with respect to a pay-
ment by a withholding agent, a foreign
branch (including a foreign disregarded
entity) of a U.S. person that provides a
valid Form W-8IMY on which it repre-
sents that it is a QI.

Sec. 2.31. Foreign Reverse Hybrid En-
tity. A "foreign reverse hybrid entity"
means an entity organized or incorporated
outside of the United States that is treated
as a corporation for U.S. federal income
tax purposes but is fiscally transparent
(within the meaning of § 1.894-
1(d)(3)(ii)) under the laws of the country
in which it is organized with respect to the
items of income paid to the entity.

Sec. 2.32. Form W-8. "Form W-8"
means IRS Form W-8BEN, Certificate of
Foreign Status of Beneficial Owner for
United States Tax Withholding (Individu-
als); 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 Or-
ganization for United States Tax With-
holding and Reporting; and IRS Form
W-8IMY, Certificate of Foreign Interme-
diary, Foreign Flow-Through Entity, or
Certain U.S. Branches for United States
Tax Withholding and Reporting, as appro-
priate. It also includes any acceptable
substitute Form W-8 described under
§§ 1.1441-1(e)(4)(vi) and 1.1471-3(c)
(6)(v).

Sec. 2.33. Form W-9. "Form W-9"
means IRS Form W-9, Request for Tax-
payer Identification Number and Certifi-
cation, or any acceptable substitute Form
W-9 as described under § 31.3406(h)-
3(c).

Sec. 2.34. Form 1042. "Form 1042"
means IRS Form 1042, Annual Withhold-
ing Tax Return for U.S. Source Income of
Foreign Persons.

Sec. 2.35. Form 1042-S. "Form 1042-S"
means IRS Form 1042-S, Foreign Per-
son's U.S. Source Income Subject to
Withholding.

Sec. 2.36. Form 1065. "Form 1065"
means IRS Form 1065, U.S. Return of
Partnership Income, including Schedules
K-1 associated with that form.

Sec. 2.37. Form 1099. "Form 1099"
means IRS Form 1099-B, Proceeds From
Broker and Barter Exchange Transac-
tions; 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 re-
quired to be reported.

Sec. 2.38. Form 8966. "Form 8966"
means IRS Form 8966, FATCA Report.
Sec. 2.39. Global Intermediary Identifi-
cation Number (GIIN). "Global interme-
diary identification number" or "GIIN"

means the identification number that is
assigned by the IRS to a participating FFI,
registered deemed-compliant FFI, direct
reporting NFFE, or sponsoring entity. The
term also includes the identification num-
ber assigned by the IRS to a reporting
Model 1 FFI or registered deemed-
compliant Model 1 IGA FFI for the pur-
pose of identifying itself to withholding
agents.

Sec. 2.40. Indirect Partner. An "indirect
partner" is a person that owns a partner-
ship interest in WP through one or more
passthrough partners (as defined in section
2.56 of this Agreement). For example, a
person that holds an account with a for-
eign intermediary or an interest in a flow-
through entity which intermediary or
flow-through entity, in turn, is a direct
partner of WP is an indirect partner. A
person is an indirect partner of WP even if
there are multiple tiers of intermediaries
or flow-through entities between the per-
son and WP.

Sec. 2.41. Intermediary. An "intermedi-
ary" means a person that, for that pay-
ment, acts as a custodian, broker, nomi-
nee, or otherwise as an agent for another
person, regardless of whether such other
person is the beneficial owner of the
amount paid, a flow-through entity, or an-
other intermediary.

Sec. 2.42. Know-Your-Customer Rules.
"Know-your-customer rules" refers to the
applicable laws, regulations, rules, and ad-
ministrative practices and procedures gov-
erning the requirements of certain WPs
that are FFIs to obtain documentation con-
firming the identity of WP's direct part-
ners. A list of jurisdictions for which the
IRS has received know-your-customer in-
formation and for which the know-your-
customer rules and specified documenta-
tion are acceptable is available at: http://www.
irs.gov/Businesses/International-Businesses/
List-of-Approved-KYC-Rules.

Sec. 2.43. Marketable Securities. For
purposes of this Agreement, the term
"marketable securities" means those secu-
rities described in § 1.1441-6 for which a
U.S. TIN or foreign TIN is not required to
be provided by the beneficial owner to
obtain treaty benefits.

Sec. 2.44. Non-Consenting U.S. Ac-
count. For purposes of a reporting Model
2 FFI, "non-consenting U.S. account" has

the meaning that such term has under the
applicable Model 2 IGA.

Sec. 2.45. Non-Exempt Recipient. A
"non-exempt recipient" means a person
that is not an exempt recipient under the
definition in section 2.22 of this Agree-
ment.

Sec. 2.46. 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 IGA or
Model 2 IGA.

Sec. 2.47. Nonparticipating FFI. A
"nonparticipating FFI" means an FFI
other than a participating FFI, a deemed-
compliant FFI, or an exempt beneficial
owner.

Sec. 2.48. Nonqualified Intermediary. A
"nonqualified intermediary" is any inter-
mediary that is not a qualified intermedi-
ary. 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 intermedi-
ary also includes an intermediary that is a
territory financial institution (as defined in
§ 1.1471-1(b)(130)) unless such institu-
tion agrees to be treated as a U.S. person.
Sec. 2.49. Nonreporting Model 1 FFI. A
"nonreporting Model 1 FFI" means a non-
reporting financial institution described in
Annex II of a Model 1 IGA.

Sec. 2.50. Nonreporting Model 2 FFI. A
"nonreporting Model 2 FFI" means a non-
reporting financial institution described in
Annex II of a Model 2 IGA.

Sec. 2.51. Nonwithholding Foreign Part-
nership (NWP). A "nonwithholding for-
eign partnership" means a foreign partner-
ship other than a withholding foreign
partnership, as defined in § 1.1441-5(c)(2).
Sec. 2.52. Nonwithholding Foreign
Trust (NWT). A "nonwithholding for-
eign trust" means a foreign trust (as de-
fined 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 (as defined in section 2.85 of this
Agreement).

Sec. 2.53. Overwithholding. The term
"overwithholding" means any amount ac-

tually withheld (determined before appli-
cation of the adjustment procedures de-
scribed in section 7.01 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 lia-
bility of the beneficial owner of the in-
come or payment to which the withheld
amount is attributable, regardless of
whether such overwithholding was in er-
ror or appeared correct at the time it oc-
curred. 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. 2.54. Participating FFI. A "partici-
pating FFI" is defined in § 1.1471-
1(b)(91).

Sec. 2.55. Partnership and Partner. The
terms "partnership" and "partner" are de-
fined in section 7701(a)(2) of the Code
and the regulations thereunder. For pur-
poses of chapter 4, "partner" includes an
account holder, as defined in section 2.02
of this Agreement, with respect to a WP
that is an FFI. For purposes of a foreign
reverse hybrid entity, the term "partner"
includes a foreign interest holder of a for-
eign reverse hybrid entity, when the for-
eign reverse hybrid entity is treated as
fiscally transparent under the tax laws of
the interest holder's country of residence
(within the meaning of § 1.894-1(d)
(3)(iii)) with respect to the item of income
paid to the foreign reverse hybrid entity,
and the interest holder itself is not treated
as fiscally transparent under the tax laws
of the interest holder's country of resi-
dence.

Sec. 2.56. Passthrough Partner. A
"passthrough partner" is a direct or indi-
rect partner of WP that is a nonqualified
intermediary, a qualified intermediary that
does not assume primary chapters 3 and 4
withholding responsibility with respect to
payments of U.S. source FDAP income or
primary Form 1099 reporting and backup
withholding responsibility, or a flow-
through entity. As provided in section
2.27 of this Agreement, a withholding for-
eign partnership or withholding foreign

trust is not a flow-through entity and thus
is not a passthrough partner.

Sec. 2.57. Payee. For purposes of chapter
3, a "payee" is defined in § 1.1441-
1(c)(12), and for purposes of chapter 4, a
"payee" means a person described in
§ 1.1471-3(a).

Sec. 2.58. Payment. A "payment" means
an amount 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).

Sec. 2.59. 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.

Sec. 2.60. Pooled Reporting (PR) Elec-
tion. A "pooled reporting election" or "PR
election" is an election to pool report
chapter 3 reporting pools on Form 1042-S
for chapter 3 purposes as described in
section 6.02(D) of this Agreement.

Sec. 2.61. Qualified Intermediary (QI).
A "qualified intermediary" or "QI" is a
person (or branch) described in § 1.1441-
1(e)(5)(ii) that has in effect an agreement
with the IRS to be treated as a QI and acts
as a QI. See Rev. Proc. 2017-15, 2017-03
I.R.B. 437 (as updated or superseded by
any subsequent revenue procedure), for
the QI Agreement.

Sec. 2.62. Recalcitrant Account Holder.
A "recalcitrant account holder" means a
person described in § 1.1471-5(g).

Sec. 2.63. 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
a registered deemed-compliant FFI.

Sec. 2.64. 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 require-
ments 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. 2.65. Reportable Amount. A "re-
portable amount" means U.S. source
FDAP income that is an amount subject to
chapter 3 withholding (as defined in sec-
tion 2.04 of this Agreement), U.S. source

deposit interest (as defined in section
871(i)(2)(A)), and U.S. source interest or
original issue discount paid on the re-
demption of short-term obligations (as de-
fined in section 871(g)(1)(B)(i)). 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. 2.66. Reporting Model 1 FFI. A
"reporting Model 1 FFI" means an FFI
with respect to which a foreign govern-
ment 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 nonparticipating FFI
under an applicable Model 1 IGA.

Sec. 2.67. Reporting Pool. A "reporting
pool" is defined in section 6.02(A) of this
Agreement.

Sec. 2.68. Responsible Officer. A "re-
sponsible officer" of a WP means a part-
ner of WP or an officer or agent of the
general partner of WP with sufficient au-
thority to fulfill the duties of a responsible
officer as described in section 8 of this
Agreement, including the requirements to
periodically certify and to respond to re-
quests by the IRS for additional informa-
tion to review WP's compliance with this
Agreement.

Sec. 2.69. Retirement Fund. A "retire-
ment fund" means a retirement fund or
other fund that is an exempt beneficial
owner described in § 1.1471-6(f) or a
similar fund that qualifies as an exempt
beneficial owner under an applicable
Model 1 IGA or Model 2 IGA.

Sec. 2.70. Schedule K-1. "Schedule
K-1" or "K-1" is a schedule associated
with Form 1065 that shows each partner's
separate share of partnership's income,
credits, deductions, etc.

Sec. 2.71. Sponsored Direct Reporting
NFFE. The term "sponsored direct report-
ing NFFE" has the meaning set forth in
§ 1.1472-1(c)(5).

Sec. 2.72. Sponsored FFI. The term

"sponsored FFI" means any entity de-
scribed in § 1.1471-5(f)(1)(i)(F) (spon-
sored investment entities and sponsored
controlled foreign corporations) or
§ 1.1471-5(f)(2)(iii) (sponsored, closely
held investment vehicles).

Sec. 2.73. Sponsoring Entity. "Sponsor-
ing entity" means (i) an entity that regis-
ters with the IRS and agrees to perform
the due diligence, withholding, and re-
porting obligations of one or more spon-
sored FFIs pursuant to § 1.1471-
5(f)(1)(i)(F) or (f)(2)(iii); or (ii) an entity
that registers with the IRS and agrees to
perform the due diligence and reporting
obligations of one or more direct reporting
NFFEs pursuant to § 1.1472-1(c)(5).

Sec. 2.74. Underwithholding. "Under-
withholding" means the excess of the
amount required to be withheld under
chapter 3 or 4 over the amount actually
withheld.

Sec. 2.75. Undocumented Partner. An
"undocumented partner" is a partner for
whom WP does not have valid documen-
tation.

Sec. 2.76. U.S. Account. A "U.S. ac-
count" is any financial account maintained
by a participating FFI or registered
deemed-compliant FFI that is held by one
or more specified U.S. persons or U.S.
owned foreign entities that such FFI re-
ports or elects to report under the FFI
agreement or § 1.1471-5(f), as applicable.
A U.S. account includes, in the case of a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI, a
U.S. reportable account as defined in sec-
tion 2.78 of this Agreement.

Sec. 2.77. U.S. Person. A "United States
person" (or "U.S. person") is a person
described in section 7701(a)(30), the U.S.
government (including an agency or in-
strumentality thereof), a State of the
United States (including an agency or in-
strumentality thereof), or the District of
Columbia (including an agency or instru-
mentality thereof). An individual will not
be treated as a U.S. person for purposes of
this Agreement for a taxable year or any
portion of a taxable year that the individ-
ual 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 comput-
ing the individual's U.S. tax liability. A
U.S. person does not include an alien in-

dividual who has made an election under
section 6013(g) or (h) to be treated as a
resident of the United States. For chapter
4 purposes, the term "U.S. person" or
"United States person" also means a for-
eign 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. 2.78. U.S. Reportable Account. A
"U.S. reportable account" means a finan-
cial 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 appli-
cable domestic law for compliance with
and implementation of FATCA.

Sec. 2.79. U.S. Source FDAP. "U.S.
source FDAP" means amounts from
sources within the United States that con-
stitute fixed or determinable annual or pe-
riodical income, as defined in § 1.1441-
2(b)(1).

Sec. 2.80. U.S. TIN. A "U.S. TIN" means
a U.S. taxpayer identification number as-
signed under section 6109.

Sec. 2.81. Withholdable Payment. A
"withholdable payment" means an
amount described in § 1.1473-1(a).

Sec. 2.82. Withholding Agent. A "with-
holding 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 2.59 of this
Agreement).

Sec. 2.83. Withholding Foreign Part-
nership (WP). A "withholding foreign
partnership" or "WP" means a partner-
ship, described in § 1.1441-5(c)(2), that
has in effect a withholding agreement
with the IRS to be treated as a withholding
foreign partnership.

Sec. 2.84. WP-EIN. A "WP-EIN" means
the employer identification number as-
signed by the IRS to a withholding foreign
partnership. WP's WP-EIN is only to be
used when WP is acting as a WP. For
example, WP must give a withholding
agent its EIN (other than its WP-EIN), if
any, if it is not acting as a WP (i.e., acting
as a nonwithholding foreign partnership)

and a taxpayer identification number is
required.

Sec. 2.85. Withholding Foreign Trust
(WT). A "withholding foreign trust" or
"WT" means a trust, described in
§ 1.1441-5(e)(5)(v), that has in effect a
withholding agreement with the IRS to be
treated as a withholding foreign trust.

## Section 3. WITHHOLDING RESPONSIBILITY

Sec. 3.01. Chapters 3 and 4 Withhold-
ing-In General.

(A) Chapter 4 Withholding.

WP (unless WP is a retirement fund) is a
withholding agent for purposes of chapter
4 and is subject to the withholding and
reporting provisions applicable to with-
holding agents under sections 1471 and
1472 with respect to its partners. WP is
required to withhold 30 percent of any
withholdable payment made after June 30,
2014, that is distributed to, or included in
the distributive share of, a partner that is
an FFI unless WP can reliably associate
the payment (or portion of the payment)
with documentation upon which it is per-
mitted 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 § 1.1473-1(a) for the
definition of a withholdable payment and
the applicable exceptions to this defini-
tion. WP is also required to withhold 30
percent of any withholdable payment
made after June 30, 2014, that is distrib-
uted to, or included in the distributive
share of, a partner that is an NFFE unless
WP can reliably associate the payment (or
portion of the payment) with a certifica-
tion described in § 1.1472-1(b)(1)(ii),
or an exception to withholding under
§ 1.1472-1 applies.

If WP is a retirement fund, WP is not
required to withhold under section 1471
or 1472. If WP is a participating FFI or
registered deemed-compliant FFI (other
than a reporting Model 1 FFI), WP will
satisfy its requirement to withhold under
sections 1471(a) and 1472(a) with respect
to direct partners that are entities by with-
holding on withholdable payments made
to nonparticipating FFIs and recalcitrant
account holders to the extent required
under its FATCA requirements as a par-
ticipating FFI or registered deemed-

compliant FFI. See the FFI agreement,
§ 1.1471-5(f), or the applicable Model 2
IGA for the withholding requirements
that apply to withholdable payments
made to direct partners that are individ-
uals and are treated as recalcitrant
account holders. If WP is a reporting
Model 1 FFI or a registered deemed-
compliant Model 1 IGA FFI, WP will
satisfy its requirement to withhold under
section 1471(a) with respect to direct
partners 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. WP must
withhold at the time and in the manner
described in sections 3.02 through 3.04
of this Agreement, which modifies other
provisions describing the time and man-
ner in which WP would otherwise be
required to withhold for chapter 4 pur-
poses.

(B) Chapter 3 Withholding.

WP is a withholding agent for purposes of
chapter 3 and is subject to the withholding
and reporting provisions applicable to
withholding agents under chapter 3. WP
must withhold 30 percent of any payment
of an amount subject to chapter 3 with-
holding that is distributed to, or included
in the distributive share of, a partner that
is a foreign person unless WP can reliably
associate the payment with documentation
upon which it can rely to treat the pay-
ment 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 re-
duced rate of withholding. See section 4
of this Agreement regarding documenta-
tion requirements applicable to WP for
determining whether chapter 3 withhold-
ing applies.

With respect to an amount subject to
chapter 4 withholding that is also an
amount subject to chapter 3 withholding,
WP 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
WP of its requirements to withhold on an
amount subject to chapter 3 withholding

to the extent required under sections 3.02
through 3.04 of this Agreement or modi-
fies the documentation upon which WP
may rely under section 4 of this Agree-
ment for determining whether withhold-
ing under chapter 3 applies.

Sec. 3.02. Primary Chapters 3 and 4
Withholding Responsibility. WP must
assume primary chapters 3 and 4 with-
holding responsibility for all withholdable
payments and amounts subject to chapter
3 withholding that are distributed to, or
included in the distributive share of, any
direct partner and any indirect partner for
which it acts as a WP to the extent per-
missible under section 9 of this Agree-
ment. If WP acts as a nonwithholding
foreign partnership (NWP) with respect to
an indirect partner, it cannot assume pri-
mary chapters 3 and 4 withholding re-
sponsibility for payments made to that
indirect partner. WP is not required to
withhold on amounts it pays to a QI that
assumes primary withholding responsibil-
ity with respect to the payment, or to a
WT, or another WP.

If WP is a participating FFI or a registered
deemed-compliant FFI, it may not elect
with respect to its direct partners 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 backup withholding under section
3406 as provided in § 1.1471-4(b)(3)(iii)
and section 4 of the FFI agreement.

See section 6 of this Agreement regarding
WP's responsibility to report amounts
subject to withholding on Form 1042-S.
Sec. 3.03. Timing of Withholding. WP
must withhold on the date it makes a
distribution to a foreign partner that in-
cludes a withholdable payment or an
amount subject to chapter 3 withholding
as determined under section 3.04 of this
Agreement. To the extent a partner's dis-
tributive share of income subject to with-
holding has not actually been distributed
to the partner, WP must withhold on the
partner's distributive share on the earlier
of the date that the statement required
under section 6031(b) (i.e., Schedule K-1)
is mailed or otherwise provided to the
partner or the due date for furnishing the
statement (whether or not WP is required
to prepare and furnish the statement). If
that date is after the due date (including

extensions) for filing WP's Forms 1042-S
for the calendar year to which the distrib-
utive share relates, WP must withhold and
report the withholding on the distributive
share that relates to the prior calendar year
as if it arises in the subsequent calendar
year. See section 6.01 of this Agreement
for the requirement to report the withheld
tax.

Sec. 3.04. Withholding on Distributions.
WP may determine the amount of with-
holding on a distribution based on a rea-
sonable estimate of the partner's distribu-
tive share of income subject to withholding
for the year. WP must correct the estimated
withholding to reflect the partner's actual
distributive share on the earlier of the date
that the statement required under section
6031(b) (i.e., Schedule K-1) is mailed or
otherwise provided to the partner or the
due date for furnishing the statement
(whether or not WP is required to prepare
and furnish the statement). If that date is
after the earlier of the due date (including
extensions) for filing WP's Forms 1042-S
or the date WP actually issues Forms
1042-S for the calendar year, WP must
withhold and report any adjustments re-
quired by correcting the information for
the following calendar year.

Sec. 3.05. Deposit Requirements. WP
must deposit amounts withheld under
chapters 3 and 4 at the time and in the
manner provided under section 6302 (see
§ 1.6302-2(a) or § 31.6302-1(h)).

## Section 4. DOCUMENTATION REQUIREMENTS

Sec. 4.01. Documentation Requirements.
(A) General Documentation Require-
ments. Except as otherwise provided in
this section 4, WP must obtain a Form
W-8 or Form W-9 from every direct part-
ner that receives a distribution or distrib-
utive share of a reportable amount. If WP
is an FFI and is subject to the know-your-
customer rules for documenting its part-
ners (or subset of partners), WP may ob-
tain documentary evidence as set forth in
the "know-your-customer" rules approved
by the IRS (or the documentation de-
scribed in section 4.03(A)(3) of this
Agreement) for the applicable jurisdiction
from its direct partners rather than a Form
W-8 or Form W-9, provided WP adheres
to the know-your-customer rules that ap-
ply to WP with respect to the direct part-

ner from whom the documentary evidence
is obtained.

WP must review and maintain documen-
tation in accordance with this section 4
and, in the case of documentary evidence
obtained from direct partners, in accor-
dance with the know-your-customer rules
approved by the IRS for the applicable
jurisdiction. WP must make documenta-
tion (together with any associated with-
holding statements and other documents
or information) available upon request for
inspection by WP's external reviewer, if
the performance of an external review is
requested by the IRS (as described in sec-
tion 8.07(D) of this Agreement). WP rep-
resents that none of the laws to which it is
subject prohibits disclosure of the identity
of any partner or corresponding partner
information to WP's reviewer.

(B) Coordination of Chapter 3 and Chap-
ter 4 Documentation Requirements. If WP
is an FFI (other than a retirement fund),
WP is required to perform the due dili-
gence procedures under its FATCA re-
quirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI for
each direct partner to determine if the
partner is a holder of a U.S. account (or
U.S. reportable account), and to determine
each direct partner that is a nonparticipat-
ing FFI and, if applicable, that is a recal-
citrant account holder (or non-consenting
U.S. account). See, however, the auto-
matic termination provision of section
10.03(A) of this Agreement if WP is not
in possession of valid documentation for
any direct partner at any time that with-
holding or reporting is required. For pur-
poses of this section 4, with respect to
documenting a partner for chapter 4 pur-
poses, documentary evidence also in-
cludes documentation or information that
is publicly available to determine the
chapter 4 status of the account holder to
the extent permitted under an applicable
IGA.

If WP is an NFFE, WP is required to
document the chapter 4 status of each
partner to determine if reporting or with-
holding applies under section 1471 or
1472 on withholdable payments distrib-
uted to, or included in the distributive
share of, the partner under the require-
ments of § 1.1471-3(d).

If WP has determined that withholding is

not required under chapter 4, WP must
obtain, unless already collected, docu-
mentation that meets the requirements of
this section 4 to determine whether with-
holding applies under chapter 3. See also
WP's FATCA requirements as a partici-
pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model
1 IGA FFI for when WP will have reason to
know that a claim of chapter 4 status is
unreliable or incorrect and for WP's re-
quirements following a change in circum-
stances. If WP is an NFFE, see § 1.1471-
3(e)(4) for when WP 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 WP's require-
ments following a change in circum-
stances.

Sec. 4.02. Documentation for Foreign
Partners. WP may treat a partner as a
foreign beneficial owner of an amount if
the partner provides a valid Form W-8
(other than Form W-8IMY), or valid doc-
umentary evidence, to the extent permit-
ted under section 4.01(A) of this Agree-
ment, that supports the partner's status as
a foreign person. WP may treat a partner
that has provided documentation as enti-
tled to a reduced rate of withholding under
chapter 3 if all the requirements for a
reduced rate are met and the documenta-
tion provided by the partner supports en-
titlement to a reduced rate of withholding
and no withholding under chapter 4. Sec-
tions 4.03 through 4.06 of this Agreement
describe the specific documentation re-
quirements necessary for obtaining a re-
duced rate of withholding in certain cir-
cumstances.

Sec. 4.03. Treaty Claims. WP may not
reduce the rate of withholding under chap-
ter 3 based on a partner's claim of treaty
benefits unless WP has determined that no
chapter 4 withholding is required and it
obtains from the partner the documenta-
tion required by section 4.03(A) of this
Agreement. In addition, WP agrees to es-
tablish procedures to inform partners of
the terms of the limitation on benefits pro-
visions of a treaty (if applicable, and re-
gardless of whether those provisions are
contained in a separate article entitled
Limitation on Benefits) under which the
partner is claiming benefits. For partners
that are entities documented by WP on or
after January 1, 2017, WP is required to

obtain a Form W-8BEN-E with the ap-
propriate limitation on benefits certifica-
tion or, if WP is allowed to and obtains
documentary evidence, the written certifi-
cation included in the treaty statement as
described in section 4.03(B) of this Agree-
ment. For partners that are entities that
were documented with documentary evi-
dence prior to January 1, 2017, and for
which treaty benefits are being claimed,
WP is required to obtain the appropriate
limitation on benefits statement prior to
January 1, 2019.

(A) Treaty Documentation. The documen-
tation required by this section 4.03(A) is
as follows:

(1) A Form W-8BEN or Form W-
8BEN-E on which a claim of treaty
benefits is made, including, for an en-
tity, the appropriate limitation on bene-
fits and section 894 certifications, as
provided in § 1.1441-6(b)(1) (if appli-
cable), and a U.S. TIN or foreign TIN. A
U.S. TIN or foreign TIN shall not be
required, however, if the partner is a
direct partner. If WP is acting as a with-
holding foreign partnership for an indi-
rect partner, the indirect partner is re-
quired to have either a U.S. TIN or a
foreign TIN in order to claim treaty ben-
efits unless it is claiming treaty benefits
on income from marketable securities as
described in § 1.1441-6(c);

(2) Documentary evidence, as permitted
under section 4.01(A) of this Agreement,
that has been obtained pursuant to the
know-your-customer rules that apply to
the direct partner, and the direct partner, if
it is an entity, has made the treaty state-
ment (if applicable) required by section
4.03(B) of this Agreement; or

(3) The type of documentary evidence, as
permitted under section 4.01(A) of this
Agreement, required under § 1.1441-6 to
establish entitlement to a reduced rate of
withholding under a treaty, and the direct
partner, if it is an entity, has made the
treaty statement (if applicable) required
by section 4.03(B) of this Agreement.

(B) Treaty Statement. The treaty statement
required by an entity direct partner under
this section 4.03(B) is as follows: [Name
of Direct Partner] meets all provisions of
the treaty that are necessary to claim a
reduced rate of withholding, including any
applicable limitation on benefits provi-
sions, and derives the income within the

meaning of section 894, and the regula-
tions thereunder, as the beneficial owner.
WP is only required to obtain the treaty
statement described in this section 4.03(B)
from a partner that is an entity. WP shall
not be required to obtain a treaty state-
ment described in this section 4.03(B)
from an individual who is a resident of an
applicable treaty country or from the gov-
ernment, or its political subdivisions, of a
treaty country. WP is required to collect
and report (as required on Form 1042-S)
the specific category of limitation on ben-
efits provision from all of its entity part-
ners, including a government (or its polit-
ical subdivisions). WP may rely on a
partner's claim of the specific category of
limitation on benefits provision absent ac-
tual knowledge that the claim is unreliable
or incorrect.

(C) A WP that is a foreign reverse hybrid
entity may reduce the rate of withholding
on an item of income under chapter 3
based on a partner's claim of treaty ben-
efits only if the partner is not fiscally
transparent in the jurisdiction in which it
is resident with respect to the item of
income, and WP (and, if applicable, any
flow-through entity through which the
partner holds an interest in WP) is consid-
ered to be fiscally transparent under the
laws of the partner's jurisdiction with re-
spect to the item of income. The claim of
treaty benefits must be based on the tax
treaty between the United States and the
jurisdiction where the partner is resident.
To determine when WP is treated as fis-
cally transparent under the laws of the
partner's jurisdiction with respect to the
item of income, see the rules in § 1.894-
1(d)(3)(iii).

Sec. 4.04. Documentation for Interna-
tional Organizations. WP may not treat a
partner as an international organization
entitled to an exemption from withholding
under section 892 unless WP has deter-
mined that no chapter 4 withholding is
required and it obtains a Form W-8EXP
(or documentary evidence as permitted
under section 4.01(A) of this Agreement)
from the international organization. The
name provided on the documentation
must be the name of an entity designated
as an international organization by exec-
utive order pursuant to 22 United States
Code 288 through 288f. If an international
organization is not claiming benefits un-

der section 892 but under another Code
exception, the provisions of section 4.02
of this Agreement apply rather than the
provisions of this section 4.04.

Sec. 4.05. Documentation for Foreign
Governments and Foreign Central
Banks of Issue.

(A) Documentation for a Foreign Govern-
ment or Foreign Central Bank of Issue
Claiming an Exemption from Withholding
Under Section 892 or Section 895. WP
may not treat a partner as a foreign gov-
ernment or foreign central bank of issue
exempt from withholding under section
892 or 895 unless WP has determined that
no chapter 4 withholding is required
and-

(1) WP receives from the partner a Form
W-8EXP (or documentary evidence as
permitted under section 4.01(A) of this
Agreement) establishing that the partner is
a foreign government or foreign central
bank of issue;

(2) The income distributed to, or included
in the distributive share of, the partner is
the type of income that qualifies for an
exemption from withholding under sec-
tion 892 or 895; and

(3) WP does not know, or have reason to
know, that the partner is a controlled com-
mercial entity as described in section 892,
that the income owned by the foreign gov-
ernment or foreign central bank of issue is
being received from a controlled commer-
cial entity, or that the income is from the
disposition of an interest in a controlled
commercial entity.

(B) Treaty Benefits. WP may not treat a
partner 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 unless WP
has determined that no chapter 4 with-
holding is required and it has valid docu-
mentation that is sufficient to obtain a
reduced rate of withholding under a treaty,
as described in section 4.03 of this Agree-
ment.

(C) Other Code Exception. If a foreign
government or foreign central bank of is-
sue is not claiming benefits under section
892 or 895 or a reduced rate under an
income tax treaty but under another Code
exception (e.g., the portfolio interest ex-
ception under section 871(h) or 881(c)),
the provisions of section 4.02 of this

Agreement apply rather than the provi-
sions of this section 4.05.

Sec. 4.06. Documentation for Foreign
Tax-Exempt Organizations. To the ex-
tent that WP determines that an amount
distributed to, or included in the distribu-
tive share of, a partner is not subject to
withholding under chapter 4, WP may not
treat the partner as a foreign tax-exempt
organization and reduce the rate of with-
holding or exempt the partner from with-
holding for purposes of chapter 3 unless
WP satisfies the requirements provided in
section 4.06(A), (B), or (C) of this Agree-
ment.

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

(B) Treaty Exemption. WP may not treat a
partner as a foreign organization that is
tax-exempt on an item of income pursuant
to a treaty unless WP obtains valid docu-
mentation as described under section 4.03
of this Agreement that is sufficient for
obtaining a reduced rate of withholding
under the treaty and the documentation
establishes that the partner is an organiza-
tion exempt from tax under the treaty on
that item of income.

(C) Other Exceptions. If a tax-exempt en-
tity is not claiming a reduced rate of with-
holding because it is a foreign organiza-
tion described under section 501(c) or
under a treaty article that applies to ex-
empt certain foreign organizations from
tax, but is claiming a reduced rate of with-
holding under another Code or treaty ex-
ception, the provisions of section 4.02 or
4.03 of this Agreement (as applicable)
shall apply rather than the provisions of
this section 4.06.

Sec. 4.07. Documentation from Pass-
through Partners. Except as otherwise
provided in section 9 of this Agreement,
WP shall not act as a withholding foreign
partnership with respect to an amount dis-
tributed to, or included in the distributive
share of, a passthrough partner. WP must
forward the passthrough partner's docu-
mentation (and associated withholding

statement and documentation of indirect
partners) to the withholding agent from
whom WP receives a reportable amount.
Sec. 4.08. Documentation for U.S. Ex-
empt Recipients. WP shall not treat a
partner as a U.S. exempt recipient unless
WP obtains from the partner-

(A) A valid Form W-9 on which the part-
ner includes an exempt payee code to cer-
tify that the partner is a U.S. exempt re-
cipient;

(B) Documentary evidence, as permitted
under section 4.01(A) of this Agreement,
that is sufficient to establish that the part-
ner is a U.S. exempt recipient; or

(C) Documentary evidence, as permitted
under section 4.01(A) of this Agreement,
that is sufficient to establish the partner's
status as a U.S. person and WP can treat
the partner as an exempt recipient under
the rules of §§ 1.6045-2(b)(2)(i) or
1.6049-4(c)(1)(ii), as appropriate, with-
out obtaining documentation.

Sec. 4.09. Documentation for U.S. Non-
Exempt Recipients. WP shall not treat a
partner as a U.S. non-exempt recipient
unless WP obtains a valid Form W-9
from the partner.

### Sec. 4.10. Documentation Validity.

(A) In General. WP may not rely on doc-
umentation if WP has actual knowledge or
reason to know that the information or
certifications contained in the documenta-
tion provided by a partner is unreliable or
incorrect, or that there is a change in cir-
cumstances with respect to the informa-
tion or statements contained in the docu-
mentation or in WP's files (account
information) pertaining to the obligation
that affects the reliability of the partner's
claim. See § 1.1441-1(e)(4)(ii)(D) for the
definition of change in circumstances.
Once WP knows, or has reason to know,
that documentation provided by a partner
is unreliable or incorrect to establish for-
eign status or residency for purposes of
claiming benefits under an applicable in-
come tax treaty, it can no longer reliably
associate a payment with valid documen-
tation unless it obtains additional docu-
mentation to establish the partner's chap-
ter 3 status. If WP can no longer reliably
associate a payment with valid documen-
tation, it must obtain new documentation
prior to the time withholding is required
under section 3 of this Agreement. With
respect to a withholding agent's reason to

know that a claim for treaty benefits is
unreliable or incorrect based on the exis-
tence of a tax treaty, the rules in § 1.1441-
6(b)(1)(ii) will apply to preexisting
partners for which WP held valid docu-
mentation upon a change in circumstances
or, with respect to a preexisting entity
partner, when it provides a written limita-
tion on benefits statement (as described in
section 4.03(B) of this Agreement). For
all partners admitted on or after January 1,
2017, this rule will apply on admission of
the partner to the partnership. For pur-
poses of this section 4.10(A), a "preexist-
ing partner" or "preexisting entity part-
ner" is a partner documented by WP prior
to January 1, 2017, for a WP with a WP
Agreement in effect prior to that date. For
a WP that did not have a WP Agreement
in effect prior to January 1, 2017, a "pre-
existing partner" or "preexisting entity
partner" means a partner that was admit-
ted to the partnership (and for which WP
has valid documentation) prior to the ef-
fective date of its WP Agreement.

(B) General Rules.

(1) WP 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) or if it has been in-
formed by the IRS or another withholding
agent that the form is unreliable or incor-
rect and shall not rely on a Form W-8 if
it is not permitted to do so under this
section 4.10.

(2) WP shall not treat documentary evi-
dence provided by a partner as valid if the
documentary evidence does not reason-
ably establish the identity of the person
presenting the documentary evidence. For
example, documentary evidence is not
valid if it is provided in person by a part-
ner that is a natural person and the photo-
graph on the documentary evidence, if
any, does not match the appearance of the
person presenting the document.

(3) WP may not rely on documentation to
reduce the withholding rate that would
otherwise apply if-

(a) The partner's documentation is incom-
plete or contains information that is incon-
sistent with the partner's claim,

(b) WP has other information in the ac-
count information that is inconsistent with
the partner's claim, or

For example, if a direct partner that is an
entity provides documentation to claim
treaty benefits and the documentation es-
tablishes the direct partner's status as a
foreign person and a resident of a treaty
country but fails to provide the treaty
statement in section 4.03(B) of this Agree-
ment, the documentation does not estab-
lish the direct partner's entitlement to a
reduced rate of withholding.

Sec. 4.11. Documentation Validity Pe-
riod.

(A) Documentation Other Than a Form
W-9. WP, as permitted under section
4.01(A) of this Agreement, may rely on
valid documentary evidence obtained
from direct partners in accordance with
applicable know-your-customer rules as
long as the documentary evidence remains
valid under those rules or until WP knows,
or has reason to know, that the informa-
tion contained in the documentary evi-
dence is unreliable or incorrect. However,
WP may only rely on statements regard-
ing entitlement to treaty benefits described
in § 1.1441-6(c)(5)(i) or the representa-
tions described in section 4.03 of this
Agreement until the validity expires under
§ 1.1441-1(e)(4)(ii)(A)(2). For establish-
ing a partner's chapter 3 status (as defined
in § 1.1441-1(c)(45)) or foreign status for
chapter 61 purposes, WP may rely on a
valid Form W-8 until its validity expires
under § 1.1441-1(e)(4)(ii) and may rely
on documentary evidence (other than doc-
umentary evidence obtained pursuant to
applicable know-your-customer rules) un-
til its validity expires under § 1.6049-
5(c).

(B) Form W-9. WP may rely on a Form
W-9 unless one of the conditions of
§ 31.3406(h)-3(e)(2)(i) through (v) ap-
plies or if it has been informed by the IRS
or another withholding agent that the form
is unreliable or incorrect.

Sec. 4.12. Maintenance and Retention
of Documentation.

(A) Maintaining Documentation. WP
shall maintain documentation by retaining
the original documentation, a certified
copy, a photocopy, a scanned copy, a mi-
crofiche, or other means that allow repro-
duction (provided that WP has recorded
receipt of the documentation and is able to
produce a hard copy). If WP is not re-
quired to retain copies of documentary
evidence under its know-your-customer

rules, WP 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 obligations held by a direct
partner opened prior to January 1, 2001, if
WP was not required under its know-
your-customer rules to maintain originals
or copies of documentation, WP may nev-
ertheless rely on the information if it has
complied with all other aspects of its
know-your-customer rules regarding es-
tablishment of a partner's identity, it has a
record that the documentation required
under the know-your-customer rules was
actually examined by an employee of WP
or partner of WP in accordance with the
know-your-customer rules, and it has no
information in its possession that would
require WP to treat the documentation as
invalid.

(B) Retention Period. WP shall retain a
partner's documentation obtained under
this section 4 for as long as the document
is relevant for the determination of WP's
tax liability or reporting responsibilities
under chapters 3, 4, and 61, and section
3406.

# Section 5. WITHHOLDING FOREIGN PARTNERSHIP WITHHOLDING CERTIFICATE

Sec. 5.01. WP Withholding Certificate.
WP agrees to furnish a withholding for-
eign partnership withholding certificate to
each withholding agent from which it re-
ceives a reportable amount as a withhold-
ing foreign partnership. The withholding
foreign partnership withholding certificate
is a Form W-8IMY (or acceptable substi-
tute form) that certifies that WP is acting
as a withholding foreign partnership, con-
tains WP's WP-EIN, and provides all
other information and certifications re-
quired by the form, including its WP-EIN.
If WP is receiving a reportable amount
that is a withholdable payment, the with-
holding certificate must also contain WP's
chapter 4 status to the extent required,
provide its GIIN (if applicable), and pro-
vide the other information and certifica-
tions required on the form. If WP is an
FFI, WP must provide a GIIN on its with-
holding foreign partnership withholding
certificate irrespective of the time the FFI

is permitted under its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI to
obtain a GIIN. WP is not required to dis-
close, as part of that Form W-8IMY or its
withholding statement, any information
regarding the identity of its direct partners
and those indirect partners for which it
acts as a withholding foreign partnership
to the extent permitted under section 9 of
this Agreement.

If WP does not act as a withholding for-
eign partnership for an indirect partner,
WP is required to furnish a nonwithhold-
ing foreign partnership certificate to its
withholding agent. See § 1.1441-5(c)(3)
for the requirements of a nonwithholding
foreign partnership withholding certifi-
cate, the withholding statement associated
with the withholding certificate, and the
other documentation or other information
for each passthrough partner and its direct
and indirect partners.

Sec. 5.02. Withholding Statement.
When WP is acting as a withholding for-
eign partnership, WP must assume pri-
mary chapters 3 and 4 withholding re-
sponsibility as required by section 3.02 of
this Agreement for reportable amounts
that are distributed to, or included in the
distributive shares of, its direct partners
and any indirect partners for which it is
acting as a withholding foreign partner-
ship. Accordingly, WP is not required to
provide a withholding statement in such
circumstances. See section 9 of this
Agreement, providing that WP may not
act as a withholding foreign partnership
for certain indirect partners that are U.S.
non-exempt recipients.

# Section 6. TAX RETURN AND INFORMATION REPORTING OBLIGATIONS

## Sec. 6.01. Form 1042 Filing Require- ment.

(A) In General. WP shall file a return on
Form 1042, whether or not WP withheld
any amounts under chapter 3 or 4 of the
Code, on or before March 15 of the year
following any calendar year in which WP
acts as a withholding foreign partnership.
In addition to the information required on
Form 1042 and its accompanying instruc-
tions, WP shall attach a statement setting
forth the amounts of any overwithholding

or underwithholding adjustments made
under sections 7.01 and 7.03 of this
Agreement, and an explanation of the cir-
cumstances that resulted in the over- or
underwithholding. If WP is requesting a
collective refund or credit, WP shall at-
tach the statements required by section
7.02 of this Agreement and shall comply
with the procedures specified in section
7.02 of this Agreement.

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

Sec. 6.02. Form 1042-S Reporting.

(A) In General. WP must file Form
1042-S for each partner for whom it acts
as a withholding foreign partnership and
for whom WP distributes, or in whose
distributive share is included, a reportable
amount unless WP is permitted under sec-
tions 6.02(C) and (D) of this Agreement to
report in pools (reporting pools). With
respect to its direct partners, WP must file
Forms 1042-S in the manner required by
the regulations under chapters 3 and 4 for
amounts distributed to, or included in the
distributive share of, its partners (or in the
case of a participating FFI, pursuant to its
FATCA requirements as a participating
FFI) and the instructions to the form, in-
cluding any requirement to file the forms
magnetically or electronically. Any Form
1042-S required to be filed by this section
6 shall be filed on or before March 15
following the calendar year in which with-
holding, if any, was required under sec-
tion 3.02 of this Agreement. WP may re-
quest an extension of time to file Forms
1042-S by submitting Form 8809, Appli-
cation for Extension of Time to File In-
formation Returns, (or other superseding
form) by the due date of Forms 1042-S in
the manner required by (and to the extent
permitted on) Form 8809.

(B) Recipient Specific Reporting. WP is
required to file a separate Form 1042-S
for amounts distributed to, or included in
the distributive share of, each separate
partner as described in this section
6.02(B). WP must file separate Forms
1042-S by income code, chapter 3 or 4

exemption code, recipient code, chapter 4
withholding rate pool (if applicable), and
withholding rate.

(1) Unless WP has made the pooled re-
porting election pursuant to section
6.02(D) of this Agreement, WP must file a
separate Form 1042-S for each direct
partner (other than a passthrough partner)
to whom WP distributes, or whose distrib-
utive share includes, an amount subject to
chapter 3 withholding that is either not a
withholdable payment or is a withhold-
able payment for which no chapter 4 with-
holding is required.

(2) WP must file a separate Form 1042-S
for each partner that is a qualified inter-
mediary, a withholding foreign partner-
ship, or a withholding foreign trust to
whom WP distributes, or whose distribu-
tive share includes, an amount subject to
withholding under chapters 3 or 4, regard-
less of whether such partner is a direct or
indirect partner of WP.

(3) WP must file a separate Form 1042-S
for each passthrough partner that is a non-
qualified intermediary or flow-through en-
tity that is a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI and
to whom WP distributes, or whose distrib-
utive share includes, an amount subject to
chapter 4 withholding allocable to such
FFI's chapter 4 withholding rate pools of
recalcitrant account holders, nonpartici-
pating FFIs, and reportable amounts allo-
cable to U.S. payees, if applicable, regard-
less of whether such FFI is a direct or
indirect partner of WP when WP applies
section 9.03 of this Agreement.

(4) WP must file a separate Form 1042-S
for each passthrough partner that is a non-
qualified intermediary or flow-through en-
tity that is not described in section
6.02(B)(3) of this Agreement (other than a
nonparticipating FFI), and to whom WP
distributes, or whose distributive share in-
cludes, an amount subject to chapter 4
withholding allocable to such passthrough
partner's chapter 4 withholding rate pool
of payees that are nonparticipating FFIs,
regardless of whether such passthrough
partner is a direct or indirect partner of
WP when WP applies section 9.03 of this
Agreement.

(5) WP must file a separate Form 1042-S
for each partner of WP that is a partner-
ship or trust to which WP applies the

agency option under section 9.02 of this
Agreement and to whom WP distributes,
or whose distributive share includes, an
amount subject to chapter 4 withholding
that is allocable to the partnership or
trust's chapter 4 withholding rate pool of
payees that are nonparticipating FFIs or to
whom WP distributes, or whose distribu-
tive share includes, an amount subject to
chapter 3 withholding that is either not a
withholdable payment or is a withhold-
able payment for which no chapter 4 with-
holding is required and that is allocable to
such partnership's or trust's chapter 3
withholding rate pools.

(6) WP must file a separate Form 1042-S
for each foreign account holder (or inter-
est holder) of a passthrough partner that is
a nonparticipating FFI that receives a pay-
ment on behalf of an exempt beneficial
owner (regardless of whether the pass-
through partner is a direct or indirect part-
ner of WP) to the extent WP can reliably
associate such amounts with valid docu-
mentation from such passthrough partner
as to the portion of the payment allocable
to one or more exempt beneficial owners.
In addition, WP must file separate Forms
1042-S in the same manner for each for-
eign account holder (or interest holder) of
a passthrough partner that is described in
the preceding sentence and that is a direct
or indirect partner, beneficiary, or owner
of a partnership or trust to which WP
applies the agency option.

(7) WP must file a separate Form 1042-S
for each foreign account holder (or inter-
est holder) of a passthrough partner to
whom WP distributes, or whose distribu-
tive share includes, an amount subject to
chapter 3 withholding that is either not a
withholdable payment or is a withhold-
able payment for which no chapter 4 with-
holding is required to the extent WP can
reliably associate such amounts with valid
documentation from an account holder (or
interest holder) that is not itself a non-
qualified intermediary or flow-through en-
tity when WP applies section 9.03 of this
Agreement. In addition, WP must file a
separate Form 1042-S in the same manner
for each foreign account holder (or inter-
est holder) of a nonqualified intermediary
or flow-through entity (to which WP does
not apply the agency option) that is de-
scribed in the preceding sentence and that
is a direct or indirect account holder (or

interest holder) of a partnership or trust to
which WP applies the agency option.

(8) If WP is an NFFE, WP must file a
separate Form 1042-S for each direct
partner that establishes its status as a pas-
sive NFFE but fails to provide the infor-
mation regarding its owners as required
under § 1.1471-3(d)(12)(iii).

If WP is an FFI, WP shall report on Form
1042-S amounts subject to chapter 4
withholding that it distributes to, or in-
cludes in the distributive share of, its di-
rect partners consistent with its FATCA
requirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI. A
separate Form 1042-S shall be filed for
each type of chapter 4 reporting pool. A
chapter 4 reporting pool is a payment of a
single type of income, determined in ac-
cordance with the categories of income
reported on Form 1042-S, that is allocable
to a chapter 4 withholding rate pool con-
sisting of payees that are nonparticipating
FFIs or recalcitrant account holders. WP
must report recalcitrant account holders in
pools based upon their particular class de-
scribed in § 1.1471-4(d)(6), with a sepa-
rate Form 1042-S issued for each such
pool. See section 9 of this Agreement for
when a WP may include certain indirect
partners in its chapter 4 reporting pools.
If WP is a participating FFI or registered
deemed-compliant FFI (including for this
purpose a reporting Model 1 IGA FFI),
WP may report in a chapter 4 withholding
rate pool of U.S. payees reportable
amounts that are distributed to, or in-
cluded in the distributive share of, a direct
partner that is a U.S. person, provided that
WP reports such partner as a U.S. account
(or U.S reportable account) under its ap-
plicable FATCA requirements as a partic-
ipating FFI, registered deemed-compliant
FFI, reporting Model 1 FFI, or registered
deemed-compliant Model 1 IGA FFI. WP
shall include in its U.S. payee pool report-
able amounts that are distributed to, or
included in the distributive share of, a
direct partner that is a U.S. person when
WP either reports such partner as a U.S.
account (or U.S. reportable account) pur-
suant to its FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI; or reports

such partner as a recalcitrant account
holder (or non-consenting U.S. account)
provided that WP is not required to with-
hold on such partner pursuant to its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI. See, however, the automatic ter-
mination provision of section 10.03(A) of
this Agreement if WP is not in possession
of valid documentation for any direct part-
ner at any time that withholding or report-
ing is required.

If WP is an NFFE, WP shall report
amounts subject to chapter 4 withholding
by reporting pools on a Form 1042-S if
those amounts are distributed to, or in-
cluded in the distributive share of, direct
partners of WP that are nonparticipating
FFIs in a chapter 4 reporting pool of non-
participating FFIs.

(D) Chapter 3 Reporting Pools.

WP may elect to perform pool reporting
(PR election) for an amount subject to
chapter 3 withholding that either is not a
withholdable payment or is a withhold-
able payment for which no chapter 4 with-
holding is required and that WP distrib-
utes to, or includes in the distributive
share of, a foreign direct partner (other
than a passthrough partner, withholding
foreign partnership, or withholding for-
eign trust). A separate Form 1042-S shall
be filed for each chapter 3 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 ex-
emption code and, if the payment is a
withholdable payment, a chapter 4 exemp-
tion code as determined on Form 1042-S
and its accompanying instructions. WP
may use a single chapter 3 pool reporting
code (e.g., WP- withholding rate pool-
general) for all reporting pools except for
amounts paid to foreign tax-exempt recip-
ients, for which a separate chapter 3 pool
reporting code (e.g., WP- 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 res-
idence because it is a charitable organiza-
tion, a pension fund, or a foreign govern-
ment. See section 9 of this Agreement for
when a WP may include certain indirect
partners in its chapter 3 reporting pools.

If WP has made the PR election pursuant
to this section 6.02(D), WP is not required
to file Forms 1042-S for amounts distrib-
uted to, or included in the distributive
share of, each separate direct partner for
whom such reporting would otherwise be
required. Instead, WP shall file a separate
Form 1042-S for each reporting pool.
However, see section 7.02 of this Agree-
ment for the requirement for WP to pro-
vide a Form 1042-S to a partner if re-
quested. Once made, the PR election is
effective for the entire term of this Agree-
ment beginning on the effective date of
the Agreement and ending on the date of
its expiration or termination under section
10 of the Agreement. WP must make a
new election for each renewal term of this
Agreement. If WP makes the PR election,
WP cannot revoke it prior to the end of the
term for which WP has made the PR elec-
tion unless WP obtains consent from the
IRS to revoke such election. WP may
request IRS consent by contacting the IRS
at the address specified in section 11.06 of
this Agreement. If WP did not make the
PR election at the time this Agreement
was executed, then WP may make a PR
election only by contacting the IRS at the
address specified in section 11.06 of this
Agreement.

## Sec. 6.03. Form 1065 Filing Require- ment.

(A) General Rule. If WP is required to file
Form 1065 and Schedules K-1 under
§ 1.6031(a)-1, then WP shall file Form
1065 and Schedules K-1 in accordance
with the regulations and the instructions
for the form as modified by section
6.03(B) or (C) of this Agreement.

(B) Modified Filing Obligations. If WP
has U.S. source income, WP may avail
itself of the modified obligations de-
scribed in section 6.03(B)(1) or (2) of this
Agreement, if, in addition to satisfying the
requirements of section 6.03(B)(1) or (2)
of this Agreement, none of this income is
attributable to a permanent establishment
inside the United States, none of this in-
come is effectively connected with a trade
or business within the United States, and
WP would not otherwise be required to
report to any partner a specially allocated
item on Schedule K-1.

(1) WP is not required to file a Form 1065
provided that WP has no direct or indirect

partners that are U.S. persons at any time
during WP's taxable year.

(2) WP is required to file a Form 1065, but
is not required to file Schedules K-1 for
any partners other than its direct U.S. part-
ners and its passthrough partners (whether
U.S. or foreign) through which indirect
U.S. partners hold an interest in WP.
Schedules K-1 that are not excepted from
the filing requirement under this section
6.03(B)(2) must contain the same infor-
mation required of a U.S. partnership un-
der § 1.6031(a)-1(a).

(C) Foreign Reverse Hybrid Entities. If
WP is an FFI that is a foreign reverse
hybrid entity, WP is not required to file
Form 1065 and Schedules K-1, and in-
stead WP must satisfy the requirements in
sections 6.03(C)(1) through (5) of this
Agreement.

(1) WP is a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI.

(2) WP files Form 1120-F for each tax-
able year to report income effectively con-
nected with a U.S. trade or business (ECI)
(if any).

(3) With respect to each calendar year,
WP prepares a statement supporting its
allocations of U.S. source FDAP income
for the year to each partner that claims
benefits under an income tax treaty ("Rec-
onciliation Statement"). The Reconcilia-
tion Statement shall be prepared by the
due date (including extensions) for filing
WP's Forms 1042 and 1042-S for the
calendar year. The Reconciliation State-
ment must be retained for six years and
provided to the IRS upon request, and
must be reviewed by the reviewer for ac-
curacy as part of the periodic review un-
der sections 8.04 and 8.05 of this Agree-
ment. The Reconciliation Statement must
include the following information:

(i) The total amount of non-ECI U.S.
source FDAP income that is received by
WP during the year and, of such amount,
the portion that is included in the distrib-
utive share of each partner that is a U.S.
person; each foreign partner that claims
benefits under an income tax treaty with
respect to such income; and all other part-
ners in WP (in the aggregate);

(ii) For each partner described in section
6.03(C)(3)(i) of this Agreement, the
amount of withholding applied by WP to
the distribution or distributive share of the

amount of non-ECI U.S. source FDAP
allocated to such partner for the year; and
(iii) Identification of any allocation of
non-ECI U.S. source FDAP income to a
partner claiming benefits under an income
tax treaty with respect to such income in a
ratio different than the ratio for allocating
income or loss generally to such partner
under WP's partnership agreement and
identifying information with respect to
each such partner that would be provided
on Schedule K-1 if WP were required to
provide Schedule K-1 under § 1.6031
(a)-1 for such partner.

(4) If WP is a passive foreign investment
company (PFIC), WP must issue a PFIC
Annual Information Statement (described
in § 1.1295-1(g)(1)) each year to each
U.S. person that is a shareholder (as de-
fined in § 1.1295-1(j)) of the PFIC that
has made an election to treat WP as a
qualified electing fund under section
1295(b). WP shall retain a copy of each
PFIC Annual Information Statement for
six years and provide each such statement
to the IRS upon request. Each PFIC An-
nual Information Statement must be re-
viewed by the reviewer for accuracy as
part of the periodic review under sections
8.04 and 8.05 of this Agreement.

(5) WP may not reduce the rate of with-
holding under chapter 3 based on a part-
ner's claim of treaty benefits unless WP
obtains from the partner the documenta-
tion required under section 4.03 of this
Agreement.

Sec. 6.04. Retention of Returns. WP
shall retain Forms 1042 and 1065 for the
period of the applicable statute of limita-
tions on assessments and collection under
the Code.

Sec. 6.05. FATCA U.S. Account Report-
ing.

(A) WP that is an FFI.

(1) In general. If WP is an FFI, WP is
required to report each U.S. account (or,
in the case of an FFI that is a reporting
Model 1 FFI or registered deemed-
compliant Model 1 IGA FFI, each U.S.
reportable account) that it maintains con-
sistent with its FATCA requirements as
a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. If WP is a
participating FFI or registered deemed-
compliant FFI (other than a reporting
Model 1 FFI), WP must report its U.S.

accounts on Form 8966 in the time and
manner specified under its FATCA re-
quirements as a participating FFI or
registered deemed-compliant FFI, except
to the extent WP is reporting under
§ 1.1471-4(d)(5) on Form 1099 with re-
spect to its U.S. accounts. If WP is a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI, WP
must report each U.S. reportable account
as required under the applicable Model 1
IGA.

(2) Reporting payments made to partners
on Form 8966. Beginning with reporting
with respect to calendar year 2017, if WP
is a participating FFI or registered
deemed-compliant FFI (other than a re-
porting Model 1 FFI) reporting a U.S.
account or an account held by an owner-
documented FFI on Form 8966, WP
must report the payments described in
§ 1.1471-4(d)(4)(iv)(C) (i.e., the part-
ner's distributive share of the partner-
ship's income or loss for the calendar
year, without regard to whether any such
amount is distributed to the partner during
the year, and any guaranteed payments for
the use of capital).

(B) WP that is an NFFE. If WP is an
NFFE, WP shall file Forms 8966 to report
withholdable payments distributed to, or
included in the distributive share of, any
partner that is an NFFE (other than an
excepted NFFE) with one or more sub-
stantial U.S. owners if the NFFE is the
beneficial owner of the withholdable pay-
ment received by WP. See § 1.1471-
1(b)(8) for the definition of beneficial
owner. WP must report on Form 8966 in
accordance with the form and its accom-
panying instructions.

The Form 8966 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 distrib-
uted to, or included in the distributive
share of, the NFFE during the calendar
year; and any other information as re-
quired by the form and its accompanying
instructions. If WP is acting as a sponsor-
ing entity on behalf of a NFFE for chapter
4 purposes, WP is not required to report as
described in this paragraph if WP reports
the NFFE as part of WP's requirements as
a sponsoring entity. See § 1.1472-1(c)

(5)(ii) for the reporting requirements of a
sponsoring entity.

(C) Form 8966 Reporting for Payees that
are NFFEs. WP shall file Form 8966 to
report withholdable payments that WP
distributes to, or includes in the distribu-
tive share of, a passthrough partner that
provides information regarding an ac-
count 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 applica-
ble IGA) and that is the beneficial owner
of the withholdable payment received by
WP when such substantial U.S. owner or
controlling person is not reported under
section 6.05(A) of this Agreement. WP
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 that is a
specified U.S. person); the name, address,
and U.S. TIN of each substantial U.S.
owner (or controlling person that is a
specified U.S. person); 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.

WP is not required to report on Form
8966, however, on a withholdable pay-
ment made to a passthrough partner that is
a participating FFI or registered deemed-
compliant FFI that is allocated to a payee
that is a passive NFFE with one or more
substantial U.S. owners on an FFI with-
holding statement when the participating
FFI or registered deemed-compliant FFI
includes on the statement the certification
described in § 1.1471-3(c)(3)(iii)(B)(2)
(iv) (certifying that the FFI is reporting the
passive NFFE as a U.S. account or U.S.
reportable account in accordance with the
terms of the FFI agreement or an applica-
ble IGA), provided WP does not know or
have reason to know that the certification
is incorrect or unreliable. See § 1.1474-
1(i)(2).

# Section 7. ADJUSTMENTS FOR OVER- AND UNDERWITHHOLDING; REFUNDS

Sec. 7.01. Adjustments for Chapter 3 or
4 Overwithholding by WP. WP may

make an adjustment for amounts paid to
its partners when WP has overwithheld
under chapter 3 or 4 by applying either the
reimbursement procedure described in
section 7.01(A) of this Agreement or the
set-off procedure described in section
7.01(B) of this Agreement within the time
period prescribed for those procedures.

(A) Reimbursement Procedure. WP may
repay its partners for an amount overwith-
held under chapter 3 or 4 and reimburse
itself by reducing, by the amount of tax
actually repaid to the partners, the amount
of any subsequent deposit of tax required
to be made by WP under section 3.05 of
this Agreement. For purposes of this sec-
tion 7.01(A), an amount that is overwith-
held shall be applied in order of time (i.e.,
sequentially) to each of WP'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 ear-
lier 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 WP with the IRS;

(2) WP states on a Form 1042-S (issued,
if applicable, to the partner 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) WP 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. WP may repay its
partners by applying the amount over-
withheld against any amount which other-
wise would be required under chapter 3 or
4 to be withheld from a payment made by
WP 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 Form 1042-S for the cal-
endar 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. 7.02. Collective Credit or Refund
Procedures for Chapter 3 or 4 Over-
withholding. If WP has made a PR elec-
tion and there has been overwithholding
(as defined in section 2.53 of this Agree-
ment) on amounts paid to WP's direct
partners during a calendar year and the
amount of overwithholding has not been
recovered under the reimbursement or set-
off procedures as described in section 7.01
of this Agreement, WP may request a
credit or refund of the total amount over-
withheld by following the procedures of
this section 7.02. WP shall follow the pro-
cedures 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 overwithholding and WP does not
apply for a collective refund, it must pro-
vide a Form 1042-S for the payment that
was subject to the overwithholding if re-
quested by the partner receiving the pay-
ment.

(A) Payments for which a Collective Re-
fund is Permitted. Except as otherwise
provided in this section 7.02, WP may use
the collective refund procedure of this
section 7.02 with respect to all amounts
subject to chapter 3 or 4 withholding that
WP has withheld under this Agreement.
With respect to amounts withheld under
chapter 3 or 4, WP shall not include in its
collective refund claim any amounts with-
held on payments made to an indirect
partner or a direct account holder of WP
that is a passthrough partner. Further, with
respect to amounts withheld under chapter
4, if WP is a participating FFI or regis-
tered deemed-compliant FFI, WP shall not
include in its collective refund claim any
amounts withheld on payments made to
any partner that is an account holder de-
scribed in the FFI agreement or in
§ 1.1471-4(h)(2).

(B) Requirements for a Collective Refund.
(1) WP may use the collective refund pro-
cedures under this section 7.02 only if WP

has not issued (and will not issue) Forms
1042-S to the partners that were subject to
overwithholding and for which a collec-
tive refund claim is being made.

(2) WP must submit, together with its
amended Form 1042 on which it provides
a reconciliation of amounts withheld and a
claim for credit or refund, a statement that
includes the following information and
representations-

(i) The reason(s) for the overwithholding;
(ii) WP deposited the tax for which a
refund is being sought under section 6302
and WP has not applied the reimburse-
ment or set-off procedures of §§ 1.1461-2
and 1.1474-2 to adjust the tax withheld to
which the claim relates;

(iii) WP has repaid or will repay the
amount for which a refund is sought to the
appropriate partners;

(iv) WP retains a record showing the total
amount of tax withheld, adjustments for
underwithholding, and reimbursements
for overwithholding as it relates to each
partner and also showing the repayment
(if applicable) to such partners for the
amount of tax for which a refund is being
sought;

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

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

Sec. 7.03. Adjustments for Chapter 3 or
4 Underwithholding. If WP knows that
an amount should have been withheld un-
der chapter 3 or 4 from a previous pay-
ment made to a partner and the amount
was not withheld, WP may either with-
hold from future payments made pursuant
to chapter 3 or chapter 4 to the same
partner or satisfy the tax from the part-
ner's proportionate share of assets over
which WP 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 under-
withholding occurred.

Sec. 7.04. Chapter 3 or 4 Underwith-

holding after Form 1042 Filed. If, after a
Form 1042 has been filed for a calendar
year, WP, WP's reviewer, or the IRS de-
termines that WP has underwithheld tax
under chapter 3 or 4 for such year, WP
shall file an amended Form 1042 to report
and pay the underwithheld tax. WP shall
pay the underwithheld tax, the interest due
on the underwithheld tax, and any appli-
cable penalties, at the time of filing the
amended Form 1042. If WP 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 8. COMPLIANCE PROCEDURES

### Sec. 8.01. In General.

(A) In General. WP must adopt a compli-
ance program under the authority of a
responsible officer or, if WP adopts a con-
solidated compliance program, under the
authority of a responsible officer of the
Compliance Entity (as described in sec-
tion 8.02(C) of this Agreement). WP's
compliance program must include poli-
cies, procedures, and processes sufficient
for WP to satisfy the documentation, re-
porting, and withholding requirements of
this Agreement and sufficient for the re-
sponsible officer of WP to make the cer-
tifications required under section 8.03 of
this Agreement. See section 2.68 of this
Agreement for the definition of responsi-
ble officer. WP must also perform or ar-
range for the performance of the periodic
review described in section 8.04 of this
Agreement to the extent required by that
section. As part of the responsible off-
icer's certification, WP must provide to
the IRS the factual information as re-
quired by and referenced in sections 8.04
and 8.05 of this Agreement and in the
Appendix to this Agreement. WP must
also satisfy the requirements of section
8.06 of this Agreement with respect to the
report of the periodic review and must
comply with the IRS review referenced in
section 8.08 of this Agreement.

compliance procedures described in this
section 8, determine whether it is compli-
ant with its FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI.

# Sec. 8.02. Compliance Program.

(A) Responsible Officer. WP must appoint
an individual as the responsible officer (as
defined in section 2.68 of this Agree-
ment). The responsible officer must be
identified on the QI/WP/WT Application
and Accounts Management System as the
WP's responsible officer, and such person
may, but is not required to, be the same
responsible officer as for purposes of
compliance with WP's FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI. The
responsible officer must establish a com-
pliance program that meets the require-
ments of this section 8.02 and must make
the periodic certifications to the IRS de-
scribed in section 8.03 of this Agreement.
The responsible officer of WP must be a
partner of WP or an officer or agent of the
general partner with sufficient authority to
fulfill the duties of a responsible officer
described in this section 8.02. The respon-
sible 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 informa-
tion or additional review procedures under
section 8.08 of this Agreement. Refer-
ences in this section 8.02 to the responsi-
ble officer include a responsible officer's
designee, where appropriate.

(B) Compliance Program. The responsi-
ble officer must establish a program for
WP to comply with the requirements of
this Agreement that includes the follow-
ing:

(1) Written Policies and Procedures. The
responsible officer must ensure the draft-
ing and updating, as necessary, of written
policies and procedures sufficient for WP
to satisfy the documentation, withholding,
reporting, and other obligations of this
Agreement. Such written policies and pro-
cedures must include a process for an em-
ployee or partner of WP to raise issues to
the responsible officer that concern WP's
compliance with this Agreement.

(2) Training. The responsible officer must

communicate such policies and proce-
dures to persons responsible for obtaining,
reviewing, and retaining a record of doc-
umentation under the requirements of sec-
tion 4 of this Agreement, making distri-
butions and allocations to partners on
behalf of WP that are subject to withhold-
ing under section 3 of this Agreement, or
reporting distributions or allocations to
partners under section 6 of this Agree-
ment.

(3) Systems. The responsible officer must
ensure that systems and processes are in
place that will allow WP to fulfill its ob-
ligations under this Agreement. For exam-
ple, in order to fulfill WP's obligations to
report on Forms 1042-S, Schedules K-1,
and Forms 8966 under section 6 of this
Agreement, WP must establish systems
for documenting partners and for record-
ing the information with respect to each
such partner that WP is required to report
under that section.

(4) Monitoring of Business Changes. The
responsible officer must monitor business
practices and arrangements that affect
WP's compliance with this Agreement,
including, for example, changes in WP's
partners that give rise to documentation,
withholding, or reporting obligations un-
der this Agreement.

(5) Periodic Review. Unless WP receives
a waiver (the requirements of which are
described in section 8.07 of this Agree-
ment), the responsible officer must desig-
nate a reviewer that meets the qualifica-
tions described in section 8.04(A) of this
Agreement to perform the periodic review
described in section 8.05 of this Agree-
ment, to the extent required.

(6) Certification of Internal Controls. The
responsible officer must make the certifi-
cation of internal controls as described in
section 8.03 of this Agreement, including
ensuring that corrective actions are taken
in response to any material failures (as
defined in section 8.03(D) of this Agree-
ment) of WP's compliance with this
Agreement.

(C) Consolidated Compliance Program.
The IRS, in its discretion, may permit a
WP to participate in a consolidated com-
pliance program if all the requirements in
this section 8.02(C) are met.

Two or more WPs may designate an entity
(the Compliance Entity) to implement a
consolidated compliance program that in-

cludes uniform practices, procedures, and
systems, subject to uniform monitoring
and control, with respect to all WPs in the
consolidated compliance program for pur-
poses of meeting the requirements of sec-
tion 8 of this Agreement. The responsible
officer of the Compliance Entity must per-
form a consolidated periodic review de-
scribed in sections 8.04 and 8.05 of this
Agreement that includes each WP in the
consolidated compliance program. The re-
sponsible officer of the Compliance Entity
may make a single certification of internal
controls under section 8.03 of this Agree-
ment that covers all WPs in the consoli-
dated compliance program, but must pro-
vide the factual information described in
sections 8.04 and 8.05 of this Agreement
and the Appendix to this Agreement sep-
arately for each WP in the consolidated
compliance program.

The Compliance Entity must be the same
as the sponsoring entity for chapter 4 pur-
poses for each WP in the consolidated
compliance program unless the IRS For-
eign Intermediaries Program approves the
use a different entity. The Compliance
Entity must agree to be jointly and sever-
ally liable for the obligations and liabili-
ties of each WP in the consolidated
compliance program relating to WP's ob-
ligations under this Agreement. A WP in a
consolidated compliance program may
not request a waiver of the periodic re-
view requirement described in section
8.04 of this Agreement.

Sec. 8.03. Certification of Internal Con-
trols by Responsible Officer. WP's re-
sponsible officer must make the applica-
ble certification of compliance described
in either Part II.A (Certification of Effec-
tive Internal Controls) or Part II.B (Qual-
ified Certification) of the Appendix to this
Agreement and must disclose any material
failures that occurred during the certifica-
tion period or during any prior period if
the material failure was not disclosed as
part of a prior certification or written dis-
closure made by WP to the IRS. If the
responsible officer has identified an event
of default or a material failure that has not
been corrected as of the date of the certi-
fication, the responsible officer cannot
make the certification in Part II.A (Certi-
fication of Effective Internal Controls)
and must make the certification in Part
II.B (Qualified Certification) of the Ap-

pendix to this Agreement. All WPs must
also complete Parts II.C through II.F of
the Appendix to this Agreement.

The certification of internal controls re-
quired by this section 8.03 applies only to
the internal controls related to WP's com-
pliance with this Agreement and its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI and does not relate to any other
obligations or requirements. In making the
certification required by this section 8.03,
the responsible officer may rely on, in
addition to the results of the periodic re-
view (if required), any reasonable proce-
dures, processes, reviews, or certifications
made by other persons that the responsible
officer has determined are necessary in
order to make the certification described
in this section 8.03. If the responsible of-
ficer relies on an internal or external re-
view for this purpose (i.e., for purposes of
determining whether WP has effective in-
ternal controls), the internal or external
reviewer must be independent, as de-
scribed in section 8.04 of this Agreement.
The responsible officer must document
the procedures, processes, reviews, or cer-
tifications relied upon in making the cer-
tification. WP's responsible officer (or the
responsible officer of its Compliance En-
tity) must make the certifications of com-
pliance in such manner as the IRS may
prescribe.

(A) Partnerships or Trusts to which WP
Applies the Agency Option. Unless WP
has received a waiver of the periodic re-
view requirement, any partnership or trust
to which WP applies the agency option
must provide its documentation and other
information to WP for inclusion in WP's
periodic review or conduct an indepen-
dent periodic review and provide a written
certification to WP regarding its compli-
ance with the requirements of the agency
agreement. Such certification must be
available to the IRS upon a request made
as part of the review described in section
8.08 of this Agreement (with a certified
translation into English if the certification
is not in English).

(B) Material Failures.

(1) Material Failures Defined. A material
failure is generally a failure of WP to
fulfill the requirements of this Agreement
or its FATCA requirements as a partici-

pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI. For purposes of the
certifications described in Parts II.A and
II.B of the Appendix to this Agreement, a
material failure is limited to the following:
(i) WP's establishing of, for financial
statement purposes, a tax reserve or pro-
vision for a potential future tax liability
related to WP's failure to comply with this
Agreement, including its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI;

(ii) WP's failure to establish written pol-
icies, procedures, or systems sufficient for
the relevant personnel of WP to take ac-
tions consistent with WP's obligations un-
der this Agreement;

(iii) A criminal or civil penalty or sanction
imposed on WP by a regulator or other
governmental authority or agency with
oversight over WP's compliance with the
AML/KYC procedures, if applicable, to
which WP is subject and that is imposed
due to WP's failure to properly identify
partners under the requirements of those
procedures; or

(iv) A finding (including a finding noted in
the reviewer's periodic review report de-
scribed in section 8.06 of this Agreement)
that, for one or more years covered by this
Agreement, WP failed to-

(a) Withhold an amount that WP was re-
quired to withhold under chapter 3 or 4 as
required under section 3 of this Agree-
ment;

(b) Make deposits in the time and manner
required by section 3.05 of this Agree-
ment or make adequate deposits to satisfy
its withholding obligations, taking into ac-
count the procedures under section 7 of
this Agreement; or

(c) Report accurately on Forms 1042,
1042-S, 8966 (or similar report of U.S.
reportable accounts as required under a
Model 1 IGA), 1065 and Schedules K-1
as required under section 6 of this Agree-
ment.

ticipating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI with respect
to one or more partners of WP, or was an
error attributable to a failure of WP to
establish or implement internal controls
necessary for WP to meet the require-
ments of this Agreement. Regardless of
these limitations for the certifications de-
scribed in sections 8.03(A) and (B) of this
Agreement, WP is required to correct a
failure to withhold or deposit tax under
section 3 of this Agreement or to report
under section 6 of this Agreement.

(1) Certification Due Date. For a WP that
uses the last year of the certification pe-
riod for its periodic review, the certifica-
tion is due on or before December 31 of
the calendar year following the end of the
certification period. For a WP that uses a
year other than the last year of the certi-
fication period for its periodic review, and
a WP that obtains a waiver of the periodic
review requirement, the certification is
due on or before July 1 of the year fol-
lowing the certification period.

(2) Certification Period. The initial certi-
fication period is the period beginning on
the effective date of the WP agreement
and 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 certi-
fication period (including renewals of this
Agreement).

(3) FATCA Certifications. The certifica-
tion period described in section 8.03(C)(2)
of this Agreement may not be the same as
the certification period (if any) applicable
to WP's FATCA requirements as a partic-
ipating FFI or registered deemed-
compliant FFI. WP is required to make the
certification required under its FATCA re-
quirements as a participating FFI or reg-
istered deemed-compliant FFI at the time
and in the manner specified in such re-
quirements.

# Sec. 8.04. Periodic Review Absent Waiver.

Unless WP receives a waiver (the require-
ments of which are described in section
8.07(B) of this Agreement), at the time
WP provides the certification described in
section 8.03 of this Agreement, WP must

also provide certain factual information
regarding its partners, withholdable pay-
ments, and amounts subject to chapter 3
withholding, based on the results of a pe-
riodic review. The factual information re-
quested is included in the Appendix to this
Agreement.

(A) Independent Reviewer. The periodic
review may be performed by an internal
reviewer (such as an internal auditor) that
is an employee of WP or the general part-
ner of WP, including an employee of the
Compliance Entity in the case of a con-
solidated compliance program (internal
reviewer), or a certified public accountant,
attorney, or third-party consultant (exter-
nal reviewer), or any combination thereof.
(1) Internal Reviewer. WP may designate
an internal reviewer to perform the peri-
odic review (or a portion of the periodic
review) only when the internal reviewer is
competent with respect to the require-
ments of this Agreement. The internal re-
viewer 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, proce-
dures, or results (e.g., the internal re-
viewer reviewing WP's documentation
cannot be part of the team primarily re-
sponsible for collecting and validating
documentation). The results of the peri-
odic review and the internal reviewer's
reporting of such results to the responsible
officer cannot influence or affect the com-
pensation, bonus, employment status, or
employee review of the internal reviewer.
The IRS has the right to request the per-
formance of the periodic review by an
alternative reviewer if the IRS, in its sole
discretion, reasonably believes that the re-
viewer selected by WP was not indepen-
dent, as described in this Agreement, or
did not perform an effective periodic re-
view under this Agreement.

In the case of a consolidated compliance
program, the Compliance Entity of a con-
solidated compliance program of which
WP is a member (if WP is approved by
the IRS) may designate an internal re-
viewer to perform the consolidated peri-
odic review (or a portion of the consoli-
dated periodic review). See sections
8.02(B) and (C) of this Agreement. The
internal reviewer of the Compliance En-
tity must meet the requirements of this
section with respect to each WP that is a

member of the consolidated compliance
program.

(2) External Reviewer. WP may engage an
external reviewer that is a certified public
accountant, attorney, or third-party con-
sultant that is regularly engaged in the
practice of performing reviews of clients'
policies, procedures, and processes for
complying with accounting, tax, or regu-
latory requirements (including for assist-
ing clients in determining such compli-
ance). The external reviewer cannot be
reviewing systems, policies, or procedures
or the results thereof that it (or the firm
with which it is affiliated) was involved in
designing, implementing, or maintaining.
The external reviewer must be in good
standing with and comply with any appli-
cable professional standards for maintain-
ing its license as an accountant or attorney
(or other third-party consultant that has
similar professional standards or require-
ments). The external reviewer is not re-
quired to make an attestation or render an
opinion regarding WP's compliance with
this Agreement or WP's compliance with
its FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI, but the reviewer must be able to
perform the periodic review as specified
in section 8.05 of this Agreement. WP
must permit the external reviewer access
to all relevant records of WP for purposes
of performing the review, including infor-
mation regarding specific partners. Addi-
tionally, the engagement between the ex-
ternal reviewer and WP must impose no
restrictions on WP's ability to provide the
results of the review to the IRS. However,
the external reviewer is not required to
divulge the identity of WP's foreign part-
ners to the IRS, except as otherwise re-
quired under WP's FATCA requirements
as a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. WP 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. 8.05. Scope and Timing of Review.
The responsible officer of WP (or the
Compliance Entity if WP is a member of
a consolidated compliance program) must
require the reviewer to review WP's doc-

umentation, withholding, reporting, and
other obligations under this Agreement
and WP's FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI, and identify
deficiencies in meeting these obligations.
To the extent WP applies the joint account
option with respect to another partnership
or trust as described in section 9.01 of this
Agreement or acts as a withholding for-
eign partnership for any indirect partners
as described in section 9.03 of this Agree-
ment, the review must include such indi-
rect partners, beneficiaries, or owners in
addition to WP's direct partners. In addi-
tion, if WP applies the agency option to a
partnership or trust as described in section
9.02 of this Agreement, the review must
include the partners, beneficiaries, or
owners of such partnership or trust unless
the partnership or trust conducts its own
review in accordance with this section 8
of this Agreement and provides the re-
sponsible officer of WP with the report
documenting the results of such review as
described in section 8.06 of this Agree-
ment. Unless otherwise approved by the
IRS, the review must include the steps
described in sections 8.05(A) through (D)
of this Agreement. WP is required to ar-
range for the performance of one review
for the certification period to evaluate
WP's documentation, withholding, and
reporting practices. The review may be
conducted for any calendar year covered
by the certification period. WP may con-
duct 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 8.04 of this
Agreement), there are 15 or more months
available on the period for assessment un-
der section 6501(a) of the calendar year
for which the review is to be conducted or
the WP submits, upon request, a Form
872, Consent to Extend the Time to As-
sess Tax, that will satisfy the 15-month
requirement. The Form 872 must be sub-
mitted to the IRS at the address provided
in section 11.06 of this Agreement.

If WP has more than 60 partners for which
WP acts for the year of the periodic re-
view, WP's reviewer may use statistical
sampling procedures by applying the prin-
ciples set forth in Appendix II of the QI
Agreement in Revenue Procedure 2017-

15, 2017-03 I.R.B. 437 for the periodic
review.

If the reviewer determines that underwith-
holding has occurred, WP shall pay any
amount determined and report both the
underwithholding determined by the re-
view and any amount of underwithholding
that was cured following the review by
obtaining the documentation required to
support reduced withholding by WP
(without regard to projection if statistical
sampling is used for the review). WP must
also notify the IRS Foreign Intermediaries
Program at the address provided in section
11.06 of this Agreement of the underwith-
holding discovered as a result of the re-
view within 30 days of the completion of
the review.

(A) Documentation. The reviewer must-
(1) Review information contained in doc-
umentation obtained for WP's partners
and any correspondence or memoranda
associated with the partners (the partners'
files) to ensure that WP obtained docu-
mentation that meets the requirements de-
scribed in section 4 of this Agreement
(including the treaty statements and limi-
tation on benefits information required by
section 4.03(B) of this Agreement for
partners making treaty claims);

(2) Review information contained in the
partners' files to determine if the docu-
mentation validity standards of section
4.10 of this Agreement have been met.
For example, the reviewer must verify that
WP is withholding at the correct rate after
any change in circumstances (e.g., a
change of address to a U.S. address or
change of account holder status from for-
eign to U.S. or a change in chapter 4 status
from participating FFI to nonparticipating
FFI); and

(3) Review WP's partners' files to ensure
that WP is obtaining, reviewing, and
maintaining documentation in accordance
with its FATCA requirements as a partic-
ipating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI.

(B) Withholding Responsibilities. The re-
viewer must-

(1) Perform test checks of WP's direct
partners that are recalcitrant account hold-
ers (if applicable) and nonparticipating
FFIs to verify that WP is withholding as
required under chapter 4;

(2) Perform test checks of foreign partners

for which no withholding is required un-
der chapter 4 based on the partner's chap-
ter 4 status to verify that WP withheld the
proper amounts; and

(3) Verify that amounts withheld by WP
were timely deposited in accordance with
section 3.05 of this Agreement.

(1) Obtain copies of original and amended
Forms 1042, and any schedules, state-
ments, or attachments required to be filed
with those forms, and verify that the forms
have been filed and determine whether the
amounts of income, taxes, and other in-
formation reported on those forms are ac-
curate by-

(i) Reviewing copies of Forms 1042-S
received from withholding agents for rec-
onciling amounts received by WP with the
amounts distributed to, or included in the
distributive share of, WP's partners;

(ii) Reviewing account statements and
correspondence from withholding agents;
(iii) Determining that adjustments to the
amount of tax shown on Form 1042 (and
any claim by WP for refund or credit)
properly reflect the adjustments to with-
holding made by WP using the reimburse-
ment or set-off procedures under section 7
of this Agreement and that the adjust-
ments are supported by sufficient docu-
mentation;

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

(v) In the case of collective credits or
refunds, reviewing the statements attached
to the amended Forms 1042 filed to claim
a collective credit or refund, determine
whether those forms are accurate, and-
(a) Determining the causes of any over-
withholding reported and ensure WP did
not issue Forms 1042-S to partners that
were included as part of its collective
credit or refund claim;

(b) Determining that WP repaid the appro-
priate partners and that the amount of the
claim is accurate and supported by ade-
quate documentation for reducing the rate
of withholding; and

(c) Determining that WP did not include
payments made to a partner described in
section 7.02(A) of this Agreement or a
partnership or trust described in section
9.01 of this Agreement.

(2) Obtain copies of original and amended
Forms 1042-S, 1065, Schedules K-1, and
1120-F (if applicable) filed by WP to-
gether with the work papers used to pre-
pare those forms and determine whether
the amounts reported on those forms are
accurate by-

(i) Reviewing the Forms 1042-S received
from withholding agents;

(ii) Reviewing the Form 1065, if required,
and if no Form 1065 was required to be
filed, determining whether the exemption
from filing was properly applied;

(iii) Reviewing Schedules K-1 or income
statements issued by WP to partners, if
any;

(iv) Reviewing Form 1120-F (if applica-
ble);

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

(vi) Determining, in any case in which WP
utilized the reimbursement or set-off pro-
cedure, that WP satisfied the requirements
of section 7 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 (or, if WP is a reporting
Model 1 FFI, any analogous forms used
for reporting account information pursu-
ant to an applicable Model 1 IGA), 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. re-
portable accounts), accounts held by non-
participating FFIs, and recalcitrant ac-
count holders to determine that such
accounts were reported in accordance
with WP's FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI;

(ii) If WP is an NFFE, confirming that any
direct partners that are passive NFFEs
with one or more substantial U.S. owners
were reported in accordance with § 1.1472-
1(c)(3);

(iii) Confirming with respect to any pass-
through partner that provides information
regarding an account holder (or interest
holder) that is an NFFE (other than an

excepted NFFE) with one or more sub-
stantial U.S. owners that such substantial
U.S. owners were reported to the extent
required under section 6.05(C) of this
Agreement;

(iv) Reviewing the documentation pro-
vided by a partnership or trust to which
WP applied the agency option, confirming
that WP reported on Form 8966 (or, if WP
is a reporting Model 1 FFI, any analogous
forms used for reporting account informa-
tion pursuant to an applicable Model 1
IGA) to the extent required under section
9 of this Agreement; and

(v) Reviewing work papers used to pre-
pare these forms.

(4) If WP is a foreign reverse hybrid en-
tity, obtain the Reconciliation Statement
described in section 6.03(C)(3) of this
Agreement and determine whether the
amounts shown on the statement are ac-
curate by-

(i) Comparing the total amount of non-
ECI U.S. source FDAP income shown on
the Reconciliation Statement to the total
amount of non-ECI U.S. source FDAP
income reported on Forms 1042-S re-
ceived from withholding agents; and

(ii) Comparing the allocations of non-ECI
U.S. source FDAP income to each partner
on the Reconciliation Statement to the al-
locations of income and loss generally to
each such partner under WP's partnership
agreement.

(5) If WP is a foreign reverse hybrid en-
tity, obtain copies of the PFIC Annual
Information Statements issued to each
U.S. person that is a shareholder (as de-
fined in § 1.1295-1(j)) and determine
whether the amounts shown on the state-
ments are accurate by reviewing WP's
books of account, records, and such other
documents maintained by WP to establish
that WP's ordinary earnings and net cap-
ital gain are computed in accordance with
U.S. income tax principles, and to verify
these amounts and each shareholder's pro
rata shares thereof.

(D) 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 described in section 10.04(A), (D), or
(E) of this Agreement.

# Sec. 8.06. 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 WP (or the responsible officer of the
Compliance Entity) 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 per-
formed to satisfy each requirement of sec-
tion 8.05(A) through (D). The report may
include explanatory footnotes to clarify
the results of the report. Recommenda-
tions 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 WP that
is set forth in the Appendix to this Agree-
ment.

(B) Partnership or Trust to which WP
Applies the Agency Option. Any partner-
ship or trust to which WP applies the
agency option and that does not provide
documentation and other information to
WP for inclusion in WP's periodic review
described in section 8.04 of this Agree-
ment must conduct an independent peri-
odic review in accordance with the com-
pliance procedures described in section
8.05 of this Agreement. The performance
results of the periodic review must be
documented in a written report addressed
to the responsible officer of WP and must

be available to the IRS upon request (with
a certified translation into English if the
certification is not in English).

(C) Retention of Report and Certifica-
tions. The report and certifications de-
scribed in this section 8.06 must be re-
tained by WP (or the Compliance Entity
of a consolidated compliance group) for
as long as this Agreement is in effect
(including renewals of this Agreement).

## Sec. 8.07. Waiver of Periodic Review Requirement.

(A) In General. A WP that is an FFI that
meets the requirements of section 8.07(B)
of this Agreement may apply for a waiver
of the periodic review requirement. The
waiver application is set forth in Part III of
the Appendix to this Agreement. WP must
include the information of any partnership
or trust to which WP applies the agency
option in its waiver application. WP must
request a waiver under this section 8.07 at
the time the responsible officer makes the
certification described in section 8.03 of
this Agreement. WP's request for such a
waiver must be approved by the IRS, and
waiver requests are not approved automat-
ically. If WP's request for a waiver is
approved, such approval is only to waive
WP's obligations under sections 8.04 and
8.05 of this Agreement, and WP is still
required to make the certification de-
scribed in section 8.03 of this Agreement.
The waiver does not preclude the IRS
from requesting information or conduct-
ing a correspondence review as described
in section 8.08 of this Agreement. WP
must apply for a waiver for each certifi-
cation period for which a waiver is re-
quested.

(B) Eligibility. WP is eligible to apply for
a waiver of the periodic review require-
ment if it meets the following require-
ments-

(1) WP must be an FFI;

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

(3) For each calendar year covered by
the certification period, the reportable
amounts received by WP cannot exceed
$1 million;

(4) WP must have timely filed its Forms
1042, 1042-S, and 8966 (or the reporting
required under an applicable IGA), 1065,
and Schedule K-1, as applicable, for all
years (fiscal or calendar) in the certifica-
tion period;

(5) WP must have made all periodic cer-
tifications and reviews required by sec-
tions 8.02 and 8.03 of this Agreement for
each certification period, as well as any
certifications required pursuant to WP's
FATCA requirements as a participating
FFI or registered deemed-compliant FFI;
and

(6) WP must make the certification of
effective internal controls described in
Part II.A of the Appendix to this Agree-
ment for the certification period for which
WP is applying for a waiver of the peri-
odic review.

(C) Documentation Required with Waiver
Application. When applying for a waiver
under this section 8.07, WP must include
the information described in Part III.B of
the Appendix to this Agreement using the
most recent calendar year in the certifica-
tion period for which filing is due and
reporting such results without any curing
or remediation.

(D) Approval. If WP's request for a
waiver of the periodic review requirement
is approved, the IRS will notify WP. If
WP requests a waiver but such request is
not approved, WP will be granted a six
month extension from the date of denial of
the waiver to complete the periodic re-
view under sections 8.04 and 8.05 of this
Agreement. Such extension will not be
granted if WP has made the request for
waiver in bad faith.

Sec. 8.08. IRS Review.

(A) In General. Based upon the certifica-
tions made by the responsible officer and
disclosure of material failures, the infor-
mation reported on Forms 1042, 1042-S,
1065, and 8966 and Schedules K-1 filed
with the IRS during the certification pe-
riod, or otherwise at the IRS's discretion
for compliance purposes, the IRS may
initiate requests of WP under this section
8.08. The IRS may request remediation or
the conduct of a limited periodic review
earlier than the time period provided in
this section if, based on the information
described above, the IRS identifies, in its
discretion, a presence of factors indicating
systemic or significant compliance fail-
ures by WP. The IRS may also request
that WP designate a replacement respon-
sible officer if WP'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 respon-
sible 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 WP or the
Compliance Entity, a copy of the results
of WP's periodic review for any prior
certification period or the periodic review
report of any partnership or trust with
which WP has an agency agreement dur-
ing the current certification period (with a
certified translation into English if the re-
port is not in English). WP 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 re-
view. In such a review, the IRS will con-
tact the responsible officer of WP (or the
Compliance Entity of a consolidated com-
pliance program) in writing and request
information about WP's compliance with
this Agreement or the compliance of a
partnership or trust to which WP applied
the agency option, including, for example,
information about documentation, with-
holding, or reporting processes, its peri-
odic review, and information about any
material failures that were disclosed to the
IRS (including remediation plans). The
IRS may request phone or video inter-
views with relevant personnel of WP (or
the Compliance Entity of a consolidated
compliance program) or a partnership or
trust to which WP applied the agency op-
tion as part of such review. WP is required
to respond within a reasonable period of
time to any such requests.

(D) Additional Review Procedures. In
limited circumstances, the IRS may direct
WP (or the Compliance Entity of a con-
solidated compliance program) or any
partnership or trust described in section
9.02 of this Agreement to which WP ap-
plies the agency option to perform addi-
tional, specified review procedures. The
IRS reserves the right to require WP (or
the Compliance Entity of a consolidated
compliance program) or a partnership or
trust to which WP applied the agency op-
tion to engage an external reviewer to
perform the additional review procedures
regardless of whether such reviewer per-
formed the periodic review. The IRS will
provide the responsible officer of WP with

a written plan describing the additional
review procedures and will provide a pe-
riod of not more than 120 days within
which the WP must provide to the IRS a
report covering the reviewer's findings.

# Section 9. CERTAIN PARTNERSHIPS AND TRUSTS

Sec. 9.01. Joint Account Treatment for
Certain Partnerships and Trusts.

(A) In General. WP may enter an agree-
ment with a nonwithholding foreign part-
nership or nonwithholding foreign trust
that is either a simple or grantor trust
described in this section 9.01(A) to apply
the simplified joint account documenta-
tion, reporting, and withholding proce-
dures provided in section 9.01(B) of this
Agreement. WP and the partnership or
trust that apply this section 9.01 to any
calendar year must apply these rules to the
calendar year in its entirety. WP and the
partnership or trust may not apply this
section 9.01 to any calendar year in which
the partnership or trust has failed to make
available to WP or WP's reviewer the
records described in section 9.01(A)(5) 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 WP. If
the partnership or trust has failed to make
these records available within the 90-day
period, or if WP and the partnership or
trust fail to comply with any other require-
ments of this section 9.01, WP must apply
the provisions of §§ 1.1441-1 and
1.1441-5 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 7.03 of this Agreement, and
cannot apply this section 9.01 to subse-
quent calendar years. WP and the partner-
ship or trust that apply this section 9.01 to
any calendar year are not required to ap-
ply this section 9.01 to subsequent calen-
dar years.

A partnership or trust is described in this
section 9.01(A) if the following condi-
tions are met.

(1) The partnership or trust has a chapter 4
status as a certified deemed-compliant
FFI, an owner-documented FFI with re-
spect to WP, an exempt beneficial owner,
or an NFFE, and has provided WP with a

certification that it has maintained such
chapter 4 status at all times during each
certification period;

(2) The partnership or trust is a direct
partner of WP;

(3) None of the partnership's or trust's
partners, beneficiaries, or owners is a
flow-through entity or intermediary;

(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 with-
holding or reporting under chapter 4 (e.g.,
a nonparticipating FFI or certain passive
NFFEs); and

(5) The partnership or trust agrees to make
available upon request to WP and WP's
reviewer for purposes of WP's periodic
review under section 8 of this Agreement
(including to respond to IRS inquiries re-
garding its compliance review) records
that establish that the partnership or trust
has provided WP with documentation for
purposes of chapters 3 and 4 for all of its
partners, beneficiaries, or owners.

(B) Modification of Obligations for WP.

(1) WP may rely on a valid Form
W-8IMY provided by the partnership or
trust and may rely on a withholding state-
ment 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
and, for a withholdable payment made to
a partner, beneficiary, or owner that is
an entity, documentation required under
§ 1.1471-3(d) to establish such partner's,
beneficiary's, or owner's chapter 4 status.
The withholding statement, however,
need not provide any allocation informa-
tion.

(2) WP must treat amounts distributed to,
or included in the distributive share of, the
partnership or trust as allocated solely to a
partner, beneficiary, or owner that is sub-
ject to the highest rate of withholding un-
der chapter 3 and must withhold at that
rate.

(3) WP may pool report amounts distrib-
uted to, or included in the distributive
share of, the partnership's or trust's direct
partners, beneficiaries, or owners in WP's
chapter 3 reporting pools on Form 1042-S
as described in section 6.02(D) of this
Agreement.

(4) After WP has withheld in accordance
with section 9.01(B)(2) of this Agree-
ment, it may file a separate Form 1042-S
for any partner, beneficiary, or owner who
requests that it do so. If WP issues a
separate Form 1042-S for any partner,
beneficiary, or owner, it cannot include
such partner, beneficiary, or owner in its
chapter 3 reporting pool. If WP has al-
ready 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. WP may file a sep-
arate Form 1042-S for a partner, benefi-
ciary, 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 to make available to
WP or WP's reviewer the records that
substantiate the allocation information in-
cluded in its withholding statement.

(5) WP may not include any amounts dis-
tributed to, or included in the distributive
share of, a partnership or trust to which
WP is applying the rules of this section
9.01 in any collective refund claim made
under section 7.02 of this Agreement.

Sec. 9.02. Agency Option for Certain
Partnerships and Trusts.

(A) In General. WP may enter an agree-
ment with a nonwithholding foreign part-
nership or nonwithholding foreign trust
that is either a simple or grantor trust
described in section 9.02(A) of this
Agreement under which the partnership or
trust agrees to act as an agent of WP with
respect to its partners, beneficiaries, or
owners, and, as WP's agent, to apply the
provisions of the WP agreement to the
partners, beneficiaries, or owners. By en-
tering into an agreement with a partner-
ship or trust as described in this section
9.02, WP is not assigning its liability for
the performance of any of its obligations
under the WP agreement. WP and the
partnership or trust to which WP applies
the rules of this section 9.02 are jointly
and severally liable for any tax, penalties,
and interest that may result from the fail-
ure of the partnership or trust to meet any
of the obligations imposed by its agree-
ment with WP. WP and the partnership or

trust that applies the agency option to any
calendar year must apply these rules to the
calendar year in its entirety. Generally,
WP and the partnership or trust that apply
the agency option to any calendar year are
not required to apply the agency option to
subsequent calendar years. If, however,
WP withholds and reports any adjust-
ments required by corrected information
in a subsequent calendar year under sec-
tion 9.02(B)(2) of this Agreement, WP
must apply the agency option to that cal-
endar year in its entirety.

If the partnership or trust is included in
WP's periodic review of compliance as
described in section 9.02(A)(6) of this
Agreement, WP and the partnership or
trust may not apply the agency option to
any calendar year in which the partnership
or trust has failed to make available to WP
or WP's reviewer the records described in
this section 9.02 within 90 days after these
records are requested and the partnership
or trust must waive any legal prohibitions
against providing such records to the WP.
If, for any calendar year, the partnership
or trust has failed to make these records
available within the 90-day period, or if
WP and the partnership or trust fail to
comply with any other requirement of this
section 9.02, WP must apply §§ 1.1441-1
and 1.1441-5 to the partnership or trust as
a nonwithholding foreign partnership or
nonwithholding foreign trust, correct its
withholding for the period in which the
failure occurred in accordance with sec-
tion 7.03 of this Agreement, and cannot
apply this section 9.02 to subsequent cal-
endar years.

A partnership or trust is described in this
section 9.02(A) if the following condi-
tions are met:

(1) The partnership or trust is either a
direct partner of WP or an indirect partner
of WP that is a direct partner, beneficiary,
or owner of a partnership or trust to which
WP also applies this section 9.02.

(2) The partnership or trust has a chapter 4
status as a certified deemed-compliant
FFI, an owner-documented FFI with re-
spect to WP, an NFFE, or an exempt
beneficial owner, and has provided WP
with a certification that it has maintained
such chapter 4 status during each certifi-
cation period.

(3) None of the partnership's or trust's
partners, beneficiaries, or owners is a WT,

WP, participating FFI, registered deemed-
compliant FFI, registered deemed-
compliant Model 1 IGA FFI, or QI act-
ing as an intermediary for a payment
made by WP to the partnership or trust.

(4) WP may not act as a withholding
foreign partnership with respect to any
direct or indirect partner of the partnership
or trust that is a U.S. non-exempt recipi-
ent, unless the U.S. non-exempt recipient
is an owner of an owner-documented FFI
or passive NFFE to which WP applies the
agency option and is included in WP's
U.S. payee pool (described in section
6.02(C) of this Agreement).

(5) The partnership or trust agrees to com-
ply with the documentation requirements
described in section 4 of this Agreement.
(6) The partnership or trust agrees, to the
extent necessary for WP to satisfy its
compliance obligations (e.g., if the WP
does not receive a waiver as described in
section 8.07 of this Agreement), either to
(i) conduct an independent periodic re-
view in accordance with the procedures
described in section 8.05 of this Agree-
ment and provide WP with the certifica-
tion required under section 8.03 of this
Agreement for each certification period in
order to allow the responsible officer of
WP to make a certification to the IRS
regarding the partnership's or trust's com-
pliance with this section 9.02, or (ii) pro-
vide WP with documentation or other in-
formation for inclusion in WP's periodic
review described in section 8.04 of this
Agreement. The partnership or trust must
also agree to respond (either directly or
through WP) to IRS inquiries regarding its
compliance review, as described in sec-
tion 8.08 of this Agreement, including, if
applicable, providing the WP and the IRS
with the results of the reviewer's testing
of partners, beneficiaries, or owners de-
scribed in section 8.06 of this Agreement.
(B) Modification of Obligations for WP.

(1) WP may rely on a valid Form
W-8IMY provided by the partnership or
trust, together with a withholding state-
ment 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
WP to fulfill its withholding, reporting,
and filing obligations under this Agree-
ment. For a withholdable payment, the
withholding statement may include a

chapter 4 withholding rate pool (as de-
fined in § 1.1471-1(b)(20)) of nonpartic-
ipating FFIs for payments of amounts
subject to chapter 4 withholding. The
withholding statement may also include
chapter 3 withholding rate pools for part-
ners, beneficiaries, or owners that are not
intermediaries, flow-through entities (or
persons holding interests in the partner-
ship or trust through such entities), U.S.
non-exempt recipients, or passive NFFEs
with one or more substantial U.S. owners
(or one or more controlling persons that is
a specified U.S. person under an applica-
ble Model 1 or Model 2 IGA), and the
partnership or trust need not provide to
WP documentation for these partners,
beneficiaries, or owners. Notwithstanding
the preceding sentences of this section
9.02(B)(1), the partnership or trust is re-
quired to disclose to WP any partner or
interest holder that is a passive NFFE with
substantial U.S. owners (or controlling
persons that are specified U.S. persons
under an applicable IGA) or that is a U.S.
non-exempt recipient, as well as the ac-
count holders of any nonqualified inter-
mediary or interest holders in a flow-
through entity which has an interest in the
partnership or trust, and provide all of the
documentation and other information re-
lating to those account holders and inter-
est holders that is required for WP or
another withholding agent to report the
payments made to those account holders
and interest holders to the extent required
by section 6 of this Agreement.

(2) Timing of Withholding. WP must with-
hold on the date an amount is distributed
to, or included in the distributive share of,
the partnership or trust based on a with-
holding statement provided by the part-
nership or trust on which WP 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 WP on the earlier of the date that
the statement required under section
6031(b) (i.e., Schedule K-1) or the Ben-

eficiary 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
WP's Forms 1042 and 1042-S for the
calendar year, WP may withhold and
report any adjustments required by cor-
recting the information in the following
calendar year.

(3) Payments Reportable under Chapters
3 and 4. WP 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.

(i) For a direct partner, beneficiary, or
owner of the partnership or trust that is a
nonparticipating FFI, WP shall report an
amount subject to withholding using the
chapter 4 reporting pool described in sec-
tion 6.02(C) of this Agreement with the
partnership or trust reported as the recip-
ient.

(ii) 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 en-
tity described below), WP shall report an
amount subject to chapter 3 withholding
using the chapter 3 reporting pools as de-
scribed in section 6.02(D) of this Agree-
ment with the partnership or trust reported
as the recipient.

(iii) For a direct or indirect partner, ben-
eficiary, or owner of the partnership or
trust that is a nonqualified intermediary or
flow-through entity, WP shall report pay-
ments of amounts subject to chapter 4
withholding included in a chapter 4 with-
holding rate pool of nonparticipating FFIs
using the chapter 4 reporting pool for such
partner, beneficiary, or owner with the
nonqualified intermediary or flow-through
entity reported as the recipient, and WP
shall report payments of amounts subject
to chapter 3 withholding that are not with-
holdable payments or are withholdable
payments for which no chapter 4 with-
holding is required by reporting the pay-
ments as made to specific recipients as
described in 6.02(B) of this Agreement.
(4) Form 8966 Reporting Requirements. If

WP is an FFI and if the partnership or
trust is a U.S. account (or U.S. reportable
account), WP is required to report the
partnership or trust consistent with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI. The agreement between WP and
the partnership or trust must also provide
that WP shall report withholdable pay-
ments that the partnership or trust distrib-
utes to, or includes in the distributive
share of, a partner, beneficiary, or owner
that is an NFFE (other than an excepted
NFFE) with one or more substantial U.S.
owners (or one or more controlling per-
sons that is a specified U.S. person under
an applicable IGA) and is the beneficial
owner of the withholdable payment re-
ceived by the partnership or trust. WP
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 that is a
specified U.S. person); the name, address,
and U.S. TIN of each substantial U.S.
owner (or controlling person that is a
specified U.S. person); 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.

(C) Other Requirements of Agency Agree-
ment. WP shall require the partnership or
trust to which it applies the agency option
described in this section 9.02 to provide
WP with all the information necessary for
WP to meet its obligations under this
Agreement. No provisions shall be con-
tained in the agreement between WP and
the partnership's or trust that preclude,
and no provisions of this Agreement shall
be construed to preclude, the partnership's
or trust's joint and several liability for tax,
penalties, and interest under chapters 3
and 4 to the extent that underwithholding,
penalties, and interest have not been col-
lected from WP and the underwithholding
or failure to report amounts correctly on
Forms 1042, 1042-S or 8966, is due to the
partnership's or trust's failure to properly
perform its obligations under its agree-
ment with WP. Nothing in the agreement
between WP and the partnership or trust
shall be construed to limit the partner-

ship's or trust's requirements under chap-
ter 4 as a certified deemed-compliant FFI,
an owner-documented FFI with respect to
WP, an NFFE, or an exempt beneficial
owner. Further, nothing in the agreement
between WP and the partnership or trust
shall permit the partnership or trust to
assume primary chapters 3 and 4 with-
holding responsibility.

## Sec. 9.03. Indirect Partners of WP.

(A) General Requirements. WP may act as
a withholding foreign partnership for re-
portable amounts distributed to, or in-
cluded in the distributive share of, pass-
through partners and indirect partners if
such indirect partner is not a U.S. non-
exempt recipient. Notwithstanding the
preceding sentence, WP may act as a
withholding foreign partnership with re-
spect to an indirect partner that is a U.S.
non-exempt recipient if the indirect part-
ner is included in a passthrough partner's
chapter 4 withholding rate pool of recal-
citrant account holders or U.S. payees.
WP does not need to use the agency op-
tion described in section 9.02 of this
Agreement or make the pooled reporting
election described in section 6.02(D) of
this Agreement to apply the procedures
described in this section 9.03.

(B) Modification of Obligations for WP.
(1) Except to the extent described in this
section 9.03(B), WP need not forward the
documentation and the withholding state-
ment of the passthrough partner and indi-
rect partner to WP's withholding agent;
(2) WP must provide its withholding
agent with documentation and other in-
formation from any passthrough partner
whose direct or indirect partner is a U.S.
non-exempt recipient (unless such U.S.
non-exempt recipient is included in a
chapter 4 withholding rate pool of recal-
citrant account holders or U.S. payees);
(3) WP will assume primary chapters 3
and 4 withholding responsibility as de-
scribed in section 3 of this Agreement and
must report on its indirect partners on a
specific payee basis on Form 1042-S (ex-
cept to the extent such indirect partners
are included in a passthrough partner's
chapter 4 withholding rate pool or a QI's
withholding rate pool) as described in sec-
tion 6.02(B) of this Agreement, regardless
of whether WP made a PR election for its
direct partners under section 6.02(D) of
this Agreement; and

(4) WP must include any passthrough
partner and indirect partner for which it
acts as a withholding foreign partnership
in its periodic review as described in sec-
tion 8.05 of this Agreement.

(C) Documentation from Passthrough
Partner. WP agrees to use its best efforts
to obtain from a passthrough partner the
documentation of an indirect partner for
which WP acts as a withholding foreign
partnership. Unless WP can reliably asso-
ciate an amount distributed to, or included
in the distributive share of, any pass-
through partner with valid documentation
from such partner within the meaning of
§ 1.1441-1(b)(2)(vii) and, for a withhold-
able payment, § 1.1471-3(c), WP shall
apply the presumption rules described in
§§ 1.1441-1(b)(3), 1.1441-4(a), 1.1441-
5(d) and (e)(6), 1.1441-9(b)(3), and
1.6049-5(d) and for a withholdable pay-
ment made to an entity, § 1.1471-3(f) or,
if WP is an FFI, its FATCA requirements
as a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. Generally,
WP can reliably associate an amount with
documentation provided by a passthrough
partner if WP obtains-

(1) A valid Form W-8IMY provided by
the passthrough partner that, if the pay-
ment is a withholdable payment, estab-
lishes the chapter 4 status of the pass-
through partner; and

(2) If the payment is a withholdable
payment, a withholding statement that
meets the requirements of § 1.1471-
3(c)(3)(iii)(B) that includes the account
holders or interest holders of the pass-
through partner in chapter 4 withholding
rate pools to the extent permitted, and, for
an amount subject to chapter 3 withhold-
ing that is not a withholdable payment or
is a withholdable payment for which
chapter 4 withholding is not required,
valid documentation described in sec-
tion 4 of this Agreement provided by
account holders or interest holders of
the passthrough partner that are not
themselves nonqualified intermediaries
or flow-through entities.

WP may not reduce the rate of withhold-
ing with respect to an indirect partner that
is a foreign beneficial owner for which it
acts as a WP unless WP can reliably as-
sociate the payment with valid documen-
tation that establishes the indirect part-

ner's entitlement to a reduced rate of
withholding under chapter 3 and, in the
case of a withholdable payment, estab-
lishes that chapter 4 withholding does not
apply.

(D) Timing of Withholding. WP must
withhold on the date an amount is distrib-
uted to, or included in the distributive
share of, the passthrough partner based on
a withholding statement provided by the
passthrough partner on which WP is per-
mitted to rely. The amount allocated to
each indirect partner in the withholding
statement may be based on a reasonable
estimate of the indirect partner's distribu-
tive share of income subject to withhold-
ing for the year. The passthrough partner
must agree to correct the estimated allo-
cations to reflect the indirect partner's ac-
tual distributive share and must provide
this corrected information to WP, on the
earlier of the date that the statement re-
quired under section 6031(b) of the Code
(Schedule K-1) is mailed or otherwise
provided to the indirect partner or the due
date for furnishing the statement (whether
or not the passthrough partner is required
to prepare and furnish the statement). If
that date is after the due date (without
regard to extensions) for WP's Forms
1042 and 1042-S for the calendar year,
WP may withhold and report any adjust-
ments required by correcting the informa-
tion in the following calendar year.

(E) Form 8966 Reporting Requirements.
If WP is an FFI and if the passthrough
partner is a U.S. account (or U.S. report-
able account), WP is required to report the
partnership or trust consistent with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI. WP shall also report withhold-
able payments that WP distributes to, or
includes in the distributive share of, a
passthrough partner if an account holder
or interest holder of such passthrough
partner is an NFFE (other than an ex-
cepted NFFE) with one or more substan-
tial U.S. owners (or one or more control-
ling persons that is a specified U.S. person
under an applicable IGA) and if the NFFE
is the beneficial owner of the withholdable
payment received by the passthrough part-
ner. WP 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 that is a
specified U.S. person); the name, address,
and U.S. TIN of each substantial U.S.
owner (or controlling person that is a
specified U.S. person); 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.

WP is not required to report under
§ 1.1474-1(i)(2) on a withholdable pay-
ment made to a passthrough partner that is
a participating FFI or registered deemed-
compliant FFI that is allocated to a payee
that is a passive NFFE with one or more
substantial U.S. owners on an FFI withhold-
ing statement when the participating FFI or
registered deemed-compliant FFI includes
on the statement the certification described
in § 1.1471-3(c)(3)(iii)(B)(2)(iv) (certifying
that the FFI is reporting the passive NFFE as
a U.S. account or U.S. reportable account in
accordance with the terms of the FFI agree-
ment or an applicable IGA), provided WP
does not know or have reason to know that
the certification is incorrect or unreliable.
See § 1.1474-1(i)(2).

# Section 10. EXPIRATION, TERMINATION AND DEFAULT

Sec. 10.01. Term of Agreement. This
Agreement begins on the effective date,
as described in section 12 of this Agree-
ment, and expires upon the earlier of the
date WP terminates under its partnership
agreement or the end of the sixth full
calendar year the Agreement is in effect,
unless terminated under section 10.02 or
10.03 of this Agreement. This Agree-
ment may be renewed for additional
terms as provided in section 10.07 of
this Agreement.

Sec. 10.02. Termination of Agreement
(In General).

(A) In General. Except as otherwise pro-
vided in section 10.03 of this Agreement,
this Agreement may be terminated by ei-
ther the IRS or WP prior to the end of its
term by delivery of a notice, in accordance
with section 11.06 of this Agreement, of
termination to the other party. The IRS,
however, shall not terminate this Agree-
ment unless there has been a significant
change in circumstances, as defined in
section 10.04 of this Agreement, or an

event of default has occurred, as defined
in section 10.05 of this Agreement, and
the IRS determines, in its sole discretion,
that the significant change in circum-
stances or the event of default warrants
termination of this Agreement. The IRS
shall not terminate this Agreement if WP
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 WP that an event of default
has occurred and that the IRS intends to
terminate the Agreement unless WP cures
the default or establishes that no event of
default has occurred. A notice of termina-
tion sent by either party shall take effect
on the date specified in the notice, and WP
is required to notify its withholding agent
of the date its status as a WP was termi-
nated.

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

After the date of termination of this
Agreement, WP may not act as a with-
holding foreign partnership, and must so
notify any persons to which WP has fur-
nished a withholding foreign partnership
certificate of the termination (including
the date of the termination). After the date
of termination of this Agreement, the IRS
may reinstate this Agreement (or the IRS
may require WP to enter into a new with-
holding foreign partnership agreement) on
such terms and conditions and with such
modifications as the IRS may determine.
(B) Final Certification after a Termina-
tion of the Agreement. Upon a termination
of this Agreement, WP must provide to
the IRS the certification described in sec-
tion 8.03 of this Agreement covering the
period from the end of the most recent
certification period (or, if the first certifi-
cation period has not ended, the effective
date of this Agreement) to the date of

termination within six months of the date
of termination, regardless of whether a
periodic review has been completed for
such period.

Sec 10.03. Automatic Termination of
Agreement.

(A) Automatic Termination. Notwith-
standing section 10.02 of this Agreement,
this Agreement will terminate automati-
cally in the event that the reviewer or the
IRS (including during its compliance re-
view described in section 8.08 of this
Agreement) discovers that WP was not in
possession of Forms W-8 or W-9, as
applicable, or documentary evidence, as
permitted under section 4.01(A) of this
Agreement, for any direct partner at any
time that withholding or reporting was
required under section 3.02 of this Agree-
ment. The automatic termination will be
effective as of December 31 of the year in
which the reviewer or the IRS makes that
discovery.

(B) Cure and Reinstatement after Auto-
matic Termination. This Agreement will
be reinstated, effective the same date it
automatically terminated under section
10.03(A) of this Agreement, if-

(1) WP obtains appropriate Forms W-8 or
W-9 or documentary evidence, as permit-
ted under section 4.01(A) of this Agree-
ment, that relate to the time withholding
or reporting was required, for each such
undocumented partner before March 15 of
the year following the year in which the
Agreement automatically terminated, or
(2) All such undocumented partners have
ceased to be partners in WP before March
15 of the year following the year in which
the Agreement automatically terminated.
(C) Payment of Underwithholding and
Reporting upon Termination. In the event
of automatic termination of this Agree-
ment under this section 10.03, WP must
pay any underwithholding of tax, interest,
and penalties that the IRS determines is
attributable to each undocumented partner
for the period during which the partner
was undocumented based on the presump-
tion rules, and, if WP has made a pooled
reporting election for chapter 3 purposes,
WP must file partner specific Forms
1042-S for amounts subject to chapter 3
withholding for which no chapter 4 with-
holding is required and Schedules K-1
reporting the names and addresses and
other required information, as appropriate,

for every undocumented partner from the
earliest time the documentation was re-
quired for that undocumented partner
through the date of termination. WP may,
however, continue to report on a pooled
basis for documented foreign direct part-
ners through this period.

Sec. 10.04. Significant Change in Cir-
cumstances. For purposes of this Agree-
ment, a significant change in circum-
stances includes, but is not limited to-
(A) Any change in circumstances that
would result in a termination of WP under
section 708;

(B) A change in U.S. federal law, or ap-
plicable foreign law, that affects the va-
lidity of any provision of this Agreement,
materially affects the procedures con-
tained in this Agreement, or affects WP's
ability to perform its obligations under
this Agreement;

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

(E) If applicable, a material change in the
applicable know-your-customer rules and
procedures when WP relied on documen-
tary evidence as permitted in section
4.01(A) of this Agreement;

(F) If WP is an FFI (other than a retire-
ment fund), WP's failure to maintain its
status as a participating FFI, registered
deemed-compliant FFI, or a registered
deemed-compliant Model 1 IGA FFI; or
(G) If WP is acting as a sponsoring entity
on behalf of a sponsored FFI or sponsored
direct reporting NFFE, WP's failure to
comply with the due diligence, withhold-
ing, reporting, and compliance require-
ments of a sponsoring entity.

Sec. 10.05. Events of Default. For pur-
poses of this Agreement, an event of de-
fault occurs if WP fails to perform any
material duty or obligation required under
this Agreement and the responsible officer
had actual knowledge of or should have
known 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) WP fails to implement adequate pro-
cedures, accounting systems, and internal
controls to ensure compliance with this
Agreement;

(B) WP underwithholds a material amount
of tax that WP is required to withhold
under chapter 3 or 4 and fails to correct
the underwithholding or to file an
amended Form 1042 reporting, and pay-
ing, the appropriate tax;

(C) WP makes excessive refund claims;
(D) WP fails to file required Forms, 1042,
1042-S, 8966, 1065, Schedules K-1, or
1120-F (if WP is a foreign reverse hybrid
entity) by the due date specified on such
forms or files forms that are materially
incorrect or fraudulent;

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

(F) If WP is a sponsoring entity, WP
materially fails to comply with the due
diligence, withholding, reporting, and
compliance requirements of a sponsoring
entity;

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

(H) WP fails to inform the IRS within 90
days of any significant change in its busi-
ness practices to the extent that change
affects WP's obligations under this
Agreement;

(I) WP fails to cure a material failure
identified in the qualified certification de-
scribed in Part II.B of the Appendix to this
Agreement or identified by the IRS;

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

(K) The IRS determines that WP's re-
viewer is not sufficiently independent, as
described in section 8.04 of this Agree-
ment, to adequately perform its review
function and WP fails to arrange for a
periodic review conducted by a reviewer
approved by the IRS;

(L) WP fails to make deposits in the time
and manner required by section 3.05 of
this Agreement or fails to make adequate
deposits, taking into account the proce-
dures of section 7.05 of this Agreement;
(M) If applicable, WP fails to inform the
IRS of any change in the applicable know-
your-customer rules within 90 days of the
change becoming effective when WP re-
lied on documentary evidence as permit-
ted in section 4.01(A) of this Agreement;

(N) WP fails to cooperate with the IRS on
its compliance review described in section
8.08 of this Agreement;

(O) A partnership or trust to which WP
applies the agency option is in default
with the agency agreement and WP fails
to terminate that agreement within the
time period specified in section 9.02 of
this Agreement;

(P) WP fails to materially comply with the
requirements of a nonwithholding foreign
partnership under chapter 3 with respect
to any partner for which it does not act as
a withholding foreign partnership;

(Q) With respect to a consolidated com-
pliance program under section 8.02(C) of
this agreement, the Compliance Entity
failed to comply with the obligations of a
Compliance Entity under section 8.02(C)
of this Agreement, and, if the Compliance
Entity is a sponsoring entity, the Compli-
ance Entity failed to comply with the due
diligence, withholding, reporting, and
compliance requirements of a sponsoring
entity under chapter 4;

(R) If WP is a foreign reverse hybrid en-
tity, WP fails to prepare and retain the
PFIC Annual Information Statement or
Reconciliation Statement, as required un-
der 6.03(C) of this Agreement; or

(S) WP is not in possession of valid doc-
umentation described in sections 4.01
through 4.09 of this Agreement for each
direct partner as of the due date of the
certification described in section 8.03
(C)(1) of this Agreement.

Sec. 10.06. Notice and Cure. Upon the
occurrence of an event of default, the IRS
will deliver to WP a notice of default
specifying each event of default. WP 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 WP believes that
no event of default has occurred. If WP
does not provide a 60-day response, the
IRS will deliver a notice of termination as
provided in section 10.02 of this Agree-
ment. If WP provides a 60-day response,
the IRS shall either accept or reject WP's
statement that no default has occurred or
WP's proposal to cure the event of de-
fault.

If the IRS rejects WP's statement that
no default has occurred or rejects WP's

proposal to cure the event of default, the
IRS may offer a counter-proposal to cure
the event of default with which WP will
be required to comply within 30 days. If
WP fails to provide a 30-day response, the
IRS will send a notice of termination in
accordance with section 10.02 of this
Agreement, which WP may appeal within
30 days of the date of the notice by send-
ing a written appeal to the address speci-
fied in section 11.06 of this Agreement. If
WP 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, WP may cure the default, without
following the procedures of this section
10.06, if the external reviewer's report
describes the default and the actions that
WP took to cure the default and the IRS
determines that the cure procedures fol-
lowed by WP were sufficient. If the IRS
determines that WP's actions to cure the
default were not sufficient, the IRS shall
issue a notice of default and the proce-
dures described in this section 10.06 shall
be followed.

Sec. 10.07. Renewal. If WP intends to
renew this Agreement, it shall submit an
application for renewal to the IRS on the
QI/WP/WT Application and Account
Management System. This Agreement
will be renewed only upon the agreement
of both WP and the IRS.

# Section 11. MISCELLANEOUS PROVISIONS

Sec. 11.01. WP's application to become a
WP, the Appendix to this Agreement, and,
if WP is an FFI, its FATCA requirements
as a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI (or, if WP is
a sponsoring entity, the due diligence,
withholding, reporting, and compliance
requirements of a sponsoring entity) are
hereby incorporated into and made an in-
tegral part of this Agreement. This Agree-
ment, WP's application, and the Appendix
to this Agreement constitute the complete
agreement between the parties.

Sec. 11.02. This Agreement may be
amended by the IRS if the IRS determines

that such amendment is needed for the
sound administration of the internal reve-
nue 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 re-
quirements will in no event become effec-
tive 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 guid-
ance.

Sec. 11.03. Any waiver of a provision of
this Agreement by the IRS is a waiver
solely of that provision. The waiver does
not obligate the IRS to waive other provi-
sions of this Agreement or the same pro-
vision at a later date.

Sec. 11.04. This Agreement shall be gov-
erned by the laws of the United States.
Any legal action brought under this
Agreement shall be brought only in a U.S.
court with jurisdiction to hear and resolve
matters under the internal revenue laws of
the United States. For this purpose, WP
agrees to submit to the jurisdiction of such
U.S. court.

Sec. 11.05. WP's rights and responsibili-
ties under this Agreement cannot be as-
signed to another person.

Sec. 11.06. Except as otherwise provided
in the QI/WP/WT Application and Ac-
count Management System, notices pro-
vided under this Agreement shall be
mailed registered, first class airmail. All
notices sent to the IRS must include the
WP's name, WP-EIN, GIIN (if applica-
ble), and the name of its responsible offi-
cer. Such notices shall be directed as fol-
lows:

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

The WP's responsible officer. Such no-
tices shall be sent to the address indicated
in the WP's registration or application (as
may be amended).

Sec. 11.07. WP, acting in its capacity as a
withholding foreign partnership 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 12. EFFECTIVE DATE OF AGREEMENT

## Sec. 12.01. New Applicants.

(A) In General. Applications for WP sta-
tus received on or before March 31 of the
calendar year, if approved, will be effec-
tive January 1 of that calendar year. If an
entity submits an application to be a WP
after March 31 and does not receive any
reportable amounts between January 1 of
the calendar year in which the WP appli-
cation is submitted and the date of ap-
proval, the entity will have a WP agree-
ment with an effective date of the date it is
issued a WP-EIN. All other entities apply-
ing for WP status after March 31 that are
approved during the calendar year will
have a WP agreement with an effective
date of January 1 of the following calen-
dar year.

(B) Calendar Year 2017. If a WP is ap-
proved for WP status during calendar year
2017, the rules described in section
12.01(A) of this Agreement apply, except
that the WP agreement effective from Jan-
uary 1, 2017, to the date of issuance of
this revenue procedure will be the WP
agreement in Revenue Procedure 2014-
47, and the WP agreement provided in this
revenue procedure will be effective begin-
ning on the date of issuance of this reve-
nue procedure.

Sec. 12.02. Renewal of WP Agreement.
A WP that applies to renew its WP agree-
ment provided in Revenue Procedure
2014-47 on or before March 31, 2017,
will have a WP agreement with an effec-
tive date of the date of issuance of this
revenue procedure.

# APPENDIX TO WP AGREEMENT

General Instructions: WPs must provide
the information and certifications de-
scribed in this Appendix as applicable to
their WP status and activities. The follow-
ing Parts must be completed by the spec-
ified WPs:

Parts I and II:

All WPs.

Part III:

WPs eligible pursuant to section 8.07 of the WP Agreement to apply for a waiver of the periodic review requirement (as described in section 8.07 of the WP Agreement) and who wish to apply for such a waiver. The following WPs are not eligible for a waiver: (a) WPs that are NFFEs, and (b) WPs that are part of a consolidated compliance program.

Part IV.A-G:

All WPs that have not applied for or have not been approved for a waiver.

A Compliance Entity may complete Parts I and II for all WPs in its consolidated compliance program by providing aggregate
information (where applicable). However, Part IV must be completed separately for each WP. If a Compliance Entity of a
consolidated compliance program is completing this form, "WP" when used in Parts I and II means each WP that is a member of
the consolidated compliance program.

## PART I. GENERAL INFORMATION

A. Is this certification and information
provided by a Compliance Entity of a
consolidated compliance program?
Y/N

1\. If yes, provide the names and WP-
EINs of the members of the consol-
idated compliance program.

B. Did WP make a pooled reporting elec-
tion? Y/N

1\. If this certification and information
is provided by a Compliance Entity
of a consolidated compliance pro-
gram, provide the names and WP-
EINs of each WP that made a pooled
reporting election.

C. The number of partnerships or trusts to
which WP applied the agency option
(if none enter 0).

1\. Each partnership or trust to which
WP applied the agency option has
provided WP with a certification
that it has maintained status as a
certified deemed-compliant FFI, an
owner-documented FFI with respect
to WP, an NFFE, or an exempt ben-
eficial owner as required under sec-
tion 9.02(A)(2) of the WP Agree-
ment. Y/N

2\. Each partnership or trust to which
WP applied the agency option has
provided WP with either (1) its doc-
umentation and other information
for inclusion in WP's periodic re-
view (as described in section
9.02(A)(6) of the WP Agreement) or
(2) a certification described in sec-
tion 8.03 of the WP Agreement and
the results of the periodic review
described in section 8.06 of the WP
Agreement for the certification pe-
riod. Y/N

D. The number of partnerships or trusts to

which WP applied the joint account
option (if none enter 0).

1\. Each partnership or trust to which
WP applies the joint account option
has provided WP with a certification
that it has maintained status as a
certified deemed-compliant FFI, an
owner-documented FFI with respect
to WP, an exempt beneficial owner,
or an NFFE as required under sec-
tion 9.01(A)(1) of the WP Agree-
ment. Y/N

## PART II: CERTIFICATION OF INTERNAL CONTROLS BY RESPONSIBLE OFFICER AND GENERAL INFORMATION

Part II must be completed by all WPs.
Complete either Section A (Certification
of Effective Internal Controls) or Section
B (Qualified Certification). All WPs com-
plete Sections C, D, E, and F.

## A. Certification of Effective Internal Controls

If the responsible officer has identified an
event of default or a material failure that
WP has not corrected as of the date of this
certification (or if an event of default or
material failure has otherwise been iden-
tified), the responsible officer cannot
make the certification of effective internal
controls under this Section A and must
make the qualified certification under Sec-
tion B, below.

The responsible officer certifies to the fol-
lowing, check each statement to confirm:

1\. WP has established a compliance
program that meets the requirements
described in section 8.02(B) or
8.02(C) (if applicable) of the WP
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) by the responsible
officer, including the findings of any
procedure, process, review, or certi-
fication undertaken in preparation for
the responsible officer's certification
of internal controls, WP maintains
effective internal controls over its
documentation, withholding, and re-
porting obligations under the WP
Agreement and according to its ap-
plicable FATCA requirements for
partners for which it acts as a WP.

3\. Based on the information known (or
information that reasonably should
have been known) by the responsible
officer, including the findings of any
procedure, process, review, or certi-
fication undertaken in preparation for
the responsible officer's certification
of internal controls, there are no ma-
terial failures, as defined in section
8.03(D) of the WP 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 certifica-
tion as well as the actions taken to
remediate them and to prevent their
reoccurrence by the date of this cer-
tification. See Part II.D.2.a of this
Appendix.

4\. With respect to any failure to with-
hold, deposit, or report to the extent
required under the WP Agreement,
WP has corrected such failure by
paying any taxes due (including in-
terest and penalties) and filing the
appropriate return (or amended re-
turn).

5\. All partnerships and trusts to which
WP applies the agency option have
either (a) provided (or will provide,
to the extent WP does not obtain a

waiver under section 8.07 of the WP
Agreement) documentation and other
necessary information for inclusion
in the WP's periodic review or (b)
provided the responsible officer of
WP with a certification of effective
internal controls described in Part
II.A of this Appendix and have rep-
resented to WP that there are no ma-
terial failures, as defined in section
8.03(D) of the WP Agreement, or, if
there are such failures, they have
been corrected as of the time of this
certification, and the partnerships or
trusts have disclosed any such fail-
ures to WP together with the actions
taken by the partnership or trust to
remediate such failures.

6\. Unless WP has received a waiver, a
periodic review was conducted for
the certification period in accordance
with section 8.04 of the WP Agree-
ment, and the results of such review
are reported to the extent required in
section 8.06 of the WP Agreement.

## B. Qualified Certification

If the responsible officer has identified (1)
an event of default or (2) a material failure
that WP 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 10.05 of the WP
Agreement, or has determined that, as
of the date of the certification, there are
one or more material failures as de-
fined in section 8.03(D) of the WP
Agreement with respect to WP's com-
pliance or the compliance of a partner-
ship or trust to which WP applies the
agency option and that appropriate ac-
tions will be taken to prevent such fail-
ures from reoccurring.

2\. With respect to any failure to with-
hold, deposit, or report to the extent
required under the WP Agreement,
WP will correct such failure by pay-
ing any taxes due (including interest
and penalties) and filing the appro-
priate return (or amended return).

3\. The responsible officer (or an officer
of the partnership or trust to which
WP applies the agency option if the
partnership or trust performs its own
periodic review) will respond to any

notice of default (if applicable) or
will provide (either directly or
through WP) to the IRS, to the extent
requested, a description of each ma-
terial failure and a written plan to
correct each such failure.

## C. Amended Form 1042

1\. Did WP file 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 under-
taken by the responsible officer in
preparation for the certification of
internal controls? Y/N

## D. Material Failures or Event of Default

1\. Did the responsible officer determine
that as of the date of the periodic
review report (or the date of comple-
tion of any other procedure, process,
or review), there are no material fail-
ures with respect to WP's compli-
ance with the WP Agreement? Y/N

2\. Did the responsible officer determine
that as of the date of the periodic re-
view report (or the date of completion
of any other procedure, process, or re-
view), there are one or more material
failures with respect to WP's compli-
ance with the WP Agreement and that
appropriate actions have been or will
be taken to prevent such failures from
reoccurring? Y/N

a. If yes, check the following ma-
terial failures that were identi-
fied. If a Compliance Entity is
completing this certification for
a consolidated compliance pro-
gram, identify the WP(s) that
had the material failure.

i. WP's establishment of, for
financial statement pur-
poses, a tax reserve or pro-
vision for a potential future
tax liability related to WP's
failure to comply with the
WP Agreement, including
its FATCA requirements as
a participating FFI, regis-
tered deemed-compliant
FFI, or registered deemed-
compliant Model 1 IGA
FFI.

ii. WP's failure to establish writ-
ten policies, procedures, or sys-
tems sufficient for the relevant
personnel of WP to take ac-

tions consistent with WP's
obligations under the WP
Agreement.

iii. A criminal or civil penalty
or sanction imposed on
WP by a regulator or other
governmental authority or
agency with oversight over
WP's compliance with AML/
KYC procedures, if applica-
ble, to which WP is subject
and that is imposed due to
WP's failure to properly
identify partners under the
requirements of those proce-
dures.

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

1\. Withhold an amount
that WP was required to
withhold under chapter
3 or 4 as required under
section 3 of the WP
Agreement;

2\. Make deposits in the
time and manner re-
quired by section 3.05
of the WP Agreement or
make adequate deposits
to satisfy its withhold-
ing obligations, taking
into account the proce-
dures under section 7 of
the WP Agreement;

3\. Report or report accu-
rately on Forms 1042 or
1042-S as required un-
der sections 6.01 and
6.02 of the WP Agree-
ment;

4\. Report or report accu-
rately on Forms 8966 as
required under section
6.05 of the WP Agree-
ment; or

5\. Report or report accu-
rately on Form 1065
and Schedules K-1 as
required under section
6.03 of the WP Agree-
ment.

v. Other (include a detailed ex-
planation).

3\. The material failure(s) 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 partnerships or trusts to
which WP applies the agency option
inform WP that it has had a material
failure with respect to its obligations
as described in the WP Agreement?
Y/N/NA

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

5\. An event of default as defined in
section 10.05 of the WP Agreement
has been identified. Y/N

a. If yes, identify the event of de-
fault. If a Compliance Entity is
completing this certification for
a consolidated compliance pro-
gram, identify the WP(s) that
had the event of default.

i. WP failed to implement ade-
quate procedures, accounting
systems, and internal controls
to ensure compliance with the
WP Agreement;

ii. WP underwithheld a material
amount of tax that WP was re-
quired to withhold under chap-
ter 3 or 4 and failed to correct
the underwithholding or to file
an amended Form 1042 report-
ing, and paying, the appropri-
ate tax;

iii. WP made excessive refund
claims;

iv. WP failed to file required
Forms 1042, 1042-S, 8966,
1065, or Schedules K-1 by the
due date specified on such
forms or filed forms that are
materially incorrect or fraudu-
lent;

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

vi. If WP is a sponsoring entity of
a sponsored FFI (other than a
WP) or a sponsored direct re-

porting NFFE, WP failed to
materially comply with the
due diligence, withholding,
reporting, and compliance re-
quirements of a sponsoring
entity;

vii. With respect to a consolidated
compliance program under
section 8.02(C) of the WP
agreement, the Compliance
Entity failed to comply with
the obligations of a Compli-
ance Entity under section
8.02(C) of the WP Agreement,
or, if the Compliance Entity is
a sponsoring entity, the Com-
pliance Entity failed to comply
with the due diligence, with-
holding, reporting, and compli-
ance requirements of a spon-
soring entity under chapter 4;

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

ix. WP failed to inform the IRS
within 90 days of any signifi-
cant change in its business
practices to the extent that
change affects WP's obliga-
tions under the WP Agreement;

x. WP failed to cure a material
failure identified in the qualified
certification described in Part
II.B of this Appendix or identi-
fied by the IRS;

xi. WP made any fraudulent state-
ment or a misrepresentation of
material fact with regard to the
WP Agreement to the IRS, a
withholding agent, or WP's re-
viewer;

xii. The IRS determined that WP's
reviewer is not sufficiently inde-
pendent, as described in the WP
Agreement, to adequately per-
form its review function, and
WP failed to arrange for a peri-
odic review conducted by a re-
viewer approved by the IRS;

xiii. WP failed to make deposits in
the time and manner required by
section 3.05 of the WP Agree-
ment or failed to make adequate
deposits, taking into account the
procedures of section 7.05 of the
WP Agreement;

xiv. If applicable, WP failed to in-
form the IRS of any change in
the applicable know-your-
customer rules within 90 days of
the change becoming effective

when WP relied on documen-
tary evidence as permitted in
section 4.01(A) of the WP
Agreement;

xv. A partnership or trust to which
WP applied the agency option
was in default with the agency
agreement and WP failed to ter-
minate that agreement within the
time period specified in section
9.02 of the WP Agreement;

xvi. WP failed to materially comply
with the requirements of a non-
withholding foreign partnership
under chapter 3 with respect to
any partner for which WP does
not act as a withholding foreign
partnership;

xvii. If WP is a foreign reverse hybrid
entity, WP failed to prepare and
retain the PFIC Annual Informa-
tion Statement or reconciliation
statement, as required under
6.03(C) of the WP Agreement;

xviii. WP is not in possession of valid
documentation described in
sections 4.01 through 4.09 of
the WP Agreement for each di-
rect partner as of the due date
of this certification; or

xix. Other (please describe).

E. Significant Change in Circumstances

Check the applicable statements to con-
firm.

1\. For the most recent certification pe-
riod, the periodic review (or any
other procedure, process, or review)
has not identified any significant
change in circumstances, as de-
scribed in section 10.04(A), (D), or
(E) of the WP Agreement.

2\. For the most recent certification pe-
riod, the periodic review has identi-
fied the following significant
change(s) in circumstances:

a. Any change in circumstances that
would result in a termination of
WP under section 708 of the
Code.

b. A significant change in WP's
business practices that affects
WP's ability to meet its obliga-
tions under the WP Agreement.

c. If applicable, a material change
in the applicable know-your-
customer rules and procedures
when WP relied on documentary

evidence as permitted in section
4.01(A) of the WP Agreement.
d. Other (please describe).

3\. Describe any significant changes in
circumstances identified in Question 2.

## F. Chapter 4 Status

1\. If this certification is submitted by a
Compliance Entity of a consolidated
compliance program that is a spon-
soring entity, check the following
statement to confirm.

For the most recent certification
period under the WP Agreement,
the sponsoring entity has made
or will make the following certi-
fication of compliance with re-
spect to its requirements as a
sponsoring entity for chapter 4
purposes with respect to each
WP that is a sponsored FFI for
which it acts during the most re-
cent certification period under
the WP Agreement (check one).

a. Certification of Effective Inter-
nal Controls

b. Qualified Certification

2\. All other WPs, complete the applica-
ble section (if any) and check the
applicable statement to confirm.

a. If WP is a participating FFI:
For the most recent certification
period under its WP Agreement,
WP has obtained (or maintained)
status as a participating FFI and
has made the following certifica-
tion of compliance with respect to
its FFI agreement for the most re-
cent certification period under the
FFI agreement (check one).

Note: You may check Not Applica-
ble if, during the certification pe-
riod under the WP Agreement,
your chapter 4 status changed from
one of the other applicable chapter
4 statuses to participating FFI or if
your certification of compliance
under the FFI agreement is not yet
due as of the date of this certifica-
tion.

i. Certification of Effective In-
ternal Controls

ii. Qualified Certification

iii. Not Applicable

b. If WP is a registered deemed-
compliant FFI:
For the most recent certification
period under its WP Agreement,
WP has certified as required un-
der § 1.1471-5(f)(1)(ii)(B) or
Annex II of an applicable Model

2 IGA that it has satisfied the
requirements of the deemed-
compliant status claimed.

c. If WP is a registered deemed-
compliant Model 1 IGA FFI:
For the most recent certification
period under its WP Agreement,
WP has been resident in or orga-
nized under the laws of a jurisdic-
tion that has in place a Model 1
IGA with the United States and
has met the requirements under an
applicable Model 1 IGA to be
treated as a deemed-compliant FFI.

d. If WP is a retirement fund:
For the most recent certification
period under the WP Agreement,
WP has been a retirement fund or
other fund that is an exempt ben-
eficial owner described in
§ 1.1471-6(f) or a similar fund
that qualifies as an exempt bene-
ficial owner under an applicable
Model 1 IGA or Model 2 IGA.

### PART III. WAIVER OF PERIODIC REVIEW

For purposes of this Part III, "partner"
means, unless otherwise specified, any
partner for which WP acts as a WP.
For sections B.1 through 6 of this Part III,
while the curing of inadequate documen-
tation is permissible, the information re-
ported in these sections must not reflect
any remediation or curing.

In order to be eligible for a waiver, WP
must be able to confirm all of the eligibil-
ity requirements in Section A are met.

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

1\. WP is an FFI.

2\. WP is not part of a consolidated
compliance program.

3\. For each calendar year in the certifi-
cation period, the reportable amounts
received by WP do not exceed $1
million.

4\. WP timely filed its Forms 1042,
1042-S, 8966 (or, if WP is a reporting
Model 1 FFI, any analogous forms
used for reporting account information
pursuant to an applicable Model 1
IGA), 1065, and Schedules K-1, as
applicable, for all years (fiscal or cal-
endar) in the certification period.

5\. WP made all periodic certifications
and reviews required by sections 8.02

and 8.03 of the WP Agreement as well
as any certifications required pursuant
to WP's FATCA requirements as a
participating FFI or registered
deemed-compliant FFI.

6\. WP made the certification of effec-
tive internal controls in Part II.A.

B. Information required (provided for the
most recent year in the certification
period for which filing has been made
by the time of this waiver request)

1\. The total number of partners

a. Total number of direct partners
i. Foreign persons

ii. U.S. persons

iii. Foreign intermediaries and
flow-through entities

b. Total number of indirect partners

i. Foreign persons

ii. U.S. persons

iii. Foreign intermediaries and
flow-through entities

2\. The total number of non-U.S. partners
that received reportable amounts

a. The total number of such part-
ners that have valid documenta-
tion.

b. The total number of such part-
ners that have no documentation
or invalid documentation.

3\. The aggregate amount of reportable
amounts received for non-U.S. partners

4\. The total number of Forms 1042-S
filed by WP.

5\. The total number of Schedules K-1
filed by WP.

6\. The aggregate amount of tax with-
held under chapter 3.

7\. The aggregate amount of tax with-
held under chapter 4.

8\. The aggregate amount of withheld
tax deposited by WP.

### PART IV. PERIODIC REVIEW: WP FACTUAL INFORMATION

This Part IV must be completed by all
WPs that have not received a waiver. If a
Compliance Entity is completing this
form for WPs in its consolidated compli-
ance program, complete Part IV sepa-
rately for each WP.

For purposes of this Part IV, "partner"
means, unless otherwise specified, any di-
rect or indirect partner for which WP acts
as a withholding foreign partnership.
For Sections B through G of this Part IV,

while the curing of inadequate documen-
tation is permissible, unless otherwise in-
dicated, the information reported shall be
based on the review and not results ob-
tained after curing.

#### A. General Information

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

a. If yes, provide the name(s) of
reviewer(s) and the name and
address of the firm at which the
reviewer is employed.

2\. Did WP 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 WP's WP activities.

3\. Calendar year reviewed for periodic
review.

Caution: On the due date for reporting the
factual information relating to the peri-
odic review (provided in section 8.04 of
the WP 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
WP 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 11.06 of the WP
Agreement.

## B. General Information on Partners and Review of Partners

1\. Total partners reviewed for peri-
odic review.

Note: WP must review all partners that
received a distribution, or included in
their distributive share, of a reportable
amount that is attributable to an amount
paid to WP in the year under review.

## C. Documentation

1\. Total partners reviewed that are
direct partners.

2\. Total partners reviewed that are
indirect partners.

3\. Total partners reviewed with valid D. Withholding
documentation.

4\. Total partners reviewed with in-
valid documentation or no docu-
mentation.

5\. Total partners reviewed with in-
valid documentation or no docu-
mentation for which valid docu-
mentation or additional valid
documentation was obtained after
the review.

6\. Total direct partners reviewed for
which WP had no documentation
at any time that withholding or re-
porting was required under section
3.02 of the WP Agreement.

7\. Total direct partners in question 6
for which valid documentation
(that relates to the time withhold-
ing or reporting was required) was
obtained by WP for each such un-
documented direct partner before
March 15 of the year following the
year in which the WP Agreement
was automatically terminated un-
der section 10.03(A) of the WP
Agreement.

8\. Total partners reviewed for which
treaty benefits were claimed.

9\. Total partners reviewed for which
treaty benefits were claimed where
WP did not obtain sufficient docu-
mentation to establish the payee's
entitlement to treaty benefits (in-
cluding, where applicable, the
treaty statement and limitation on
benefits information required by
section 4.03(B) of the WP Agree-
ment).

10\. Total partners reviewed that are
U.S. accounts (or U.S. reportable
accounts under an applicable
Model 1 IGA) for chapter 4 pur-
poses.

11\. Total partners reviewed that are
U.S. accounts for chapter 4 pur-
poses (or U.S. reportable accounts
under an applicable Model 1 IGA)
for which WP has obtained valid
documentation.

12\. If WP is an NFFE, total partners
reviewed that are passive NFFEs
with substantial U.S. owners.

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

2\. Number of partners for which
amounts were withheld under
chapter 3 (excluding partners re-
ported in question 10(a) or 11(a)
below).

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

4\. Number of partners for which
amounts were withheld under
chapter 4 (excluding partners re-
ported in question 10(a) or 11(a)
below).

5\. The aggregate amount reported as
withheld by WP on Form 1042 un-
der chapter 3 or 4.

6\. Additional withholding required
under chapter 4 based on the re-
sults of the periodic review (ex-
cluding withholding reported in
question 10(d) or 11(d) below).

7\. Additional withholding required
under chapter 3 based on the re-
sults of the periodic review (ex-
cluding withholding reported in
question 10(d) or 11(d) below).

8\. The aggregate amount of deposits
made by WP in accordance with
section 3.05 of the WP Agreement.

9\. The aggregate amount withheld by
WP but not timely deposited.

10\. Number of partnerships or trusts to
which the joint account option of
section 9.01 of the WP Agreement
was applied (if applicable).

a. Total partners, beneficiaries, or
owners of a partnership or
trust to which the joint account
option applied for which ap-
propriate documentation was
obtained and the appropriate
rate of withholding was ap-
plied.

b. Total partners, beneficiaries,
or owners of a partnership or
trust to which the joint ac-
count option applied for which
appropriate documentation
was obtained and the appro-
priate rate of withholding was
not applied.

c. Total partners, beneficiaries, or
owners of a partnership or
trust to which the joint account
option applied for which ap-
propriate documentation was
not obtained and the appropri-
ate rate of withholding was not
applied.

d. Aggregate amount of under-
withholding resulting from the
appropriate rate of withhold-
ing not being applied with re-
spect to a partner, beneficiary,
or owner of a partnership or
trust to which the joint ac-
count option applied.

11\. Number of partnerships or trusts to
which the agency option of section
9.02 of the WP Agreement was
applied (if WP includes the part-
nership or trust in WP's periodic
review).

a. Total partners, beneficiaries, or
owners of a partnership or
trust to which the agency op-
tion applied for which appro-
priate documentation was ob-
tained and the appropriate rate
of withholding was applied.

b. Total partners, beneficiaries,
or owners of a partnership or
trust to which the agency op-
tion applied for which appro-
priate documentation was ob-
tained and the appropriate rate
of withholding was not ap-
plied.

c. Total partners, beneficiaries, or
owners of a partnership or
trust to which the agency op-
tion applied for which appro-
priate documentation was not
obtained and the appropriate
rate of withholding was not
applied.

E. Reconciliation of Amounts Reported
on Forms 1042-S

1\. The aggregate amount reported
paid to WP during the year under
review on all Forms 1042-S issued
to WP (acting as a withholding for-
eign partnership).

2\. The aggregate amount reported by
WP on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, partners that are in-
cluded in WP's chapter 4 reporting
pools (other than the U.S. payee
pool) (including a chapter 4 report-
ing pool of a partnership or trust to
which WP applies the agency op-
tion) to the extent such amount is
attributable to an amount paid to
WP in the year under review.

3\. The aggregate amount reported by
WP on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, WP's chapter 4 re-
porting pool- U.S. payee pool to the
extent such amount is attributable
to an amount paid to WP in the year
under review.

4\. If WP made a pooled reporting
election under section 6.02(D) of
the WP Agreement, the aggregate
amount reported by WP on Forms
1042-S as distributed to, or in-
cluded in the distributive share of,
WP's chapter 3 reporting pools (in-
cluding chapter 3 reporting pools of
a partnership or trust to which WP
applies the joint account or agency
option) to the extent such amount is
attributable to an amount paid to
WP in the year under review.

5\. If WP did not make a pooled re-
porting election, the aggregate
amount of reported by WP on
Forms 1042-S as distributed to, or
included in the distributive share
of, each direct partner (other than a
passthrough partner) (not included
in question 2 or 3 above) to the
extent such amount is attributable
to an amount paid to WP in the year
under review (excluding an amount
reported in question 6 below).

6\. The aggregate amount reported by
WP on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, other WPs, WTs, and

QIs as a class to the extent such
amount is attributable to an amount
paid to WP in the year under re-
view.

7\. The aggregate amount reported by
WP on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, participating FFIs,
registered deemed-compliant FFIs,
and registered deemed-compliant
Model 1 IGA FFIs that are pass-
through partners to which WP ap-
plies section 9.03 of the WP Agree-
ment as a class with respect to their
chapter 4 reporting pools to the ex-
tent such amount is attributable to
an amount paid to WP in the year
under review (excluding amounts
included in question 6 above).

8\. The aggregate amount reported by
WP on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, indirect partners (not
included in any of the questions
above) to which WP applies section
9.03 of the WP Agreement to the
extent such amount is attributable
to an amount paid to WP in the year
under review.

9\. The aggregate amount subject to
chapter 3 withholding that WP dis-
tributed to, or included in the dis-
tributive share of, U.S. partners not
included in a chapter 4 withholding
rate pool to the extent such amount
is attributable to an amount paid to
WP in the year under review.

10\. The aggregate amount distributed
to, or included in the distributive
share of, direct partners of WP (in-
cluding partners, beneficiaries, or
owners of a partnership or trust to
which WP applies the joint account
or agency option) that requested
individual Form(s) 1042-S and di-
rect partners that were issued
Forms 1042-S under section
6.02(B)(8) of the WP Agreement
(excluding an amount reported in
question 4 above).

11\. Total of questions 2 through 10.

12\. The amount of any unreconciled
variances (if question 1 minus
question 11 is other than 0).

13\. The aggregate amount reported by
WP on Form 1042 as distributed
to, or included in the distributive

share of, partners of WP to the
extent such amount is attributable
to an amount paid to WP in the
year under review.

14\. The amount of any unreconciled
variances of amounts reported by
WP on Forms 1042 and 1042-S
(question 13 minus the total of
questions 2 through 8).

15\. The aggregate amount of any col-
lective claims for refund or credit
made by WP.

F. Reporting of Reportable Amounts
Other Than Amounts Subject to Chapter
3 Withholding

1\. The aggregate amount of reportable
amounts other than amounts subject
to chapter 3 withholding received by
WP.

2\. The aggregate amount of reportable
amounts other than amounts subject
to chapter 3 withholding distributed
to, or included in the distributive
share of, a direct partner that is a
U.S. person.

3\. Number of direct partners that are
U.S. persons that are not reported on
Schedules K-1 to Form 1065 or un-
der WP's FATCA requirements (if
none enter 0).

G. Reporting on Form 1065 and
Schedules K-1

WPs that are exempt from filing Schedules
K-1 under section 6.03(B) (Modified Fil-
ing Obligations) or 6.03(C) (Foreign Re-
verse Hybrid Entities) of the WP Agree-
ment should not complete this section G.

1\. The total number of Schedules K-1
issued by WP to partners that are
U.S. persons for the year under re-
view.

2\. The total number of Schedules K-1
issued by WP to partners that are
foreign persons for the year under
review.

3\. The aggregate amount of special al-
locations to partners that are foreign
persons for the year under review (if
none enter 0).

# SECTION 7. WITHHOLDING FOREIGN TRUST AGREEMENT

Section 1. PURPOSE AND SCOPE
Section 2. DEFINITIONS

Section 3. WITHHOLDING RESPON-
SIBILITY

Section 4. DOCUMENTATION RE-
QUIREMENTS

Section 5. WITHHOLDING FOR-
EIGN TRUST WITHHOLDING CER-
TIFICATE

Section 6. TAX RETURN AND IN-
FORMATION REPORTING OBLIGA-
TIONS

Section 7. ADJUSTMENTS FOR
OVER- AND UNDERWITHHOLDING;
REFUNDS

Section 8. COMPLIANCE PROCE-
DURES

Section 9. CERTAIN PARTNER-
SHIPS AND TRUSTS AND INDIRECT
BENEFICIARIES AND OWNERS

Section 10. EXPIRATION, TERMI-
NATION AND DEFAULT

Section 11. MISCELLANEOUS PRO-
VISIONS

Section 12. EFFECTIVE DATE OF
AGREEMENT

The text of the WT agreement is set forth
below. The IRS will not provide signed
copies of the WT agreement. A reporting
Model 2 FFI should interpret this Agree-
ment by substituting the term "reporting
Model 2 FFI" for "participating FFI"
throughout this Agreement, except in
cases where this Agreement explicitly re-
fers to a reporting Model 2 FFI. A report-
ing Model 1 FFI and a nonreporting
Model 2 FFI treated as a registered
deemed-compliant FFI should apply this
Agreement by substituting the term "re-
porting Model 1 FFI" or "nonreporting
Model 2 FFI," as applicable, for "regis-
tered 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.

WHEREAS, WT has submitted an
application in accordance with this reve-
nue procedure to be a withholding foreign
trust for purposes of § 1.1441-5(e)(5)(v);

WHEREAS, WT and the IRS desire
to enter into an agreement to establish
WT's rights and obligations regarding
documentation, withholding, information
reporting, tax return filing, deposits, and
refund procedures under sections 1441,
1442, 1443, 1461, 1471, 1472, 1474,

6048, 6302, 6402, and 6414 with respect
to certain types of payments;

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

WHEREAS, if WT is a foreign fi-
nancial institution (other than a retirement
fund), WT represents that 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 an applicable Model 1
IGA, in the case of a reporting Model 1
FFI or a registered deemed-compliant
Model 1 IGA FFI beginning on the effec-
tive date of this Agreement;

NOW, THEREFORE, in consider-
ation of the following terms, representa-
tions, and conditions, the parties agree as
follows:

Section 1. PURPOSE AND SCOPE

Sec. 1.01. General Obligations. When
the IRS enters into a WT agreement with
a foreign person, that foreign person be-
comes a WT. Except as otherwise pro-
vided in this Agreement, WT's obliga-
tions with respect to income distributed to,
or included in the distributive shares of, its
beneficiaries or owners are governed by
the Internal Revenue Code and the regu-
lations thereunder. WT must act in its
capacity as a withholding foreign trust
pursuant to this Agreement for reportable
amounts that are distributed to, or in-
cluded in the distributive share of, WT's
direct beneficiaries or owners. WT may
also act as a withholding foreign trust for
reportable amounts that are distributed to,
or included in the distributive share of, a
partner, beneficiary, or owner of a pass-
through beneficiary or owner (i.e., an in-
direct beneficiary or owner of WT) if such
indirect beneficiary or owner is not a U.S.
non-exempt recipient. Notwithstanding
the preceding sentence, a WT may act as
a withholding foreign trust for an indirect
beneficiary or owner that is a U.S. non-
exempt recipient if such beneficiary or
owner is included in the passthrough ben-
eficiary's or owner's chapter 4 withhold-
ing rate pool (as defined in section 2.14 of
this Agreement) of U.S. payees or recal-

citrant account holders provided on the
FFI withholding statement (as defined in
section 2.26 of this Agreement) of the
passthrough beneficiary or owner.

WT is not required to act as a withholding
foreign trust for payments that it distrib-
utes to, or includes in the distributive
share of, a passthrough beneficiary or
owner or indirect beneficiary or owner.
With respect to an indirect beneficiary or
owner for which WT does not (or cannot)
act as a withholding foreign trust, WT
must, as part of its WT agreement, comply
with the requirements of a withholding
agent, as applicable to a nonwithholding
foreign trust under chapters 3 and 4. WT
(regardless of whether it is an FFI or
NFFE) must also, pursuant to this Agree-
ment, assume primary reporting responsi-
bility for purposes of section 1472.

If WT is an FFI, the requirements WT has
agreed to as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI ap-
ply in addition to the requirements under
this Agreement except to the extent spe-
cifically modified by this Agreement. This
Agreement references WT's FATCA re-
quirements when necessary to facilitate
coordination with a WT's obligations un-
der this Agreement with respect to its ben-
eficiaries or owners. A participating FFI's
obligations are provided in the FFI agree-
ment, a registered deemed-compliant
FFI's (other than a reporting Model 1
FFI's) 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.

If WT is an NFFE, WT must comply with
the requirements of a withholding agent
under sections 1471 and 1472 which are
provided in this Agreement.

If a WT acts as a sponsoring entity on
behalf of a sponsored FFI or sponsored
direct reporting NFFE, it must comply
with the due diligence, withholding, re-
porting, and compliance requirements of a
sponsoring entity in addition to its re-
quirements under this Agreement.

Sec. 1.02. Parties to the Agreement.
This Agreement applies to WT and the
IRS.

# Section 2. DEFINITIONS

For purposes of this Agreement, unless
otherwise specified in this Agreement, the
terms listed below are defined as follows.
Any term not defined in this section has
the same meaning that it has under the
Code, including the income tax regula-
tions under the Code, any applicable in-
come tax treaty, or any applicable Model
1 IGA or Model 2 IGA with respect to
WT's FATCA requirements as a partici-
pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI.

Sec. 2.01. Account. "Account" has the
meaning given to that term in § 1.1471-
1(b)(1) with respect to WT's FATCA re-
quirements.

Sec. 2.02. Account Holder. "Account
Holder" has the meaning given to that
term in § 1.1471-1(b)(2) with respect to
WT's FATCA requirements with respect
to an account that it maintains within the
meaning of § 1.1471-5(b)(5).

Sec. 2.03. Agreement. "Agreement"
means this Agreement between WT and
the IRS, the Appendix to this Agreement,
and WT's application to become a with-
holding foreign trust. The Appendix to
this Agreement and WT's application are
incorporated into this Agreement by ref-
erence.

Sec. 2.04. Amount Subject to Chapter 3
Withholding. An "amount subject to
chapter 3 withholding" is an amount de-
scribed in § 1.1441-2(a), regardless of
whether such amount is withheld upon.

Sec. 2.05. Amount Subject to Chapter 4
Withholding. An "amount subject to
chapter 4 withholding" is a withholdable
payment (as defined in section 2.79 of this
Agreement) for which withholding is re-
quired under chapter 4 or an amount for
which withholding was otherwise applied
under chapter 4.

Sec. 2.06. Assuming Primary Withhold-
ing Responsibility. "Assuming primary
withholding responsibility" refers to when
a WT assumes primary chapters 3 and 4
withholding responsibility with respect to
amounts subject to chapter 3 or 4 with-
holding under the terms of the WT agree-
ment. Generally, a WT assuming primary
chapters 3 and 4 withholding responsibil-
ity relieves the person who makes a pay-
ment to the WT from the responsibility to

withhold. See sections 3.03 and 3.04 of
this Agreement for when WT is required
to withhold under this Agreement.

Sec. 2.07. Beneficial Owner. A "benefi-
cial owner" has the meaning given to that
term in § 1.1441-1(c)(6).

Sec. 2.08. Chapter 3. Any reference to
"chapter 3 of the Code" or "chapter 3"
means sections 1441, 1442, 1443, 1461,
1463, and 1464.

Sec. 2.09. Chapter 3 Reporting Pool. A
chapter 3 reporting pool means a reporting
pool described in section 6.02(D) of this
Agreement.

Sec. 2.10. Chapter 3 Status. The term
"chapter 3 status" refers to the attributes
of a payee (and a beneficiary or owner of
WT for purposes of this Agreement) rel-
evant for determining the rate of with-
holding with respect to a payment made to
the payee for purposes of chapter 3.

Sec. 2.11. Chapter 4. Any reference to
"chapter 4 of the Code" or "chapter 4"
means sections 1471, 1472, 1473, and
1474.

Sec. 2.12. Chapter 4 Reporting Pool. A
chapter 4 reporting pool means a reporting
pool described in section 6.02(C) of this
Agreement.

Sec. 2.13. Chapter 4 Status. "Chapter 4
status" means the status of a person as a
U.S. person, specified U.S. person, an in-
dividual that is a foreign person, a partic-
ipating 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. 2.14. Chapter 4 Withholding Rate
Pool. A "chapter 4 withholding rate pool"
means a pool of payees that are nonpar-
ticipating FFIs provided on a chapter 4
withholding statement (as described in
§ 1.1471-3(c)(3)(iii)(B)(3)) to which a
withholdable payment is allocated. The
term chapter 4 withholding rate pool also
means a pool of payees provided on an
FFI withholding statement (as described
in § 1.1471-3(c)(3)(iii)(B)(2)) to which a
withholdable payment is allocated to -

(A) A pool of payees consisting of each
class of recalcitrant account holders de-
scribed in § 1.1471-4(d)(6) (or with re-
spect to an FFI that is a QI, a single pool
of recalcitrant account holders that is not
subdivided into classes of recalcitrant ac-
count holders described in § 1.1471-
4(d)(6)), including a separate pool of ac-
count holders to which the escrow
procedures for dormant accounts apply; or
(B) A pool of payees that are U.S. persons
as described in § 1.1471-3(c)(3)(iii)
(B)(2).

Sec. 2.15. Deemed-Compliant FFI.
"Deemed-compliant FFI" means a certi-
fied deemed-compliant FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI that
is treated, pursuant to section 1471(b)(2)
and § 1.1471-5(f), as meeting the require-
ments of section 1471(b). For the defini-
tion of certified deemed-compliant FFI,
see section 2.08 of this Agreement. For
the definition of registered deemed-
compliant FFI, see section 2.61 of this
Agreement. For the definition of regis-
tered deemed-compliant Model 1 IGA
FFI, see section 2.62 of this Agreement.

Sec. 2.16. Direct Beneficiary or Owner.
A "direct beneficiary or owner" means a
beneficiary or owner that is not an indirect
beneficiary or owner (as defined in section
2.39 of this Agreement).

Sec. 2.17. Distributive Share. "Distribu-
tive share" means an amount subject to
chapter 3 withholding or an amount of a
withholdable payment that is required to
be distributed to the beneficiaries of a
simple trust and an amount subject to
chapter 3 withholding or an amount that is
a withholdable payment includible in the
income of the owners of a grantor trust.

Sec. 2.18. Documentary Evidence.
"Documentary evidence" means any doc-
umentation obtained under the appropriate
know-your-customer rules (as defined in
section 2.41 of this Agreement), or any
documentary evidence described in
§ 1.1441-6 sufficient to establish entitle-
ment to a reduced rate of withholding
under an income tax treaty. 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. 2.19. Documentation. "Documenta-
tion" means any valid Form W-8, Form
W-9 (or acceptable substitute Form W-8

or Form W-9), or documentary evidence,
as defined in section 2.18 of this Agree-
ment, including all statements or other
information required to be associated with
the form or documentary evidence.

Sec. 2.20. Excepted NFFE. "Excepted
NFFE" means a person described in
§ 1.1471-1(b)(41).

Sec. 2.22. Exempt Recipient. An "ex-
empt recipient" means a person described
in § 1.6049-4(c)(1)(ii) (for interest, divi-
dends, and royalties), a person described
in § 1.6045-2(b)(2)(i) (for broker pro-
ceeds), and a person described in
§ 1.6041-3(p) (for rents, amounts paid on
notional principal contracts, and other
fixed or determinable income), for which
no Form 1099 reporting is required. Ex-
empt recipients are not exempt from
reporting or withholding under chapter 3
or 4.

(A) For a participating FFI, the require-
ments set forth in the FFI agreement;

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

(C) For a reporting Model 1 FFI and a
registered deemed-compliant Model 1
IGA FFI, the requirements under applica-
ble foreign law to implement the applica-
ble Model 1 IGA.

seded by any subsequent revenue proce-
dure).

Sec. 2.26. 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. 2.28. Foreign Financial Institution
(FFI). "Foreign financial institution" or
"FFI" has the meaning set forth in
§ 1.1471-5(d).

Sec. 2.29. Foreign TIN. A "foreign TIN"
is a taxpayer identification number issued
by a foreign person's country of resi-
dence.

Sec. 2.31. Form W-8. "Form W-8"
means IRS Form W-8BEN, Certificate of
Foreign Status of Beneficial Owner for
United States Tax Withholding (Individu-
als); 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 Or-

ganization for United States Tax With-
holding and Reporting; and IRS Form
W-8IMY, Certificate of Foreign Interme-
diary, Foreign Flow-Through Entity, or
Certain U.S. Branches for United States
Tax Withholding and Reporting, as appro-
priate. It also includes any acceptable sub-
stitute Form W-8 as described under
§§ 1.1441-1(e)(4)(vi) and 1.1471-3(c)
(6)(v).

Sec. 2.32. Form W-9. "Form W-9"
means IRS Form W-9, Request for Tax-
payer Identification Number and Certifi-
cation, or any acceptable substitute Form
W-9 as described under § 31.3406(h)-
3(c).

Sec. 2.33. Form 1042. "Form 1042"
means IRS Form 1042, Annual Withhold-
ing Tax Return for U.S. Source Income of
Foreign Persons.

Sec. 2.34. Form 1042-S. "Form 1042-S"
means IRS Form 1042-S, Foreign Per-
son's U.S. Source Income Subject to
Withholding.

Sec. 2.35. Form 1099. "Form 1099"
means IRS Form 1099-B, Proceeds From
Broker and Barter Exchange Transac-
tions; 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 re-
quired to be reported.

Sec. 2.36. Form 3520-A, Owner State-
ment, Beneficiary Statement, and State-
ment Required Under Section 6048(b).
"Form 3520-A" means IRS Form
3520-A, Annual Information Return of
Foreign Trust with a U.S. Owner. "Owner
Statement," when referred to in connec-
tion with Form 3520-A, means a Foreign
Grantor Trust Owner Statement. "Benefi-
ciary Statement," when referred to in con-
nection with Form 3520-A, means a For-
eign Grantor Trust Beneficiary Statement.
The "statement required under section
6048(b)" means the Owner Statement and
Beneficiary Statement.

Sec. 2.37. Form 8966. "Form 8966"
means IRS Form 8966, FATCA Report.
Sec. 2.38. Global Intermediary Identifi-
cation Number (GIIN). "Global interme-
diary identification number" or "GIIN"
means the identification number that is
assigned by the IRS to a participating FFI,

registered deemed-compliant FFI, direct
reporting NFFE, or sponsoring entity. The
term also includes the identification num-
ber assigned by the IRS to a reporting
Model 1 FFI or registered deemed-
compliant Model 1 IGA FFI for the pur-
pose of identifying itself to withholding
agents.

Sec. 2.39. Indirect Beneficiary or
Owner. An "indirect beneficiary or
owner" is a person that owns an interest in
WT through one or more passthrough
beneficiaries or owners (as defined in sec-
tion 2.54 of this Agreement). For exam-
ple, a person that holds an account with a
foreign intermediary or an interest in a
flow-through entity which intermediary or
flow-through entity, in turn, is a direct
beneficiary or owner of WT is an indirect
beneficiary or owner in WT. A person is
an indirect beneficiary or owner of WT
even if there are multiple tiers of interme-
diaries or flow-through entities between
the person and WT.

Sec. 2.40. Intermediary. An "intermedi-
ary" means a person that, for that pay-
ment, acts as a custodian, broker, nomi-
nee, or otherwise as an agent for another
person, regardless of whether such other
person is the beneficial owner of the
amount paid, a flow-through entity, or an-
other intermediary.

Sec. 2.41. Know-Your-Customer Rules.
"Know-your-customer rules" refers to the
applicable laws, regulations, rules, and ad-
ministrative practices and procedures gov-
erning the requirements of certain WTs that
are FFIs to obtain documentation confirm-
ing the identity of WT's direct beneficiaries
or owners. A list of jurisdictions for which
the IRS has received know-your-customer
information and for which the know-your-
customer rules and specified documentation
are acceptable is available at: http://www.
irs.gov/Businesses/International-Businesses/
List-of-Approved-KYC-Rules.

Sec. 2.42. Marketable Securities. For
purposes of this Agreement, the term
"marketable securities" means those secu-
rities described in § 1.1441-6 for which a
U.S. TIN or foreign TIN is not required to
be provided by the beneficial owner to
obtain treaty benefits.

Sec. 2.43. Non-Consenting U.S. Ac-
count. For purposes of a reporting Model
2 FFI, "non-consenting U.S. account" has

the meaning that such term has under the
applicable Model 2 IGA.

Sec. 2.44. Non-Exempt Recipient. A
"non-exempt recipient" means a person
that is not an exempt recipient under the
definition in section 2.22 of this Agree-
ment.

Sec. 2.45. 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 IGA or
Model 2 IGA.

Sec. 2.46. Nonparticipating FFI. A
"nonparticipating FFI" means an FFI
other than a participating FFI, a deemed-
compliant FFI, or an exempt beneficial
owner.

Sec. 2.47. Nonqualified Intermediary. A
"nonqualified intermediary" is any inter-
mediary that is not a qualified intermedi-
ary. 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 intermedi-
ary also includes an intermediary that is a
territory financial institution (as defined in
§ 1.1471-1(b)(130)) unless such institu-
tion agrees to be treated as a U.S. person.
Sec. 2.48. Nonreporting Model 1 FFI. A
"nonreporting Model 1 FFI" means a non-
reporting financial institution described in
Annex II of a Model 1 IGA.

Sec. 2.49. Nonreporting Model 2 FFI. A
"nonreporting Model 2 FFI" means a non-
reporting financial institution described in
Annex II of a Model 2 IGA.

Sec. 2.50. Nonwithholding Foreign
Partnership (NWP). A "nonwithholding
foreign partnership" means a foreign part-
nership other than a withholding foreign
partnership as defined in § 1.1441-5(c)(2).

Sec. 2.51. Nonwithholding Foreign
Trust (NWT). A "nonwithholding for-
eign trust" means a foreign trust (as de-
fined 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 (as defined in section 2.82 of this
Agreement).

Sec. 2.52. Overwithholding. The term
"overwithholding" means any amount ac-

tually withheld (determined before appli-
cation of the adjustment procedures de-
scribed in section 7.01 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

Sec. 2.53. Participating FFI. A "partici-
pating FFI" is defined in § 1.1471-
1(b)(91).

Sec. 2.54. Passthrough Beneficiary or
Owner. A "passthrough beneficiary or
owner" is a direct or indirect beneficiary
or owner of WT that is a nonqualified
intermediary, a qualified intermediary that
does not assume primary chapters 3 and 4
withholding responsibility with respect to
payments of U.S. source FDAP income or
primary Form 1099 reporting and backup
withholding responsibility, or a flow-
through entity. As provided in section
2.27 of this Agreement, a withholding for-
eign partnership or withholding foreign
trust is not a flow-through entity and thus
is not a passthrough beneficiary or owner.
Sec. 2.55. Payee. For purposes of chapter
3, a "payee" is defined in § 1.1441-
1(c)(12) and for purposes of chapter 4, a
"payee" means a person described in
§ 1.1471-3(a).

Sec. 2.56. Payment. A "payment" means
an amount considered made to a person if
that person realizes income whether or not
such income results from an actual trans-
fer of cash or other property. See
§ 1.1441-2(e).

Sec. 2.57. 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.

Sec. 2.58. Pooled Reporting (PR) Elec-
tion. A "pooled reporting election" or "PR

election" is an election to pool report
chapter 3 reporting pools on Form 1042-S
for chapter 3 purposes as described in
section 6.02(D) of this Agreement.

Sec. 2.59. Qualified Intermediary (QI).
A "qualified intermediary" or "QI" is a
person (or branch) described in § 1.1441-
1(e)(5)(ii) that has in effect an agreement
with the IRS to be treated as a QI and acts
as a QI. See Rev. Proc. 2017-15, 2017-03
I.R.B. 437 (as updated or superseded by
any subsequent revenue procedure), for
the QI Agreement.

Sec. 2.60. Recalcitrant Account Holder.
A "recalcitrant account holder" means a
person described in § 1.1471-5(g).

Sec. 2.61. 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 a registered deemed-
compliant FFI.

Sec. 2.62. 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 re-
porting requirements with respect to U.S.
accounts as those applicable to a regis-
tered deemed-compliant FFI under
§ 1.1471-5(f)(1), including the require-
ment to register with the IRS.

Sec. 2.63. Reportable Amount. A "re-
portable amount" means U.S. source
FDAP income that is an amount subject to
chapter 3 withholding (as defined in sec-
tion 2.04 of this Agreement), U.S. source
deposit interest (as defined in section
871(i)(2)(A)), and U.S. source interest or
original issue discount paid on the re-
demption of short-term obligations (as de-
fined in section 871(g)(1)(B)(i)). 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. 2.64. Reporting Model 1 FFI. A
"reporting Model 1 FFI" means an FFI

with respect to which a foreign govern-
ment 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 nonparticipating FFI
under an applicable Model 1 IGA.

Sec. 2.65. Reporting Pool. A "reporting
pool" is defined in section 6.02(A) of this
Agreement.

Sec. 2.66. Responsible Officer. A "re-
sponsible officer" of a WT means the
trustee of WT or an agent of the trustee of
WT with sufficient authority to fulfill the
duties of a responsible officer as described
in section 8 of this Agreement, including
the requirements to periodically certify
and to respond to requests by the IRS for
additional information to review WT's
compliance with this Agreement.

Sec. 2.67. Retirement Fund. A "retire-
ment fund" means a retirement fund or
other fund that is an exempt beneficial
owner described in § 1.1471-6(f) or a
similar fund that qualifies as an exempt
beneficial owner under an applicable
Model 1 IGA or Model 2 IGA.

Sec. 2.68. Sponsored Direct Reporting
NFFE. The term "sponsored direct report-
ing NFFE" has the meaning set forth in
§ 1.1472-1(c)(5).

Sec. 2.69. Sponsored FFI. The term
"sponsored FFI" means any entity de-
scribed in § 1.1471-5(f)(1)(i)(F) (spon-
sored investment entities and sponsored
controlled foreign corporations) or
§ 1.1471-5(f)(2)(iii) (sponsored, closely
held investment vehicles).

Sec. 2.70. Sponsoring Entity. “Sponsor-
ing entity" means (i) an entity that regis-
ters with the IRS and agrees to perform
the due diligence, withholding, and re-
porting obligations of one or more spon-
sored FFIs pursuant to § 1.1471-5(f)
(1)(i)(F) or (f)(2)(iii); or (ii) an entity that
registers with the IRS and agrees to per-
form the due diligence and reporting ob-
ligations of one or more direct reporting
NFFEs pursuant to § 1.1472-1(c)(5).

Sec. 2.71. Trust, Beneficiary, and Owner.
The term "trust" is defined in § 301.
7701-4. The term "beneficiary" is defined
in section 643(c) of the Code and the
regulations thereunder. An "owner" is a
grantor under § 1.671-2(e) or a person

treated as an owner under sections 671 to
679 and the regulations thereunder.

Sec. 2.72. Underwithholding. "Under-
withholding" means the excess of the
amount required to be withheld under
chapter 3 or 4 over the amount actually
withheld.

Sec. 2.73. Undocumented Beneficiary or
Owner. An "undocumented beneficiary
or owner" is a beneficiary or owner for
whom WT does not have valid documen-
tation.

Sec. 2.74. U.S. Account. A "U.S. ac-
count" is any financial account maintained
by a participating FFI or registered
deemed-compliant FFI that is held by one
or more specified U.S. persons or U.S.
owned foreign entities that such FFI re-
ports or elects to report under the FFI
agreement or § 1.1471-5(f), as applicable.
A U.S. account includes, in the case of a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI, a
U.S. reportable account as defined in sec-
tion 2.76 of this Agreement.

Sec. 2.75. U.S. Person. A "United States
person" (or "U.S. person") is a person
described in section 7701(a)(30), the U.S.
government (including an agency or in-
strumentality thereof), a State of the
United States (including an agency or in-
strumentality thereof), or the District of
Columbia (including an agency or instru-
mentality thereof). An individual will not
be treated as a U.S. person for purposes of
this Agreement for a taxable year or any
portion of a taxable year that the individ-
ual 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 comput-
ing the individual's U.S. tax liability. A
U.S. person does not include an alien in-
dividual who has made an election under
section 6013(g) or (h) to be treated as a
resident of the United States. For chapter
4 purposes, the term "U.S. person" or
"United States person" also means a for-
eign 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. 2.76. U.S. Reportable Account. A

"U.S. reportable account" means a finan-
cial 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 appli-
cable domestic law for compliance with
and implementation of FATCA.

Sec. 2.77. U.S. Source FDAP. "U.S.
source FDAP" means amounts from
sources within the United States that con-
stitute fixed or determinable annual or pe-
riodical income, as defined in § 1.1441-
2(b)(1).

Sec. 2.78. U.S. TIN. A "U.S. TIN" means
a U.S. taxpayer identification number as-
signed under section 6109.

Sec. 2.79. Withholdable Payment. A
"withholdable payment" means an
amount described in § 1.1473-1(a).

Sec. 2.80. Withholding Agent. A "with-
holding 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 2.57 of this
Agreement).

Sec. 2.81. Withholding Foreign Part-
nership (WP). A "withholding foreign
partnership" or "WP" means a partner-
ship, described in § 1.1441-5(c)(2), that
has in effect a withholding agreement
with the IRS to be treated as a withholding
foreign partnership.

Sec. 2.82. Withholding Foreign Trust
(WT). A "withholding foreign trust" or
"WT" means a trust, described in
§ 1.1441-5(e)(5)(v), that has in effect a
withholding agreement with the IRS to be
treated as a withholding foreign trust.

Sec. 2.83. WT-EIN. A "WT-EIN" means
the employer identification number as-
signed by the IRS to a WT. WT's WT-
EIN is only to be used when WT is acting
as a WT. For example, WT must give a
withholding agent its EIN (other than its
WT-EIN), if any, if it is not acting as a
WT (i.e., acting as a nonwithholding for-
eign trust) and a taxpayer identification
number is required.

# Section 3. WITHHOLDING RESPONSIBILITY

Sec. 3.01. Chapters 3 and 4 Withhold-
ing-In General.

(A) Chapter 4 Withholding.

WT (unless WT is a retirement fund) is a
withholding agent for purposes of chapter

4 and is subject to the withholding and
reporting provisions applicable to with-
holding agents under sections 1471 and
1472 with respect to its beneficiaries or
owners. WT is required to withhold 30
percent of any withholdable payment
made after June 30, 2014, that is distrib-
uted to, or included in the distributive
share of, a beneficiary or owner that is an
FFI unless WT 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 grandfa-
thered obligation described in § 1.1471-
2(b). See § 1.1473-1(a) for the definition
of a withholdable payment and the appli-
cable exceptions to this definition. WT is
also required to withhold 30 percent of
any withholdable payment made after
June 30, 2014, that is distributed to, or
included in the distributive share of, a
beneficiary or owner that is an NFFE un-
less WT can reliably associate the pay-
ment (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 applies.

If WT is a retirement fund, WT is not
required to withhold under section 1471
or 1472. If WT is a participating FFI or
registered deemed-compliant FFI (other
than a reporting Model 1 FFI), WT will
satisfy its requirement to withhold under
sections 1471(a) and 1472(a) with respect
to direct beneficiaries or owners that are
entities by withholding on withholdable
payments made to nonparticipating FFIs
and recalcitrant account holders to the ex-
tent required under its FATCA require-
ments as a participating FFI or registered
deemed-compliant FFI. See the FFI agree-
ment, § 1.1471-5(f), or the applicable
Model 2 IGA for the withholding require-
ments that apply to withholdable pay-
ments made to direct beneficiaries or own-
ers that are individuals and are treated as
recalcitrant account holders. If WT is a
reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI, WT
will satisfy its requirement to withhold
under section 1471(a) with respect to di-
rect beneficiaries or owners by withhold-
ing on withholdable payments made to
nonparticipating FFIs to the extent re-
quired under its FATCA requirements as a

registered deemed-compliant FFI or reg-
istered deemed-compliant Model 1 IGA
FFI. WT must withhold at the time and in
the manner described in sections 3.02
through 3.04 of this Agreement, which
modifies other provisions describing the
time and manner in which WT would oth-
erwise be required to withhold for chapter
4 purposes.

(B) Chapter 3 Withholding.

WT is a withholding agent for purposes of
chapter 3 and is subject to the withholding
and reporting provisions applicable to
withholding agents under chapter 3. WT
must withhold 30 percent of any payment
of an amount subject to chapter 3 with-
holding that is distributed to, or included
in the distributive share of, a beneficiary
or owner that is a foreign person unless
WT 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 4 of this Agreement regarding
documentation requirements applicable to
WT for determining whether chapter 3
withholding applies.

With respect to an amount subject to
chapter 4 withholding that is also an
amount subject to chapter 3 withholding,
WT 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
WT of its requirements to withhold on an
amount subject to chapter 3 withholding
to the extent required under sections 3.02
through 3.04 of this Agreement or modi-
fies the documentation upon which WT
may rely under section 4 of this Agree-
ment for determining whether withhold-
ing under chapter 3 applies.

Sec. 3.02. Primary Chapters 3 and 4
Withholding Responsibility. WT must
assume primary chapters 3 and 4 with-
holding responsibility for all withholdable
payments and amounts subject to chapter
3 withholding that are distributed to, or
included in the distributive share of, any
direct beneficiary or owner and any indi-
rect beneficiary or owner for which it acts

as a WT to the extent permissible under
section 9 of this Agreement. If WT acts as
a nonwithholding foreign trust with re-
spect to an indirect beneficiary or owner,
it cannot assume primary chapters 3 and 4
withholding responsibility for payments
made to that indirect beneficiary or owner.
WT is not required to withhold on
amounts it pays to a QI that assumes pri-
mary withholding responsibility with re-
spect to the payment, or to a WP, or
another WT.

If WT is a participating FFI or a registered
deemed-compliant FFI, it may not elect
with respect to its direct beneficiaries or
owners to satisfy its obligation to with-
hold under chapter 4 (or the FFI agree-
ment) on a withholdable payment made to
a recalcitrant account holder that is a U.S.
non-exempt recipient by backup with-
holding under section 3406 as provided in
§ 1.1471-4(b)(3)(iii) and section 4 of the
FFI agreement.

See section 6 of this Agreement regarding
WT's responsibility to report amounts
subject to withholding on Form 1042-S.
Sec. 3.03. Timing of Withholding. WT
must withhold on the date it makes a
distribution to a foreign beneficiary or
owner that includes a withholdable pay-
ment or an amount subject to chapter 3
withholding as determined under section
3.04 of this Agreement. To the extent a
beneficiary's or owner's distributive share
of income subject to withholding has not
actually been distributed to the beneficiary
or owner, WT must withhold on the ben-
eficiary's or owner's distributive share on
the earlier of the date that the statement
required under section 6048(b) is mailed
or otherwise provided to the beneficiary or
owner or the due date for furnishing the
statement (whether or not WT is required
to prepare and furnish the statement). If
that date is after the due date (including
extensions) for filing WT's Forms 1042-S
for the calendar year to which the distrib-
utive share relates, WT must withhold and
report the withholding on the distributive
share that relates to the prior calendar year
as if it arises in the subsequent calendar
year. See section 6.01 of this Agreement
for requirements to report the withheld
tax.

Sec. 3.04. Withholding on Distributions.
WT may determine the amount of with-
holding on a distribution based on a rea-

sonable estimate of the beneficiary's or
owner's distributive share of income sub-
ject to withholding for the year. WT must
correct the estimated withholding to re-
flect the beneficiary's or owner's actual
distributive share on the earlier of the date
that the statement required under section
6048(b) is mailed or otherwise provided
to the beneficiary or owner or the due date
for furnishing the statement (whether or
not WT is required to prepare and furnish
the statement). If that date is after the
earlier of the due date (including exten-
sions) for filing WT's Forms 1042-S or
the date WT actually issues Forms
1042-S for the calendar year, WT must
withhold and report any adjustments re-
quired by correcting the information for
the following calendar year.

Sec. 3.05. Deposit Requirements. WT
must deposit amounts withheld under
chapters 3 and 4 at the time and in the
manner provided under section 6302 (see
§ 1.6302-2(a) or § 31.6302-1(h)).

# Section 4. DOCUMENTATION REQUIREMENTS

Sec. 4.01. Documentation Require-
ments.

(A) General Documentation Require-
ments. Except as otherwise provided in
this section 4, WT must obtain a Form
W-8 or Form W-9 from every direct ben-
eficiary or owner that receives a distribu-
tion or distributive share of a reportable
amount. If WT is an FFI and is subject to
the know-your-customer rules for docu-
menting its beneficiaries or owners (or
subset of beneficiaries or owners), WT
may obtain documentary evidence as set
forth in the "know-your-customer" rules
approved by the IRS (or the documenta-
tion described in section 4.03(A)(3) of this
Agreement) for the applicable jurisdiction
from its direct beneficiaries or owners
rather than a Form W-8 or Form W-9,
provided WT adheres to the know-your-
customer rules that apply to WT with re-
spect to the direct beneficiary or owner
from whom the documentary evidence is
obtained.

WT must review and maintain documen-
tation in accordance with this section 4
and, in the case of documentary evidence
obtained from direct beneficiaries or own-
ers, in accordance with the know-your-
customer rules approved by the IRS for

the applicable jurisdiction. WT must make
documentation (together with any associ-
ated withholding statements and other
documents or information) available upon
request for inspection by WT's external
reviewer, if the performance of an exter-
nal review is requested by the IRS (as
described in section 8.08(D) of this
Agreement). WT represents that none of
the laws to which it is subject prohibits
disclosure of the identity of any benefi-
ciary or owner or corresponding benefi-
ciary or owner information to WT's re-
viewer.

(B) Coordination of Chapter 3 and Chap-
ter 4 Documentation Requirements. If WT
is an FFI (other than a retirement fund),
WT is required to perform the due dili-
gence procedures under its FATCA re-
quirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI for
each direct beneficiary or owner to deter-
mine if the beneficiary or owner is a
holder of a U.S. account (or U.S. report-
able account), and to determine each di-
rect beneficiary or owner that is a nonpar-
ticipating FFI and, if applicable, that is a
recalcitrant account holder (or non-
consenting U.S. account). See, however,
the automatic termination provision of
section 10.03(A) of this Agreement if WT
is not in possession of valid documenta-
tion for any direct beneficiary or owner at
any time that withholding or reporting is
required. For purposes of this section 4,
with respect to documenting a beneficiary
or owner for chapter 4 purposes, docu-
mentary evidence also includes documen-
tation or information that is publicly avail-
able to determine the chapter 4 status of
the account holder to the extent permitted
under an applicable IGA.

If WT is an NFFE, WT is required to doc-
ument the chapter 4 status of each benefi-
ciary or owner to determine if reporting or
withholding applies under section 1471 or
1472 on withholdable payments distributed
to, or included in the distributive share of,
the beneficiary or owner under the require-
ments of § 1.1471-3(d).

If WT has determined that withholding is
not required under chapter 4, WT must
obtain, unless already collected, docu-
mentation that meets the requirements of
this section 4 to determine whether with-
holding applies under chapter 3. See also

WT's FATCA requirements as a partici-
pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI for when WT will have
reason to know that a claim of chapter 4
status is unreliable or incorrect and for
WT's requirements following a change in
circumstances. If WT is an NFFE, see
§ 1.1471-3(e)(4) for when WT 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 WT's re-
quirements following a change in circum-
stances.

Sec. 4.02. Documentation for Foreign
Beneficiaries or Owners. WT may treat a
beneficiary or owner as a foreign benefi-
cial owner of an amount if the beneficiary
or owner provides a valid Form W-8
(other than Form W-8IMY), or valid doc-
umentary evidence, to the extent permit-
ted under section 4.01(A) of this Agree-
ment, that supports the beneficiary's or
owner's status as a foreign person. WT
may treat a beneficiary or owner that has
provided documentation as entitled to a
reduced rate of withholding under chapter
3 if all the requirements for a reduced rate
are met and the documentation provided
by the beneficiary or owner supports en-
titlement to a reduced rate of withholding
and no withholding under chapter 4. Sec-
tions 4.03 through 4.06 of this Agreement
describe the specific documentation re-
quirements necessary for obtaining a re-
duced rate of withholding in certain cir-
cumstances.

Sec. 4.03. Treaty Claims. WT may not
reduce the rate of withholding under chap-
ter 3 based on a beneficiary's or owner's
claim of treaty benefits unless WT has
determined that no chapter 4 withholding
is required and it obtains from the bene-
ficiary or owner the documentation re-
quired by section 4.03(A) of this Agree-
ment. In addition, WT agrees to establish
procedures to inform beneficiaries or
owners of the terms of the limitation on
benefits provisions of a treaty (if applica-
ble and regardless of whether those pro-
visions are contained in a separate article
entitled Limitation on Benefits) under
which the beneficiary or owner is claim-
ing benefits. For beneficiaries or owners
that are entities documented by WT on or
after January 1, 2017, WT is required to
obtain a Form W-8BEN-E with the ap-

propriate limitation on benefits certifica-
tion or, if WT is allowed to and obtains
documentary evidence, the written certifi-
cation included in the treaty statement as
described in section 4.03(B) of this Agree-
ment. For beneficiaries or owners that are
entities that were documented with docu-
mentary evidence prior to January 1,
2017, and for which treaty benefits are
being claimed, WT is required to obtain
the appropriate limitation on benefits
statement prior to January 1, 2019.

(A) Treaty Documentation. The documen-
tation required by this section 4.03(A) is
as follows:

(1) A 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) (if applicable), and a
U.S. TIN or foreign TIN. A U.S. TIN or
foreign TIN shall not be required, how-
ever, if the beneficiary or owner is a direct
beneficiary or owner. If WT is acting as a
withholding foreign trust for an indirect
beneficiary or owner, the indirect benefi-
ciary or owner is required to have either a
U.S. TIN or a foreign TIN in order to
claim treaty benefits unless it is claiming
treaty benefits on income from marketable
securities as described in § 1.1441-6(c);
(2) Documentary evidence, as permitted
under section 4.01(A) of this Agreement,
that has been obtained pursuant to the
know-your-customer rules that apply to
the direct beneficiary or owner, and the
direct beneficiary or owner, if it is an
entity, has made the treaty statement (if
applicable) required by section 4.03(B) of
this Agreement; or

(3) The type of documentary evidence, as
permitted under section 4.01(A) of this
Agreement, required under § 1.1441-6 to
establish entitlement to a reduced rate of
withholding under a treaty and the direct
beneficiary or owner, if it is an entity, has
made the treaty statement (if applicable)
required by section 4.03(B) of this Agree-
ment.

(B) Treaty Statement. The treaty statement
required by an entity direct beneficiary or
owner under this section 4.03(B) is as
follows: [Name of Direct Beneficiary or
Owner] meets all provisions of the treaty
that are necessary to claim a reduced rate
of withholding, including any applicable

limitation on benefits provisions, and de-
rives the income within the meaning of
section 894, and the regulations thereun-
der, as the beneficial owner.

WT is only required to obtain the treaty
statement described in this section 4.03(B)
from a beneficiary or owner that is an
entity. WT shall not be required to obtain
a treaty statement described in this section
4.03(B) from an individual who is a resi-
dent of an applicable treaty country or
from the government, or its political sub-
divisions, of a treaty country. WT is re-
quired to collect and report (as required on
Form 1042-S) the specific category of
limitation on benefits provision from all of
its entity beneficiaries or owners, includ-
ing a government (or its political subdivi-
sions). WT may rely on a beneficiary's or
owner's claim of the specific category of
limitation on benefits provision absent ac-
tual knowledge that the claim is unreliable
or incorrect.

Sec. 4.04. Documentation for Interna-
tional Organizations. WT may not treat a
beneficiary or owner as an international
organization entitled to an exemption
from withholding under section 892 un-
less WT has determined that no chapter 4
withholding is required and it obtains a
Form W-8EXP (or documentary evi-
dence as permitted under section 4.01(A)
of this Agreement) from the international
organization. The name provided on the
documentation must be the name of an
entity designated as an international orga-
nization by executive order pursuant to 22
United States Code 288 through 288f. If
an international organization is not claim-
ing benefits under section 892 but under
another Code exception, the provisions of
section 4.02 of this Agreement apply
rather than the provisions of this section
4.04.

Sec. 4.05. Documentation for Foreign
Governments and Foreign Central
Banks of Issue.

(A) Documentation for a Foreign Govern-
ment or Foreign Central Bank of Issue
Claiming an Exemption from Withholding
Under Section 892 or Section 895. WT
may not treat a beneficiary or owner as a
foreign government or foreign central
bank of issue exempt from withholding
under section 892 or 895 unless WT has
determined that no chapter 4 withholding
is required and-

(1) WT receives from the beneficiary or
owner a Form W-8EXP (or documentary
evidence as permitted under section
4.01(A) of this Agreement) establishing
that the beneficiary or owner is a foreign
government or foreign central bank of
issue;

(2) The income distributed to, or included
in the distributive share of, the beneficiary
or owner is the type of income that qual-
ifies for an exemption from withholding
under section 892 or 895; and

(3) WT does not know, or have reason to
know, that the beneficiary or owner 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 in-
terest in a controlled commercial entity.

(B) Treaty Benefits. WT may not treat a
beneficiary or owner as a foreign govern-
ment or foreign central bank of issue en-
titled to a reduced rate of withholding
under an income tax treaty for purposes of
chapter 3 unless WT has determined that
no chapter 4 withholding is required and it
has valid documentation that is sufficient
to obtain a reduced rate of withholding
under a treaty, as described in section 4.03
of this Agreement.

Sec. 4.06. Documentation for Foreign
Tax-Exempt Organizations. To the ex-
tent that WT determines that an amount
distributed to, or included in the distribu-
tive share of, a beneficiary or owner is not
subject to withholding under chapter 4,
WT may not treat the beneficiary or owner
as a foreign tax-exempt organization and
reduce the rate of withholding or exempt
the beneficiary or owner from withholding
for purposes of chapter 3 unless WT sat-
isfies the requirements provided in section
4.06(A), (B), or (C) of this Agreement.
(A) Reduced Rate of Withholding Under
Section 501. WT may not treat a benefi-

ciary or owner as a foreign organization
described under section 501(c), and there-
fore exempt from withholding under
chapter 3 (or, if the beneficiary or owner is
a foreign private foundation, subject to
withholding at a 4-percent rate under sec-
tion 1443(b)) unless WT obtains a valid
Form W-8EXP with Part IV of the form
completed.

(B) Treaty Exemption. WT may not treat a
beneficiary or owner as a foreign organi-
zation that is tax-exempt on an item of
income pursuant to a treaty unless WT
obtains valid documentation as described
under section 4.03 of this Agreement that
is sufficient for obtaining a reduced rate of
withholding under the treaty and the doc-
umentation establishes that the beneficiary
or owner is an organization exempt
from tax under the treaty on that item of
income.

Sec. 4.07. Documentation from Pass-
through Beneficiaries or Owners. Ex-
cept as otherwise provided in section 9 of
this Agreement, WT shall not act as a
withholding foreign trust with respect to
an amount distributed to, or included in
the distributive share of, a passthrough
beneficiary or owner. WT must forward
the passthrough beneficiary's or owner's
documentation (and associated withhold-
ing statement and documentation of indi-
rect beneficiaries or owners) to the with-
holding agent from whom WT receives a
reportable amount.

Sec. 4.08. Documentation for U.S. Ex-
empt Recipients. WT shall not treat a
beneficiary or owner as a U.S. exempt
recipient unless WT obtains from the ben-
eficiary or owner-

(A) A valid Form W-9 on which the ben-
eficiary or owner includes an exempt
payee code to certify that the beneficiary
or owner is a U.S. exempt recipient;

(B) Documentary evidence, as permitted

under section 4.01(A) of this Agreement,
that is sufficient to establish that the ben-
eficiary or owner is a U.S. exempt recip-
ient; or

(C) Documentary evidence, as permitted
under section 4.01(A) of this Agreement,
that is sufficient to establish the beneficia-
ry's or owner's status as a U.S. person and
WT can treat the beneficiary or owner 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 doc-
umentation.

Sec. 4.09. Documentation for U.S. Non-
Exempt Recipients. WT shall not treat a
beneficiary or owner as a U.S. non-
exempt recipient unless WT obtains a
valid Form W-9 or other similar agreed
form from the beneficiary or owner.

Sec. 4.10. Documentation Validity.

(A) In General. WT may not rely on doc-
umentation if WT has actual knowledge
or reason to know that the information or
certifications contained in the documenta-
tion provided by a beneficiary or owner is
unreliable or incorrect, or that there is a
change in circumstances with respect to
the information or statements contained in
the documentation or in WT's files (ac-
count information) pertaining to the obli-
gation that affects the reliability of the
beneficiary or owner's claim. See
§ 1.1441-1(e)(4)(ii)(D) for the definition
of change in circumstances. Once WT
knows, or has reason to know, that docu-
mentation provided by a beneficiary or
owner is unreliable or incorrect to estab-
lish foreign status or residency for pur-
poses of claiming benefits under an appli-
cable income tax treaty, it can no longer
reliably associate a payment with valid
documentation unless it obtains additional
documentation to establish the beneficia-
ry's or owner's chapter 3 status. If WT
can no longer reliably associate a payment
with valid documentation, it must obtain
new documentation prior to the time with-
holding is required under section 3 of this
Agreement. With respect to a withholding
agent's reason to know that a claim for
treaty benefits is unreliable or incorrect
based on the existence of a tax treaty, the
rules in § 1.1441-6(b)(1)(ii) will apply to
preexisting beneficiaries or owners for
which WT held valid documentation upon
a change in circumstances or, with respect
to a preexisting entity beneficiary or

owner, when it provides a written limita-
tion on benefits statement (as described in
section 4.03(B) of this Agreement). For
all beneficiaries or owners that become
beneficiaries or owners of WT on or after
January 1, 2017, this rule will apply on the
date that such beneficiary or owner be-
comes a beneficiary or owner of WT. For
purposes of this section 4.10(A), a "pre-
existing beneficiary or owner" or "preex-
isting entity beneficiary or owner" is a
beneficiary or owner documented by WT
prior to January 1, 2017, for a WT with a
WT Agreement in effect prior to that date.
For a WT that did not have a WT Agree-
ment in effect prior to January 1, 2017, a
"preexisting beneficiary or owner" or
"preexisting entity beneficiary or owner"
means a beneficiary or owner that became
a beneficiary or owner of WT (and for
which WT has valid documentation) prior
to the effective date of its WT Agreement.
(B) General Rules.

(1) WT 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) or if it has been in-
formed by the IRS or another withholding
agent that the form is unreliable or incor-
rect and shall not rely on a Form W-8 if
it is not permitted to do so under this
section 4.10.

(2) WT shall not treat documentary evi-
dence provided by a beneficiary or owner
as valid if the documentary evidence does
not reasonably establish the identity of the
person presenting the documentary evi-
dence. For example, documentary evi-
dence is not valid if it is provided in
person by a beneficiary or owner that is a
natural person and the photograph on the
documentary evidence, if any, does not
match the appearance of the person pre-
senting the document.

(3) WT may not rely on documentation to
reduce the withholding rate that would
otherwise apply if-

(a) The beneficiary's or owner's docu-
mentation is incomplete or contains infor-
mation that is inconsistent with the bene-
ficiary's or owner's claim,

(b) WT has other information in the ac-
count information that is inconsistent with
the beneficiary's or owner's claim, or

For example, if a direct beneficiary or

owner that is an entity provides documen-
tation to claim treaty benefits and the doc-
umentation establishes the direct benefi-
ciary's or owner's status as a foreign
person and a resident of a treaty country
but fails to provide the treaty statement in
section 4.03(B) of this Agreement, the
documentation does not establish the di-
rect beneficiary's or owner's entitlement
to a reduced rate of withholding.

Sec. 4.11. Documentation Validity Pe-
riod.

(A) Documentation Other Than a Form
W-9. WT, as permitted under section
4.01(A) of this Agreement, may rely on
valid documentary evidence obtained
from direct beneficiaries or owners in
accordance with applicable know-your-
customer rules as long as the documentary
evidence remains valid under those rules
or until WT knows, or has reason to know,
that the information contained in the doc-
umentary evidence is unreliable or incor-
rect. However, WT may only rely on
statements regarding entitlement to treaty
benefits described in § 1.1441-6(c)(5)(i)
or the representations described in section
4.03 of this Agreement until the validity
expires under § 1.1441-1(e)(4)(ii)(A)(2).
For establishing a beneficiary's or own-
er's chapter 3 status (as defined in
§ 1.1441-1(c)(45)) or foreign status for
chapter 61 purposes, WT may rely on a
valid Form W-8 until its validity expires
under § 1.1441-1(e)(4)(ii) and may rely
on documentary evidence (other than doc-
umentary evidence obtained pursuant to
applicable know-your-customer rules) un-
til its validity expires under § 1.6049-
5(c).

(B) Form W-9. WT may rely on a Form
W-9 unless one of the conditions of
§ 31.3406(h)-3(e)(2)(i) through (v) ap-
plies or if it has been informed by the IRS
or another withholding agent that the form
is unreliable or incorrect.

Sec. 4.12. Maintenance and Retention
of Documentation.

(A) Maintaining Documentation. WT
shall maintain documentation by retaining
the original documentation, a certified
copy, a photocopy, a scanned copy, a mi-
crofiche, or other means that allow repro-
duction (provided that WT has recorded
receipt of the documentation and is able to
produce a hard copy). If WT is not re-
quired to retain copies of documentary

evidence under its know-your-customer
rules, WT 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 obligations held by a direct
beneficiary or owner opened prior to Jan-
uary 1, 2001, if WT was not required
under its know-your-customer rules to
maintain originals or copies of documen-
tation, WT may nevertheless rely on the
information if it has complied with all
other aspects of its know-your-customer
rules regarding establishment of a benefi-
ciary's or owner's identity, it has a record
that the documentation required under the
know-your-customer rules was actually
examined by an employee of WT or em-
ployees of the trustee of WT in accor-
dance with the know-your-customer rules,
and it has no information in its possession
that would require WT to treat the docu-
mentation as invalid.

(B) Retention Period. WT shall retain a
beneficiary's or owner's documentation
obtained under this section 4 for as long as
the document is relevant for the determi-
nation of WT's tax liability or reporting
responsibilities under chapters 3, 4, and
61, and sections 3406 and 6048.

## Section 5. WITHHOLDING FOREIGN TRUST WITHHOLDING CERTIFICATE

Sec. 5.01. WT Withholding Certificate.
WT agrees to furnish a withholding for-
eign trust withholding certificate to each
withholding agent from which it receives
a reportable amount as a withholding for-
eign trust. The withholding foreign trust
withholding certificate is a Form W-
8IMY (or acceptable substitute form) that
certifies that WT is acting as a withhold-
ing foreign trust, contains WT's WT-EIN,
and provides all other information and
certifications required by the form, includ-
ing its WT-EIN. If WT is receiving a
reportable amount that is a withholdable
payment, the withholding certificate must
also contain WT's chapter 4 status to the
extent required, provide its GIIN (if appli-
cable), and provide the other information
and certifications required on the form. If
WT is an FFI, WT must provide a GIIN
on its withholding foreign trust withhold-

ing certificate irrespective of the time the
FFI is permitted under its FATCA re-
quirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI to
obtain a GIIN. WT is not required to dis-
close, as part of that Form W-8IMY or its
withholding statement, any information
regarding the identity of its direct benefi-
ciaries or owners and those indirect ben-
eficiaries or owners for which it acts as a
withholding foreign trust to the extent per-
mitted under section 9 of this Agreement.
If WT does not act as a withholding foreign
trust for an indirect beneficiary or owner,
WT is required to furnish a nonwithholding
foreign trust certificate to its withholding
agent. See § 1.1441-5(e)(5)(iii) for the re-
quirements of a nonwithholding foreign
trust withholding certificate, the withholding
statement associated with the withholding
certificate, and the other documentation or
other information for each passthrough ben-
eficiary or owner and its direct and indirect
beneficiaries or owners.

Sec. 5.02. Withholding Statement.
When WT is acting as a withholding for-
eign trust, WT must assume primary chap-
ters 3 and 4 withholding responsibility as
required by section 3.02 of this Agree-
ment for reportable amounts that are dis-
tributed to, or included in the distributive
shares of, its direct beneficiaries or owners
and any indirect beneficiaries or owners
for which it is acting as a withholding
foreign trust. Accordingly, WT is not re-
quired to provide a withholding statement
in such circumstances. See section 9 of
this Agreement, providing that WT may
not act as a withholding foreign trust for
certain indirect beneficiaries or owners
that are U.S. non-exempt recipients.

## Section 6. TAX RETURN AND INFORMATION REPORTING OBLIGATIONS

### Sec. 6.01. Form 1042 Filing Require- ment.

(A) In General. WT shall file a return on
Form 1042, whether or not WT withheld
any amounts under chapter 3 or 4 of the
Code, on or before March 15 of the year
following any calendar year in which WT
acts as a withholding foreign trust. In ad-
dition to the information required on Form
1042 and its accompanying instructions,
WT shall attach a statement setting forth

the amounts of any overwithholding or
underwithholding adjustments made un-
der sections 7.01 and 7.03 of this Agree-
ment, and an explanation of the circum-
stances that resulted in the over- or
underwithholding. If WT is requesting a
collective refund or credit, WT shall at-
tach the statements required by section
7.02 of this Agreement and shall comply
with the procedures specified in section
7.02 of this Agreement.

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

Sec. 6.02. Form 1042-S Reporting.

(A) In General. WT must file Form
1042-S for each beneficiary or owner for
whom it acts as a withholding foreign
trust and for whom WT distributes, or in
whose distributive share is included, a re-
portable amount unless WT is permitted
under sections 6.02(C) and (D) of this
Agreement to report in pools (reporting
pools). With respect to its direct benefi-
ciaries or owners, WT must file Forms
1042-S in the manner required by the
regulations under chapters 3 and 4 for
amounts distributed to, or included in the
distributive share of, its beneficiaries or
owners (or in the case of a participating
FFI, pursuant to its FATCA requirements
as a participating FFI) and the instructions
to the form, including any requirement to
file the forms magnetically or electroni-
cally. Any Form 1042-S required to be
filed by this section 6 shall be filed on or
before March 15 following the calendar
year in which withholding, if any, was
required under section 3.02 of this Agree-
ment. WT may request an extension of
time to file Forms 1042-S by submitting
Form 8809, Application for Extension of
Time to File Information Returns (or other
superseding form) by the due date of
Forms 1042-S in the manner required by
(and to the extent permitted on) Form
8809.

(B) Recipient Specific Reporting. WT is
required to file a separate Form 1042-S
for amounts distributed to, or included in
the distributive share of, each separate

beneficiary or owner as described in this
section 6.02(B). WT must file separate
Forms 1042-S by income code, chapter 3
or 4 exemption code, recipient code, chap-
ter 4 withholding rate pool (if applicable),
and withholding rate.

(1) Unless WT has made the pooled re-
porting election pursuant to section
6.02(D) of this Agreement, WT must file a
separate Form 1042-S for each direct ben-
eficiary or owner (other than a pass-
through beneficiary or owner) to whom
WT distributes, or whose distributive
share includes, an amount subject to chap-
ter 3 withholding that is either not a with-
holdable payment or is a withholdable
payment for which no chapter 4 withhold-
ing is required.

(2) WT must file a separate Form 1042-S
for each beneficiary or owner that is a
qualified intermediary, a withholding for-
eign partnership, or a withholding foreign
trust to whom WT distributes, or whose
distributive share includes, an amount
subject to withholding under chapters 3 or
4, regardless of whether such beneficiary
or owner is a direct or indirect beneficiary
or owner of WT.

(3) WT must file a separate Form 1042-S
for each passthrough beneficiary or owner
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 to whom WT distributes, or
whose distributive share includes, an
amount subject to chapter 4 withholding
allocable to such FFI's chapter 4 with-
holding rate pools of recalcitrant account
holders, nonparticipating FFIs, and report-
able amounts allocable to U.S. payees, if
applicable, regardless of whether such FFI
is a direct or indirect beneficiary or owner
of WT when WT applies section 9.03 of
this Agreement.

(4) WT must file a separate Form 1042-S
for each passthrough beneficiary or owner
that is a nonqualified intermediary or
flow-through entity that is not described in
section 6.02(B)(3) of this Agreement
(other than a nonparticipating FFI), and to
whom WT distributes, or whose distribu-
tive share includes, an amount subject to
chapter 4 withholding allocable to such
passthrough beneficiary's or owner's
chapter 4 withholding rate pool of payees
that are nonparticipating FFIs, regardless

of whether such passthrough beneficiary
or owner is a direct or indirect beneficiary
or owner of WT when WT applies section
9.03 of this Agreement.

(5) WT must file a separate Form 1042-S
for each beneficiary or owner of WT that
is a partnership or trust to which WT
applies the agency option under section
9.02 of this Agreement and to whom WT
distributes, or whose distributive share in-
cludes, an amount subject to chapter 4
withholding that is allocable to the part-
nership or trust's chapter 4 withholding
rate pool of payees that are nonparticipat-
ing FFIs or to whom WT distributes, or
whose distributive share includes, an
amount subject to chapter 3 withholding
that is either not a withholdable payment
or is a withholdable payment for which no
chapter 4 withholding is required and that
is allocable to such partnership's or trust's
chapter 3 withholding rate pools.

(6) WT must file a separate Form 1042-S
for each foreign account holder (or inter-
est holder) of a passthrough beneficiary or
owner that is a nonparticipating FFI that
receives a payment on behalf of an ex-
empt beneficial owner (regardless of
whether the passthrough beneficiary or
owner is a direct or indirect beneficiary or
owner of WT) to the extent WT can reli-
ably associate such amounts with valid
documentation from such passthrough
beneficiary or owner as to the portion of
the payment allocable to one or more ex-
empt beneficial owners. In addition, WT
must file separate Forms 1042-S in the
same manner for each foreign account
holder (or interest holder) of a pass-
through beneficiary or owner that is de-
scribed in the preceding sentence and that
is a direct or indirect partner, beneficiary,
or owner of a partnership or trust to which
WT applies the agency option.

(7) WT must file a separate Form 1042-S
for each foreign account holder (or inter-
est holder) of a passthrough beneficiary or
owner to whom WT distributes, or whose
distributive share includes, an amount
subject to chapter 3 withholding that is
either not a withholdable payment or is a
withholdable payment for which no chap-
ter 4 withholding is required to the extent
WT can reliably associate such amounts
with valid documentation from an account
holder (or interest holder) that is not itself
a nonqualified intermediary or flow-

through entity when WT applies section
9.03 of this Agreement. In addition, WT
must file a separate Form 1042-S in the
same manner for each foreign account
holder (or interest holder) of a nonquali-
fied intermediary or flow-through entity
(to which WT does not apply the agency
option) that is described in the preceding
sentence and that is a direct or indirect
account holder (or interest holder) of a
partnership or trust to which WT applies
the agency option.

(8) If WT is an NFFE, WT must file a
separate Form 1042-S for each direct ben-
eficiary or owner that establishes its status
as a passive NFFE but fails to provide the
information regarding its owners as re-
quired under § 1.1471-3(d)(12)(iii).

If WT is an FFI, WT shall report on Form
1042-S amounts subject to chapter 4
withholding that it distributes to, or in-
cludes in the distributive share of, its di-
rect beneficiaries or owners consistent
with its FATCA requirements as a partic-
ipating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI. A separate Form
1042-S shall be filed for each type of
chapter 4 reporting pool. A chapter 4 re-
porting pool is a payment of a single type
of income, 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 payees
that are nonparticipating FFIs or recalci-
trant account holders. WT must report re-
calcitrant account holders in pools based
upon their particular class described in
§ 1.1471-4(d)(6), with a separate Form
1042-S issued for each such pool. See
section 9 of this Agreement for when a
WT may include certain indirect benefi-
ciaries or owners in its chapter 4 reporting
pools.

If WT is a participating FFI or registered
deemed-compliant FFI (including for this
purpose a reporting Model 1 IGA FFI),
WT may report in a chapter 4 withholding
rate pool of U.S. payees reportable
amounts that are distributed to, or in-
cluded in the distributive share of, a direct
beneficiary or owner that is a U.S. person,
provided that WT reports such beneficiary
or owner as a U.S. account (or U.S report-
able account) under its applicable FATCA
requirements as a participating FFI, regis-

tered deemed-compliant FFI, reporting
Model 1 FFI, or registered deemed-
compliant Model 1 IGA FFI. WT shall
include in its U.S. payee pool reportable
amounts that are distributed to, or in-
cluded in the distributive share of, a direct
beneficiary or owner that is a U.S. person
when WT either reports such beneficiary
or owner as a U.S. account (or U.S. re-
portable account) pursuant to its FATCA
requirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI; or
reports such beneficiary or owner as a
recalcitrant account holder (or non-
consenting U.S. account) provided that
WT is not required to withhold on such
beneficiary or owner pursuant to its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI. See, however, the automatic ter-
mination provision of section 10.03(A) of
this Agreement if WT is not in possession
of valid documentation for any direct ben-
eficiary or owner at any time that with-
holding or reporting is required.

If WT is an NFFE, WT shall report
amounts subject to chapter 4 withholding
by reporting pools on a Form 1042-S if
those amounts are distributed to, or in-
cluded in the distributive share of, direct
beneficiaries or owners of WT that are
nonparticipating FFIs in a chapter 4 re-
porting pool of nonparticipating FFIs.

(D) Chapter 3 Reporting Pools of WT.
WT may elect to perform pool reporting
(PR election) for an amount subject to
chapter 3 withholding that either is not a
withholdable payment or is a withhold-
able payment for which no chapter 4 with-
holding is required and that WT distrib-
utes to, or includes in the distributive
share of, a foreign direct beneficiary or
owner (other than a passthrough benefi-
ciary or owner, withholding foreign part-
nership, or withholding foreign trust). A
separate Form 1042-S shall be filed for
each chapter 3 reporting pool. A chapter 3
reporting pool is a payment of a single
type of income that falls within a partic-
ular withholding rate, chapter 3 exemption
code and, if the payment is a withholdable
payment, a chapter 4 exemption code as
determined on Form 1042-S and its ac-
companying instructions. WT may use a
single chapter 3 pool reporting code (e.g.,

WT-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., WT-withholding rate pool- exempt
organization) must be used. For this pur-
pose, a foreign tax-exempt recipient in-
cludes any organization that is not subject
to chapter 3 withholding and is not liable
to tax in its jurisdiction of residence be-
cause it is a charitable organization, a
pension fund, or a foreign government.
See section 9 of this Agreement for when
a WT may include certain indirect bene-
ficiaries or owners in its chapter 3 report-
ing pools.

If WT has made the PR election pursuant
to this section 6.02(D), WT is not required
to file Forms 1042-S for amounts distrib-
uted to, or included in the distributive
share of, each separate direct beneficiary
or owner for whom such reporting would
otherwise be required. Instead, WT shall
file a separate Form 1042-S for each re-
porting pool. However, see section 7.02 of
this Agreement for the requirement for
WT to provide a Form 1042-S to a ben-
eficiary or owner if requested. Once made,
the PR election is effective for the entire
term of this Agreement beginning on the
effective date of the Agreement and end-
ing on the date of its expiration or termi-
nation under section 10 of the Agreement.
WT must make a new election for each
renewal term of this Agreement. If WT
makes the PR election, WT cannot revoke
it prior to the end of the term for which
WT has made the PR election unless WT
obtains consent from the IRS to revoke
such election. WT may request IRS con-
sent by contacting the IRS at the address
specified in section 11.06 of this Agree-
ment. If WT did not make the PR election
at the time this Agreement was executed,
then WT may make a PR election only by
contacting the IRS at the address specified
in section 11.06 of this Agreement.

Sec. 6.03. Form 3520-A Filing Require-
ment.

If WT is required to file Form 3520-A
and an Owner Statement or Beneficiary
Statement under section 6048 of the Code,
then WT shall file Form 3520-A and file
and furnish any required Owner State-
ments or Beneficiary Statements to U.S.
beneficiaries or owners in accordance
with the instructions for the form. See

section 6.05(D) for a special reporting ob-
ligation of WT with respect to beneficia-
ries not required to be reported by WT on
Form 3520-A.

Sec. 6.04. Retention of Returns. WT
shall retain Forms 1042 for the period of
the applicable statute of limitations on as-
sessments and collection under the Code.
Sec. 6.05. FATCA U.S. Account Report-
ing.

(A) WT that is an FFI. If WT is an FFI,
WT is required to report each U.S. ac-
count (or, in the case of an FFI that is a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI,
each U.S. reportable account) that it main-
tains consistent with its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI. If
WT is a participating FFI or registered
deemed-compliant FFI (other than a re-
porting Model 1 FFI), WT must report its
U.S. accounts on Form 8966 in the time
and manner specified under its FATCA
requirements as a participating FFI or reg-
istered deemed-compliant FFI, except to
the extent WT is reporting under
§ 1.1471-4(d)(5) on Form 1099 with re-
spect to its U.S. accounts. If WT is a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI, WT
must report each U.S. reportable account
on Form 8966 as required under the ap-
plicable Model 1 IGA.

(B) WT that is an NFFE. If WT is an
NFFE, WT shall file Forms 8966 to report
withholdable payments distributed to, or
included in the distributive share of, any
beneficiary or owner 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 with-
holdable payment received by WT. See
§ 1.1471-1(b)(8) for the definition of ben-
eficial owner. WT must report on Form
8966 in accordance with the form and its
accompanying instructions.

instructions. If WT is acting as a sponsor-
ing entity on behalf of a NFFE for chapter
4 purposes, WT is not required to report as
described in this paragraph if WT reports
the NFFE as part of WT's requirements as
a sponsoring entity. See § 1.1472-
1(c)(5)(ii) for the reporting requirements
of a sponsoring entity.

(C) Form 8966 Reporting for Payees that
are NFFEs. WT shall file Form 8966 to
report withholdable payments that WT
distributes to, or includes in the distribu-
tive share of, a passthrough beneficiary or
owner 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 per-
sons that is a specified U.S. person under
an applicable IGA) and that is the benefi-
cial owner of the withholdable payment
received by WT when such substantial
U.S. owner or controlling person is not
reported under section 6.05(A) of this
Agreement. WT must report on Form
8966 in the time and manner provided in
§ 1.1474-1(i)(2). Such report must in-
clude the name of the NFFE that is owned
by a substantial U.S. owner (or controlling
person that is a specified U.S. person); the
name, address, and U.S. TIN of each sub-
stantial U.S. owner (or controlling person
that is a specified U.S. person); the total of
all withholdable payments made to the
NFFE during the calendar year (or report-
able period under the applicable IGA);
and any other information as required by
the form and its accompanying instruc-
tions.

WT is not required to report on Form
8966, however, on a withholdable pay-
ment made to a passthrough beneficiary or
owner that is a participating FFI or regis-
tered deemed-compliant FFI that is allo-
cated to a payee that is a passive NFFE
with one or more substantial U.S. owners
on an FFI withholding statement when the
participating FFI or registered deemed-
compliant FFI includes on the statement
the certification described in § 1.1471-
3(c)(3)(iii)(B)(2)(iv) (certifying that the
FFI is reporting the passive NFFE as a
U.S. account or U.S. reportable account in
accordance with the terms of the FFI
agreement or an applicable IGA), pro-
vided WT does not know or have reason

to know that the certification is incorrect
or unreliable. See § 1.1474-1(i)(2).

(D) Special Reporting Obligation. If WT
is not a participating FFI, a registered
deemed-compliant FFI, or a registered
deemed-compliant Model 1 IGA FFI, and
WT is not required to report with respect
to a U.S. beneficiary of WT on Form
3520-A, then WT must report with re-
spect to such beneficiary on Form 8966 as
required under this section 6.05(D). A
beneficiary for this purpose means a ben-
eficiary that receives a distribution from
WT during the year or that is required to
include an amount in gross income under
sections 652(a) or 662(a) with respect to
WT.

# Section 7. ADJUSTMENTS FOR OVER- AND UNDERWITHHOLDING; REFUNDS

Sec. 7.01. Adjustments for Chapter 3 or
4 Overwithholding by WT. WT may
make an adjustment for amounts paid to
its beneficiaries or owners when WT has
overwithheld under chapter 3 or 4 by ap-
plying either the reimbursement proce-
dure described in section 7.01(A) of this
Agreement or the set-off procedure de-
scribed in section 7.01(B) of this Agree-
ment within the time period prescribed for
those procedures.

(A) Reimbursement Procedure. WT may
repay its beneficiaries or owners for an
amount overwithheld under chapter 3 or 4
and reimburse itself by reducing, by the
amount of tax actually repaid to the ben-
eficiaries or owners, the amount of any
subsequent deposit of tax required to be
made by WT under section 3.05 of this
Agreement. For purposes of this section
7.01(A), an amount that is overwithheld
shall be applied in order of time (i.e.,
sequentially) to each of WT'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 ear-
lier 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 WT with the IRS;

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

(3) WT 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. WT may repay its
beneficiaries or owners 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 WT 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 Form 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. 7.02. Collective Credit or Refund
Procedures for Chapter 3 or 4 Over-
withholding. If WT has made a PR elec-
tion and there has been overwithholding
(as defined in section 2.52 of this Agree-
ment) on amounts paid to WT's direct
beneficiaries or owners during a calendar
year and the amount of overwithholding
has not been recovered under the reim-
bursement or set-off procedures as de-
scribed in section 7.01 of this Agreement,
WT may request a credit or refund of the
total amount overwithheld by following
the procedures of this section 7.02. WT
shall follow the procedures set forth under
sections 6402 and 6414, and the regula-
tions thereunder, to claim the credit or
refund. No credit or refund will be al-
lowed after the expiration of the statutory
period of limitation for refunds under sec-
tion 6511. If there has been overwithhold-
ing and WT does not apply for a collective
refund, it must provide a Form 1042-S for
the payment that was subject to the over-

withholding if requested by the benefi-
ciary or owner receiving the payment.

(A) Payments for which a Collective Re-
fund is Permitted. Except as otherwise
provided in this section 7.02, WT may use
the collective refund procedure of this
section 7.02 with respect to all amounts
subject to chapter 3 or 4 withholding that
WT has withheld under this Agreement.
With respect to amounts withheld under
chapter 3 or 4, WT shall not include in its
collective refund claim any amounts with-
held on payments made to an indirect ben-
eficiary or owner or a direct account
holder of WT that is a passthrough bene-
ficiary or owner. Further, with respect to
amounts withheld under chapter 4, if WT
is a participating FFI or registered
deemed-compliant FFI, WT shall not in-
clude in its collective refund claim any
amounts withheld on payments made to
any beneficiary or owner that is an ac-
count holder described in the FFI agree-
ment or in § 1.1471-4(h)(2).

(B) Requirements for a Collective Refund.
(1) WT may use the collective refund pro-
cedures under this section 7.02 only if WT
has not issued (and will not issue) Forms
1042-S to the beneficiaries or owners that
were subject to overwithholding and for
which a collective refund claim is being
made.

(2) WT must submit, together with its
amended Form 1042 on which it provides
a reconciliation of amounts withheld and a
claim for credit or refund, a statement that
includes the following information and
representations-

(i) The reason(s) for the overwithholding;
(ii) WT deposited the tax for which a
refund is being sought under section 6302
and WT has not applied the reimburse-
ment or set-off procedures of §§ 1.1461-2
and 1.1474-2 to adjust the tax withheld to
which the claim relates;

(iii) WT has repaid or will repay the
amount for which a refund is sought to the
appropriate beneficiaries or owners;

(iv) WT retains a record showing the total
amount of tax withheld, adjustments for
underwithholding, and reimbursements
for overwithholding as it relates to each
beneficiary or owner and also showing the
repayment (if applicable) to such benefi-
ciaries or owners for the amount of tax for
which a refund is being sought;

(v) WT retains valid documentation that

meets the requirements of chapter 3 or 4
(as applicable) to substantiate the amount
of overwithholding with respect to each
beneficiary or owner for which a refund is
being sought; and

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

Sec. 7.03. Adjustments for Chapter 3 or
4 Underwithholding. If WT knows that
an amount should have been withheld un-
der chapter 3 or 4 from a previous pay-
ment made to a beneficiary or owner and
the amount was not withheld, WT may
either withhold from future payments
made pursuant to chapter 3 or chapter 4 to
the same beneficiary or owner or satisfy
the tax from the beneficiary's or owner's
proportionate share of assets over which
WT has control. The additional withhold-
ing or satisfaction of the tax owed de-
scribed in the previous sentence must be
made before the due date (not including
extensions) of the Form 1042 for the cal-
endar year in which the underwithholding
occurred.

Sec. 7.04. Chapter 3 or 4 Underwith-
holding after Form 1042 Filed. If, after a
Form 1042 has been filed for a calendar
year, WT, WT's reviewer, or the IRS de-
termines that WT has underwithheld tax
under chapter 3 or 4 for such year, WT
shall file an amended Form 1042 to report
and pay the underwithheld tax. WT shall
pay the underwithheld tax, the interest due
on the underwithheld tax, and any appli-
cable penalties, at the time of filing the
amended Form 1042. If WT 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 8. COMPLIANCE PROCEDURES

### Sec. 8.01. In General.

(A) In General. WT must adopt a compli-
ance program under the authority of a
responsible officer. WT's compliance pro-
gram must include policies, procedures,
and processes sufficient for WT to satisfy
the documentation, reporting, and with-
holding requirements of this Agreement
and sufficient for the responsible officer of
WT to make the certifications required

under section 8.03 of this Agreement. See
section 2.66 of this Agreement for the
definition of responsible officer. WT must
also perform or arrange for the perfor-
mance of the periodic review described in
section 8.04 of this Agreement to the ex-
tent required by that section. As part of the
responsible officer's certification, WT
must provide to the IRS the factual infor-
mation as required by and referenced in
sections 8.04 and 8.05 of this Agreement
and in the Appendix to this Agreement.
WT must also satisfy the requirements of
section 8.06 of this Agreement with re-
spect to the report of the periodic review
and must comply with the IRS review
referenced in section 8.07 of this Agree-
ment.

(B) Coordination with FATCA Require-
ments as a Participating FFI, Registered
Deemed-Compliant FFI, or Registered
Deemed-Compliant Model 1 IGA FFI. As
a condition for maintaining this Agree-
ment, WT must maintain its chapter 4
status. Therefore, WT must, as part of the
compliance procedures described in this
section 8, determine whether it is compli-
ant with its FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI.

Sec. 8.02. Compliance Program.

(A) Responsible Officer. WT must appoint
an individual as the responsible officer (as
defined in section 2.66 of this Agree-
ment). The responsible officer must be
identified on the QI/WP/WT Application
and Accounts Management System as the
WT's responsible officer, and such person
may, but is not required to, be the same
responsible officer as for purposes of
compliance with WT's FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI. The
responsible officer must establish a com-
pliance program that meets the require-
ments of this section 8.02 and must make
the periodic certifications to the IRS de-
scribed in section 8.03 of this Agreement.
The responsible officer of WT must be the
trustee of WT or an agent of the trustee of
WT with sufficient authority to fulfill the
duties of a responsible officer described in
this section 8.02. The responsible officer
(or a delegate appointed by the responsi-
ble 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 8.07 of
this Agreement. References in this section
8.02 to the responsible officer include a
responsible officer's designee, where ap-
propriate.

(B) Compliance Program. The responsi-
ble officer must establish a program for
WT to comply with the requirements of
this Agreement that includes the follow-
ing:

(1) Written Policies and Procedures. The
responsible officer must ensure the draft-
ing and updating, as necessary, of written
policies and procedures sufficient for WT
to satisfy the documentation, withholding,
reporting, and other obligations of this
Agreement. Such written policies and pro-
cedures must include a process for an em-
ployee of the trustee or an agent of the
trustee of WT to raise issues to the respon-
sible officer that concern WT's compli-
ance with this Agreement.

(2) Training. The responsible officer must
communicate such policies and proce-
dures to persons responsible for obtaining,
reviewing, and retaining a record of doc-
umentation under the requirements of sec-
tion 4 of this Agreement, making distri-
butions and allocations to beneficiaries or
owners on behalf of WT that are subject to
withholding under section 3 of this Agree-
ment, or reporting distributions or alloca-
tions to beneficiaries or owners under sec-
tion 6 of this Agreement.

(3) Systems. The responsible officer must
ensure that systems and processes are in
place that will allow WT to fulfill its ob-
ligations under this Agreement. For exam-
ple, in order to fulfill WT's obligations to
report on Forms 1042-S, 3520-A and
8966 under section 6 of this Agreement,
WT must establish systems for document-
ing beneficiaries or owners and for record-
ing the information with respect to each
such beneficiary or owner that WT is re-
quired to report under that section.

(4) Monitoring of Business Changes. The
responsible officer must monitor business
practices and arrangements that affect
WT's compliance with this Agreement,
including, for example, changes in WT's
beneficiaries or owners that give rise to
documentation, withholding, or reporting
obligations under this Agreement.

(5) Periodic Review. Unless WT receives
a waiver (the requirements of which are
described in section 8.07 of this Agree-
ment), the responsible officer must desig-
nate a reviewer that meets the qualifica-
tions described in section 8.04(A) of this
Agreement to perform the periodic review
described in section 8.05 of this Agree-
ment, to the extent required.

Sec. 8.03. Certification of Internal Con-
trols by Responsible Officer. WT's re-
sponsible officer must make the applica-
ble certification of compliance described
in either Part II.A (Certification of Effec-
tive Internal Controls) or Part II.B (Qual-
ified Certification) of the Appendix to this
Agreement and must disclose any material
failures that occurred during the certifica-
tion period or during any prior period if
the material failure was not disclosed as
part of a prior certification or written dis-
closure made by WT to the IRS. If the
responsible officer has identified an event
of default or a material failure that has not
been corrected as of the date of the certi-
fication, the responsible officer cannot
make the certification in Part II.A (Certi-
fication of Effective Internal Controls)
and must make the certification in Part
II.B (Qualified Certification) of the Ap-
pendix to this Agreement. All WTs must
also complete Parts II.C through II.F of
the Appendix to this Agreement.

The certification of internal controls re-
quired by this section 8.03 applies only to
the internal controls related to WT's com-
pliance with this Agreement and its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI and does not relate to any other
obligations or requirements. In making the
certification required by this section 8.03,
the responsible officer may rely on, in
addition to the results of the periodic re-
view, any reasonable procedures, pro-
cesses, reviews, or certifications made by
other persons that the responsible officer
has determined are necessary in order to
make the certification described in this
section 8.03. If the responsible officer re-

lies on an internal or external review for
this purpose (i.e., for purposes of deter-
mining whether WT has effective internal
controls), the internal or external reviewer
must be independent, as described in sec-
tion 8.04 of this Agreement. The respon-
sible officer must document the proce-
dures, processes, reviews, or certifications
relied upon in making the certification.
WT's responsible officer must make the
certifications of compliance in such man-
ner as the IRS may prescribe.

(A) Partnerships or Trusts to which WT
Applies the Agency Option. Any partner-
ship or trust to which WT applies the
agency option must provide its documen-
tation and other information to WT for
inclusion in WT's periodic review or con-
duct an independent periodic review and
provide a written certification to WT re-
garding its compliance with the require-
ments of the agency agreement. Such cer-
tification must be available to the IRS
upon a request made as part of the review
described in section 8.07 of this Agree-
ment (with a certified translation into Eng-
lish if the certification is not in English).

(B) Material Failures.

(1) Material Failures Defined. A material
failure is generally a failure of WT to
fulfill the requirements of this Agreement
or its FATCA requirements as a partici-
pating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI. For purposes of the
certifications described in Parts II.A and
II.B of the Appendix to this Agreement, a
material failure is limited to the following:
(i) WT's establishing of, for financial
statement purposes, a tax reserve or pro-
vision for a potential future tax liability
related to WT's failure to comply with
this Agreement, including its FATCA re-
quirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI;

(ii) WT's failure to establish written pol-
icies, procedures, or systems sufficient for
the relevant personnel of WT to take ac-
tions consistent with WT's obligations un-
der this Agreement;

(iii) A criminal or civil penalty or sanction
imposed on WT by a regulator or other
governmental authority or agency with
oversight over WT's compliance with the
AML/KYC procedures, if applicable, to
which WT is subject and that is imposed

due to WT's failure to properly identify
beneficiaries or owners under the require-
ments of those procedures; or

(iv) A finding (including a finding noted in
the reviewer's periodic review report de-
scribed in section 8.06 of this Agreement)
that, for one or more years covered by this
Agreement, WT failed to -

(a) Withhold an amount that WT was re-
quired to withhold under chapter 3 or 4 as
required under section 3 of this Agreement;
(b) Make deposits in the time and manner
required by section 3.05 of this Agree-
ment or make adequate deposits to satisfy
its withholding obligations, taking into ac-
count the procedures under section 7 of
this Agreement; or

(c) Report accurately on Forms 1042,
1042-S, 8966(or similar report of U.S.
reportable accounts as required under a
Model 1 IGA), 3520-A, and the Owner
Statements and Beneficiary Statements
that are part of Form 3520-A, as required
under section 6 of this Agreement.

(2) Limitations on Material Failures. A
failure described in section 8.03(B)(1)(iv)
of this Agreement is a material failure
only if the failure was the result of a
deliberate action on the part of WT's
trustee or one or more employees or
agents of WT's trustee to avoid the re-
quirements of this Agreement or WT's
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI with respect to one or more
beneficiaries or owners of WT, or was an
error attributable to a failure of WT to
establish or implement internal controls
necessary for WT to meet the require-
ments of this Agreement. Regardless of
these limitations for the certifications de-
scribed in sections 8.03(A) and (B) of this
Agreement, WT is required to correct a
failure to withhold or deposit tax under
section 3 of this Agreement or to report
under section 6 of this Agreement.

(1) Certification Due Date. For a WT that
uses the last year of the certification pe-
riod for its periodic review, the certifica-
tion is due on or before December 31 of
the calendar year following the end of the
certification period. For a WT that uses a
year other than the last year of the certi-
fication period for its periodic review, the

certification is due on or before July 1 of
the year following the certification period.
(2) Certification Period. The initial certi-
fication period is the period beginning on
the effective date of the WT agreement
and 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 certi-
fication period (including renewals of this
Agreement).

(3) FATCA Certifications. The certifica-
tion period described in section 8.03(C)(2)
of this Agreement may not be the same as
the certification period (if any) applicable
to WT's FATCA requirements as a par-
ticipating FFI or registered deemed-
compliant FFI. WT is required to make
the certification required under its
FATCA requirements as a participating
FFI or registered deemed-compliant FFI
at the time and in the manner specified in
such requirements.

### Sec. 8.04. Periodic Review.

(A) Independent Reviewer. The periodic
review may be performed by an internal
reviewer (such as an internal auditor) that
is an employee or agent of the trustee of
WT (internal reviewer) or a certified pub-
lic accountant, attorney, or third-party
consultant (external reviewer), or any
combination thereof.

(1) Internal Reviewer. WT may designate
an internal reviewer to perform the peri-
odic review (or a portion of the periodic
review) only when the internal reviewer is
competent with respect to the require-
ments of this Agreement. The internal re-
viewer 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, proce-
dures, or results (e.g., the internal re-
viewer reviewing WT's documentation
cannot be part of the team primarily re-
sponsible for collecting and validating
documentation). The results of the peri-
odic review and the internal reviewer's
reporting of such results to the responsible
officer cannot influence or affect the com-
pensation, bonus, employment status, or
employee review of the internal reviewer.
The IRS has the right to request the per-
formance of the periodic review by an
alternative reviewer if the IRS, in its sole
discretion, reasonably believes that the re-

viewer selected by WT was not indepen-
dent, as described in this Agreement, or
did not perform an effective periodic re-
view under this Agreement.

(2) External Reviewer. WT 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 accounting, tax, or regu-
latory requirements (including for assist-
ing clients in determining such compli-
ance). The external reviewer cannot be
reviewing systems, policies, or procedures
or the results thereof that it (or the firm
with which it is affiliated) was involved in
designing, implementing, or maintaining.
The external reviewer must be in good
standing with and comply with any appli-
cable professional standards for maintain-
ing its license as an accountant or attorney
(or other third-party consultant that has
similar professional standards or require-
ments). The external reviewer is not re-
quired to make an attestation or render an
opinion regarding WT's compliance with
this Agreement or WT's compliance with
its FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI, but the reviewer must be able to
perform the periodic review as specified
in section 8.05 of this Agreement. WT
must permit the external reviewer access
to all relevant records of WT for purposes
of performing the review, including infor-
mation regarding specific beneficiaries or
owners. Additionally, the engagement be-
tween the external reviewer and WT must
impose no restrictions on WT's ability to
provide the results of the review to the
IRS. However, the external reviewer is
not required to divulge the identity of
WT's foreign beneficiaries or owners to
the IRS, except as otherwise required un-
der WT's FATCA requirements as a
participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. WT 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. 8.05. Scope and Timing of Review.
The responsible officer of WT must re-

quire the reviewer to review WT's docu-
mentation, withholding, reporting, and
other obligations under this Agreement
and its FATCA requirements as a partic-
ipating FFI, registered deemed-compliant
FFI, or registered deemed-compliant Model
1 IGA FFI, and identify deficiencies in
meeting these obligations. To the extent
WT applies the joint account option with
respect to another partnership or trust as
described in section 9.01 of this Agree-
ment or acts as a withholding foreign trust
for any indirect beneficiaries or owners as
described in section 9.03 of this Agree-
ment, the review must include such indi-
rect partners, beneficiaries, or owners in
addition to WT's direct beneficiaries or
owners. In addition, if WT applies the
agency option to a partnership or trust as
described in section 9.02 of this Agree-
ment, the review must include the part-
ners, beneficiaries, or owners of such part-
nership or trust unless the partnership or
trust conducts its own review in accor-
dance with this section 8 of this Agree-
ment and provides the responsible officer
of WT with the report documenting the
results of such review as described in sec-
tion 8.06 of this Agreement. Unless oth-
erwise approved by the IRS, the review
must include the steps described in sec-
tions 8.05(A) through (D) of this Agree-
ment. WT is required to arrange for the
performance of one review for the certifi-
cation period to evaluate WT's documen-
tation, withholding, and reporting prac-
tices. The review may be conducted for
any calendar year covered by the certifi-
cation period. WT 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 8.04 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 WT sub-
mits, 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
11.06 of this Agreement.

If WT has more than 60 beneficiaries or
owners for which WT acts for the year of
the periodic review, WT's reviewer may
use statistical sampling procedures for the

periodic review if the reviewer applies the
principles set forth in Appendix II to the
QI Agreement in Revenue Procedure
2017-15, 2017-03 I.R.B. 437.

If the reviewer determines that underwith-
holding has occurred, WT shall pay any
amount determined and report both the
underwithholding determined by the re-
view and any amount of underwithholding
that was cured following the review by
obtaining the documentation required to
support reduced withholding by WT
(without regard to projection if statistical
sampling is used for the review). WT must
also notify the IRS Foreign Intermediaries
Program at the address provided in section
11.06 of this Agreement of the underwith-
holding discovered as a result of the re-
view within 30 days of the completion of
the review.

(A) Documentation. The reviewer must-
(1) Review information contained in doc-
umentation obtained for WT's beneficia-
ries or owners and any correspondence or
memoranda associated with the beneficia-
ries or owners (the beneficiaries' or own-
ers' files) to ensure that WT obtained doc-
umentation that meets the requirements
described in section 4 of this Agreement
(including the treaty statements and limi-
tation on benefits information required by
section 4.03(B) of this Agreement for
partners making treaty claims);

(2) Review information contained in the
beneficiaries' or owners' files to deter-
mine if the documentation validity stan-
dards of section 4.10 of this Agreement
have been met. For example, the reviewer
must verify that WT is withholding at the
correct rate after any change in circum-
stances (e.g., a change of address to a U.S.
address or change of account holder status
from foreign to U.S. or change of account
holder status from foreign to U.S. or a
change in chapter 4 status from participat-
ing FFI to nonparticipating FFI); and

(3) Review WT's beneficiaries' or own-
ers' files to ensure that WT is obtaining,
reviewing, and maintaining documenta-
tion in accordance with its FATCA re-
quirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI.

(B) Withholding Responsibilities. The re-
viewer must-

(1) Perform test checks of WT's direct
beneficiaries or owners that are recalci-

trant account holders (if applicable) and
nonparticipating FFIs to verify that WT is
withholding as required under chapter 4;
(2) Perform test checks of foreign benefi-
ciaries or owners for which no withhold-
ing is required under chapter 4 based on
the beneficiary's or owner's chapter 4 sta-
tus to verify that WT withheld the proper
amounts; and

(3) Verify that amounts withheld by WT
were timely deposited in accordance with
section 3.05 of this Agreement.

(i) Reviewing copies of Forms 1042-S
received from withholding agents for rec-
onciling amounts received by WT with
the amounts distributed to, or included in
the distributive share of, WT's beneficia-
ries or owners;

(ii) Reviewing account statements and
correspondence from withholding agents;
(iii) Determining that adjustments to the
amount of tax shown on Form 1042 (and
any claim by WT for refund or credit)
properly reflect the adjustments to with-
holding made by WT using the reimburse-
ment or set-off procedures under section 7
of this Agreement and that the adjust-
ments are supported by sufficient docu-
mentation;

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

(v) In the case of collective credits or
refunds, reviewing the statements attached
to the amended Forms 1042 filed to claim
a collective credit or refund, determine
whether those forms are accurate, and-
(a) Determining the causes of any over-
withholding reported and ensure WT did
not issue Forms 1042-S to beneficiaries or
owners that were included as part of its
collective credit or refund claim;

(b) Determining that WT repaid the ap-
propriate beneficiaries or owners and that
the amount of the claim is accurate and

supported by adequate documentation for
reducing the rate of withholding; and

(c) Determining that WT did not include
payments made to a beneficiary or owner
described in section 7.02(A) of this
Agreement or a partnership or trust de-
scribed in section 9.01 of this Agreement.
(2) Obtain copies of original and amended
Forms 1042-S, 3520-A, and the Owner
Statements and Beneficiary Statements
filed by WT together with the work papers
used to prepare those forms and determine
whether the amounts reported on those
forms are accurate by-

(i) Reviewing the Forms 1042-S received
from withholding agents;

(ii) Reviewing the Form 3520-A, if re-
quired, and if no Form 3520-A was re-
quired to be filed, determining whether the
exemption from filing was properly ap-
plied;

(iii) Reviewing Owner Statements and
Beneficiary Statements issued by WT to
beneficiaries or owners, if any;

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

(v) Determining, in any case in which WT
utilized the reimbursement or set-off pro-
cedure, that WT satisfied the requirements
of section 7 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
Form 8966 (or, if WT is a reporting Model
1 FFI, any analogous forms used for re-
porting account information pursuant to
an applicable Model 1 IGA), and deter-
mine whether the amounts of income and
other information reported on Form and
8966 are accurate by-

(i) Reviewing the U.S. beneficiaries and
owners of WT (including beneficiaries
holding U.S. accounts (or U.S. reportable
accounts)) to determine-

(a) That such accounts were reported on
Form 8966 (or, if WT is a reporting Model
1 FFI, any analogous forms used for re-
porting account information pursuant to
an applicable Model 1 IGA) in accordance
with WT's FATCA requirements as a par-
ticipating FFI, registered deemed-

compliant FFI, or registered deemed-
compliant Model 1 IGA FFI; and

(b) That U.S. beneficiaries otherwise re-
quired to be reported on Form 8966 (or, if
WT is a reporting Model 1 FFI, any anal-
ogous forms used for reporting account
information pursuant to an applicable
Model 1 IGA) under section 6.05(D) of
this Agreement are so reported;

(ii) If WT is an NFFE, confirming that any
direct beneficiaries or owners that are pas-
sive NFFEs with one or more substantial
U.S. owners were reported in accordance
with § 1.1472-1(c)(3);

(iii) Confirming with respect to any pass-
through beneficiary or owner that pro-
vides 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 6.05(C)
of this Agreement;

(iv) Reviewing the documentation pro-
vided by a partnership or trust to which
WT applied the agency option, confirming
that WT reported on Form 8966 (or, if WT
is a reporting Model 1 FFI, any analogous
forms used for reporting account informa-
tion pursuant to an applicable Model 1
IGA) to the extent required under section
9 of this Agreement; and

(v) Reviewing work papers used to pre-
pare these forms.

### Sec. 8.06. 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 WT and must be available to the IRS
upon request (with a certified translation
into English if the report is not in Eng-
lish). The report must describe the scope
of the review and the actions performed to
satisfy each requirement of section
8.05(A) through (D). The report may in-
clude 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 re-
view report should form the basis for the
factual information provided by WT that

is set forth in the Appendix to this Agree-
ment.

In addition to the findings of section 8.05
of this Agreement, the periodic review
report must also include details regarding
the documentation and tax deposit and
payment failures identified by the re-
viewer but then cured before the periodic
review report is finalized. While the cur-
ing of inadequate documentation is per-
missible, the factual information reported
(as set forth in the Appendix to this
Agreement) should report the results of
the review as it was performed and should
not reflect the results after curing. Any
curing process should not delay certifica-
tion of internal controls or factual infor-
mation required in the Appendix 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
beneficiaries or owners with respect to
which the reviewer determined that under-
withholding had occurred, the number of
beneficiaries or owners for which curative
documentation was obtained, and a re-
vised calculation of the underwithholding.
(B) Partnership or Trust to which WT
Applies the Agency Option. Any partner-
ship or trust to which WT applies the
agency option and that does not provide
documentation and other information to
WT for inclusion in WT's periodic review
described in section 8.04 of this Agree-
ment must conduct an independent peri-
odic review in accordance with the com-
pliance procedures described in section
8.05 of this Agreement. The performance
results of the periodic review must be
documented in a written report addressed
to the responsible officer of WT and must
be available to the IRS upon request (with
a certified translation into English if the
certification is not in English).

(C) Retention of Report and Certifica-
tions. The report and certifications de-
scribed in this section 8.06 must be re-
tained by WT for as long as this
Agreement is in effect (including renew-
als of this Agreement).

Sec. 8.07. Waiver of Periodic Review
Requirement.

(A) In General. A WT that is an FFI that
meets the requirements of section 8.07(B)
of this Agreement may apply for a waiver
of the periodic review requirement. The

waiver application is set forth in Part III of
the Appendix to this Agreement. WT must
include the information of any partnership
or trust to which WT applies the agency
option in its waiver application. WT must
request a waiver under this section 8.07 at
the time the responsible officer makes the
certification described in section 8.03 of
this Agreement. WT's request for such a
waiver must be approved by the IRS, and
waiver requests are not approved automat-
ically. If WT's request for a waiver is
approved, such approval is only to waive
WT's obligations under sections 8.04 and
8.05 of this Agreement, and WT is still
required to make the certification de-
scribed in section 8.03 of this Agreement.
The waiver does not preclude the IRS
from requesting information or conduct-
ing a correspondence review as described
in section 8.08 of this Agreement. WT
must apply for a waiver for each certifi-
cation period for which a waiver is re-
quested.

(B) Eligibility. WT is eligible to apply for
a waiver of the periodic review require-
ment if it meets the following require-
ments-

(1) WT must be an FFI;

(2) For each calendar year covered by the
certification period, the reportable amounts
received by WT cannot exceed $1 million;
(3) WT must have timely filed its Forms
1042, 1042-S, and 8966 (or the reporting
required under an applicable IGA), and
3520-A, as applicable, for all years (fiscal
or calendar) in the certification period;

(4) WT must have made all periodic cer-
tifications and reviews required by sec-
tions 8.02 and 8.03 of this Agreement for
each certification period, as well as any
certifications required pursuant to WT's
FATCA requirements as a participating
FFI or registered deemed-compliant FFI;
and

(5) WT must make the certification of
effective internal controls described in
Part II.A of the Appendix to this Agree-
ment for the certification period for which
WT is applying for a waiver of the peri-
odic review.

(C) Documentation Required with Waiver
Application. When applying for a waiver
under this section 8.07, WT must include
the information described in Part III.B of
the Appendix to this Agreement using the
most recent calendar year in the certifica-

tion period for which filing is due and
reporting such results without any curing
or remediation.

(D) Approval. If WT's request for a
waiver of the periodic review requirement
is approved, the IRS will notify WT. If
WT requests a waiver but such request is
not approved, WT will be granted a six
month extension from the date of denial of
the waiver to complete the periodic re-
view under sections 8.04 and 8.05 of this
Agreement. Such extension will not be
granted if WT has made the request for
waiver in bad faith.

### Sec. 8.08. IRS Review.

(A) In General. Based upon the certifica-
tions made by the responsible officer and
disclosure of material failures, the infor-
mation reported on Forms 1042, 1042-S,
8966, 3520-A and the Owner Statements
and Beneficiary Statements filed with the
IRS during the certification period, or oth-
erwise at the IRS's discretion for compli-
ance purposes, the IRS may initiate re-
quests of WT under this section 8.08. The
IRS may request remediation or the con-
duct of a limited periodic review earlier
than the time period provided in this sec-
tion if, based on the information described
above, the IRS identifies, in its discretion,
a presence of factors indicating systemic
or significant compliance failures by WT.
The IRS may also request that WT desig-
nate a replacement responsible officer if
WT's responsible officer has not complied
with its responsibilities (including re-
sponding to requests by the IRS for addi-
tional information) or the IRS has infor-
mation 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 WT a copy of
the results of WT's periodic review for
any prior certification period or the peri-
odic review report of any partnership or
trust to which WT applied the agency
option during the current certification pe-
riod (with a certified translation into Eng-
lish if the report is not in English). WT 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 re-
view. In such a review, the IRS will con-

tact the responsible officer of WT in writ-
ing and request information about WT's
compliance with this Agreement or the
compliance of a partnership or trust to
which WT applied the agency option, in-
cluding, for example, information about
documentation, withholding, or reporting
processes, its periodic review, and infor-
mation about any material failures that
were disclosed to the IRS (including re-
mediation plans). The IRS may request
phone or video interviews with relevant
personnel of WT or a partnership or trust
to which WT applied the agency option as
part of such review. WT is required to
respond within a reasonable period of
time to any such requests.

(D) Additional Review Procedures. In
limited circumstances, the IRS may direct
WT or any partnership or trust described
in section 9.02 of this Agreement to which
WT applies the agency option to perform
additional, specified review procedures.
The IRS reserves the right to require WT
or a partnership or trust to which WT
applied the agency option to engage an
external reviewer to perform the addi-
tional review procedures regardless of
whether such reviewer performed the pe-
riodic review. The IRS will provide the
responsible officer of WT with a written
plan describing the additional review pro-
cedures and will provide a period of not
more than 120 days within which the WT
must provide to the IRS a report covering
the reviewer's findings.

## Section 9. CERTAIN PARTNERSHIPS AND TRUSTS

### Sec. 9.01. Joint Account Treatment for Certain Partnerships and Trusts.

(A) In General. WT may enter an agree-
ment with a nonwithholding foreign part-
nership or nonwithholding foreign trust
that is either a simple or grantor trust
described in this section 9.01(A) to apply
the simplified joint account documenta-
tion, reporting, and withholding proce-
dures provided in section 9.01(B) of this
Agreement. WT and the partnership or
trust that apply this section 9.01 to any
calendar year must apply these rules to the
calendar year in its entirety. WT and the
partnership or trust may not apply this
section 9.01 to any calendar year in which
the partnership or trust has failed to make
available to WT or WT's reviewer the

records described in section 9.01(A)(5) 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 WT. If
the partnership or trust has failed to make
these records available within the 90-day
period, or if WT and the partnership or
trust fail to comply with any other require-
ments of this section 9.01, WT must apply
the provisions of §§ 1.1441-1 and
1.1441-5 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 7.03 of this Agreement, and
cannot apply this section 9.01 to subse-
quent calendar years. WT and the partner-
ship or trust that apply this section 9.01 to
any calendar year are not required to ap-
ply this section 9.01 to subsequent calen-
dar years.

A partnership or trust is described in this
section 9.01(A) if the following condi-
tions are met.

(1) The partnership or trust has a chapter 4
status as a certified deemed-compliant
FFI, an owner-documented FFI with re-
spect to WT, an exempt beneficial owner,
or an NFFE, and has provided WT with a
certification that it has maintained such
chapter 4 status at all times during each
certification period;

(2) The partnership or trust is a direct
beneficiary or owner of WT;

(3) None of the partnership's or trust's
partners, beneficiaries, or owners is a
flow-through entity or intermediary;

(5) The partnership or trust agrees to make
available upon request to WT and WT's
reviewer for purposes of WT's periodic
review under section 8 of this Agreement
(including to respond to IRS inquiries re-
garding its compliance review) records
that establish that the partnership or trust
has provided WT with documentation for
purposes of chapters 3 and 4 for all of its
partners, beneficiaries, or owners.

(B) Modification of Obligations for WT.

(1) WT may rely on a valid Form
W-8IMY provided by the partnership or
trust and may rely on a withholding state-
ment 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
and, for a withholdable payment made to
a partner, beneficiary, or owner that is an
entity, documentation required under
§ 1.1471-3(d) to establish such partner's,
beneficiary's, or owner's chapter 4 status.
The withholding statement, however,
need not provide any allocation informa-
tion.

(2) WT must treat amounts distributed to,
or included in the distributive share of, the
partnership or trust as allocated solely to a
partner, beneficiary, or owner that is sub-
ject to the highest rate of withholding un-
der chapter 3 and must withhold at that
rate.

(3) WT may pool report amounts distrib-
uted to, or included in the distributive
share of, the partnership's or trust's direct
partners, beneficiaries, or owners in WT's
chapter 3 reporting pools on Form 1042-S
as described in section 6.02(D) of this
Agreement.

(4) After WT has withheld in accordance
with section 9.01(B)(2) of this Agree-
ment, it may file a separate Form 1042-S
for any partner, beneficiary, or owner who
requests that it do so. If WT issues a
separate Form 1042-S for any partner,
beneficiary, or owner, it cannot include
such partner, beneficiary, or owner in its
chapter 3 reporting pool. If WT has al-
ready 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. WT may file a
separate Form 1042-S for a partner, ben-
eficiary, 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 to make available to
WT or WT's reviewer the records that
substantiate the allocation information in-
cluded in its withholding statement.

(5) WT may not include any amounts dis-
tributed to, or included in the distributive
share of, a partnership or trust to which
WT is applying the rules of this section
9.01 in any collective refund claim made
under section 7.02 of this Agreement.

### Sec. 9.02. Agency Option for Certain Partnerships and Trusts.

(A) In General. WT may enter an agree-
ment with a nonwithholding foreign part-
nership or nonwithholding foreign trust
that is either a simple or grantor trust
described in section 9.02(A) of this
Agreement under which the partnership or
trust agrees to act as an agent of WT with
respect to its partners, beneficiaries, or
owners, and, as WT's agent, to apply the
provisions of the WT agreement to the
partners, beneficiaries, or owners. By en-
tering into an agreement with a partner-
ship or trust as described in this section
9.02, WT is not assigning its liability for
the performance of any of its obligations
under the WT agreement. WT and the
partnership or trust to which WT applies
the rules of this section 9.02 are jointly
and severally liable for any tax, penalties,
and interest that may result from the fail-
ure of the partnership or trust to meet any
of the obligations imposed by its agree-
ment with WT. WT and the partnership or
trust that applies the agency option to any
calendar year must apply these rules to the
calendar year in its entirety. Generally,
WT and the partnership or trust that apply
the agency option to any calendar year are
not required to apply the agency option to
subsequent calendar years. If, however,
WT withholds and reports any adjust-
ments required by corrected information
in a subsequent calendar year under sec-
tion 9.02(B)(2) of this Agreement, WT
must apply the agency option to that cal-
endar year in its entirety.

If the partnership or trust is included in
WT's periodic review of compliance as
described in section 9.02(A)(6) of this
Agreement, WT and the partnership or
trust may not apply the agency option to
any calendar year in which the partnership
or trust has failed to make available to WT
or WT's reviewer the records described in
this section 9.02 within 90 days after these
records are requested and the partnership
or trust must waive any legal prohibitions
against providing such records to the WT.
If, for any calendar year, the partnership

or trust has failed to make these records
available within the 90-day period, or if
WT and the partnership or trust fail to
comply with any other requirement of this
section 9.02, WT must apply §§ 1.1441-1
and 1.1441-5 to the partnership or trust as
a nonwithholding foreign partnership or
nonwithholding foreign trust, correct its
withholding for the period in which the
failure occurred in accordance with sec-
tion 7.03 of this Agreement, and cannot
apply this section 9.02 to subsequent cal-
endar years.

A partnership or trust is described in this
section 9.02(A) if the following condi-
tions are met:

(1) The partnership or trust is either a
direct beneficiary or owner of WT or an
indirect beneficiary or owner of WT that
is a direct partner, beneficiary, or owner of
a partnership or trust to which WT also
applies this section 9.02.

(2) The partnership or trust has a chapter 4
status as a certified deemed-compliant
FFI, an owner-documented FFI with re-
spect to WT, an NFFE, or an exempt
beneficial owner, and has provided WT
with a certification that it has maintained
such chapter 4 status during each certifi-
cation period.

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

(4) WT may not act as a withholding
foreign trust with respect to any direct or
indirect beneficiary or owner of the part-
nership or trust that is a U.S. non-exempt
recipient, unless the U.S. non-exempt re-
cipient is an owner of an owner-
documented FFI or passive NFFE to
which WT applies the agency option and
is included in WT's U.S. payee pool (de-
scribed in section 6.02(C) of this Agree-
ment).

(5) The partnership or trust agrees to com-
ply with the documentation requirements
described in section 4 of this Agreement.
(6) The partnership or trust agrees, to the
extent necessary for WT to satisfy its
compliance obligations, either to (i) con-
duct an independent periodic review in
accordance with the procedures described
in section 8.05 of this Agreement and

provide WT with the certification required
under section 8.03 of this Agreement for
each certification period in order to allow
the responsible officer of WT to make a
certification to the IRS regarding the part-
nership's or trust's compliance with this
section 9.02, or (ii) provide WT with doc-
umentation or other information for inclu-
sion in WT's periodic review described in
section 8.04 of this Agreement. The part-
nership or trust must also agree to respond
(either directly or through WT) to IRS
inquiries regarding its compliance review,
as described in section 8.08 of this Agree-
ment, including, if applicable, providing
the WT and the IRS with the results of the
reviewer's testing of partners, beneficia-
ries, or owners described in section 8.06
of this Agreement.

(B) Modification of Obligations for WT.

(1) WT may rely on a valid Form
W-8IMY provided by the partnership or
trust, together with a withholding state-
ment 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
WT to fulfill its withholding, reporting,
and filing obligations under this Agree-
ment. For a withholdable payment, the
withholding statement may include a
chapter 4 withholding rate pool (as de-
fined in § 1.1471-1(b)(20)) of nonpartic-
ipating FFIs for payments of amounts sub-
ject to chapter 4 withholding. The
withholding statement may also include
chapter 3 withholding rate pools for part-
ners, beneficiaries, or owners that are not
intermediaries, flow-through entities (or
persons holding interests in the partner-
ship or trust through such entities), U.S.
non-exempt recipients, or passive NFFEs
with one or more substantial U.S. owners
(or one or more controlling persons that is
a specified U.S. person under an applica-
ble Model 1 or Model 2 IGA), and the
partnership or trust need not provide to
WT documentation for these partners,
beneficiaries, or owners. Notwithstanding
the preceding sentences of this section
9.02(B)(1), the partnership or trust is re-
quired to disclose to WT any partner or
interest holder that is a passive NFFE with
substantial U.S. owners (or controlling
persons that are specified U.S. persons
under an applicable IGA) or that is a U.S.
non-exempt recipient as well as the ac-

count holders of any nonqualified inter-
mediary or interest holders in a flow-
through entity which has an interest in the
partnership or trust, and provide all of the
documentation and other information re-
lating to those account holders and inter-
est holders that is required for WT or
another withholding agent to report the
payments made to those account holders
and interest holders to the extent required
by section 6 of this Agreement.

(2) Timing of Withholding. WT must with-
hold on the date an amount is distributed
to, or included in the distributive share of,
the partnership or trust based on a withhold-
ing statement provided by the partnership or
trust on which WT is permitted to rely. The
amount allocated to each partner, benefi-
ciary, or owner in the withholding statement
may be based on a reasonable estimate of
the partner's, beneficiary's, or owner's dis-
tributive share of income subject to with-
holding for the year. The partnership or trust
must correct the estimated allocations to re-
flect the partner's, beneficiary's, or owner's
actual distributive share and must provide
this corrected information to WT on the
earlier of the date that the statement required
under section 6031(b) (i.e., Schedule K-1)
or the Owner Statement or Beneficiary
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 state-
ment). If that date is after the due date (with-
out regard to extensions) for WT's Forms
1042 and 1042-S for the calendar year, WT
may withhold and report any adjustments
required by correcting the information in the
following calendar year.

(3) Payments Reportable under Chapters
3 and 4. WT 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:

(i) For a direct partner, beneficiary, or
owner of the partnership or trust that is a
nonparticipating FFI, WT shall report an
amount subject to withholding using the
chapter 4 reporting pool described in sec-
tion 6.02(C) of this Agreement with the
partnership or trust reported as the recip-
ient.

(ii) 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 en-
tity described below), WT shall report an
amount subject to chapter 3 withholding
using the chapter 3 reporting pools as de-
scribed in section 6.02(D) of this Agree-
ment with the partnership or trust reported
as the recipient.

(iii) For a direct or indirect partner, ben-
eficiary, or owner of the partnership or
trust that is a nonqualified intermediary or
flow-through entity, WT shall report pay-
ments of amounts subject to chapter 4
withholding included in a chapter 4 with-
holding rate pool of nonparticipating FFIs
using the chapter 4 reporting pool for such
partner, beneficiary, or owner with the
nonqualified intermediary or flow-through
entity reported as the recipient, and WT
shall report payments of amounts subject
to chapter 3 withholding that are not with-
holdable payments or are withholdable
payments for which no chapter 4 with-
holding is required by reporting the pay-
ments as made to specific recipients as
described in 6.02(B) of this Agreement.
(4) Form 8966 Reporting Requirements. If
WT is an FFI and if the partnership or
trust is a U.S. account (or U.S. reportable
account), WT is required to report the
partnership or trust consistent with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI. The agreement between WT and
the partnership or trust must also provide
that WT shall report withholdable pay-
ments that the partnership or trust distrib-
utes to, or includes in the distributive
share of, a partner, beneficiary, or owner
that is an NFFE (other than an excepted
NFFE) with one or more substantial U.S.
owners (or one or more controlling per-
sons that is a specified U.S. person under
an applicable IGA) and is the beneficial
owner of the withholdable payment re-
ceived by the partnership or trust. WT
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 that is a
specified U.S. person); the name, address,
and U.S. TIN of each substantial U.S.
owner (or controlling person that is a
specified U.S. person); 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.

(C) Other Requirements of Agency Agree-
ment. WT shall require the partnership or
trust to which it applies the agency option
described in this section 9.02 to provide
WT with all the information necessary for
WT to meet its obligations under this
Agreement. No provisions shall be con-
tained in the agreement between WT and
the partnership or trust that preclude, and
no provisions of this Agreement shall be
construed to preclude, the partnership's or
trust's joint and several liability for tax,
penalties, and interest under chapters 3
and 4 to the extent that underwithholding,
penalties, and interest have not been col-
lected from WT and the underwithholding
or failure to report amounts correctly on
Forms 1042, 1042-S or 8966, is due to the
partnership's or trust's failure to properly
perform its obligations under its agree-
ment with WT. Nothing in the agreement
between WT and the partnership or trust
shall be construed to limit the partner-
ship's or trust's requirements under chap-
ter 4 as a certified deemed-compliant FFI,
an owner-documented FFI with respect to
WT, an NFFE, or an exempt beneficial
owner. Further, nothing in the agreement
between WT and the partnership or trust
shall permit the partnership or trust to
assume primary chapters 3 and 4 with-
holding responsibility.

Sec. 9.03. Indirect Beneficiaries or
Owners of WT.

(A) General Requirements. WT may act as
a withholding foreign trust for reportable
amounts distributed to, or included in the
distributive share of, passthrough benefi-
ciaries or owners and indirect beneficia-
ries or owners if such indirect beneficiary
or owner is not a U.S. non-exempt recip-
ient. Notwithstanding the preceding sen-
tence, WT may act as a withholding for-
eign trust with respect to an indirect
beneficiary or owner that is a U.S. non-
exempt recipient if the indirect beneficiary
or owner is included in a passthrough ben-
eficiary's or owner's chapter 4 withhold-
ing rate pool of recalcitrant account hold-
ers or U.S. payees. WT does not need to
use the agency option described in section
9.02 of this Agreement or make the

pooled reporting election described in sec-
tion 6.02(D) of this Agreement to apply
the procedures described in this section
9.03.

(B) Modification of Obligations for WT.
(1) Except to the extent described in this
section 9.03(B), WT need not forward the
documentation and the withholding state-
ment of the passthrough beneficiary or
owner and indirect beneficiary or owner to
WT's withholding agent;

(2) WT must provide its withholding
agent with documentation and other infor-
mation from any passthrough beneficiary
or owner whose direct or indirect benefi-
ciary or owner is a U.S. non-exempt re-
cipient (unless such U.S. non-exempt re-
cipient is included in a chapter 4
withholding rate pool of recalcitrant ac-
count holders or U.S. payees);

(3) WT will assume primary chapters 3
and 4 withholding responsibility as de-
scribed in section 3 of this Agreement and
must report on its indirect beneficiaries or
owners on a specific payee basis on Form
1042-S (except to the extent such indirect
beneficiaries or owners are included in a
passthrough beneficiary's or owner's
chapter 4 withholding rate pool or a QI's
withholding rate pool) as described in sec-
tion 6.02(B) of this Agreement, regardless
of whether WT made a PR election for its
direct beneficiaries or owners under sec-
tion 6.02(D) of this Agreement; and

(4) WT must include any passthrough
beneficiary or owner and indirect benefi-
ciary or owner for which it acts as a with-
holding foreign trust in its periodic review
as described in section 8.05 of this Agree-
ment.

(C) Documentation from Passthrough
Beneficiary or Owner. WT agrees to use
its best efforts to obtain from a pass-
through beneficiary or owner the docu-
mentation of an indirect beneficiary or
owner for which WT acts as a withholding
foreign trust. Unless WT can reliably as-
sociate an amount distributed to, or in-
cluded in the distributive share of, any
passthrough beneficiary or owner with
valid documentation from such benefi-
ciary or owner within the meaning of
§ 1.1441-1(b)(2)(vii) and, for a withhold-
able payment, § 1.1471-3(c), WT shall
apply the presumption rules described in
§§ 1.1441-1(b)(3), 1.1441-4(a), 1.1441-
5(d) and (e)(6), 1.1441-9(b)(3), and

1.6049-5(d) and for a withholdable pay-
ment made to an entity, § 1.1471-3(f) or,
if WT is an FFI, its FATCA requirements
as a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI. Generally,
WT can reliably associate an amount with
documentation provided by a passthrough
beneficiary or owner if WT obtains-

(1) A valid Form W-8IMY provided by
the passthrough beneficiary or owner that,
if the payment is a withholdable payment,
establishes the chapter 4 status of the
passthrough beneficiary or owner; and

(2) If the payment is a withholdable pay-
ment, a withholding statement that meets
the requirements of § 1.1471-
3(c)(3)(iii)(B) that includes the account
holders or interest holders of the pass-
through beneficiary or owner in chapter 4
withholding rate pools to the extent per-
mitted, and, for an amount subject to
chapter 3 withholding that is not a with-
holdable payment or is a withholdable
payment for which chapter 4 withholding
is not required, valid documentation de-
scribed in section 4 of this Agreement
provided by account holders or interest
holders of the passthrough beneficiary
or owner that are not themselves non-
qualified intermediaries or flow-through
entities.

WT may not reduce the rate of withhold-
ing with respect to an indirect beneficiary
or owner that is a foreign beneficial owner
for which it acts as a WT unless WT can
reliably associate the payment with valid
documentation that establishes the indi-
rect beneficiary's or owner's entitlement
to a reduced rate of withholding under
chapter 3 and, in the case of a withhold-
able payment, establishes that chapter 4
withholding does not apply.

(D) Timing of Withholding. WT must
withhold on the date an amount is distrib-
uted to, or included in the distributive
share of, the passthrough beneficiary or
owner based on a withholding statement
provided by the passthrough beneficiary
or owner on which WT is permitted to
rely. The amount allocated to each indi-
rect beneficiary or owner in the withhold-
ing statement may be based on a reason-
able estimate of the indirect beneficiary's
or owner's distributive share of income
subject to withholding for the year. The
passthrough beneficiary or owner must

agree to correct the estimated allocations
to reflect the indirect beneficiary's or
owner's actual distributive share and must
provide this corrected information to WT,
on the earlier of the date that the statement
required under section 6048(b) of the
Code is mailed or otherwise provided to
the indirect beneficiary or owner or the
due date for furnishing the statement
(whether or not the passthrough benefi-
ciary or owner is required to prepare and
furnish the statement). If that date is after
the due date (without regard to exten-
sions) for WT's Forms 1042 and 1042-S
for the calendar year, WT may withhold
and report any adjustments required by
correcting the information in the follow-
ing calendar year.

(E) Form 8966 Reporting Requirements.
If WT is an FFI and if the passthrough
beneficiary or owner is a U.S. account (or
U.S. reportable account), WT is required
to report the partnership or trust consistent
with its FATCA requirements as a partic-
ipating FFI, registered deemed-compliant
FFI, or registered deemed-compliant
Model 1 IGA FFI. WT shall also report
withholdable payments that WT distrib-
utes to, or includes in the distributive
share of, a passthrough beneficiary or
owner if an account holder or interest
holder of such passthrough beneficiary or
owner is an NFFE (other than an excepted
NFFE) with one or more substantial U.S.
owners (or one or more controlling per-
sons that is a specified U.S. person under
an applicable IGA) and if the NFFE is the
beneficial owner of the withholdable pay-
ment received by the passthrough benefi-
ciary or owner. WT must report on Form
8966 in the time and manner provided in
§ 1.1474-1(i)(2). Such report must in-
clude the name of the NFFE that is owned
by a substantial U.S. owner (or controlling
person that is a specified U.S. person); the
name, address, and U.S. TIN of each sub-
stantial U.S. owner (or controlling person
that is a specified U.S. person); the total of
all withholdable payments made to the
NFFE during the calendar year (or report-
able period under the applicable IGA);
and any other information as required by
the form and its accompanying instruc-
tions. WT is not required to report, how-
ever, to the extent permitted under
§ 1.1474-1(i)(2), on a payment made to a
participating FFI or registered deemed-

compliant FFI if the passthrough benefi-
ciary or owner certifies on its withholding
statement that it is reporting the account
holder (or interest holder) as a U.S. ac-
count pursuant to its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI.

# Section 10. EXPIRATION, TERMINATION AND DEFAULT

Sec. 10.01. Term of Agreement. This
Agreement begins on the effective date, as
described in section 12 of this Agreement,
and expires upon the earlier of the date
WT terminates under the trust instrument
or the end of the sixth full calendar year
the Agreement is in effect, unless termi-
nated under section 10.02 or 10.03 of this
Agreement. This Agreement may be re-
newed for additional terms as provided in
section 10.07 of this Agreement.

Sec. 10.02. Termination of Agreement
(In General).

(A) In General. Except as otherwise pro-
vided in section 10.03 of this Agreement,
this Agreement may be terminated by ei-
ther the IRS or WT prior to the end of its
term by delivery of a notice, in accordance
with section 11.06 of this Agreement, of
termination to the other party. The IRS,
however, shall not terminate this Agree-
ment unless there has been a significant
change in circumstances, as defined in
section 10.04 of this Agreement, or an
event of default has occurred, as defined
in section 10.05 of this Agreement, and
the IRS determines, in its sole discretion,
that the significant change in circum-
stances or the event of default warrants
termination of this Agreement. The IRS
shall not terminate this Agreement if WT
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 WT that an event of default
has occurred and that the IRS intends to
terminate the Agreement unless WT cures
the default or establishes that no event of
default has occurred. A notice of termina-
tion sent by either party shall take effect
on the date specified in the notice, and WT
is required to notify its withholding agent
of the date its status as a WT was termi-
nated.

The termination of the Agreement shall

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

After the date of termination of this
Agreement, WT may not act as a with-
holding foreign trust, and must so notify
any persons to which WT has furnished a
withholding foreign trust certificate of the
termination (including the date of the ter-
mination). After the date of termination of
this Agreement, the IRS may reinstate this
Agreement (or the IRS may require WT to
enter into a new WT agreement) on such
terms and conditions and with such mod-
ifications as the IRS may determine.

(B) Final Certification after a Termina-
tion of the Agreement. Upon a termination
of this Agreement, WT must provide to
the IRS the certification described in sec-
tion 8.03 of this Agreement covering the
period from the end of the most recent
certification period (or, if the first certifi-
cation period has not ended, the effective
date of this Agreement) to the date of
termination within six months of the date
of termination, regardless of whether a
periodic review has been completed for
such period.

Sec 10.03. Automatic Termination of
Agreement.

(A) Automatic Termination. Notwith-
standing section 10.02 of this Agreement,
this Agreement will terminate automati-
cally in the event that the reviewer or the
IRS (including during its compliance re-
view described in section 8.08 of this
Agreement) discovers that WT was not in
possession of Forms W-8 or W-9, as
applicable, or documentary evidence, as
permitted under section 4.01(A) of this
Agreement, for any direct beneficiary or
owner at any time that withholding or
reporting was required under section 3.02
of this Agreement. The automatic termi-
nation will be effective as of December 31
of the year in which the reviewer or the
IRS makes that discovery.

(B) Cure and Reinstatement after Auto-
matic Termination. This Agreement will
be reinstated, effective the same date it
automatically terminated under section
10.03(A) of this Agreement, if-

(1) WT obtains appropriate Forms W-8
or W-9 or documentary evidence, as per-
mitted under section 4.01(A) of this
Agreement, that relate to the time with-
holding or reporting was required, for
each such undocumented beneficiary or
owner before March 15 of the year fol-
lowing the year in which the Agreement
automatically terminated, or

(2) All such undocumented beneficiaries
or owners have ceased to be beneficiaries
or owners in WT before March 15 of the
year following the year in which the
Agreement automatically terminated.

(C) Payment of Underwithholding and
Reporting upon Termination. In the event
of automatic termination of this Agree-
ment under this section 10.03, WT must
pay any underwithholding of tax, interest,
and penalties that the IRS determines is
attributable to each undocumented bene-
ficiary or owner for the period during
which the beneficiary or owner was un-
documented based on the presumption
rules, and, if WT has made a pooled re-
porting election for chapter 3 purposes,
WT must file beneficiary or owner spe-
cific Forms 1042-S for amounts subject to
chapter 3 withholding for which no chap-
ter 4 withholding is required and Owner
Statements and Beneficiary Statements as
part of Form 3520-A reporting the names
and addresses and other required informa-
tion, as appropriate, for every undocu-
mented beneficiary or owner from the ear-
liest time the documentation was required
for that undocumented beneficiary or
owner through the date of termination.
WT may, however, continue to report on a
pooled basis for documented foreign di-
rect beneficiaries or owners through this
period.

Sec. 10.04. Significant Change in Cir-
cumstances. For purposes of this Agree-
ment, a significant change in circum-
stances includes, but is not limited to-
(A) A change in U.S. federal law, or ap-
plicable foreign law, that affects the va-
lidity of any provision of this Agreement,
materially affects the procedures con-
tained in this Agreement, or affects WT's

ability to perform its obligations under
this Agreement;

(B) A ruling of any court that affects the
validity of any material provision of this
Agreement;

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

(D) If applicable, a material change in the
applicable know-your-customer rules and
procedures when WT relied on documen-
tary evidence as permitted in section
4.01(A) of this Agreement;

(E) If WT is an FFI (other than a retire-
ment fund), WT's failure to maintain its
status as a participating FFI, registered
deemed-compliant FFI, or a registered
deemed-compliant Model 1 IGA FFI; or
(F) If WT is acting as a sponsoring entity
on behalf of a sponsored FFI or sponsored
direct reporting NFFE, WT's failure to
comply with the due diligence, withhold-
ing, reporting, and compliance require-
ments of a sponsoring entity.

Sec. 10.05. Events of Default. For pur-
poses of this Agreement, an event of de-
fault occurs if WT fails to perform any
material duty or obligation required under
this Agreement and the responsible officer
had actual knowledge of or should have
known 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) WT fails to implement adequate pro-
cedures, accounting systems, and internal
controls to ensure compliance with this
Agreement;

(B) WT underwithholds a material amount
of tax that WT is required to withhold
under chapter 3 or 4 and fails to correct
the underwithholding or to file an
amended Form 1042 reporting, and pay-
ing, the appropriate tax;

(C) WT makes excessive refund claims;
(D) WT fails to file required Forms
1040NR (if required), 1042, 1042-S,
8966, 3520-A, or the Owner Statements
or Beneficiary Statements required as part
of such form by the due date specified on
such forms or files forms that are materi-
ally incorrect or fraudulent;

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

(F) If WT is a sponsoring entity, WT
materially fails to comply with the due
diligence, withholding, reporting, and
compliance requirements of a sponsoring
entity;

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

(H) WT fails to inform the IRS within 90
days of any significant change in its busi-
ness practices to the extent that change
affects WT's obligations under this
Agreement;

(I) WT fails to cure a material failure
identified in the qualified certification de-
scribed in Part II.B of the Appendix to this
Agreement or identified by the IRS;

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

(K) The IRS determines that WT's re-
viewer is not sufficiently independent, as
described in section 8.04 of this Agree-
ment, to adequately perform its review
function and WT fails to arrange for a
periodic review conducted by a reviewer
approved by the IRS;

(L) WT fails to make deposits in the time
and manner required by section 3.05 of
this Agreement or fails to make adequate
deposits, taking into account the proce-
dures of section 7.05 of this Agreement;
(M) If applicable, WT fails to inform the
IRS of any change in the applicable know-
your-customer rules within 90 days of the
change becoming effective when WT re-
lied on documentary evidence as permit-
ted in section 4.01(A) of this Agreement;
(N) WT fails to cooperate with the IRS on
its compliance review described in section
8.08 of this Agreement;

(O) A partnership or trust to which WT
applies the agency option is in default
with the agency agreement and WT fails
to terminate that agreement within the
time period specified in section 9.02 of
this Agreement;

(P) WT fails to materially comply with
the requirements of a nonwithholding for-
eign trust under chapter 3 with respect to
any beneficiary or owner for which it does
not act as a withholding foreign trust; or
(Q) WT is not in possession of valid doc-
umentation described in sections 4.01
through 4.09 of this Agreement for each
direct beneficiary or owner as of the due

date of the certification described in sec-
tion 8.03(C)(1) of this Agreement.

Sec. 10.06. Notice and Cure. Upon the
occurrence of an event of default, the IRS
will deliver to WT a notice of default
specifying each event of default. WT 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 WT believes that
no event of default has occurred. If WT
does not provide a 60-day response, the
IRS will deliver a notice of termination as
provided in section 10.02 of this Agree-
ment. If WT provides a 60-day response,
the IRS shall either accept or reject WT's
statement that no default has occurred or
WT's proposal to cure the event of de-
fault.

If the IRS rejects WT's statement that no
default has occurred or rejects WT's pro-
posal to cure the event of default, the IRS
may offer a counter-proposal to cure the
event of default with which WT will be
required to comply within 30 days. If WT
fails to provide a 30-day response, the IRS
will send a notice of termination in accor-
dance with section 10.02 of this Agree-
ment, which WT may appeal within 30
days of the date of the notice by sending a
written appeal to the address specified in
section 11.06 of this Agreement. If WT
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, WT may cure the default, without
following the procedures of this section
10.06, if the external reviewer's report
describes the default and the actions that
WT took to cure the default and the IRS
determines that the cure procedures fol-
lowed by WT were sufficient. If the IRS
determines that WT's actions to cure the
default were not sufficient, the IRS shall
issue a notice of default and the proce-
dures described in this section 10.06 shall
be followed.

Sec. 10.07. Renewal. If WT intends to
renew this Agreement, it shall submit an
application for renewal to the IRS on the
QI/WP/WT Application and Account
Management System. This Agreement
will be renewed only upon the agreement
of both WT and the IRS.

# Section 11. MISCELLANEOUS PROVISIONS

Sec. 11.01. WT's application to become a
WT, the Appendix to this Agreement, and,
if WT is an FFI, its FATCA requirements
as a participating FFI, registered deemed-
compliant FFI, or registered deemed-
compliant Model 1 IGA FFI (or, if WT is
a sponsoring entity, the due diligence,
withholding, reporting, and compliance
requirements of a sponsoring entity) are
hereby incorporated into and made an in-
tegral part of this Agreement. This Agree-
ment, WT's application, and the Appen-
dix to this Agreement constitute the
complete agreement between the parties.
Sec. 11.02. This Agreement may be
amended by the IRS if the IRS determines
that such amendment is needed for the
sound administration of the internal reve-
nue 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 re-
quirements will in no event become effec-
tive 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 guid-
ance.

Sec. 11.04. This Agreement shall be gov-
erned by the laws of the United States.
Any legal action brought under this
Agreement shall be brought only in a U.S.
court with jurisdiction to hear and resolve
matters under the internal revenue laws of
the United States. For this purpose, WT
agrees to submit to the jurisdiction of such
U.S. court.

Sec. 11.05. WT's rights and responsibili-
ties under this Agreement cannot be as-
signed to another person.

ble), and the name of its responsible offi-
cer. Such notices shall be directed as fol-
lows:
To the IRS:
Internal Revenue Service
Foreign Payments Practice
Foreign Intermediaries Program
290 Broadway, 12th Floor
New York, NY 10007-1867

To WT:

The WT's responsible officer. Such no-
tices shall be sent to the address indicated
in the WT's registration or application (as
may be amended).

Sec. 11.07. WT, acting in its capacity as a
withholding foreign trust 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.

## APPENDIX TO WT AGREEMENT

## Section 12. EFFECTIVE DATE OF AGREEMENT

### Sec. 12.01. New Applicants.

(A) In General. Applications for WT sta-
tus received on or before March 31 of the
calendar year, if approved, will be effec-
tive January 1 of that calendar year. If an
entity submits an application to be a WT
after March 31 and does not receive any
reportable amounts between January 1 of
the calendar year in which the WT applica-
tion is submitted and the date of approval,
the entity will have a WT agreement with an
effective date of the date it is issued a WT-
EIN. All other entities applying for WT
status after March 31 that are approved dur-
ing the calendar year will have a WT agree-
ment with an effective date of January 1 of
the following calendar year.

(B) Calendar Year 2017. If a WT is ap-
proved for WT status during calendar year
2017, the rules described in section
12.01(A) of this Agreement apply, except
that the WT agreement effective from Jan-
uary 1, 2017, to the date of issuance of
this revenue procedure will be the WT
agreement in Revenue Procedure 2014-
47, and the WT agreement provided in
this revenue procedure will be effective
beginning on the date of issuance of this
revenue procedure.

Sec. 12.02. Renewal of WT Agreement.
A WT that applies to renew its WT agree-
ment provided in Revenue Procedure
2014-47 on or before March 31, 2017,
will have a WT agreement with an effec-
tive date of the date of issuance of this
revenue procedure.

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

Parts I and II: All WTs.

Part III:
WTs eligible pursuant to section 8.07 of the WT Agreement to apply for a waiver of the periodic review
requirement (as described in section 8.07 of the WT Agreement) and who wish to apply for such a waiver.
WTs that are NFFEs are not eligible for a waiver.

Part IV.A-G:
All WTs that have not applied for or have not been approved for a waiver.

#### PART I. GENERAL INFORMATION

A. Did WT make a pooled reporting elec-
tion? Y/N

B. The number of partnerships or trusts to
which WT applied the agency option
(if none enter 0).

1\. Each partnership or trust to which
WT applied the agency option has
provided WT with a certification
that it has maintained status as a
certified deemed-compliant FFI, an
owner-documented FFI with respect
to WT, an NFFE, or an exempt ben-
eficial owner as required under sec-
tion 9.02(A)(2) of the WT Agree-
ment. Y/N

2\. Each partnership or trust to which
WT applied the agency option has
provided WT with either (1) its doc-
umentation and other information
for inclusion in WT's periodic re-
view (as described in section
9.02(A)(6) of the WT Agreement) or
(2) a certification described in sec-

tion 8.03 of the WT Agreement and
the results of the periodic review de-
scribed in section 8.06 of the WT
Agreement for the certification pe-
riod. Y/N

C. The number of partnerships or trusts to
which WT applied the joint account
option (if none enter 0).

1\. Each partnership or trust to which
WT applies the joint account op-
tion has provided WT with a certi-
fication that it has maintained status
as a certified deemed-compliant FFI,
an owner-documented FFI with re-
spect to WT, an exempt beneficial
owner, or an NFFE as required un-
der section 9.01(A)(1) of the WT
Agreement. Y/N

PART II: CERTIFICATION OF
INTERNAL CONTROLS BY
RESPONSIBLE OFFICER AND
GENERAL INFORMATION

Complete either Section A (Certification
of Effective Internal Controls) or Section

B (Qualified Certification). All WTs com-
plete Sections C, D, E, and F.

A. Certification of Effective Internal
Controls

If the responsible officer has identified an
event of default or a material failure that
WT has not corrected as of the date of this
certification (or if an event of default or
material failure has otherwise been iden-
tified), the responsible officer cannot
make the certification of effective internal
controls under this Section A and must
make the qualified certification under Sec-
tion B, below.

The responsible officer certifies to the fol-
lowing, check each statement to confirm:

1\. WT has established a compliance
program that meets the requirements
described in section 8.02(B) of the
WT Agreement that is in effect as of
the date of the certification and dur-
ing the certification period.

2\. Based on the information known (or
information that reasonably should

have been known) by the responsible
officer, including the findings of any
procedure, process, review, or certi-
fication undertaken in preparation for
the responsible officer's certification
of internal controls, WT maintains
effective internal controls over its
documentation, withholding, and re-
porting obligations under the WT
Agreement and according to its ap-
plicable FATCA requirements for
beneficiaries or owners for which it
acts as a WT.

3\. Based on the information known (or
information that reasonably should
have been known) by the responsible
officer, including the findings of any
procedure, process, review, or certi-
fication undertaken in preparation for
the responsible officer's certification
of internal controls, there are no ma-
terial failures, as defined in section
8.03(B of the WT 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 certifica-
tion as well as the actions taken to
remediate them and to prevent their
reoccurrence by the date of this cer-
tification. See Part II.D.2.a of this
Appendix.

4\. With respect to any failure to with-
hold, deposit, or report to the extent
required under the WT Agreement,
WT has corrected such failure by
paying any taxes due (including in-
terest and penalties) and filing the
appropriate return (or amended re-
turn).

5\. All partnerships and trusts to which
WT applies the agency option have
either (a) provided documentation
and other necessary information for
inclusion in the WT's periodic re-
view or (b) provided the responsible
officer of WT with a certification of
effective internal controls described
in Part II.A of this Appendix and
have represented to WT that there are
no material failures, as defined in
section 8.03(B) of the WT Agree-
ment, or, if there are such failures,
they have been corrected as of the
time of this certification, and the
partnerships or trusts have disclosed
any such failures to WT together

with the actions taken by the partner-
ship or trust to remediate such fail-
ures.

6\. Unless WT has received a waiver, a
periodic review was conducted for
the certification period in accordance
with section 8.04 of the WT Agree-
ment, and the results of such review
are reported to the extent required in
section 8.06 of the WT Agreement.

##### B. Qualified Certification

If the responsible officer has identified (1)
an event of default or (2) a material failure
that WT 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 10.05 of the WT
Agreement, or has determined that,
as of the date of the certification,
there are one or more material fail-
ures as defined in section 8.03(B) of
the WT Agreement with respect to
WT's compliance or the compliance
of a partnership or trust to which WT
applies the agency option and that
appropriate actions will be taken to
prevent such failures from reoccur-
ring.

2\. With respect to any failure to with-
hold, deposit, or report to the extent
required under the WT Agreement,
WT will correct such failure by pay-
ing any taxes due (including interest
and penalties) and filing the appro-
priate return (or amended return).

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

##### C. Amended Form 1042

1\. Did WT file 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 under-

taken by the responsible officer in
preparation for the certification of
internal controls? Y/N

##### D. Material Failures or Event of Default

1\. Did the responsible officer deter-
mine that as of the date of the peri-
odic review report (or the date of
completion of any other procedure,
process, or review), there are no ma-
terial failures with respect to WT's
compliance with the WT Agree-
ment? Y/N

2\. Did the responsible officer deter-
mine that as of the date of the peri-
odic review report (or the date of
completion of any other procedure,
process, or review), there are one or
more material failures with respect
to WT's compliance with the WT
Agreement and that appropriate ac-
tions have been or will be taken to
prevent such failures from reoccur-
ring? Y/N

a. If yes, check the following ma-
terial failures that were identi-
fied.

i. WT's establishment of, for
financial statement pur-
poses, a tax reserve or pro-
vision for a potential future
tax liability related to WT's
failure to comply with the
WT Agreement, including
its FATCA requirements as
a participating FFI, regis-
tered deemed-compliant
FFI, or registered deemed-
compliant Model 1 IGA
FFI.

ii. WT's failure to establish
written policies, proce-
dures, or systems suffi-
cient for the relevant per-
sonnel of WT to take
actions consistent with
WT's obligations under
the WT Agreement.

iii. A criminal or civil pen-
alty or sanction imposed
on WT by a regulator or
other governmental au-
thority or agency with
oversight over WT's
compliance with AML/
KYC procedures, if ap-
plicable, to which WT is

subject and that is im-
posed due to WT's fail-
ure to properly identify
beneficiaries or owners
under the requirements
of those procedures.

iv. A finding (including a
finding noted in the peri-
odic review report de-
scribed in section 8.06 of
the WT Agreement) that,
for one or more years
covered by the WT
Agreement, WT failed
to:

1\. Withhold an amount
that WT was required
to withhold under
chapter 3 or 4 as re-
quired under section
3 of the WT Agree-
ment;

2\. Make deposits in the
time and manner re-
quired by section
3.05 of the WT
Agreement or make
adequate deposits to
satisfy its withhold-
ing obligations, tak-
ing into account the
procedures under
section 7 of the WT
Agreement;

3\. Report or report ac-
curately on Forms
1042 or 1042-S as
required under sec-
tions 6.01 and 6.02 of
the WT Agreement;

4\. Report or report ac-
curately on Forms
8966 as required un-
der section 6.05 of
the WT Agreement;
or

5\. Report or report ac-
curately on Form
3520-A and the For-
eign Grantor Trust
Owner Statements
and Foreign Grantor
Trust Beneficiary
Statements as re-
quired under section
6.03 of the WT
Agreement.

v. Other (include a detailed
explanation).

3\. The material failure(s) 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 partnerships or trusts to which
WT applies the agency option inform
WT that it has had a material failure
with respect to its obligations as de-
scribed in the WT Agreement?
Y/N/NA

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

5\. An event of default as defined in section
10.05 of the WT Agreement has been
identified. Y/N

b. If yes, identify the event of
default.

i. WT failed to implement
adequate procedures, ac-
counting systems, and in-
ternal controls to ensure
compliance with the WT
Agreement;

ii. WT underwithheld a ma-
terial amount of tax that
WT was required to with-
hold under chapter 3 or 4
and failed to correct the
underwithholding or to
file an amended Form
1042 reporting, and pay-
ing, the appropriate tax;

iii. WT made excessive re-
fund claims;

iv. WT failed to file required
Forms 1040NR (if re-
quired), 1042, 1042-S,
8966, 3520-A and the
Foreign Grantor Trust
Owner Statements and
Foreign Grantor Trust

Beneficiary Statements
by the due date specified
on such forms or filed
forms that are materially
incorrect or fraudulent;

v. If WT is an FFI, WT
failed to materially com-
ply with its FATCA re-
quirements as a partici-
pating FFI, registered
deemed-compliant FFI, or
registered deemed-
compliant Model 1 IGA
FFI;

vi. If WT is a sponsoring
entity of a sponsored FFI
or a sponsored direct re-
porting NFFE, WT failed
to materially comply
with the due diligence,
withholding, reporting,
and compliance require-
ments of a sponsoring
entity;

vii. WT failed to perform a
periodic review when re-
quired or to document
the findings of such re-
view in a written report;

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

ix. WT failed to cure a ma-
terial failure identified in
the qualified certification
described in Part II.B of
this Appendix or identi-
fied by the IRS;

x. WT made any fraudulent
statement or a misrepre-
sentation of material fact
with regard to the WT
Agreement to the IRS, a
withholding agent, or
WT's reviewer;

xi. The IRS determined that
WT's reviewer is not
sufficiently independent,
as described in the WT
Agreement, to ade-
quately perform its re-
view function, and WT

failed to arrange for a pe-
riodic review conducted
by a reviewer approved
by the IRS;

xii. WT failed to make de-
posits in the time and
manner required by sec-
tion 3.05 of the WT
Agreement or failed to
make adequate deposits,
taking into account the
procedures of section
7.05 of the WT Agree-
ment;

xiii. If applicable, WT failed
to inform the IRS of
any change in the appli-
cable know-your-
customer rules within
90 days of the change
becoming effective
when WT relied on
documentary evidence
as permitted in section
4.01(A) of the WT
Agreement;

xiv. A partnership or trust to
which WT applied the
agency option was in
default with the agency
agreement and WT
failed to terminate that
agreement within the
time period specified in
section 9.02 of the WT
Agreement;

xv. WT failed to materially
comply with the require-
ments of a nonwithhold-
ing foreign trust under
chapter 3 with respect to
any beneficiary or owner
for which WT does not
act as a withholding for-
eign trust;

xvi. WT is not in possession
of valid documentation
described in sections
4.01 through 4.09 of the
WT Agreement for
each direct beneficiary
or owner as of the due
date of this certifica-
tion; or

xvii. Other (please describe).

E. Significant Change in Circumstances

Check the applicable statements to con-
firm.

1\. For the most recent certification
period, the periodic review (or
any other procedure, process, or
review) has not identified any sig-
nificant change in circumstances,
as described in section 10.04(C)
or (D) of the WT Agreement.

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

a. A significant change in WT's
business practices that affects
WT's ability to meet its obli-
gations under the WT Agree-
ment.

b. If applicable, a material
change in the applicable
know-your-customer rules and
procedures when WT relied
on documentary evidence as
permitted in section 4.01(A)
of the WT Agreement.

c. Other (please describe).

3\. Describe any significant changes in
circumstances identified in question
2\.

### F. Chapter 4 Status

1\. Complete the applicable section (if
any) and check the applicable state-
ment to confirm.

a. If WT is a participating FFI:
For the most recent certifica-
tion period under its WT
Agreement, WT has obtained
(or maintained) status as a par-
ticipating FFI and has made
the following certification of
compliance with respect to its
FFI agreement for the most re-
cent certification period under
the FFI agreement (check
one).

Note: You may check Not Ap-
plicable if, during the certifica-
tion period under the WT
Agreement, your chapter 4 sta-
tus changed from one of the
other applicable chapter 4 sta-
tuses to participating FFI or if
your certification of compli-
ance under the FFI agreement

is not yet due as of the date of
this certification.

i. Certification of Effec-
tive Internal Controls

ii. Qualified Certification

iii. Not Applicable

b. If WT is a registered
deemed-compliant FFI:
For the most recent certi-
fication period under its
WT Agreement, WT has
certified as required under
§ 1.1471-5(f)(1)(ii)(B) or
Annex II of an applicable
Model 2 IGA that it has
satisfied the requirements
of the deemed-compliant
status claimed.

c. If WT is a registered
deemed-compliant Model
1 IGA FFI:

For the most recent certi-
fication period under its
WT Agreement, WT has
been resident in or orga-
nized under the laws of a
jurisdiction that has in
place a Model 1 IGA with
the United States and has
met the requirements un-
der an applicable Model 1
IGA to be treated as a
deemed-compliant FFI.

d. If WT is a retirement
fund:

For the most recent certi-
fication period under the
WT Agreement, WT has
been a retirement fund or
other fund that is an ex-
empt beneficial owner de-
scribed in § 1.1471-6(f)
or a similar fund that
qualifies as an exempt
beneficial owner under an
applicable Model 1 IGA
or Model 2 IGA.

#### PART III. WAIVER OF PERIODIC REVIEW

For purposes of this Part III, "beneficiary
or owner" means, unless otherwise speci-
fied, any beneficiary or owner for which
WT acts as a WT.

For sections B.1 through 6 of this Part III,
while the curing of inadequate documen-
tation is permissible, the information re-

ported in these sections must not reflect
any remediation or curing.

In order to be eligible for a waiver, WT
must be able to confirm all of the eligibil-
ity requirements in Section A are met.

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

1\. WT is an FFI.

2\. WT is not part of a consolidated
compliance program.

3\. For each calendar year in the certi-
fication period, the reportable
amounts received by WT do not ex-
ceed $1 million.

4\. WT timely filed its Forms 1042,
1042-S, 8966 (or, if WT is a report-
ing Model 1 FFI, any analogous
forms used for reporting account in-
formation pursuant to an applicable
Model 1 IGA), and 3520-A, as ap-
plicable, for all years (fiscal or cal-
endar) in the certification period.

5\. WT made all periodic certifications
and reviews required by sections
8.02 and 8.03 of the WT Agreement
as well as any certifications required
pursuant to WT's FATCA require-
ments as a participating FFI or reg-
istered deemed-compliant FFI.

6\. WT made the certification of effec-
tive internal controls in Part II.A.

B. Information required (provided for
the most recent year in the certification
period for which filing has been made
by the time of this waiver request)

1\. The total number of beneficiaries or
owners

a. Total number of direct benefi-
ciaries or owners

i. Foreign persons

ii. U.S. persons

iii. Foreign intermediaries and
flow-through entities

b. Total number of indirect ben-
eficiaries or owners

i. Foreign persons

ii. U.S. persons

iii. Foreign intermediaries and
flow-through entities

2\. The total number of non-U.S. bene-
ficiaries or owners that received re-
portable amounts

a. The total number of such ben-
eficiaries or owners that have
valid documentation.

b. The total number of such ben-
eficiaries or owners that have
no documentation or invalid
documentation.

3\. The aggregate amount of reportable
amounts received for non-U.S. ben-
eficiaries or owners

4\. The total number of Forms 1042-S
filed by WT.

5\. The total number of Schedules K-1
filed by WT.

6\. The aggregate amount of tax with-
held under chapter 3.

7\. The aggregate amount of tax with-
held under chapter 4.

8\. The aggregate amount of withheld
tax deposited by WT.

#### PART IV. PERIODIC REVIEW: WT FACTUAL INFORMATION

This Part IV must be completed by all
WTs that have not received a waiver. For
purposes of this Part III, "beneficiary or
owner" means, unless otherwise specified,
any direct or indirect beneficiary or owner
for which WT acts as a withholding for-
eign trust.

For Sections B through G of this Part III,
while the curing of inadequate documen-
tation is permissible, unless otherwise in-
dicated, the information reported shall be
based on the review and not results ob-
tained after curing.

##### A. General Information

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

a. If yes, provide the name(s) of
reviewer(s) and the name and
address of the firm at which
the reviewer is employed.

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

a. If yes, provide a brief descrip-
tion of the internal reviewer,
such as their department and
other roles and responsibilities
with respect to the WT's WT
activities.

3\. Calendar year reviewed for periodic
review.

Caution: On the due date for reporting the
factual information relating to the peri-
odic review (provided in section 8.04 of
the WT 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
WT 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 11.06 of the WT
Agreement.

B. General Information on Beneficiaries
or Owners and Review of Beneficiaries
or Owners

1\. Total beneficiaries or owners re-
viewed for periodic review.

Note: WT must review all beneficiaries or
owners that received a distribution of, or
included in their distributive share, a re-
portable amount that is attributable to an
amount paid to WT in the year under
review.

##### C. Documentation

1\. Total beneficiaries or owners re-
viewed that are direct beneficiaries
or owners.

2\. Total beneficiaries or owners re-
viewed that are indirect beneficia-
ries or owners.

3\. Total beneficiaries or owners re-
viewed with valid documentation.

4\. Total beneficiaries or owners re-
viewed with invalid documentation
or no documentation.

5\. Total beneficiaries or owners re-
viewed with invalid documentation
or no documentation for which
valid documentation or additional
valid documentation was obtained
after the review.

6\. Total direct beneficiaries or owners
reviewed for which WT had no
documentation at any time that
withholding or reporting was re-
quired under section 3.02 of the
WT Agreement.

7\. Total direct beneficiaries or owners
in question 6 for which valid doc-
umentation (that relates to the time
withholding or reporting was re-

quired) was obtained by WT for
each such undocumented direct
beneficiary or owner before March
15 of the year following the year in
which the WT Agreement was au-
tomatically terminated under sec-
tion 10.03(A) of the WT Agree-
ment.

8\. Total beneficiaries or owners re-
viewed for which treaty benefits
were claimed.

9\. Total beneficiaries or owners re-
viewed for which treaty benefits
were claimed where WT 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 4.03(B) of the
WT Agreement).

10\. Total beneficiaries or owners re-
viewed that are U.S. accounts (or
U.S. reportable accounts under an
applicable Model 1 IGA) for chap-
ter 4 purposes.

11\. Total beneficiaries or owners re-
viewed that are U.S. accounts for
chapter 4 purposes (or U.S. report-
able accounts under an applicable
Model 1 IGA) for which WT has
obtained valid documentation.

12\. If WT is an NFFE, total beneficia-
ries or owners reviewed that are
passive NFFEs with substantial
U.S. owners.

###### D. Withholding

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

2\. Number of beneficiaries or owners
for which amounts were withheld
under chapter 3 (excluding benefi-
ciaries or owners reported in ques-
tion 10(a) or 11(a) below).

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

4\. Number of beneficiaries or owners
for which amounts were withheld
under chapter 4 (excluding benefi-
ciaries or owners reported in ques-
tion 10(a) or 11(a) below).

5\. The aggregate amount reported as
withheld by WT on Form 1042 un-
der chapter 3 or 4.

6\. Additional withholding required
under chapter 4 based on the re-
sults of the periodic review (ex-
cluding withholding reported in
question 10(d) or 11(d) below).

7\. Additional withholding required
under chapter 3 based on the re-
sults of the periodic review (ex-
cluding withholding reported in
question 10(d) or 11(d) below).

8\. The aggregate amount of deposits
made by WT in accordance with
section 3.05 of the WT Agreement.

9\. The aggregate amount withheld by
WT but not timely deposited.

10\. Number of partnerships or trusts to
which the joint account option of
section 9.01 of the WT Agreement
was applied (if applicable).

11\. Number of partnerships or trusts to
which the agency option of section
9.02 of the WT Agreement was
applied (if WT includes the part-
nership or trust in WT's periodic
review).

E. Reconciliation of Amounts Reported
on Forms 1042-S

1\. The aggregate amount reported
paid to WT during the year under
review on all Forms 1042-S issued
to WT (acting as a withholding for-
eign trust).

2\. The aggregate amount reported by
WT on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, beneficiaries or own-
ers that are included in WT's
chapter 4 reporting pools (other
than the U.S. payee pool) (includ-
ing a chapter 4 reporting pool of a
partnership or trust to which WT
applies the agency option) to the
extent such amount is attributable
to an amount paid to WT in the
year under review.

3\. The aggregate amount reported by
WT on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, WT's chapter 4 re-
porting pool- U.S. payee pool to the

extent such amount is attributable
to an amount paid to WT in the
year under review.

4\. If WT made a pooled reporting
election under section 6.02(D) of
the WT Agreement, the aggregate
amount reported by WT on Forms
1042-S as distributed to, or in-
cluded in the distributive share of,
WT's chapter 3 reporting pools (in-
cluding chapter 3 reporting pools of
a partnership or trust to which WT
applies the joint account or agency
option) to the extent such amount is
attributable to an amount paid to
WT in the year under review.

5\. If WT did not make a pooled re-
porting election, the aggregate
amount of reported by WT on
Forms 1042-S as distributed to, or
included in the distributive share
of, each direct beneficiary or owner
(other than a passthrough benefi-
ciary or owner) (not included in
question 2 or 3 above) to the extent
such amount is attributable to an
amount paid to WT in the year un-
der review (excluding an amount
reported in question 6 below).

6\. The aggregate amount reported by
WT on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, other WTs, WTs, and
QIs as a class to the extent such
amount is attributable to an amount
paid to WT in the year under re-
view.

7\. The aggregate amount reported by
WT on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, participating FFIs,
registered deemed-compliant FFIs,
and registered deemed-compliant
Model 1 IGA FFIs that are pass-
through beneficiaries or owners to
which WT applies section 9.03 of
the WT Agreement as a class with
respect to their chapter 4 reporting
pools to the extent such amount is
attributable to an amount paid to
WT in the year under review (ex-
cluding amounts included in ques-
tion 6 above).

8\. The aggregate amount reported by
WT on Forms 1042-S as distrib-
uted to, or included in the distribu-
tive share of, indirect beneficiaries

or owners (not included in any of
the questions above) to which WT
applies section 9.03 of the WT
Agreement to the extent such
amount is attributable to an amount
paid to WT in the year under re-
view.

9\. The aggregate amount subject to
chapter 3 withholding that WT dis-
tributed to, or included in the dis-
tributive share of, U.S. beneficia-
ries or owners not included in a
chapter 4 withholding rate pool to
the extent such amount is attribut-
able to an amount paid to WT in the
year under review.

10\. The aggregate amount distributed
to, or included in the distributive
share of, direct beneficiaries or
owners of WT (including partners,
beneficiaries, or owners of a part-
nership or trust to which WT ap-
plies the joint account or agency
option) that requested individual
Form(s) 1042-S and direct benefi-
ciaries or owners that were issued
Forms 1042-S under section
6.02(B)(8) of the WT Agreement
(excluding an amount reported in
question 4 above).

11\. Total of questions 2 through 10.

12\. The amount of any unreconciled
variances (if question 1 minus
question 11 is other than 0).

13\. The aggregate amount reported by
WT on Form 1042 as distributed
to, or included in the distributive
share of, beneficiaries or owners of
WT to the extent such amount is
attributable to an amount paid to
WT in the year under review.

14\. The amount of any unreconciled
variances of amounts reported by
WT on Forms 1042 and 1042-S
(question 13 minus the total of
questions 2 through 8).

15\. The aggregate amount of any col-
lective claims for refund or credit
made by WT.

F. Reporting of Reportable Amounts
Other Than Amounts Subject to Chapter
3 Withholding

1\. The aggregate amount of reportable
amounts other than amounts subject
to chapter 3 withholding received by
WT.

2\. The aggregate amount of reportable
amounts other than amounts subject
to chapter 3 withholding distributed
to, or included in the distributive
share of, a direct beneficiary or
owner that is a U.S. person.

3\. Number of direct beneficiaries or
owners that are U.S. persons that are
not reported on Form 3520-A or as
otherwise required under the WT
Agreement (if none enter 0).

G. Reporting on Form 3520-A

1\. The number of Foreign Grantor
Trust Owner Statements filed with
WT's Form 3520-A.

2\. The number of Foreign Grantor
Trust Beneficiary Statements filed
with WT's Form 3520-A.

# SECTION 8. EFFECTIVE DATE

The effective date of this revenue pro-
cedure is January 19, 2017. The effective
dates of the agreements described in sec-
tions 6 and 7 of this revenue procedure are
described in sections 6 and 7 of this rev-
enue procedure.

# SECTION 9. EFFECT ON OTHER DOCUMENTS

Revenue Procedure 2014-47, 2014-
35 I.R.B. 393, is modified and superseded.

# SECTION 10. PAPERWORK REDUCTION ACT

This revenue procedure refers to a col-
lection of information in the following
sections of this revenue procedure: (1)
section 5, regarding the application proce-
dures for WP and WT status and with-
holding agreements; (2) section 6, regard-
ing the WP agreement; and (3) section 7,
regarding the WT agreement.

This revenue procedure refers to a col-
lection of information in the following
sections of the WP agreement (set forth in
section 6 of this revenue procedure): sec-
tion 3 regarding withholding require-
ments; section 4 regarding the due dili-
gence requirements for partner
identification and documentation; section
5 regarding the withholding foreign part-
nership withholding certificate; section 6
regarding tax return and information re-
porting obligations; section 7 regarding

adjustments for overwithholding and un-
derwithholding and refunds; section 8 re-
garding compliance procedures; and sec-
tion 9 regarding simplified joint account
and indirect partner documentation, with-
holding, and reporting procedures and the
appointment of an agent to apply the WP
agreement on WP's behalf.

This revenue procedure also refers to a
collection of information in the following
sections of the WT agreement (set forth in
section 7 of this revenue procedure): sec-
tion 3 regarding withholding require-
ments; section 4 regarding the due dili-
gence requirements for beneficiary or
owner identification and documentation;
section 5 regarding the withholding for-
eign trust withholding certificate; section
6 regarding tax return and information
reporting obligations; section 7 regarding
adjustments for overwithholding and un-
derwithholding and refunds; section 8 re-
garding compliance procedures; and sec-
tion 9 regarding simplified joint account
and indirect beneficiary or owner docu-
mentation, withholding, and reporting
procedures and the appointment of an
agent to apply the WT agreement on
WT's behalf.

Responses to these collections of infor-
mation will be used to enable the IRS to
determine whether to enter into a with-
holding agreement with a WP or WT ap-
plicant, to renew an existing WP or WT
agreement, and to verify a WP's or WT's
compliance with its applicable withhold-
ing agreement. The likely respondents are
individuals, businesses, other for-profit in-
stitutions, and certain non-profit institu-
tions.

The estimated information collection
burden referred to in this revenue proce-
dure will be reflected in various IRS forms
including Forms 8957, 14345, W-8BEN,
W-8BEN-E, W-8ECI, W-8EXP, W-
8IMY, W-9, 1042, 1042-S, 1065, 1099,
3520-A, and 8966. The information col-
lection burden relating to the section 8
compliance procedures for both the WP
and WT agreements is reflected in the
Appendices to the WP and WT agree-
ments.

An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less the collection of information displays

a valid control number assigned by the
Office of Management and Budget.

Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by section 6103.

# SECTION 11. DRAFTING INFORMATION

The principal author of this revenue
procedure is Kamela K. Nelan of the Of-
fice of Associate Chief Counsel (Interna-
tional). For further information regarding
this revenue procedure, contact Ms. Nelan
at (202) 317-6942 (not a toll-free num-
ber).

## Rev. Proc. 2017-22

### SECTION 1. PURPOSE

This revenue procedure clarifies that
the safe harbor provided in Rev. Proc.
2010-46, 2010-49 I.R.B. 814, applies to
any Transportation Investment Generating
Economic Recovery grants (TIGER Dis-
cretionary Grants) for capital investments
in surface transportation infrastructure
made by the Department of Transporta-
tion (DOT) pursuant to legislative autho-
rizations of these grants made after the
publication of Rev. Proc. 2010-46.

### SECTION 2. BACKGROUND

Section 118(a) of the Internal Revenue
Code provides that in the case of a corpo-
ration, gross income does not include a
contribution to the capital of the taxpayer.
Section 1.118-1 of the Income Tax Reg-
ulations provides that § 118 applies to
contributions to capital made by a person
other than a shareholder, for example,
contributions of property to a corporation
by a governmental unit for the purpose of
enabling the corporation to expand its op-
erating facilities.

Section 362(c)(2) requires a basis re-
duction in a corporation's property when
the corporation receives money from a
nonshareholder as a contribution to its
capital.

Rev. Proc. 2010-46, in part, provides
a safe harbor under § 118(a) for certain

grant amounts received by corporate tax-
payers engaged in a transportation trade or
business for capital investments in surface
transportation infrastructure under (1) the
Supplemental Discretionary Grants for
Capital Investments in Surface Transpor-
tation Infrastructure (TIGER I Discretion-
ary Grants) program as authorized by Ti-
tle XII, Division A of ARRA; or (2) the
National Infrastructure Investments (TI-
GER II Discretionary Grants) program as
authorized by the Transportation, Housing
and Urban Development, and Related
Agencies Appropriations Act for 2010
(Title I, Division A of the Consolidated
Appropriations Act, 2010 (Pub. L. 111-
117)).

In 2009, the Office of the Secretary of
Transportation issued a Notice of Funding
Availability (NOFA), 74 FR 28755, that
provides guidance on TIGER I Discre-
tionary Grants. The grants must be for
capital investments in surface transporta-
tion infrastructure. In 2010, the Office of
the Secretary of Transportation issued a
NOFA, 75 FR 30460, that provides guid-
ance on TIGER II Discretionary Grants.
The grants must be for capital investments
in surface transportation infrastructure.
The 2010 NOFA contemplates that some
funds may be used to fund the planning,
preparation, or design of projects (TIGER
II Planning Grants). DOT has issued ad-
ditional NOFAs and Notices of Funding
Opportunity (NOFOs) as legislation en-
acted subsequent to the publication of
Rev. Proc. 2010-46 has provided further
appropriations for TIGER Discretionary
Grants awarded by DOT.

### SECTION 3. SCOPE

This revenue procedure clarifies that
the safe harbor of Rev. Proc. 2010-46
applies to corporate taxpayers engaged in
a transportation trade or business that re-
ceive grant amounts for the costs of cap-
ital investments in surface transportation
infrastructure under any TIGER Discre-
tionary Grants, including those authorized
in each year following those described in
Rev. Proc. 2010-46 as well as any to be
authorized in the future. In no case will
this revenue procedure apply to amounts
received to pay the subsidy and adminis-
trative costs of the Transportation Infra-
structure Finance and Innovation Act of

1998 or to amounts received for any TI-
GER planning grants.

Further, this revenue procedure does
not apply to noncorporate taxpayers.

### SECTION 4. PROCEDURE

The Internal Revenue Service will not
challenge a corporate taxpayer's treatment
of grant amounts received by the corpora-
tion under any TIGER Discretionary
Grants for capital investments in surface
transportation infrastructure as a non-
shareholder contribution to the capital of
the corporation under § 118(a) if the cor-

poration properly reduces the basis of its
property under § 362(c)(2) and the regu-
lations thereunder. For purposes of this
revenue procedure, TIGER Discretionary
Grants include those TIGER Discretion-
ary Grants authorized in each year follow-
ing those described in Rev. Proc.
2010-46 as well as any to be authorized
in the future.

### SECTION 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2010-46, 2010-49 I.R.B.
814, is clarified.

### SECTION 6. DRAFTING INFORMATION

The principal author of this revenue
procedure is David McDonnell of the Of-
fice of Associate Chief Counsel (Pass-
throughs & Special Industries). For fur-
ther information regarding this revenue
procedure, contact Mr. McDonnell at
(202) 317-4137 (not a toll-free number).

# Part IV. Items of General Interest

## Definitions of Qualified Matching Contributions and Qualified Nonelective Contributions

### REG-131643-15

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains
proposed amendments to the definitions of
qualified matching contributions (QMACs)
and qualified nonelective contributions
(QNECs) under regulations relating to cer-
tain qualified retirement plans that contain
cash or deferred arrangements under sec-
tion 401(k) or that provide for matching
contributions or employee contributions
under section 401(m). Under these regu-
lations, employer contributions to a plan
would be able to qualify as QMACs or
QNECs if they satisfy applicable nonfor-
feitability and distribution requirements at
the time they are allocated to participants'
accounts, but need not meet these require-
ments when they are contributed to the
plan. These regulations would affect partic-
ipants in, beneficiaries of, employers main-
taining, and administrators of tax-qualified
plans that contain cash or deferred arrange-
ments or provide for matching contributions
or employee contributions.

DATES: Comments and requests for a
public hearing must be received by April
18, 2017.

ADDRESSES: Send submissions to CC:
PA:LPD:PR (REG-131643-15) Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8 a.m. and 4 p.m. to
CC:PA:LPD:PR (REG-131643-15), Couri-
er's Desk, Internal Revenue Service, 1111
Constitution Avenue N.W., Washington,
DC 20224, or sent electronically via
the Federal eRulemaking Portal at www.
regulations.gov (IRS REG-131643-15).

FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regula-

tions, Rosemary Y. Oluwo at (202) 317-
4148; concerning submissions of comments
or to request a hearing, Regina Johnson at
(202) 317-6901 (not toll-free numbers).

### SUPPLEMENTARY INFORMATION:

#### Background

Section 401(k)(1) provides that a
profit-sharing or stock bonus plan, a pre-
ERISA money purchase plan, or a rural
cooperative plan shall not be considered
as failing to satisfy the requirements of
section 401(a) merely because the plan
includes a qualified cash or deferred ar-
rangement (CODA). To be considered a
qualified CODA, a plan must satisfy sev-
eral requirements, including: (i) under
section 401(k)(2)(B), amounts held by the
plan's trust that are attributable to em-
ployer contributions made pursuant to an
employee's election must satisfy certain
distribution requirements; (ii) under sec-
tion 401(k)(2)(C), an employee's right to
such employer contributions must be
nonforfeitable; and (iii) under section
401(k)(3), such employer contributions
must satisfy certain nondiscrimination re-
quirements.

Under section 401(k)(3)(D)(ii), the em-
ployer contributions taken into account
for purposes of applying the nondiscrim-
ination requirements may, under such
rules as the Secretary may provide and at
the election of the employer, include, in
addition to contributions made pursuant to
an employee's election, matching contri-
butions that meet the distribution and
nonforfeitability requirements of section
401(k)(2)(B) and (C) and qualified non-
elective contributions within the meaning
of section 401(m)(4)(C). Under section
401(m)(4)(C), a qualified nonelective con-
tribution is an employer contribution, other
than a matching contribution, with respect
to which the distribution and nonforfeitabil-
ity requirements of section 401(k)(2)(B) and
(C) are met.

Under § 1.401(k)-1(b)(1)(ii), a CODA
satisfies the applicable nondiscrimination
requirements if it satisfies the actual de-
ferral percentage (ADP) test of section
401(k)(3), described in § 1.401(k)-2. The
ADP test limits the degree of disparity
permitted between the percentage of com-

pensation made as employer contributions
to the plan for a plan year on behalf of
eligible highly compensated employees
and the percentage of compensation made
as employer contributions on behalf of
eligible nonhighly compensated employ-
ees. If the ADP test limits are exceeded,
the employer must take corrective action
to ensure that the limits are met. In deter-
mining the amount of employer contribu-
tions made on behalf of an eligible em-
ployee, employers are allowed to take into
account certain qualified matching contri-
butions (QMACs) and qualified nonelec-
tive contributions (QNECs) made on be-
half of the employee by the employer.

In lieu of applying the ADP test, an
employer may choose to design its plan to
satisfy an ADP safe harbor, including the
ADP safe harbor provisions of section
401(k)(12), described in § 1.401(k)-3.
Under § 1.401(k)-3, a plan satisfies the
ADP safe harbor provisions of section
401(k)(12) if, among other things, it sat-
isfies certain contribution requirements.
With respect to the safe harbor under sec-
tion 401(k)(12), an employer may choose
to satisfy the contribution requirement by
providing a certain level of QMACs or
QNECs to eligible nonhighly compen-
sated employees under the plan.

A defined contribution plan that pro-
vides for matching or employee after-tax
contributions must satisfy the nondiscrimi-
nation requirements under section 401(m)
with respect to those contributions for any
plan year. Under § 1.401(m)-1(b)(1), the
matching contributions and employee con-
tributions under a plan satisfy the nondis-
crimination requirements for a plan year if
the plan satisfies the actual contribution per-
centage (ACP) test of section 401(m)(2) de-
scribed in § 1.401(m)-2.

The ACP test limits the degree of dis-
parity permitted between the percentage
of compensation made as matching con-
tributions and after-tax employee contri-
butions for or by eligible highly compen-
sated employees under the plan and the
percentage of compensation made as
matching contributions and after-tax em-
ployee contributions for or by eligible
nonhighly compensated employees under
the plan. If the ACP test limits are ex-
ceeded, the employer must take corrective

action to ensure that the limits are met. In
determining the amount of employer con-
tributions made on behalf of an eligible
employee, employers are allowed to take
into account certain QNECs made on be-
half of the employee by the employer.
Employers must also take into account
QMACs made on behalf of the employee
by the employer unless an exclusion ap-
plies (including an exclusion for QMACs
that are taken into account under the ADP
test).

If an employer designs its plan to sat-
isfy the ADP safe harbor of section 401(k)
(12), it may avoid performing the ACP
test with respect to matching contributions
under the plan, as long as the additional
requirements of the ACP safe harbor of
section 401(m)(11) are met.

Under § 1.401(k)-6, QMACs and
QNECs are matching contributions and em-
ployer contributions (other than elective
or matching contributions) that satisfy the
nonforfeitability requirements of § 1.401
(k)-1(c) and the distribution requirements
of § 1.401(k)-1(d) "when they are contrib-
uted to the plan." Similarly, § 1.401(m)-5
includes independent definitions of QMACs
and QNECs, which are matching contribu-
tions and employer contributions (other than
elective or matching contributions) that sat-
isfy the nonforfeitability and distribution re-
quirements of § 1.401(k)-1(c) and (d) "at
the time the contribution is made."

The Treasury Department and the IRS
have received comments with respect to
the definitions of QMACs and QNECs in
§§ 1.401(k)-6 and 1.401(m)-5. In partic-
ular, commenters assert that employer
contributions should be able to qualify as
QMACs and QNECs as long as they sat-
isfy applicable nonforfeitability and distri-
bution requirements at the time they are
allocated to participants' accounts, rather
than when they are first contributed to the
plan. Commenters contend that interpret-
ing sections 401(k)(3)(D)(ii) and 401(m)
(4)(C) to require satisfaction of applicable
nonforfeitability and distribution require-
ments at the time amounts are first con-
tributed to the plan would preclude plan
sponsors with plans that permit the use of
amounts in plan forfeiture accounts to off-
set future employer contributions under
the plan from applying such amounts to
fund QMACs and QNECs. This is be-
cause the amounts would have been allo-

cated to the forfeiture accounts only after
a participant incurred a forfeiture of ben-
efits and, thus, generally would have been
subject to a vesting schedule when they
were first contributed to the plan. Com-
menters have requested that QMAC and
QNEC requirements not be interpreted to
prevent the use of plan forfeitures to fund
QMACs and QNECs. The commenters
urge that the nonforfeitability and distri-
bution requirements under § 1.401(k)-6
should apply when QMACs and QNECs
are allocated to participants' accounts and
not when the contributions are first made
to the plan.

#### Explanation of Provisions

After consideration of the comments
described in this preamble in the "Back-
ground" section, the Treasury Depart-
ment and the IRS are proposing to amend
§ 1.401(k)-6 to provide that amounts
used to fund QMACs and QNECs must be
nonforfeitable and subject to distribution
restrictions in accordance with § 1.401
(k)-1(c) and (d) when allocated to partic-
ipants' accounts, and to no longer require
that amounts used to fund QMACs and
QNECs satisfy the nonforfeitability and
distribution requirements when they are
first contributed to the plan. Treasury and
IRS note that while the second sentence of
each of the current definitions of QMACs
and QNECs refers to the "vesting" re-
quirements of § 1.401(k)-1(c), those re-
quirements are more appropriately charac-
terized as "nonforfeitability" requirements
consistent with section 401(k)(2)(C) and
the title of § 1.401(k)-1(c). Accordingly,
these proposed regulations would amend
these definitions to clarify those refer-
ences by replacing the word "vesting"
with "nonforfeitability" in each definition;
these changes are not otherwise intended
to have any substantive impact on this or
any other section of the regulations. These
proposed regulations would also amend
the definitions of QMACs and QNECs in
§ 1.401(m)-5 to provide cross-references
to the definitions of QMACs and QNECs
under § 1.401(k)-6. These amendments to
§ 1.401(m)-5 are being made to ensure a
consistent definition of QMACs and
QNECs in § 1.401(k)-6 and § 1.401(m)-5
(including the requirement that amounts
used to fund QMACs and QNECs be
made subject to nonforfeitability and dis-

tribution requirements when they are allo-
cated to participants' accounts as QMACs
or QNECs) and are not otherwise intended
to have any substantive impact on this or
any other section of the regulations.

#### Proposed Effective/Applicability Date

These regulations are proposed to ap-
ply to taxable years beginning on or after
the date of publication of the Treasury
decision adopting these rules as final reg-
ulations in the Federal Register. Taxpay-
ers, however, may rely on these proposed
regulations for periods preceding the pro-
posed applicability date. If, and to the
extent, the final regulations are more re-
strictive than the rules in these proposed
regulations, those provisions of the final
regulations will be applied without retro-
active effect.

#### Special Analyses

Certain IRS regulations, including this
one, are exempt from the requirements of
Executive Order 12866, as supplemented
and reaffirmed by Executive Order 13563.
Therefore, a regulatory impact assessment
is not required. Because the regulation
does not impose a collection of informa-
tion on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does
not apply. Pursuant to section 7805(f) of
the Internal Revenue Code, these regula-
tions will be submitted to the Chief Coun-
sel for Advocacy of the Small Business
Administration for comment on their im-
pact on small business.

#### Comments and Requests for Public Hearing

Before these proposed regulations are
adopted as final regulations, consider-
ation will be given to any comments that
are submitted timely to the IRS as pre-
scribed in this preamble under the
"ADDRESSES" heading. Treasury and
the IRS request comments on all aspects
of the proposed rules. All comments
will be available at www.regulations-
.gov or upon request. A public hearing
will be scheduled if requested in writing
by any person who timely submits writ-
ten comments. If a public hearing is
scheduled, notice of the date, time, and
place for the public hearing will be pub-
lished in the Federal Register.

#### Drafting Information

The principal author of these regula-
tions is Rosemary Y. Oluwo, Office of
Associate Chief Counsel (Tax Exempt
and Governmental Entities). However,
other personnel from the IRS and Trea-
sury Department participated in the devel-
opment of these regulations.

* * * * *

#### Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:

### PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.401(k)-1 is amended by
adding paragraph (g)(5) to read as follows:

§ 1.401(k)-1 Certain cash or deferred
arrangements.

* * * * *

(g) * * *

(5) Effective date for definitions of qual-
ified matching contributions (QMACs) and
qualified nonelective contributions (QNECs).
The revisions to the second sentence in the
definitions of QMACs and QNECs in
§ 1.401(k)-6 apply to taxable years ending
on or after the date of publication of the

Treasury decision adopting these rules as
final regulations in the Federal Register.

Par. 3. Section 1.401(k)-6 is amended
by revising the second sentence in the
definitions of Qualified matching contri-
butions (QMACs) and Qualified nonelec-
tive contributions (QNECs) to read as fol-
lows:

§ 1.401(k)-6 Definitions.

* * * * *

Qualified matching contributions
(QMACs). * * * Thus, the matching con-
tributions must satisfy the nonforfeitabil-
ity requirements of § 1.401(k)-1(c) and be
subject to the distribution requirements of
§ 1.401(k)-1(d) when they are allocated to
participants' accounts. * * *

Qualified nonelective contributions
(QNECs). * * * Thus, the nonelective
contributions must satisfy the nonforfeit-
ability requirements of § 1.401(k)-1(c)
and be subject to the distribution require-
ments of § 1.401(k)-1(d) when they are
allocated to participants' accounts. * * *
* * * * *

Par. 4. Section 1.401(m)-1 is amended
by adding paragraph (d)(4) to read as fol-
lows:

§ 1.401(m)-1 Employee contributions
and matching contributions .* * * * *

(d) * * *

(4) Effective date for definitions of quali-
fied matching contributions (QMACs) and
qualified nonelective contributions (QNECs).
The revisions to the definitions of
QMACs and QNECs in § 1.401(m)-5 ap-
ply to taxable years ending on or after the
date of publication of the Treasury deci-
sion adopting these rules as final regula-
tions in the Federal Register.

Par. 5. Section 1.401(m)-5 is amended
by revising the definitions of Qualified
matching contributions (QMACs) and
Qualified nonelective contributions
(QNECs) to read as follows:

§ 1.401(m)-5 Definitions.

* * * * *

Qualified matching contributions
(QMACs).Qualified matching contribu-
tions or QMACs means qualified matching
contributions or QMACs as defined in
§ 1.401(k)-6.

Qualified nonelective contributions
(QNECs). Qualified nonelective contribu-
tions or QNECs means qualified nonelec-
tive contributions or QNECs as defined in
§ 1.401(k)-6.

John Dalrymple,
Deputy Commissioner for
Services and Enforcement.

(Filed by the Office of the Federal Register on January 17,
2017, 8:45 a.m., and published in the issue of the Federal
Register for January 18, 2017, 82 F.R. 5477)

# Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).

Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

# Abbreviations

The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

GP-General Partner.

GR-Grantor.

IC-Insurance Company.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

CY-County.

LE-Lessee.

D-Decedent.

LP-Limited Partner.

LR-Lessor.

M-Minor.

Nonacq .- Nonacquiescence.

O Organization.

P-Parent Corporation.

PHC-Personal Holding Company.

PO-Possession of the U.S.

PR-Partner.

PRS-Partnership.

PTE-Prohibited Transaction Exemption.
Pub. L .- Public Law.

REIT-Real Estate Investment Trust.

Rev. Proc .- Revenue Procedure.

Rev. Rul .- Revenue Ruling.

S-Subsidiary.

S.P.R .- Statement of Procedural Rules.

Stat .- Statutes at Large.

T-Target Corporation.
T.C .- Tax Court.

T.D .- Treasury Decision.

TFE-Transferee.

TFR-Transferor.

T.I.R .- Technical Information Release.

TP-Taxpayer.
TR-Trust.

TT-Trustee.

U.S.C .- United States Code.

DC-Dummy Corporation.

DE-Donee.

Del. Order-Delegation Order.

DISC-Domestic International Sales Corporation.
DR-Donor.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

ERISA-Employee Retirement Income Security Act.
EX-Executor.

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

BK-Bank.

B.T.A .- Board of Tax Appeals.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

COOP-Cooperative.

X-Corporation.

Y-Corporation.

Z-Corporation.

## Numerical Finding List1

Bulletin 2017-1 through 2017-6

Notices:

2017-1, 2017-2 I.R.B. 367
2017-2, 2017-4 I.R.B. 539
2017-3, 2017-2 I.R.B. 368
2017-4, 2017-4 I.R.B. 541
2017-5, 2017-6 I.R.B. 779
2017-6, 2017-3 I.R.B. 422
2017-7, 2017-3 I.R.B. 423
2017-8, 2017-3 I.R.B. 423
2017-9, 2017-4 I.R.B. 542
2017-10, 2017-4 I.R.B. 544
2017-12, 2017-5 I.R.B. 742
2017-13, 2017-6 I.R.B. 780
2017-14, 2017-6 I.R.B. 783
2017-15, 2017-6 I.R.B. 783

## Proposed Regulations:

REG-128276-12, 2017-2 I.R.B. 369
REG-103477-14, 2017-5 I.R.B. 746
REG-112324-15, 2017-4 I.R.B. 547
REG-131643-15, 2017-6 I.R.B. 865
REG-134438-15, 2017-2 I.R.B. 373
REG-112800-16, 2017-4 I.R.B. 569
REG-123829-16, 2017-5 I.R.B. 764
REG-123841-16, 2017-5 I.R.B. 766
REG-133353-16, 2017-2 I.R.B. 372
REG-134247-16, 2017-5 I.R.B. 744

## Revenue Procedures:

2017-1, 2017-1 I.R.B. 1
2017-2, 2017-1 I.R.B. 106

2017-3, 2017-1 I.R.B. 130
2017-4, 2017-1 I.R.B. 146

2017-5, 2017-1 I.R.B. 230
2017-7, 2017-1 I.R.B. 269
2017-12, 2017-3 I.R.B. 424
2017-13, 2017-6 I.R.B. 787
2017-14, 2017-3 I.R.B. 426
2017-15, 2017-3 I.R.B. 437
2017-16, 2017-3 I.R.B. 501
2017-18, 2017-5 I.R.B. 743
2017-21, 2017-6 I.R.B. 791
2017-22, 2017-6 I.R.B. 863

## Revenue Rulings:

2017-1, 2017-3 I.R.B. 377
2017-2, 2017-2 I.R.B. 364
2017-3, 2017-4 I.R.B. 522

2017-4, 2017-6 I.R.B. 776

## Treasury Decisions:

9794, 2017-2 I.R.B. 273
9795, 2017-2 I.R.B. 326

Treasury Decisions :- Continued

9796, 2017-3 I.R.B. 380
9801, 2017-2 I.R.B. 355
9802, 2017-2 I.R.B. 361
9803, 2017-3 I.R.B. 384
9804, 2017-3 I.R.B. 406
9806, 2017-4 I.R.B. 524
9807, 2017-5 I.R.B. 573
9808, 2017-5 I.R.B. 580
9809, 2017-5 I.R.B. 664
9810, 2017-6 I.R.B. 775

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2016-27 through 2016-52 is in Internal Revenue Bulletin
2016-52, dated December 26, 2016.

## Finding List of Current Actions on Previously Published Items1

Bulletin 2017-1 through 2017-6

Notices:

2002-1
Amplified by
Notice 2017-1, 2017-2 I.R.B. 367

2011-86
Obsoleted by
Notice 2017-1, 2017-2 I.R.B. 367

2016-29
Modified by
Notice 2017-6, 2017-3 I.R.B. 422

### Revenue Procedures:

2013-22
Clarified by
Rev. Proc. 2017-18, 2017-05 I.R.B. 743

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2016-27 through 2016-52 is in Internal Revenue Bulletin
2016-52, dated December 26, 2016.

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# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
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Internal Revenue Bulletin 2017-6 (PDF rendition): IRS Notices

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