Internal Revenue Bulletin 2022-52 (PDF rendition): IRS Notices

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# INTERNAL REVENUE BULLETIN

IRS

Bulletin No. 2022-52
December 27, 2022

## 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.

## ADMINISTRATIVE, EXEMPT ORGANIZATIONS, INCOME TAX

### REG-106134-22, page 660.

These proposed regulations identify certain syndicated
conservation easement transactions and substantially
similar transactions as listed transactions per §1.6011-
4(b)(2). Material advisors and certain participants in
these listed transactions are required to disclose their
participation to the IRS and are subject to penalties
for failure to disclose. In addition, while the proposed
regulations exclude qualified organizations from being
treated as participants, material advisors, or parties to
a prohibited tax shelter transaction subject to excise
tax, these proposed regulations request comments on
whether the final regulations should remove the exclu-
sion from the application of the excise tax for qualified
organizations that continue to facilitate syndicated con-
servation easement transactions.

## ADMINISTRATIVE, INCOME TAX

### Rev. Proc. 2022-43, page 570.

This Revenue Procedure sets forth the final qualified
intermediary (QI) withholding agreement (QI agreement)
entered into by the Internal Revenue Service and cer-
tain foreign persons under Treas. Reg. § 1.1441-1(e)
(5) and (6). The QI agreement currently in effect in Rev.
Proc. 2017-15, 2017-3 I.R.B. 437, expires on Decem-
ber 31, 2022 (the 2017 QI Agreement). This Revenue
Procedure will apply beginning January 1, 2023, with a
six-year term (the 2023 QI Agreement). In general, the
QI agreement allows certain persons to enter into an
agreement with the IRS to simplify their obligations as

withholding agents under chapters 3 and 4 and as pay-
ors under chapter 61 and section 3406 for amounts
paid to their account holders. The QI agreement also
allows certain foreign persons to act as qualified deriv-
atives dealers (QDDs) and assume primary withholding
and reporting responsibilities on dividend equivalent
payments made in a principal capacity for purposes of
section 871(m). Additionally, the 2023 QI Agreement
allows foreign persons to enter into the agreement
for purposes of the withholding and reporting required
under sections 1446(a) and (f) with respect to their
account holders holding interests in publicly traded
partnerships.

## ADMINISTRATIVE, SPECIAL ANNOUNCEMENT

### Announcement 2022-28, page 659.

This announcement is being released in conjunction
with proposed regulations identifying certain syndicated
conservation easement transactions as listed transac-
tions. The announcement explains that the regulations
are being proposed in light of certain court decisions
holding that the APA requires the IRS to identify listed
transactions through notice-and-comment rulemaking,
and that the IRS intends to issue further regulations
identifying other listed transactions, to be finalized in
2023.

## INCOME TAX

### Notice 2022-61, page 560.

This notice provides guidance on the prevailing wage
and apprenticeship requirements that generally apply to

certain provisions of the Internal Revenue Code (Code),
as amended by the Inflation Reduction Act of 2022. This
notice also serves as the published guidance establish-
ing the 60-day period described in those provisions of
the Code with respect to the applicability of the prevail-
ing wage and apprenticeship requirements. Finally, this
notice provides guidance for determining the beginning
of construction of a facility for certain credits allowed
under the Code, and the beginning of installation of cer-
tain property with respect to the energy efficient com-
mercial buildings deduction under the Code.

### REG-113839-22, page 673.

This document contains proposed regulations that treat
members of a consolidated group as a single United
States shareholder in certain cases for purposes of
section 951(a)(2)(B) of the Internal Revenue Code.

### Rev. Proc. 2022-42, page 565.

This revenue procedure sets forth the procedures under
§ 30D(d)(3) for qualified manufacturers to enter into a
written agreement with the Secretary under which such
a manufacturer agrees to make periodic written reports
to the Secretary providing vehicle identification num-
bers and such other information related to each vehicle
manufactured by such manufacturer as the Secretary
may require. Vehicles eligible for the credit for qualified
commercial vehicles under § 45W and vehicles eligible
for the credit for previously owned clean vehicles under
§ 25E must be manufactured by a qualified manufac-
turer as defined in § 30D(d)(3). See §§ 45W(c)(1) and
25E(c)(1)(D)(i). This revenue procedure also provides
the procedures for persons selling vehicles to report
the information required to the IRS in order for a vehicle
to be eligible for the clean vehicle credit under §§ 30D
and 25E.

## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce 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 offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, 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 sub-
stantive 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 inter-
nal management are not published; however, statements of
internal 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 rul-
ings to taxpayers or technical advice to Service field offices,
identifying 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,
Legislation 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
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury's Office of the Assistant
Secretary (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

Prevailing Wage and
Apprenticeship Initial
Guidance under Section
45(b)(6)(B)(ii) and Other
Substantially Similar
Provisions

Notice 2022-61

This notice provides guidance on
the prevailing wage and apprenticeship
requirements that generally apply to cer-
tain provisions of the Internal Revenue
Code (Code), as amended by the Inflation
Reduction Act of 2022. This notice also
serves as the published guidance establish-
ing the 60-day period described in those
provisions of the Code with respect to the
applicability of the prevailing wage and
apprenticeship requirements. Finally, this
notice provides guidance for determining
the beginning of construction of a facil-
ity for certain credits allowed under the
Code, and the beginning of installation of
certain property with respect to the energy
efficient commercial buildings deduction
under the Code. This notice affects facil-
ities the construction of which began, or
certain property the installation of which
began, on or after January 29, 2023. The
Department of the Treasury (Treasury
Department) and the IRS anticipate issu-
ing proposed regulations and other guid-
ance with respect to the prevailing wage
and apprenticeship requirements.

DATES: January 29, 2023 is the date
that is 60 days after the Secretary of the
Treasury or her delegate (Secretary) pub-
lishes the guidance described in 26 U.S.C.
30C(g)(1)(C)(i), 45(b)(6)(B)(ii), 45Q(h)
(2), 45V(e)(2)(A)(i), 45Y(a)(2)(B)(ii),
48(a)(9)(B)(ii), 48E(a)(2)(A)(ii)(II) and
(a)(2)(B)(ii)(II), and 179D(b)(3)(B)(i).

FOR FURTHER INFORMA-
TION CONTACT: Alexander Scott,
CC:PSI:6, Internal Revenue Service, 1111

Constitution Avenue NW, Washington,
DC 20224, at (202) 317-6853 (not a toll-
free number).

## SUPPLEMENTARY INFORMATION:

### SECTION 1. PURPOSE

Public Law 117-169, 136 Stat. 1818
(August 16, 2022), commonly known as
the Inflation Reduction Act of 2022 (IRA),
amended §§ 30℃, 45, 45L, 45Q, 45U,
45V, 45Y, 45Z, 48, 48C, 48E, and 179D
of the Internal Revenue Code (Code) to
add prevailing wage and apprenticeship
requirements to qualify for increased
credit or deduction amounts.1 This notice
provides guidance on the prevailing wage
and apprenticeship requirements that
generally apply to those sections of the
Code. This notice also serves as the pub-
lished guidance under §§ 30C(g)(1)(C)
(i), 45(b)(6)(B)(ii), 45Q(h)(2), 45V(e)
(2)(A)(i), 45Y(a)(2)(B)(ii), 48(a)(9)(B)
(ii), 48E(a)(2)(A)(ii)(II) and (a)(2)(B)(ii)
(II), and 179D(b)(3)(B)(i) establishing
the 60-day period described in such sec-
tions with respect to the applicability of
the prevailing wage and apprenticeship
requirements. Finally, this notice provides
guidance for determining the beginning of
construction under §§ 30℃, 45, 45Q, 45V,
45Y, 48, and 48E, and the beginning of
installation under § 179D solely for pur-
poses of § 179D(b)(3)(B)(i).

The Department of the Treasury (Trea-
sury Department) and the Internal Reve-
nue Service (IRS) anticipate issuing pro-
posed regulations and other guidance with
respect to the prevailing wage and appren-
ticeship requirements.

## SECTION 2. BACKGROUND

.01 Increased Tax Benefits For Satisfy-
ing Certain Prevailing Wage and Appren-
ticeship or Construction and Installation
Requirements.

(1) In General. Increased credit
amounts are available under §§ 30℃, 45,
45Q, 45V, 45Y, 45Z, 48, 48C, and 48E,

and an increased deduction is available
under § 179D, for taxpayers satisfying
certain prevailing wage and appren-
ticeship requirements. Increased credit
amounts are available under §§ 45L and
45U for taxpayers satisfying certain pre-
vailing wage requirements. The general
concepts and provisions relating to the
increased tax benefits under § 45(b)(6),
(7), and (8) are similar to those under each
of these other Code sections. Therefore,
only the relevant provisions under § 45(b)
(6), (7), and (8) are discussed in section
2.01(2) and (3) of this notice.

(2) Prevailing Wage Requirements.
Section 45(b)(7)(A) provides that to meet
the prevailing wage requirements with
respect to any qualified facility, a tax-
payer must ensure that any laborers and
mechanics employed by the taxpayer or
any contractor or subcontractor in: (i) the
construction of such facility, and (ii) the
alteration or repair of such facility (with
respect to any taxable year, for any por-
tion of such taxable year that is within the
10-year period beginning on the date the
qualified facility is originally placed in
service), are paid wages at rates not less
than the prevailing rates for construction,
alteration, or repair of a similar charac-
ter in the locality in which such facility
is located as most recently determined
by the Secretary of Labor, in accordance
with subchapter IV of chapter 31 of title
40, United States Code (Prevailing Wage
Rate Requirements). Section 45(b)(7)(B)
provides correction and penalty mecha-
nisms for a taxpayer's failure to satisfy the
requirements under § 45(b)(7)(A).

(3) Apprenticeship Requirements. Sec-
tion 45(b)(8)(A)(i) provides that to meet
the apprenticeship requirements taxpay-
ers must ensure that, with respect to the
construction of any qualified facility, not
less than the applicable percentage of
the total labor hours of the construction,
alteration, or repair work (including such
work performed by any contractor or sub-
contractor) with respect to such facility
is, subject to § 45(b)(8)(B), performed
by qualified apprentices (Apprenticeship

1 See §§ 13101(f), 13102(k), 13104(d), 13105(a), 13204(a)(1), 13303(a)(1), 13304(d), 13404(d), 13501(a), 13701(a), 13702(a), and 13704(a) of the IRA.

Labor Hour Requirements). Under § 45(b)
(8)(A)(ii), for purposes of § 45(b)(8)(A)
(i), the applicable percentage is: (i) in the
case of a qualified facility the construction
of which begins before January 1, 2023,
10 percent, (ii) in the case of a qualified
facility the construction of which begins
after December 31, 2022, and before Jan-
uary 1, 2024, 12.5 percent, and (iii) in the
case of a qualified facility the construction
of which begins after December 31, 2023,
15 percent.

Section 45(b)(8)(B) provides that the
requirement under § 45(b)(8)(A)(i) is
subject to any applicable requirements
for apprentice-to-journeyworker ratios of
the Department of Labor or the applicable
State Apprenticeship Agency (Appren-
ticeship Ratio Requirements). Section
45(b)(8)(C) provides that each taxpayer,
contractor, or subcontractor who employs
4 or more individuals to perform construc-
tion, alteration, or repair work with respect
to the construction of a qualified facility
must employ 1 or more qualified appren-
tices to perform such work (Apprentice-
ship Participation Requirements).

Under § 45(b)(8)(D)(i), a taxpayer
is not treated as failing to satisfy the
requirements of § 45(b)(8) if: (i) the tax-
payer satisfies the requirements described
in § 45(b)(8)(D)(ii) (Good Faith Effort
Exception), or (ii) subject to § 45(b)(8)
(D)(iii) (Intentional Disregard Provision),
in the case of any failure by the taxpayer
to satisfy the requirement under § 45(b)
(8)(A) and (C) with respect to the con-
struction, alteration, or repair work on any
qualified facility to which § 45(b)(8)(D)(i)
(I) does not apply, the taxpayer makes pay-
ment to the Secretary of the Treasury or
her delegate (Secretary) of a penalty in an
amount equal to the product of $50 multi-
plied by the total labor hours for which the
requirement described in § 45(b)(8)(A)
and (C) was not satisfied with respect to
the construction, alteration, or repair work
on such qualified facility.

Under the Good Faith Effort Excep-
tion described in § 45(b)(8)(D)(ii), a
taxpayer is deemed to have satisfied the
apprenticeship requirements with respect
to a qualified facility if the taxpayer has
requested qualified apprentices from a
registered apprenticeship program, as
defined in § 3131(e)(3)(B), and: (i) such
request has been denied, provided that
such denial is not the result of a refusal
by the taxpayer or any contractors or sub-
contractors engaged in the performance
of construction, alteration, or repair work
with respect to such qualified facility
to comply with the established stan-
dards and requirements of the registered
apprenticeship program, or (ii) the reg-
istered apprenticeship program fails to
respond to such request within 5 business
days after the date on which such regis-
tered apprenticeship program received
such request.

Under the Intentional Disregard Pro-
vision, if the Secretary determines that
any failure described in § 45(b)(8)(D)(i)
(II) is due to intentional disregard of the
requirements under § 45(b)(8)(A) and (C),
§ 45(b)(8)(D)(i)(II) is applied by substi-
tuting "$500" for "$50."

Under § 45(b)(8)(E)(i), the term "labor
hours" means the total number of hours
devoted to the performance of construc-
tion, alteration, or repair work by any
individual employed by the taxpayer or
by any contractor or subcontractor. This
term excludes any hours worked by fore-
men, superintendents, owners, or persons
employed in a bona fide executive, admin-
istrative, or professional capacity (within
the meaning of those terms in part 541 of
title 29, Code of Federal Regulations).

Under § 45(b)(8)(E)(ii), the term
"qualified apprentice" means an indi-
vidual who is employed by the taxpayer
or by any contractor or subcontractor
and who is participating in a registered
apprenticeship program, as defined in
§ 3131(e)(3)(B).

Section 3131(e)(3)(B) defines a reg-
istered apprenticeship program as an
apprenticeship registered under the Act of
August 16, 1937 (commonly known as the
National Apprenticeship Act, 50 Stat. 664,
chapter 663, 29 U.S.C. 50 et seq.) that
meets the standards of subpart A of part
29 and part 30 of title 29 of the Code of
Federal Regulations.2

.02 Beginning of Construction.

(1) In General. A qualified facility,
property, project, or equipment, are hereaf-
ter referred to as a "facility" in this notice.
A facility generally must meet the prevail-
ing wage and apprenticeship requirements
to receive the increased credit or deduc-
tion amounts under §§ 30℃, 45, 45Q, 45V,
45Y, 48, 48E, and 179D if construction (or
installation for purposes of § 179D) of the
facility begins on or after the date 60 days
after the Secretary publishes guidance
with respect to the prevailing wage and
apprenticeship requirements of the Code.3
The IRS has issued notices under §§ 45,4
45Q,5 and 486 (collectively, IRS Notices)
that provide guidance for determining
when construction begins for purposes of
§§ 45, 45Q, and 48, respectively, includ-
ing a safe harbor regarding the continuity
requirement (described in section 2.02(3)
of this notice).

(2) Establishing Beginning of Con-
struction. The IRS Notices describe two
methods that a taxpayer may use to estab-
lish that construction of a facility begins:
(i) by starting physical work of a signif-
icant nature (Physical Work Test), and
(ii) by paying or incurring five percent or
more of the total cost of the facility (Five
Percent Safe Harbor).

(i) Physical Work Test. Under the Phys-
ical Work Test, construction of a facility
begins when physical work of a significant
nature begins, provided that the taxpayer
maintains a continuous program of con-
struction. This test focuses on the nature
of the work performed, not the amount or
the costs. Assuming the work performed

2 Effective November 25, 2022, 29 C.F.R. part 29 is no longer divided into subparts A and B because subpart B (Industry Recognized Apprenticeship Programs) was rescinded in a final rule
published on September 26, 2022. See 87 F.R. 58269.

3 Certain facilities are exempt from the prevailing wage and apprenticeship requirements. See, for example, § 45(b)(6)(B)(i).

4 Notice 2013-29, 2013-20 I.R.B. 1085; clarified by Notice 2013-60, 2013-44 I.R.B. 431; clarified and modified by Notice 2014-46, 2014-36 I.R.B. 520; updated by Notice 2015-25, 2015-13
I.R.B. 814; clarified and modified by Notice 2016-31, 2016-23 I.R.B. 1025; updated, clarified, and modified by Notice 2017-04, 2017-4 I.R.B. 541; Notice 2018-59, 2018-28 I.R.B. 196; mod-
ified by Notice 2019-43, 2019-31 I.R.B. 487; modified by Notice 2020-41, 2020-25 I.R.B. 954; clarified and modified by Notice 2021-5, 2021-3 I.R.B. 479; clarified and modified by Notice
2021-41, 2021-29 I.R.B. 17.

5 Notice 2020-12, 2020-11 I.R.B. 495.

6 Notice 2018-59, 2018-28 I.R.B. 196; modified by Notice 2019-43; modified by Notice 2020-41; clarified and modified by Notice 2021-5; clarified and modified by Notice 2021-41.

is of a significant nature, there is no fixed
minimum amount of work or monetary or
percentage threshold required to satisfy
the Physical Work Test. Physical work of
significant nature does not include prelim-
inary activities, even if the cost of those
preliminary activities is properly included
in the depreciable basis of the facility.7
For purposes of the Physical Work Test,
preliminary activities include, but are not
limited to, planning or designing, secur-
ing financing, exploring, researching,
obtaining permits, licensing, conducting
surveys, environmental and engineering
studies, or clearing a site.8

Work performed by the taxpayer and
work performed for the taxpayer by other
persons under a binding written contract9
that is entered into prior to the manufac-
ture, construction, or production of the
property for use by the taxpayer in the
taxpayer's trade or business (or for the
taxpayer's production of income) is taken
into account in determining whether con-
struction has begun.10 Both on-site and
off-site work (performed either by the tax-
payer or by another person under a bind-
ing written contract) may be taken into
account for purposes of demonstrating
that physical work of a significant nature
has begun. Physical work of a significant
nature does not include work (performed
either by the taxpayer or by another per-
son under a binding written contract) to
produce property that is either in existing
inventory or is normally held in inventory
by a vendor.11

(ii) Five Percent Safe Harbor. Under
the Five Percent Safe Harbor, construction
of a facility will be considered as having
begun if: (i) a taxpayer pays or incurs
(within the meaning of § 1.461-1(a)(1) and
(2)) five percent or more of the total cost
of the facility, and (ii) thereafter, the tax-
payer makes continuous efforts to advance

towards completion of the facility. All
costs properly included in the depreciable
basis of the facility are taken into account
to determine whether the Five Percent
Safe Harbor has been met.12 For property
that is manufactured, constructed, or pro-
duced for the taxpayer by another person
under a binding written contract with the
taxpayer, costs incurred with respect to
the property by the other person before
the property is provided to the taxpayer
are deemed incurred by the taxpayer when
the costs are incurred by the other person
under the principles of § 461.13

(3) Continuity Requirement and Con-
tinuity Safe Harbor. The IRS Notices, as
clarified and modified by Notice 2021-41,
provide that for purposes of the Physical
Work Test and Five Percent Safe Harbor,
taxpayers must demonstrate either con-
tinuous construction or continuous efforts
(Continuity Requirement) regardless of
whether the Physical Work Test or the Five
Percent Safe Harbor was used to establish
the beginning of construction. Whether a
taxpayer meets the Continuity Require-
ment under either test is determined by
the relevant facts and circumstances. The
IRS will closely scrutinize a facility and
may determine that the beginning of con-
struction is not satisfied with respect to
a facility if a taxpayer does not meet the
Continuity Requirement.

The IRS Notices, as subsequently
modified and clarified, also provide for a
"Continuity Safe Harbor" under which a
taxpayer will be deemed to satisfy the Con-
tinuity Requirement provided a qualified
facility is placed in service no more than
four calendar years after the calendar year
during which construction of the qualified
facility began for purposes of §§ 4514 and
48,15 and no more than six calendar years
after the calendar year during which con-
struction of the qualified facility or carbon

capture equipment began for purposes
of § 45Q.16 Certain offshore projects and
projects built on federal land under §§ 45
and 48 satisfy the Continuity Requirement
if such a project is placed into service no
more than 10 calendar years after the cal-
endar year during which construction of
the project began.17

.03 Recordkeeping.

Section 6001 provides that every person
liable for any tax imposed by the Code, or
for the collection thereof, must keep such
records as the Secretary may from time to
time prescribe. Section 1.6001-1(a) pro-
vides that any person subject to income
tax must keep such permanent books of
account or records, including inventories,
as are sufficient to establish the amount
of gross income, deductions, credits, or
other matters required to be shown by
such person in any return of such tax. Sec-
tion 1.6001-1(e) provides that the books
and records required by § 1.6001-1 must
be retained so long as the contents thereof
may become material in the administra-
tion of any internal revenue law.

Section 45(b)(12) authorizes the Sec-
retary to issue such regulations or other
guidance as the Secretary determines nec-
essary to carry out the purposes of § 45(b),
including regulations or other guidance
that provide requirements for recordkeep-
ing or information reporting for purposes
of administering the requirements of
§ 45(b).18

## SECTION 3. GUIDANCE WITH RESPECT TO PREVAILING WAGE RATE REQUIREMENTS

.01 How to Satisfy Prevailing Wage
Rate Requirements. The Prevailing Wage
Rate Requirements under § 45(b)(7)(A)
and the substantially similar provisions
set forth in §§ 30℃, 45L, 45Q, 45U, 45V,

7 For § 45, see Notice 2013-29, section 4.02(1); Notice 2016-31, section 5.03; for § 45Q, see Notice 2020-12, section 5.03; and for § 48, see Notice 2018-59, section 4.03.

8 For § 45, see Notice 2013-29, section 4.02(1); Notice 2016-31, section 5.03; for § 45Q, see Notice 2020-12, section 5.03; and for § 48, see Notice 2018-59, section 4.03.
9 For § 45, see Notice 2013-29, section 4.03(1); for § 45Q, see Notice 2020-12, section 8.02(1); for § 48, see Notice 2018-59, section 7.03(1).

10 For § 45, see Notice 2013-29, sections 4.01 and 4.03; for § 45Q, see Notice 2020-12, section 8.02; and for § 48, see Notice 2018-59, section 7.03.

11 For § 45, see Notice 2013-29, section 4.02(2); for § 45Q, see Notice 2020-12, section 5.04; and for § 48, see Notice 2018-59, section 4.04.
12 For § 45, see Notice 2013-29, section 5.01(1); for § 48, see Notice 2018-59, section 5.02; and for § 45Q, see Notice 2020-12, section 6.02.

13 For § 45, see Notice 2013-29, section 5.01(2); for § 48, see Notice 2018-59, section 7.03; for § 45Q, see Notice 2020-12, section 8.02.

14 Notice 2016-31, section 3.

15 Notice 2018-59, section 6.05.

16 Notice 2020-12, section 7.05.

17 Notice 2021-5. Projects under §§ 45 and 48 may also be eligible for the extended Continuity Safe Harbors provided for in Notices 2020-41 and 2021-41 due to the COVID-19 pandemic
depending on when construction began with respect to those projects.

18 See also §§ 30C(g)(4), 45L(g)(3), 45Q(h)(5), 45U(d)(3), 45V(e)(5), 45Y(f), 45Z(e), 48(a)(16), 48E(i), and 179D(b)(6).

45Y, 45Z, 48, 48C, 48E, and 179D will be
satisfied if:

(1) The taxpayer satisfies the Prevail-
ing Wage Rate Requirements with respect
to any laborer or mechanic employed in
the construction, alteration, or repair of a
facility, property, project, or equipment by
the taxpayer or any contractor or subcon-
tractor of the taxpayer; and

(2) The taxpayer maintains and pre-
serves sufficient records, including books
of account or records for work performed
by contractors or subcontractors of the
taxpayer, to establish that such laborers
and mechanics were paid wages not less
than such prevailing rates, in accordance
with the general recordkeeping require-
ments under § 6001 and § 1.6001-1, et
seq.

.02 Prevailing Wage Determinations. If
the Secretary of Labor has published on
www.sam.gov a prevailing wage determi-
nation for the geographic area and type
or types of construction applicable to the
facility, including all labor classifications
for the construction, alteration, or repair
work that will be done on the facility by
laborers or mechanics, that wage determi-
nation contains the prevailing rates for the
laborers or mechanics who perform work
on the facility as most recently determined
by the Secretary of Labor in accordance
with subchapter IV of chapter 31 of title
40, United States Code, as identified in
§ 45(b)(7)(A). The following procedures
described in section 3.02 of this notice are
designed to be used to request an unlisted
classification only in the limited circum-
stance when no labor classification on the
applicable prevailing wage determination
applies to the planned work.

If the Secretary of Labor has not pub-
lished a prevailing wage determination
for the geographic area and type of con-
struction for the facility on www.sam.
gov, or the Secretary of Labor has issued
a prevailing wage determination for the
geographic area and type of construc-
tion, but one or more labor classifications
for the construction, alteration, or repair
work that will be done on the facility by
laborers or mechanics is not listed, then
the taxpayer can rely on the procedures

established by the Secretary of Labor for
purposes of the requirement to pay pre-
vailing rates determined by the Secretary
of Labor in accordance with subchap-
ter IV of chapter 31 of title 40, United
States Code.19 To rely on the procedures
to request a wage determination or wage
rate, and to rely on the wage determina-
tion or rate provided in response to the
request, the taxpayer must contact the
Department of Labor, Wage and Hour
Division via email at IRAprevailing-
wage@dol.gov and provide the Wage
and Hour Division with the type of facil-
ity, facility location, proposed labor clas-
sifications, proposed prevailing wage
rates, job descriptions and duties, and
any rationale for the proposed classifica-
tions. The taxpayer may use these proce-
dures to request a wage determination, or
wage rates for the unlisted classifications,
applicable to the construction, alteration,
or repair of the facility. After review, the
Department of Labor, Wage and Hour
Division will notify the taxpayer as to the
labor classifications and wage rates to be
used for the type of work in question in
the area in which the facility is located.

Questions regarding the applicability of
a wage determination or its listed classifi-
cations and wage rates should be directed
to the Department of Labor, Wage and
Hour Division via email at IRAprevail-
ingwage@dol.gov.

For purposes of the Prevailing Wage
Rate Requirements, the prevailing rate
for qualified apprentices hired through a
registered apprenticeship program may be
less than the corresponding prevailing rate
for journeyworkers of the same classifica-
tion, as described in 29 C.F.R. 5.5(a)(4)(i).

For purposes of the Prevailing Wage
Requirements for the § 179D deduction,
the prevailing wage rate for installation
of energy efficient commercial building
property, energy efficient building retrofit
property, or property installed pursuant
to a qualified retrofit plan, is determined
with respect to the prevailing wage rate
for construction, alteration, or repair of a
similar character in the locality in which
such property is located, as most recently
determined by the Secretary of Labor, in

accordance with subchapter IV of chapter
31 of title 40, United States Code.

.03 Definitions. For purposes of the
Prevailing Wage Rate Requirement and
the associated recordkeeping require-
ments the following definitions apply.

(1) A taxpayer, contractor, or sub-
contractor is considered to "employ"
an individual if the individual performs
services for the taxpayer, contractor, or
subcontractor in exchange for remunera-
tion, regardless of whether the individual
would be characterized as an employee or
an independent contractor for other Fed-
eral tax purposes.

(2) The terms "wage" and "wages"
means "wages" as defined under 29 C.F.R.
5.2(p), including any bona fide fringe ben-
efits as defined therein.

(3) The term "laborer or mechanic"
means "laborer or mechanic" as defined
under 29 C.F.R. 5.2(m).

(4) The term "construction, alteration,
or repair" means "construction, prose-
cution, completion, or repair" as defined
under 29 C.F.R. 5.2(j).

(5) The term "prevailing wage" means
the wage listed for a particular classifica-
tion of laborer or mechanic on the appli-
cable wage determination for the type of
construction and the geographic area or
other applicable wage as determined by
the Secretary of Labor.

(6) The term "prevailing wage deter-
mination" means a wage determination
issued by the Department of Labor and
published on www.sam.gov.20

.04 Examples.

(1) Example 1. A taxpayer employs laborers and
mechanics to construct a facility. The taxpayer also
uses a contractor and subcontractor to construct the
facility. The Department of Labor has issued a pre-
vailing wage determination that applies to the type of
construction that the laborers and mechanics perform
for the county in which the facility is located. The
taxpayer ensures that the taxpayer, contractor, and
subcontractor pay each laborer and mechanic a wage
rate equal to the applicable rates for their respective
labor classifications listed in this prevailing wage
determination. The taxpayer maintains records that
are sufficient to establish that the taxpayer and the
taxpayer's contractor and subcontractor paid wages
not less than such prevailing wage rates. Such
records include but are not limited to, identifying
the applicable wage determination, the laborers and
mechanics who performed construction work on the

19 The taxpayer is not required to follow any other procedure to request a wage determination or a wage rate under § 45(b)(7)(A), including submission of the Form SF-1444.
20 Prevailing wage determinations and the applicable procedures are described in section 3.02 of this notice, above.

facility, the classifications of work they performed,
their hours worked in each classification, and the
wage rates paid for the work. Under these facts, the
taxpayer will be considered to have satisfied the Pre-
vailing Wage Rate Requirements with respect to the
facility.

(2) Example 2. The facts are the same as in
Example 1, except that the Department of Labor
has not issued an applicable prevailing wage deter-
mination for the relevant type of construction and
geographic area in which the facility is being con-
structed. The taxpayer contacts the Department of
Labor, Wage and Hour Division under the proce-
dures described in section 3.02 of this notice. After
review, the Department of Labor, Wage and Hour
Division notifies the taxpayer as to the labor clas-
sifications and wage rates to be used for the type of
construction work in question in the area in which
the facility is located. The taxpayer ensures that the
taxpayer, contractor, and subcontractor pay each
laborer and mechanic a wage rate equal to the appli-
cable rates for the respective classifications listed in
this wage determination.

The taxpayer maintains records, which include
the additional prevailing wage rates provided by the
Department of Labor to establish that the taxpayer
and the taxpayer's contractor and subcontractor
paid wages not less than such prevailing wage rates.
Under these facts, the taxpayer will be considered
to have satisfied the Prevailing Wage Rate Require-
ments with respect to the facility.

(3) Example 3. The facts are the same as in
Example 1, except that the Department of Labor
has issued a prevailing wage determination that
applies to the type of construction that the laborers
and mechanics are hired to perform for the county
in which the facility is located, but that wage
determination does not include a classification of
laborer or mechanic that will be used to complete
the construction work on the facility (for example,
electrician, carpenter, laborer, etc.). The taxpayer
contacts the Department of Labor, Wage and Hour
Division under the procedures described in section
3.02 of this notice. After review, including con-
firming that no labor classification on the applica-
ble prevailing wage determination that applies to
the work exists, the Department of Labor, Wage
and Hour Division notifies the taxpayer as to the
wage rate to be paid regarding the additional clas-
sification. The taxpayer ensures that the taxpayer,
contractor, and subcontractor pay each laborer and
mechanic a wage rate equal to the applicable rates
for their respective labor classifications listed in
the prevailing wage determination, including the
additional wage rates provided by the Department
of Labor.

The taxpayer maintains records, which include
the additional wage rates provided by the Depart-
ment of Labor to establish that the taxpayer and tax-
payer's contractor and subcontractor paid wages not
less than prevailing wage rates. Under these facts,
the taxpayer will be considered to have satisfied the

Prevailing Wage Rate Requirements with respect to
the facility.

## SECTION 4. GUIDANCE WITH RESPECT TO APPRENTICESHIP REQUIREMENTS

.01 How to Satisfy Apprenticeship
Requirements. A taxpayer satisfies the
apprenticeship requirements described in
§ 45(b)(8) if:

(1) The taxpayer satisfies the Appren-
ticeship Labor Hour Requirements, sub-
ject to any applicable Apprenticeship
Ratio Requirements;

(2) The taxpayer satisfies the Appren-
ticeship Participation Requirements; and

(3) The taxpayer complies with the
general recordkeeping requirements under
§ 6001 and § 1.6001-1, including main-
taining books of account or records for
contractors or subcontractors of the tax-
payer, as applicable, in sufficient form to
establish that the Apprenticeship Labor
Hour and the Apprenticeship Participation
Requirements have been satisfied.

Under the Good Faith Effort Excep-
tion,21 the taxpayer will be considered to
have made a good faith effort in request-
ing qualified apprentices if the taxpayer
requests qualified apprentices from a reg-
istered apprenticeship program in accor-
dance with usual and customary business
practices for registered apprenticeship
programs in a particular industry.22 Pur-
suant to § 6001 and § 1.6001-1, the tax-
payer must maintain sufficient books and
records establishing the taxpayer's request
of qualified apprentices from a registered
apprenticeship program and the program's
denial of such request or non-response to
such request, as applicable.

.02 Definitions. For purposes of the
apprenticeship requirements the following
definitions apply.

an independent contractor for other Fed-
eral tax purposes.23

(2) The term "journeyworker" means
"journeyworker" as defined under 29
C.F.R. 29.2.

(3) The term "apprentice-to-journey-
worker ratio" means the ratio described
under 29 C.F.R. 29.5(b)(7).

(4) The term "construction, alteration,
or repair" means "construction, prose-
cution, completion, or repair" as defined
under 29 C.F.R. 5.2(j).

(5) The term "State Apprenticeship
Agency" means "State Apprenticeship
Agency" as defined under 29 C.F.R. 29.2.

.03 Example. A taxpayer employs workers and
qualified apprentices to construct a new facility. Con-
struction of the facility begins in calendar year 2023,
and the construction of the facility is completed in
calendar year 2023. To satisfy the apprenticeship
labor hour requirement, the percentage of total labor
hours to be performed by qualified apprentices is 12.5
percent for 2023. The total labor hours, as defined in
§ 45(b)(8)(E)(i), for the construction of the facility is
10,000 labor hours. The taxpayer employed qualified
apprentices that performed a total of 1,150 hours of
construction on the facility. On each day that a qual-
ified apprentice performed construction work on the
facility for the taxpayer, the applicable requirements
for apprentice-to-journeyworker ratios of the Depart-
ment of Labor or the applicable State Apprenticeship
Agency were met.

The taxpayer also hired a contractor to assist
with construction of the facility for 1,000 labor
hours of the 10,000 total labor hours. The contrac-
tor employed qualified apprentices that performed
a total of 100 hours of construction on the facility.
On each day that a qualified apprentice performed
construction work on the facility for the con-
tractor, the applicable requirements for appren-
tice-to-journeyworker ratios of the Department
of Labor or the applicable State Apprenticeship
Agency were met.

The taxpayer ensured that the taxpayer and
the contractor each employed 1 or more qualified
apprentices because the taxpayer and contractor each
employed 4 or more individuals to perform construc-
tion work on the qualified facility.

The taxpayer maintained sufficient records to
establish that the taxpayer and the contractor hired
by the taxpayer satisfied the Apprenticeship Labor
Hour Requirement of 1,250 total labor hours for
the facility (12.5% of 10,000 labor hours), and the
Apprenticeship Ratio and Apprenticeship Participa-
tion Requirements. Under these facts, the taxpayer
will be considered to have satisfied the Apprentice-
ship Labor Hour, Apprenticeship Ratio, and Appren-
ticeship Participation Requirements of the statute
with respect to the facility.

21 Described in section 2.01(3) of this notice, above.

22 Registered apprenticeship programs can be located using the Office of Apprenticeship's partner finder tool, available at https://www.apprenticeship.gov/partner-finder and through the
applicable State Apprenticeship Agency, https://www.apprenticeship.gov/about-us/state-offices.

23 This definition does not alter any of the existing legal requirements pertaining to the proper classification of qualified apprentices in registered apprenticeship programs as employees for
purposes of certain Federal laws and regulations.

## SECTION 5. DETERMINING WHEN CONSTRUCTION OR INSTALLATION BEGINS

To determine when construction begins
for purposes of §§ 30℃, 45V, 45Y, and
48E, principles similar to those under
Notice 2013-29 regarding the Physical
Work Test and Five Percent Safe Harbor
apply, and taxpayers satisfying either test
will be considered to have begun con-
struction. In addition, principles simi-
lar to those provided in the IRS Notices
regarding the Continuity Requirement
for purposes of §§ 30℃, 45V, 45Y, and
48E apply. Whether a taxpayer meets the
Continuity Requirement under either test
is determined by the relevant facts and
circumstances.

Similar principles to those under sec-
tion 3 of Notice 2016-31 regarding the
Continuity Safe Harbor also apply for pur-
poses of §§ 30℃, 45V, 45Y, and 48E. Tax-
payers may rely on the Continuity Safe
Harbor provided the facility is placed in
service no more than four calendar years
after the calendar year during which con-
struction began.

For purposes of § 179D, the IRS will
accept that installation has begun if a tax-
payer generally satisfies principles similar
to the two tests described in section 2.02
of this notice, above, regarding the begin-
ning of construction under Notice 2013-
29 (Physical Work Test and Five Percent
Safe Harbor). The relevant facts and cir-
cumstances will ultimately be determi-
native of whether a taxpayer has begun
installation.

For purposes of §§ 45, 45Q, and 48, the
IRS Notices will continue to apply under
each respective Code section, including
application of the Physical Work Test and
Five Percent Safe Harbor, and the rules
regarding the Continuity Requirement and
Continuity Safe Harbors.24

## SECTION 6. PAPERWORK REDUCTION ACT

The Paperwork Reduction Act of
1995 (PRA), 44 U.S.C. 3501 et seq., and

its attendant regulations, 5 C.F.R. part
1320, require an agency to consider the
impact of paperwork and other infor-
mation collection burdens imposed on
the public. The IRA allows taxpayers
to take certain increased credit amounts
or an increased deduction if they satisfy
the Prevailing Wage Requirements, and
Apprenticeship Requirements, where
applicable. The Department of Labor
will collect the data needed to issue
wage rates for taxpayers in connection
with facilities whose construction, alter-
ation, or repair is not subject to one or
more Davis-Bacon and Related Acts
(DBRA), as facilities subject to the
DBRA are already accounted for in an
existing collection approved by OMB.25
DOL data collections needed to regis-
ter apprentices and apprenticeship pro-
grams are accounted for in an existing
collection approved by OMB.26

Under the PRA, an agency may not
collect or sponsor an information collec-
tion requirement unless it displays a cur-
rently valid Office of Management and
Budget (OMB) control number.27 This
collection of information is approved
under OMB Control Number 1235-0034.
The Department of Labor estimates that
it will take an average of 15 minutes for
respondents to complete this collection
of information, including the time for
reviewing instructions, searching exist-
ing data sources, gathering and maintain-
ing the data needed, and completing and
reviewing the collection of information.
The information that the Department of
Labor will collect, as discussed in section
3.02 of this notice, includes the type of
facility, facility location, proposed labor
classifications, proposed prevailing wage
rates, job descriptions and duties, and any
rationale for the proposed classifications.
After review, the Department of Labor
will notify the taxpayer as to the labor
classifications and wage rates to be used
for the type of work in question in the area
in which the facility is located. You may
view the Department of Labor's webpage
instruction here: https://www.dol.gov/
agencies/whd/IRA.

## SECTION 7. DRAFTING INFORMATION

The principal authors of this notice are
Alexander Scott and Jeremy Milton of
Associate Chief Counsel (Passthroughs &
Special Industries). However, other per-
sonnel from the Treasury Department and
the IRS participated in its development.
For further information regarding this
notice contact Mr. Scott at (202) 317-6853
(not a toll-free number).

Melanie R. Krause,
Acting Deputy Commissioner for Ser-
vices and Enforcement.

Krishna P. Vallabhaneni,
Tax Legislative Counsel.

26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability. (Also: Part I, §§ 6011, 6662,
66624, 6707A; 1-6011-4.)

### Rev. Proc. 2022-42

#### SECTION 1. PURPOSE

This revenue procedure sets forth
the procedures under § 30D(d)(3) of the
Internal Revenue Code (Code) for quali-
fied manufacturers to enter into a written
agreement with the Secretary of the Trea-
sury or her delegate (Secretary) under
which such manufacturer agrees to make
periodic written reports to the Secretary
providing vehicle identification numbers
and such other information related to each
vehicle manufactured by such manufac-
turer that is eligible for a clean vehicle
credit as the Secretary may require. Vehi-
cles eligible for the clean vehicle credit
under § 30D of the Code (§ 30D credit),
the credit for qualified commercial clean
vehicles under § 45W of the Code (§ 45W
credit), and vehicles eligible for the credit
for previously-owned clean vehicles
under § 25E of the Code (§ 25E credit),
respectively, generally must be manu-
factured by a qualified manufacturer as

24 Described in section 2.02 of this notice, above.

25 OMB Control Number 1235-0023.

26 OMB Control Number 1205-0223.

27 See 5 C.F.R. 1320.8(b)(3)(vi).

described in § 30D(d)(1)(C) and (d)(3).1
See §§ 45W(c)(1) and 25E(c)(1)(D)(i).
This revenue procedure also provides the
procedures for persons selling vehicles
to report the information required to be
reported to the Internal Revenue Service
(IRS) in order for a vehicle to be eligible
for the clean vehicle credit under § 30D
or § 25E.

## SECTION 2. BACKGROUND

.01 Section 30D, Clean Vehicle Credit
(1) Section 30D was originally enacted
by § 205(a) of the Energy Improvement
and Extension Act of 2008, Division B
of Public Law 110-343, 122 Stat. 3765,
3835 (October 3, 2008), to provide a
credit for purchasing and placing in ser-
vice new qualified plug-in electric drive
motor vehicles. Section 30D has been
amended several times since its enact-
ment, most recently by § 13401 of Public
Law 117-169, 136 Stat. 1818 (August 16,
2022), commonly known as the Inflation
Reduction Act of 2022 (IRA). In general,
the amendments made by § 13401 of the
IRA to § 30D apply to vehicles placed in
service after December 31, 2022, except
as provided in § 13401(k)(2) through (5)
of the IRA.

(2) As amended by § 13401(b) of
the IRA, § 30D(d)(1)(G) requires, as of
August 17, 2022, any vehicle eligible for
the § 30D credit to undergo final assem-
bly in North America. Section 30D(d)
(5) defines "final assembly" as the pro-
cess by which a manufacturer produces a
new clean vehicle at, or through the use
of, a plant, factory, or other place from
which the vehicle is delivered to a dealer
or importer with all component parts
necessary for the mechanical operation
of the vehicle included with the vehi-
cle, whether or not the component parts
are permanently installed in or on the
vehicle.

(3) As amended by § 13401(c)(1) of
the IRA, § 30D(d)(1) defines a "new clean
vehicle" as a motor vehicle that satisfies
the following eight requirements set forth
in § 30D(d)(1)(A) through (H):

(a) The original use of the motor vehi-
cle must commence with the taxpayer.

(b) The motor vehicle must be acquired
for use or lease by the taxpayer and not
for resale.

(d) The motor vehicle must be treated
as a motor vehicle for purposes of title II
of the Clean Air Act.

(e) The motor vehicle must have a
gross vehicle weight rating of less than
14,000 pounds.

(f) The motor vehicle must be propelled
to a significant extent by an electric motor
that draws electricity from a battery that
has a capacity of not less than 7 kilowatt
hours and is capable of being recharged
from an external source of electricity.

(g) The final assembly of the motor
vehicle must occur within North America.

(h) The person who sells any vehicle to
the taxpayer must furnish a report to the
taxpayer and to the Secretary, at such time
and in such manner as the Secretary pro-
vides, containing the following items:

(i) The name and taxpayer identifica-
tion number of the taxpayer;

(ii) The vehicle identification number
of the vehicle, unless, in accordance with
any applicable rules promulgated by the
Secretary of Transportation, the vehicle is
not assigned such a number;

(iii) The battery capacity of the vehicle;

(iv) Verification that original use of the
vehicle commences with the taxpayer;

(v) The maximum credit under § 30D
allowable to a taxpayer with respect to
the vehicle (the amount reported is with-
out regard to the § 30D(f)(10) or § 25E(b)
limitations based on modified adjusted
gross income; and

(vi) In the case of a taxpayer who
makes an election to transfer the credit to
an eligible entity under § 30D(g)(1),2 any
amount described in § 30D(g)(2)(C) that
has been provided to such taxpayer.

(4) As amended by § 13401(c)(1) of
the IRA, §§ 30D(d)(1)(C) and 30D(d)
(3) replace the term "manufacturer" with
"qualified manufacturer" applicable to
vehicles placed in service after Decem-
ber 31, 2022.3 Section 30D(d)(3) defines
a "qualified manufacturer" as any manu-
facturer (within the meaning of the reg-
ulations prescribed by the Administrator
of the Environmental Protection Agency
for purposes of the administration of title
II of the Clean Air Act (as defined in 42
U.S.C. §§ 7521, et seq ) that enters into
a written agreement with the Secretary
under which such manufacturer agrees to
make periodic written reports to the Sec-
retary (at such times and in such manner
as the Secretary may provide) providing
vehicle identification numbers and such
other information related to each vehicle
manufactured by such manufacturer as the
Secretary may require. Section 30D(d)(6)
provides that "new clean vehicle" includes
any new qualified fuel cell motor vehicle
(as defined in § 30B(b)(3)) that meets the
requirements under § 30D(d)(1)(G) and
(H).

(5) Section 30D(e)(1)(A) provides that
the critical minerals requirement with
respect to the battery from which the elec-
tric motor of a vehicle draws electricity is
satisfied if the percentage of the value of
the applicable critical minerals (as defined
in § 45X(c)(6) of the Code) contained
in such battery that were (i) extracted or
processed in the United States, or in any
country with which the United States
has a free trade agreement in effect, or
(ii) recycled in North America, is equal to
or greater than the applicable percentage
(as certified by the qualified manufacturer,
in such form or manner as prescribed by

1 Section 30D(d)(6) defines a new clean vehicle to include any new qualified fuel cell motor vehicle (as defined in § 30B(b)(3) that meets the requirements of § 30D(1)(G) and (H). Section
25E(c) defines a previously-owned clean vehicle to include, in part, a motor vehicle that either (1) meets the requirements of § 30D(d)(1)(C) (regarding qualified manufacturer), or (2) sat-
isfies the requirements of § 30B(b)(3)(A) and (B) (regarding fuel cell motor vehicles) and has a gross vehicle weight rating of less than 14,000 pounds. Therefore, if a new clean vehicle is a
new qualified fuel cell motor vehicle described in § 30D(d)(6), it does not need to be made by a qualified manufacturer, as otherwise required under § 30D(d)(1)(C). Similarly, if a previous-
ly-owned clean vehicle is a fuel cell motor vehicle described in § 25E(c)(1)(D)(ii), it does not need to be made by a qualified manufacturer, as otherwise required under § 25E(c)(1)(D)(i).
However, any qualified manufacturer that makes fuel cell vehicles must report on such vehicles as described in sections 4.02 and 6 of this revenue procedure. In addition, any manufacturer
of fuel cell vehicles that is not subject to the requirement to be a qualified manufacturer is encouraged to become a qualified manufacturer for purposes of providing the IRS with information
to facilitate tax administration.

2 Amendments to § 30D to allow an election to transfer the credit to an eligible entity are effective for vehicles placed in service after December 31, 2023.

3 See also § 25E(c)(1)(D)(i) of the Code.

the Secretary). The applicable percentage
for the critical minerals requirement is set
forth in § 30D(e)(1)(B)(i) through (v) and
varies based on when the vehicle is placed
in service. In the case of a vehicle placed
in service after the date proposed guidance
is issued and before January 1, 2024, the
applicable percentage is 40 percent. In the
case of a vehicle placed in service during
calendar year 2024, 2025, and 2026,
the applicable percentage is 50 percent,
60 percent, and 70 percent, respectively.
In the case of a vehicle placed in service
after December 31, 2026, the applicable
percentage is 80 percent.

(6) Section 30D(e)(2)(A) provides that
the battery components requirement with
respect to the battery from which the elec-
tric motor of a vehicle draws electricity is
satisfied if the percentage of the value of
the components contained in such battery
that were manufactured or assembled in
North America is equal to or greater than
the applicable percentage (as certified by
the qualified manufacturer, in such form
or manner as prescribed by the Secretary).
The applicable percentage for the battery
components requirement is set forth in
§ 30D(e)(2)(B)(i) through (vi) and varies
based on when the vehicle is placed in
service. In the case of a vehicle placed in
service after the date proposed guidance
is issued and before January 1, 2024, the
applicable percentage is 50 percent. In the
case of a vehicle placed in service during
calendar year 2024 or 2025, the applicable
percentage is 60 percent. In the case of a
vehicle placed in service during calendar
year 2026, 2027, and 2028, the applicable
percentage is 70 percent, 80 percent, and
90 percent, respectively. In the case of a
vehicle placed in service after December
31, 2028, the applicable percentage is 100
percent.

(7) Section 13401(k)(3) of the IRA
provides that the critical minerals and the
battery components requirements apply to
vehicles placed in service after the date
on which proposed guidance with respect
to the critical minerals and the battery
components requirements is issued by the
Secretary. Such guidance is described in
§ 30D(e)(3)(B).4

(8) Section 30D(f)(11)(A) provides
that no credit is allowed for a vehicle with

a manufacturer's suggested retail price in
excess of the applicable limitation. Sec-
tion 30D(f)(11)(B) provides that the appli-
cable limitation for each vehicle classifi-
cation is as follows: in the case of a van,
a sport utility vehicle, or a pickup truck,
$80,000; and in the case of any other vehi-
cle, $55,000.

.02 Section 25E, Previously-Owned
Clean Vehicles Credit

(1) Section 13402 of the IRA added §
25E to the Code, which is generally effec-
tive for vehicles acquired after Decem-
ber 31, 2022, and before January 1, 2033
(except the election to transfer of the credit
to an eligible entity is effective for vehi-
cles acquired after December 31, 2023).
Section 25E(a) provides that in the case
of a qualified buyer who during a taxable
year places in service a previously-owned
clean vehicle, an income tax credit is
allowed for the taxable year equal to the
lesser of (1) $4,000, or (2) the amount
equal to 30 percent of the sale price with
respect to such vehicle (that is, the § 25E
credit).

(2) Section 25E(c) defines certain
terms for purposes of the § 25E credit.
Section 25E(c)(1) defines "previous-
ly-owned clean vehicle" as, with respect
to a taxpayer, a motor vehicle that satisfies
the following four requirements set forth
in § 25E(c)(1)(A) through (D):

(a) The model year of the motor vehi-
cle is at least 2 years earlier than the cal-
endar year in which the taxpayer acquires
such vehicle.

(b) The original use of the motor vehi-
cle commences with a person other than
the taxpayer.

(d) The motor vehicle:

(i) meets the requirements of § 30D(d)
(1)(C), (D), (E), (F), and (H) (except for
§ 30D(d)(1)(H)(iv)), or

(ii) is a motor vehicle that:

(A) satisfies the requirements under
§ 30B(b)(3)(A) and (B), and

(B) has a gross vehicle weight rating of
less than 14,000 pounds.

(3) Section 25E(c)(2) defines a "qual-
ified sale" as a sale of a motor vehicle
(A) by a dealer (as defined in § 30D(g)(8)),
(B) for a sale price that does not exceed

$25,000, and (C) that is the first transfer
since August 16, 2022, to a qualified buyer
other than the person with whom the origi-
nal use of such vehicle commenced.

(4) Section 25E(c)(3) defines "qualified
buyer" as, with respect to a sale of a motor
vehicle, a taxpayer (A) who is an individ-
ual, (B) who purchases such vehicle for
use and not for resale, (C) with respect
to whom no deduction is allowable with
respect to another taxpayer under § 151
of the Code, and (D) who has not been
allowed a § 25E credit for any sale during
the 3-year period ending on the date of the
sale of such vehicle.

(5) Section 25E(c)(4) defines "motor
vehicle" and "capacity" to have the mean-
ing given such terms in § 30D(d)(2) and
(4), respectively.

03\. Section 45W, Credit for Qualified
Commercial Clean Vehicles

(1) Section 13403(a) of the IRA added
new § 45W to the Code, which is effec-
tive for vehicles acquired after December
31, 2022, and before January 1, 2033. A
taxpayer can claim a § 45W credit for pur-
chasing and placing in service a qualified
commercial clean vehicle, as defined in
§ 45W(c), during the taxable year. The
amount of the § 45W credit is the lesser
of (1) 15 percent of the taxpayer's basis
in the vehicle (30 percent in the case of a
vehicle not powered by a gasoline or die-
sel internal combustion engine), or (2) the
incremental cost of the vehicle. Under §
45W(b)(4), the credit is limited to $7,500
in the case of a vehicle that has a gross
vehicle weight rating of less than 14,000
pounds, and $40,000 for all other vehicles.

(2) Under § 45W(c), a "qualified com-
mercial clean vehicle" is defined as any
vehicle that is of a character subject to the
allowance for depreciation that:

(a) meets the requirement under
§ 30D(d)(1)(C) of being made by a quali-
fied manufacturer and is acquired for use
or lease by the taxpayer and not for resale,

(b) either:

(i) meets the requirement under §
30D(d)(1)(D) of being treated as a motor
vehicle for purposes of title II of the Clean
Air Act and is manufactured primarily for
use on public streets, roads, and highways
(not including a vehicle operated exclu-
sively on a rail or rails), or

4 Section 8 of this revenue procedure confirms that the issuance of this revenue procedure is not the issuance of the proposed guidance described in § 30D(e)(3)(B).

(ii) is mobile machinery, as defined in
§ 4053(8) (including vehicles that are not
designed to perform a function of trans-
porting a load over the public highways),
and

(i) is propelled to a significant extent
by an electric motor that draws electric-
ity from a battery that has a capacity of
not less than 15 kilowatt hours (or, in the
case of a vehicle that has a gross vehicle
weight rating of less than 14,000 pounds,
7 kilowatt hours) and is capable of being
recharged from an external source of elec-
tricity, or

(ii) is a motor vehicle that satisfies
the requirements under § 30B(b)(3)(A)
and (B) of being a new qualified fuel cell
motor vehicle.

## SECTION 3. DEFINITIONS

.01 In General. Terms used in this
revenue procedure and not defined in
section 3 of this revenue procedure have
the same meaning as provided in § 30D,
as amended by the IRA, and §§ 45W and
25E, as enacted by the IRA.

.02 Clean Air Act Regulations. The
Clean Air Act Regulations are the regula-
tions prescribed by the Administrator of
the Environmental Protection Agency for
purposes of the administration of title II of
the Clean Air Act (42 U.S.C. 7521, et seq.).

.03 Model Year. The term "model year"
means the model year determined under
the Clean Air Act Regulations (see 40
CFR 86-082-2).

## SECTION 4. QUALIFIED MANUFACTURER'S WRITTEN AGREEMENT AND REPORTING

.01 Written Agreement.

(1) To meet certain statutory require-
ments of § 30D, § 25E, and § 45W, any
manufacturer (within the meaning of the
Clean Air Act Regulations) may enter into
a written agreement with the Secretary
to become a qualified manufacturer as
defined in § 30D(d)(3) by providing the
IRS a statement signed by a person cur-
rently authorized to bind the taxpayer in
these matters, in the following form:

"For purposes of establishing [insert
legal name of the manufacturer] as a
qualified manufacturer as described in §
30D(d)(3) of the Internal Revenue Code,
[insert legal name of the manufacturer]
hereby agrees to make periodic written
reports to the Internal Revenue Service
providing vehicle identification numbers
and such other information as described
in any guidance that may be issued by
the Secretary of the Treasury or the Sec-
retary's delegate (Secretary), including
section 4.02 of Revenue Procedure 2022-
42, related to each vehicle manufactured
by such manufacturer at such times and
in such manner as described in any guid-
ance that may be issued by the Secretary,
including section 6.02 of Revenue Proce-
dure 2022-42."

(2) Any changes to the content and
format of the written agreement will be
provided on irs.gov, and qualified man-
ufacturers will be notified to enter a
revised written agreement where neces-
sary. The IRS will not consider a vehi-
cle to meet the requirements of § 30D(d)
(1)(C) unless a qualified manufacturer
submits a written report containing the
information required by section 4.02 of
this revenue procedure with respect to
such vehicle. For the purposes of § 25E,
a qualified manufacturer must submit a
written report or reports containing the
information required by section 4.02 of
this revenue procedure with respect to
prior model year vehicles for such vehi-
cle to be considered a previously-owned
clean vehicle, to the extent such infor-
mation has not already been provided
for purposes of § 30D and/or § 45W. In
addition, any manufacturer of fuel cell
vehicles that is not subject to the require-
ment to be a qualified manufacturer is
encouraged to become a qualified man-
ufacturer for purposes of providing the
IRS with information to facilitate tax
administration.

.02 Content of Written Reports for
Qualified Manufacturers. The written
report providing information for vehicles
that may be eligible for the credit under
§ 30D, § 25E, and/or § 45W must contain
the name, address, and taxpayer identifica-
tion number of the qualified manufacturer.

This written report must be provided by
the qualified manufacturer to the IRS in
the time and manner described in section
6.02 of this revenue procedure. In addi-
tion, the written report must contain all of
the following information for any vehicle
that the qualified manufacturer asserts is
eligible for the credit under § 30D, § 25E,
and/or § 45W:

(1) General Information.

(a) The make, model, model year, and
any other appropriate identifiers of the
motor vehicle;

(b) Certification that the motor vehi-
cle is made by a qualified manufacturer,
within the meaning of § 30D(d)(3);

(d) The gross vehicle weight rating of
the motor vehicle;

(e) The battery capacity of the motor
vehicle;

(f) The motor vehicle's vehicle identifi-
cation number; and

(g) Such other information as the Sec-
retary may provide on irs.gov.

(2) Specifically, for § 30D:

(a) Certification that the motor vehicle
is propelled to a significant extent by an
electric motor that draws electricity from
a battery that has a capacity of not less
than 7 kilowatt hours and the battery is
capable of being recharged from an exter-
nal source of electricity, or is a new qual-
ified fuel cell motor vehicle (as defined in
§ 30B(b)(3)).

(b) Certification that the motor vehicle
is manufactured primarily for use on pub-
lic streets, roads and highways (not includ-
ing a vehicle operated exclusively on a rail
or rails) and has at least four wheels.

(d) Certification of the percentage of
the value of the applicable critical miner-
als (as defined in § 45X(c)(6)) contained in
the battery from which the electric motor
of the vehicle draws electricity that were
(i) extracted or processed in the United
States, or in any country with which the
United States has a free trade agreement in
effect, or (ii) recycled in North America.5

5 This certification takes effect once the Secretary issues proposed guidance pursuant to § 30D(e)(3)(B). The IRS will not accept any certification with respect to the value of applicable critical
minerals until the Secretary issues such guidance.

(e) Certification of the percentage of
the value of the components contained in
the battery from which the electric motor
of the vehicle draws electricity that were
manufactured or assembled in North
America.6

(f) Whether the motor vehicle is a van,
sport utility vehicle, pickup truck, or other
vehicle.

(g) The motor vehicle's manufacturer's
suggested retail price.

(3) Specifically, for § 25E:7

(a) Certification that the motor vehicle
is either: propelled to a significant extent
by an electric motor that draws electric-
ity from a battery that has a capacity of
not less than 7 kilowatt hours and the bat-
tery is capable of being recharged from an
external source of electricity, or is a new
qualified fuel cell motor vehicle that sat-
isfies the requirements under § 30B(b)(3)
(A) and (B) and has a gross vehicle weight
rating of less than 14,000 pounds.

(4) Specifically, for § 45W:

(a) For motor vehicles, certification
that the vehicle is manufactured primar-
ily for use on public streets, roads, and
highways (not including a vehicle oper-
ated exclusively on a rail or rails), and is
either: a motor vehicle that is propelled to
a significant extent by an electric motor
that draws electricity from a battery that
has a capacity of not less than 15 kilowatt
hours (or, in the case of a vehicle that has
a gross vehicle weight rating of less than
14,000 pounds, 7 kilowatt hours) and is
capable of being recharged from an exter-
nal source of electricity, or is a new qual-
ified fuel cell motor vehicle that satisfies
the requirements under § 30B(b)(3)(A)
and (B); or

(b) For mobile machinery, certifica-
tion that the machinery meets the defini-
tion in § 4053(8) of the Code (including
vehicles that are not designed to perform
a function of transporting a load over the
public highways), and that the machinery
is either: propelled to a significant extent

by an electric motor that draws electric-
ity from a battery that has a capacity of
not less than 15 kilowatt hours (or, in the
case of a vehicle that has a gross vehicle
weight rating of less than 14,000 pounds,
7 kilowatt hours) and is capable of being
recharged from an external source of elec-
tricity, or is a new qualified fuel cell motor
vehicle that satisfies the requirements
under § 30B(b)(3)(A) and (B).

(c) With respect to a motor vehicle with
a gross vehicle weight rating of less than
14,000 pounds, the manufacturer's sug-
gested retail price.

(5) Attestation Required. Each written
report must include: a declaration, appli-
cable to the certification, statements, and
any accompanying documents, signed by
a person currently authorized to bind the
qualified manufacturer (or, in the case of
a foreign vehicle manufacturer, its domes-
tic distributor) in these matters, in the fol-
lowing form: "Under penalties of perjury,
I declare that I have examined this certi-
fication, including accompanying docu-
ments, and to the best of my knowledge
and belief, the facts presented in support
of this certification are true, correct, and
complete."

.03 Taxpayer's Reliance. A taxpayer
who acquires a "new clean vehicle," a
"previously-owned clean vehicle" for
which the seller provides a clean vehicle
seller report, or a "qualified commercial
clean vehicle" and places it in service may
rely on the manufacturer's certification
concerning the manufacturer's status as a
qualified manufacturer (including in cases
in which the certification is received by
the IRS after the purchase of the vehicle).
A taxpayer also may rely on the informa-
tion and certifications contained in the
qualified manufacturer's written reports
for the tax credit allowed under §§ 30D,
25E, and 45W.

.04 Erroneous Written Reports. Any
acknowledgment that the IRS provides
for a written report, including a qualified
manufacturer's certifications under §§
30D, 45W, and 25E, is not a determination
that a motor vehicle or mobile machinery
qualifies for the credit under the respec-
tive Code sections.

## SECTION 5. SELLER'S REPORTS

.01 Required Reports under Sections
30D and 25E. For purposes of § 30D(d)
(1)(H), the person who sells any vehicle to
the taxpayer or, for purposes of § 25E(c)(1)
(D)(i), the dealer (as defined in § 30D(g)
(8)) who sells any vehicle to the taxpayer,
as applicable, (collectively, Seller) must
furnish a report to the taxpayer and the
IRS, at such time and in such manner as
the Secretary provides containing infor-
mation that is listed in this section 5.01.
Accordingly, for vehicle sales occurring
in calendar year 2023 or later, the Seller
must provide the report to the taxpayer not
later than the date the vehicle is purchased
and must submit the report to Secretary
within fifteen (15) days of the end of the
calendar year containing the following:

(1) The name and taxpayer identifica-
tion number of the Seller;

(2) The name and taxpayer identifica-
tion number of the taxpayer;

(3) The vehicle identification number
of the vehicle, unless, in accordance with
any applicable rules promulgated by the
Secretary of Transportation, the vehicle is
not assigned such a number;

(4) The battery capacity of the vehicle;
(5) Only for sales of new clean vehi-
cles, verification that original use of the
vehicle commences with the taxpayer;

(6) The date of sale, sale price of the
vehicle, and maximum credit under § 30D
or § 25E, as applicable, allowable to the
taxpayer with respect to the vehicle;

(7) For sales after December 31, 2023,
in the case of a taxpayer who makes an
election to transfer the credit to an eligible
entity under § 30D(g)(1), any amount paid
or otherwise allowable as a partial pay-
ment or down payment to the taxpayer;
and

(8) A declaration applicable to the
report signed by a person currently autho-
rized to bind the Seller in these matters,
in the following form: "Under penalties
of perjury, I declare that I have examined
this report submitted to the IRS pursuant
to Revenue Procedure 2022-42 by [insert
name of Seller], and to the best of my
knowledge and belief I certify that this

6 This certification takes effect once the Secretary issues proposed guidance pursuant to § 30D(e)(3)(B). The IRS will not accept any certification with respect to value of the components
contained in a vehicle's battery until the Secretary issues such guidance.

7 For motor vehicles for which such certification has not already been provided for purposes of § 30D and/or § 45W.

report is true, correct, and complete." This
written report must be provided to the IRS
in the time and manner described in sec-
tion 6.03 of this revenue procedure.

## SECTION 6. TIME AND METHOD FOR FILING WRITTEN AGREEMENTS AND REPORTS

### .01 Filing of Qualified Manufacturer Written Agreement.

Manufacturers must file their written
agreement pursuant to section 4.01 of
this revenue procedure to be considered
a qualified manufacturer. Manufacturers
must send their signed written agreements
to
IRS.Clean. Vehicle.Manufacturers@
irs.gov. The written agreement must be
signed by a person currently authorized
to bind the taxpayer in these matters. An
electronic signature is acceptable. Manu-
facturers will not be considered qualified
manufacturers until they have filed their
written agreements with the IRS.

.02 Time for Filing Reports by Quali-
fied Manufacturers.

Qualified manufacturers must file the
reports pursuant to section 4.02 of this rev-
enue procedure with the IRS on a monthly
basis, by the fifteenth of the month. Qual-
ified manufacturers may file reports more
frequently than once a month. Qualified
manufacturers must send an email to IRS.
Clean. Vehicles.QM.Reporting@irs.gov
indicating their intent to submit monthly
reports and the IRS will respond with
instructions on how to submit their report-
ing information. Additional information
regarding written reports will be provided
on irs.gov.

### .03 Time for Filing Seller Reports

For vehicle sales occurring in cal-
endar year 2023 and later, Sellers must
file reports pursuant to section 5 of this
revenue procedure with the IRS within
fifteen days after the end of the calendar
year. Sellers must submit their reporting
information in a format and method that
the Secretary provides. The first reports
from Sellers will be due on January 15,
2024.

## SECTION 7. PAPERWORK REDUCTION ACT

The collection of information con-
tained in this revenue procedure has been

submitted to the Office of Management
and Budget in accordance with the Paper-
work Reduction Act (44 U.S.C. 3507)
under control number 1545-2137.

An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.

The collections of information in this
revenue procedure are in sections 4.01,
4.02, 5.01, 6.01, 6.02, and 6.03. This infor-
mation is collected and retained to ensure
that vehicles meet the requirements for the
clean vehicle credit under § 30D, the new
qualified commercial clean vehicle credit
under § 45, and the previously-owned
clean vehicle credit under § 25E. This
information will be used to determine
whether the vehicle for which the credit
is claimed by a taxpayer is property that
qualifies for the credit. The collection of
information is voluntary to obtain a ben-
efit. The likely respondents are corpora-
tions and partnerships.

The estimated total annual reporting
burden is 13,491 hours.

The estimated annual burden per
respondent is 0.25 hours to complete the
reporting required under this revenue pro-
cedure. The estimated number of respon-
dents is 53,965. The estimated annual fre-
quency of responses is 12.

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 § 6103 of the Code.

## SECTION 8. PROPOSED GUIDANZCE FOR CRITICAL MINERALS AND BATTERY COMPONENTS REQUIREMENTS

For purposes of § 30D(e)(3)(B), the
issuance of this revenue procedure is not
the issuance of proposed guidance with
respect to the critical minerals and battery
components requirements under § 30D(e).
The Department of the Treasury (Treasury
Department) and the IRS will explicitly
identify when they are issuing proposed
guidance with respect to the critical min-
erals and battery components require-
ments under § 30D(e).

## SECTION 9. DRAFTING INFORMATION

The principal author of this revenue
procedure is the Office of Associate Chief
Counsel (Passthroughs & Special Indus-
tries). However, other personnel from the
Treasury Department and the IRS par-
ticipated in its development. For further
information regarding this revenue pro-
cedure, call the energy security guidance
contact number at (202) 317-5254 (not a
toll-free number).

26 CFR 1.1441-1(e)(5) and (6). 2023 Qualified
Intermediary Agreement.

## Rev. Proc. 2022-43

### SECTION 1. PURPOSE

.01 In General. This Revenue Proce-
dure sets forth the final qualified inter-
mediary (QI) withholding agreement (QI
agreement) entered into under §1.1441-
1(e)(5) that applies beginning January
1, 2023 (the 2023 QI Agreement). In
general, the QI agreement allows certain
persons to enter into an agreement with
the Internal Revenue Service (IRS) to
simplify their obligations as withhold-
ing agents under chapters 3 and 4 and
as payors under chapter 61 and section
3406 for amounts paid to their account
holders and allows certain persons to act
as qualified derivatives dealers (QDDs)
and assume primary withholding and
reporting responsibilities on all dividend
equivalent payments they make. The
2023 QI Agreement also allows foreign
persons to enter into the agreement for
purposes of the withholding and report-
ing required under sections 1446(a) and
(f) with respect to their account hold-
ers holding interests in publicly traded
partnerships.

### SECTION 2. SCOPE

.01 Entities Eligible to Execute a
QI Agreement. A QI agreement may be
entered into by persons described in
§1.1441-1(e)(5)(ii), including foreign
financial institutions (FFIs) (as defined
in §1.1471-5(d)), foreign clearing orga-
nizations, and foreign branches of U.S.

financial institutions and clearing organi-
zations. An eligible entity (as defined in
§1.1441-1(e)(6)(ii)) may also enter into a
QI agreement for purposes of becoming a
QDD.

An FFI may apply to enter into a QI
agreement only with respect to its branches
operating in jurisdictions identified on the
IRS's Approved KYC List and if the FFI is
able to, and agrees to, satisfy the require-
ments and obligations of (1) a participat-
ing FFI (including a reporting Model 2
FFI), (2) a registered deemed-compliant
FFI (including a reporting Model 1 FFI
and a nonreporting Model 2 FFI treated
as registered deemed-compliant), or (3)
a registered deemed-compliant Model 1
IGA FFI (as defined in section 2.17(C)
of the 2023 QI Agreement). An FFI that
is a certified deemed-compliant FFI
(including a nonreporting IGA FFI, as
defined in §1.1471-1(b)(83)) may enter
into a QI agreement if the FFI is able
to, and agrees to, assume the obligations
of, and to be treated as, (1) a participat-
ing FFI (including a reporting Model 2
FFI), (2) a registered deemed-compliant
FFI (including a reporting Model 1 FFI
or a nonreporting Model 2 FFI treated
as registered deemed-compliant), or (3)
a registered deemed-compliant Model
1 IGA FFI, with respect to all accounts
that it maintains (even if the FFI does not
intend to act as a QI for all of the accounts
it maintains). A central bank of issue may
enter into a QI agreement provided that
it meets and agrees to assume the obliga-
tions of, and to be treated as, (1) a partic-
ipating FFI (including a reporting Model
2 FFI) or (2) a registered deemed-com-
pliant FFI (including a reporting Model 1
FFI), with respect to any account that it
maintains that is held in connection with
a commercial financial activity described
in §1.1471-6(h) and for which it receives
a withholdable payment (as defined in
§1.1471-1(b)(145)). A foreign branch of a
U.S. financial institution or clearing orga-
nization may also apply to enter into a QI
agreement provided that it is a reporting
Model 1 FFI, or it agrees to assume the
requirements and obligations of a partic-
ipating FFI (including a reporting Model
2 FFI).

An entity that is a territory financial
institution (territory FI) (as defined in
§1.1471-1(b)(130)) or a nonparticipating

FFI (as defined in §1.1471-1(b)(82)) may
not apply to enter into a QI agreement.

A foreign corporation that is a non-fi-
nancial foreign entity or NFFE (as defined
in §1.1471-1(b)(80)) that is described in
one of the categories in §1.1441-1(e)(5)
(ii) may also apply to enter into a QI agree-
ment. An NFFE that seeks to act as an
intermediary on behalf of its shareholders
should not apply for QI status and instead
should apply for withholding foreign part-
nership status as a reverse hybrid entity.
An NFFE that enters into a QI agreement
to act an as intermediary on behalf of per-
sons other than its shareholders will be
required to satisfy the withholding and
reporting requirements of §§1.1472-1(a)
and 1.1474-1(i) with respect to any NFFE
that is a beneficial owner for whom the
QI is acting with respect to a withhold-
able payment. Except for a QDD that is
a partnership or a branch of a partnership,
the QI agreement generally does not apply
to a foreign partnership or foreign trust. A
foreign partnership or foreign trust may
apply for status as a withholding foreign
partnership or withholding foreign trust.
See §§1.1441-5(c)(2)(ii) and 1.1441-5(e)
(5)(v).

.02 Effect on Other Documents. Rev-
enue Procedure 2017-15, 2017-3 I.R.B.
437 (the 2017 QI Agreement), is super-
seded with respect to a QI's requirements
that apply after December 31, 2022. A
QI agreement in effect before December
31, 2022, expires, in accordance with its
terms, on December 31, 2022.

#### SECTION 3. BACKGROUND - Withholding and Reporting Requirements under Chapters 3, 4, and 61, and Sections 1446 and 3406.

.01 Withholding and Reporting under
Chapter 4 on Payments Made to FFIs and
Other Payees. Section 1471(a) requires a
withholding agent to deduct and withhold
a tax equal to 30 percent on any with-
holdable payment made to an FFI, unless
the FFI agrees to and complies with the
terms of the FFI agreement to satisfy the
obligations specified in section 1471(b)
(a participating FFI), is deemed to meet
the requirements under section 1471(b) (a
deemed-compliant FFI), or is treated as an
exempt beneficial owner under §1.1471-
6. Section 1472(a) requires a withholding

agent to deduct and withhold a tax equal to
30 percent on any withholdable payment
made to an NFFE (other than an excepted
NFFE) unless such entity provides a certi-
fication that it does not have any substan-
tial U.S. owners or provides information
regarding its substantial U.S. owners.

A participating FFI (including a
reporting Model 2 FFI) or registered
deemed-compliant FFI (other than a
reporting Model 1 FFI) will satisfy its
requirement to withhold under sections
1471(a) and 1472(a) on withholdable pay-
ments made to accounts held by entities
by withholding on accounts that the FFI
is required to treat as held by nonpartici-
pating FFIs and recalcitrant account hold-
ers under the FFI agreement, §1.1471-
5(f), or an applicable Model 2 IGA. See
the FFI agreement, the Model 2 IGA,
and §1.1471-5(f) for further withholding
requirements that may apply to FFIs and
the Model 2 IGA's suspension of with-
holding on non-consenting U.S. accounts.
A QI that is a reporting Model 1 FFI or
a registered deemed-compliant Model 1
IGA FFI will satisfy its requirement to
withhold under section 1471(a) on with-
holdable payments made to accounts held
by entities by withholding on accounts
that the FFI is required to treat as held by
nonparticipating FFIs.

A participating FFI (including a
reporting Model 2 FFI), a registered
deemed-compliant FFI, and a registered
deemed-compliant Model 1 IGA FFI
must report certain account information
regarding each U.S. account (or U.S.
reportable account) that it maintains to
the extent required under the FFI agree-
ment, §1.1471-5(f), or a Model 1 or
Model 2 IGA. A participating FFI (includ-
ing a reporting Model 2 FFI) or a regis-
tered deemed-compliant FFI (other than
a reporting Model 1 FFI) must report
certain information about accounts that
it maintains that are held by recalcitrant
account holders (or non-consenting U.S.
accounts). A withholding agent making
payments to an NFFE that is not reported
by an FFI as a U.S. account (or U.S.
reportable account) is also required to
report withholdable payments made to an
NFFE (other than an excepted NFFE) with
substantial U.S. owners on Form 8966,
FATCA Report. See §§1.1472-1(b)(1)
(iii) and 1.1474-1(i). A withholding agent

(including a participating FFI or registered
deemed-compliant FFI) that is required to
withhold on a withholdable payment must
report the payment on Form 1042-S, For-
eign Person's U.S. Source Income Subject
to Withholding.

.02 Withholding and Reporting under
Chapter 3 on Payments to Foreign Per-
sons. Sections 1441 and 1442 require a
withholding agent 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
person (including the payment of a divi-
dend equivalent under section 871(m)). A
lower rate of withholding may apply under
the Internal Revenue Code (the Code)
(for example, section 1443), the regula-
tions, or an income tax treaty. Generally,
a withholding agent must also report these
payments on Form 1042-S regardless
of whether withholding is required. See
§1.1461-1(c) (covering amounts subject
to reporting).

.03 Backup Withholding under Sec-
tion 3406 and Reporting on Payments
to Certain U.S. Persons under Chapter
61. Under sections 6041, 6042, 6045,
6049, and 6050N (chapter 61 or the
Form 1099 reporting provisions), payors
of interest, dividends, royalties, gross
proceeds from the sale of securities,
and other fixed or determinable income
must report payments made to certain
U.S. persons (that is, U.S. non-exempt
recipients or presumed U.S. non-exempt
recipients) on the appropriate Form 1099
unless an exception to reporting applies.
See §§1.6041-4(a); 1.6042-3(b)(1)(iii);
1.6045-1(g)(1)(i); 1.6049-5(b)(12); and
1.6050N-1(c)(1)(i). Under section 3406,
a payor must generally obtain a Form
W-9, Request for Taxpayer Identifica-
tion Number and Certification, from a
U.S. non-exempt recipient receiving a
payment reportable on a Form 1099 or
must otherwise backup withhold under
section 3406 and report the payment on
Form 1099.

.04 Coordination of Withholding and
Reporting Requirements under Chapters 3
and 4. With respect to a withholdable pay-
ment that is subject to withholding under
chapter 4, a withholding agent may credit
any tax withheld under chapter 4 against

its liability for any tax due with respect to
the payment under chapter 3. A withhold-
ing agent is required to report on a single
Form 1042-S the information required
under both chapters 3 and 4 with respect
to a payment subject to withholding under
both chapters 3 and 4. With respect to a
withholdable payment that is not subject
to withholding under chapter 4 and that is
an amount subject to withholding under
chapter 3, a withholding agent is also
required to report on Form 1042-S the
applicable chapter 4 exemption code for
the payment and the recipient's chapter 4
status.

.05 Responsibilities of Intermediaries
that Enter into QI Agreements. When the
IRS enters into a QI agreement with a for-
eign person (or foreign branch of a U.S.
person), that foreign person (or foreign
branch of a U.S. person) becomes a QI. A
QI is a withholding agent under chapters
3 and 4 and a payor under chapter 61 and
section 3406 for amounts that it pays to its
account holders. In addition, as described
in section 4.01 of this Revenue Procedure,
starting January 1, 2023, a QI may assume
withholding responsibilities under section
1446(a) for a distribution from a publicly
traded partnership (PTP) received on
behalf of an account holder and under sec-
tion 1446(f) for an amount realized from
the transfer of a PTP interest paid to an
account holder that is the transferor of the
interest. The general obligations of a QI as
a withholding agent, broker, or payor are
described in section 1.01 of the QI agree-
ment and are relevant to whether an event
of default occurs under section 11.06 of
the QI agreement.

A QI agreement also includes required
compliance procedures for QIs. Under
section 10 of the QI agreement, a QI is
required to have a responsible officer
adopt a compliance program and make
periodic certifications of compliance
on behalf of the QI for each three-year
certification period. The periodic cer-
tifications also include certain factual
information that is based in part on the
results of a periodic review of the QI's
compliance with its QI agreement, which
is required to be conducted for one year
of the certification period by an inde-
pendent reviewer except when the QI
obtains a waiver of its periodic review
requirement.

## SECTION 4. SUMMARY OF CHANGES TO THE QI AGREEMENT

This section 4 outlines changes to the
QI agreement that are included in the
2023 QI Agreement set forth in section
6 of this Revenue Procedure. Section
4.01 of this Revenue Procedure generally
describes a QI's requirements under sec-
tions 1446(a) and (f) that were proposed
to be added to the QI agreement in Notice
2022-23, 2022-20 I.R.B 1062, and mod-
ifications to those requirements included
in the 2023 QI Agreement. Section 4.02
of this Revenue Procedure describes the
requirements for QIs acting as QDDs or
as intermediaries with respect to payments
of dividend equivalents for purposes of
section 871(m). Section 4.03 of this Reve-
nue Procedure describes changes included
in the 2023 QI Agreement that relate to
stakeholder remarks regarding the 2017
QI Agreement received following its
publication. Section 4.04 of this Reve-
nue Procedure describes modifications
to the compliance and certification pro-
cedures for QIs, which relate to sections
1446(a) and (f) or are otherwise included
in the 2023 QI Agreement for improved
compliance. Section 4.05 of this Revenue
Procedure describes a limited number of
changes included in the 2023 QI Agree-
ment that are not described elsewhere in
this section 4.

.01 QI's Requirements under Sections
1446(a) and (f). Section 1446(a) requires
withholding by a partnership on its effec-
tively connected income allocable to a
foreign partner for a taxable year at the tax
rates specified in section 1446(b). In the
case of a PTP, however, an entity treated
as a nominee under §1.1446-4(b)(3) for a
PTP distribution made to a foreign partner
is a withholding agent for the distribution
and is required to withhold a tax under
section 1446(a) to the extent required
under §1.1446-4(d). A nominee or broker
holding a PTP interest is also required to
comply with partner reporting require-
ments under §1.6031(c)-1T.

With respect to transfers of partnership
interests, sections 864(c)(8) and 1446(f)
were added to the Internal Revenue Code
(the Code) by the Tax Cuts and Jobs Act,
Pub. L. 115-97 on December 22, 2017.
Section 864(c)(8) generally provides that

gain or loss derived by a foreign person
on the sale or exchange of an interest in a
partnership engaged in a trade or business
within the United States is treated as effec-
tively connected gain or loss to the extent
provided in that section. Section 1446(f)
(1) generally provides that if any portion
of the gain on any disposition of an inter-
est in a partnership would be treated under
section 864(c)(8) as effectively connected
with the conduct of a trade or business
within the United States, then the trans-
feree of the interest must withhold a tax
equal to 10 percent of the amount realized
on the disposition.

On November 30, 2020, in TD 9926,
85 FR 76910, final regulations were
published that (1) impose withholding
requirements under section 1446(f) on
brokers (including QIs) that effect trans-
fers of PTP interests and (2) amend certain
of the provisions of §1.1446-4 (relating to
withholding on PTP distributions) that
apply beginning January 1, 2023, includ-
ing allowing a QI to act as a nominee by
assuming withholding on a PTP distri-
bution (the final regulations). See Notice
2021-51, 2021-36 I.R.B. 361, regarding
the effective date of these provisions of
the final regulations.

On May 16, 2022, the Treasury Depart-
ment and the IRS released Notice 2022-
23, providing proposed changes to the QI
agreement to permit a QI to assume cer-
tain withholding and reporting responsi-
bilities under sections 1446(a) and (f). The
proposed changes to the QI agreement in
Notice 2022-23 cover the documentation,
withholding, and reporting requirements
applicable to QIs receiving payments of
PTP distributions (including amounts
subject to section 1446(a)) and amounts
realized under section 1446(f) on behalf
of account holders. For withholding by
QIs on amounts realized paid on transfers
of PTP interests, the proposed changes
incorporate the exceptions to withholding
provided in §1.1446(f)-4. For PTP dis-
tributions, the proposed changes require
withholding by a QI acting as a nominee
for a distribution under §1.1446-4 and
to the extent withholding is otherwise
required under section 3.02(C) of the
QI agreement (covering a QI's residual
withholding requirement). The proposed
changes allow a QI to assume withhold-
ing under section 1446(a) or (f) on a

payment-by-payment basis and also allow
a QI to act as a disclosing QI by providing
specific payee documentation to its with-
holding agent for the payment of a PTP
distribution or amount realized from the
sale of a PTP interest, thereby generally
relieving the QI from withholding and
reporting on those payments.

With respect to a QI's documentation
of account holders for sections 1446(a)
and (f), consistent with requirements for
1446(a) and (f) purposes, a proposed
requirement in Notice 2022-23 provides
that a withholding certificate is not con-
sidered valid without a U.S. TIN for the
account holder on the withholding certifi-
cate. With respect to a QI's reporting, the
proposed changes in Notice 2022-23 spec-
ify the requirements for QIs to report part-
ner information regarding account holders
holding PTP interests, which are gen-
erally derived from the requirements of
§1.6031(c)-1T to facilitate the issuance of
partner statements under section 6031(b)
when nominees hold partnership interests.
Notice 2022-23 also proposed require-
ments for a QI's reporting on Forms
1042-S for payments subject to withhold-
ing under section 1446(a) or (f), includ-
ing a requirement regarding a QI's issu-
ance of a payee-specific Form 1042-S that
reports withholding under section 1446(a)
or (f). Notice 2022-23 further proposed a
restriction on a QI's filing of a collective
refund for overwithholding under section
1446(a) or (f), material failures and events
of default specific to a QI's requirements
under sections 1446(a) and (f), and other
modifications to the QI agreement relating
to these proposed changes. Finally, con-
sistent with the final regulations, Notice
2022-23 proposed to permit a QI to apply
the reimbursement and set-off proce-
dures for overwithholding under sections
1446(a) and (f).

Notice 2022-23 did not, however,
include proposed changes to the compli-
ance procedures for QIs under section 10
of the 2017 QI Agreement or the certifi-
cations and related information a QI must
provide for each certification period (gen-
erally in Appendix I to the 2017 QI Agree-
ment) for purposes of its requirements
under sections 1446(a) and (f). Instead,
Notice 2022-23 requested comments on
these provisions; however, none were
received.

Subject to certain modifications, gen-
erally in response to comments received,
the 2023 QI Agreement incorporates the
changes proposed in Notice 2022-23.
This section 4.01 highlights comments
and modifications to Notice 2022-23 that
are included in the 2023 QI Agreement.
The 2023 QI Agreement also includes
compliance and certification procedures
for QIs relating to sections 1446(a) and
(f), which are described, together with
other changes to those procedures, in sec-
tion 4.04 of this Revenue Procedure. For
the conditions in the 2023 QI Agreement
regarding a QI's issuance of a payee-spe-
cific Form 1042-S (including to report
withholding under section 1446(a) or
(f)), see section 4.03(7) of this Revenue
Procedure. For references to general doc-
umentation validity standards applicable
to sections 1446(a) and (f) not included
in Notice 2022-23, see section 5.10(A) of
the 2023 QI Agreement.

(1) Requirement to collect U.S. TINs.
Comments expressed concern with a pro-
posed requirement in Notice 2022-23 that
would require QIs to obtain U.S. TINs
from their foreign account holders receiv-
ing PTP distributions or amounts realized
in order to treat documentation as valid
for purposes of sections 1446(a) and (f).
The comments raised concerns that, due
to this requirement, a QI might be found
in default of its QI agreement with respect
to section 5.01(A) of the QI agreement
(prescribing best efforts to collect valid
documentation) when it is unable to col-
lect U.S. TINs from a significant number
of its account holders despite having prop-
erly withheld based on the documentation
obtained. Comments also proposed that
QIs be provided a transition period to col-
lect U.S. TINs from their account holders
for purposes of section 1446(a) or (f) given
that collecting U.S. TINs from foreign
account holders is generally not required
of a QI for chapter 3 and 4 purposes (and,
thus, may have to be requested after oth-
erwise valid documentation is collected).
One comment requested a "best efforts"
safe harbor for QIs to request U.S. TINs
based on the reasonable cause excep-
tion to penalties for missing TINs under
§301.6724-1(e) (such as an initial TIN
solicitation and two follow-up solicita-
tions), while another comment requested
that a QI's failure to obtain U.S TINs not

be treated as a material failure or an event
of default under the QI agreement.

In response to these comments and dif-
ficulties that QIs generally may encoun-
ter in obtaining U.S. TINs from all their
account holders holding PTP interests, the
2023 QI Agreement provides solicitation
requirements that QIs will be required
to apply for collecting U.S. TINs from
their account holders receiving PTP dis-
tributions or amounts realized beginning
January 1, 2023. These requirements are
similar to those for payors to establish
that a failure to provide TINs is due to
the failure of the payee to provide infor-
mation for purposes of obtaining a waiver
from penalties for missing TINs on Form
1099 based on reasonable cause under
§301.6724-1(e). When a QI satisfies these
requirements, the QI will be considered to
have applied its "best efforts" to obtain the
U.S. TINs of its account holders receiv-
ing PTP distributions or amounts real-
ized under section 5.01(A) of the 2023
QI Agreement. The 2023 QI Agreement
makes clear, however, that this allow-
ance does not affect a QI's requirement to
collect valid documentation with a U.S.
TIN to apply reduced withholding under
section 1446(a) or (f) based on the status
of an account holder for any year, includ-
ing a foreign partnership or trust account
holder (as also required for a foreign part-
nership or trust in the instructions to Form
W-8IMY, Certificate of Foreign Interme-
diary, Foreign Flow-Through Entity, or
Certain U.S. Branches for United States
Tax Withholding and Reporting).

(2) Requirements for disclosing QIs.
Comments also raised concerns with the
proposed requirement in Notice 2022-23
that a QI must, when acting as a disclos-
ing QI for a payment of a PTP distribu-
tion or amount realized from the sale
of a PTP interest, act as a disclosing QI
for the entire amount of the payment.
Because this requirement could apply
when multiple account holders of a QI
receive a payment of a PTP distribution
or amount realized from the sale of a PTP
interest, the comments noted that a QI's
failure to provide valid documentation
to its withholding agent for any account
holder (which includes a U.S. TIN for
the account holder) would prevent the
QI from acting as a disclosing QI with
respect to all account holders receiving

the payment. One comment requested that
a QI be permitted to act as a disclosing
QI on both an account-by-account and
payment-by-payments basis. The com-
ment also requested that disclosing QIs
be permitted to apply the documentation
requirements applicable to nonqualified
intermediaries, an allowance that would
not require a disclosing QI to provide
valid payee documentation to its with-
holding agent when reduced withholding
is not sought. Another comment more spe-
cifically requested that a disclosing QI be
permitted to provide documentation to its
withholding agent for a foreign account
holder that does not include a U.S. TIN.
Finally, another comment requested clar-
ification on whether a QI would be per-
mitted to act as a disclosing QI for a U.S.
account holder (in addition to its foreign
account holders).

The 2023 QI Agreement incorporates
the requirement of Notice 2022-23 that
a QI must act as a disclosing QI for the
entire amount of a PTP distribution or
amount realized from the sale of a PTP
interest. Retaining this requirement will
prohibit a disclosing QI from acting as a
nonqualified intermediary with respect to
any account holder receiving a payment
of a PTP distribution or amount realized
and will thereby require the QI to with-
hold to the extent required under the 2023
QI Agreement due to underwithholding
by its withholding agent on the amount
paid to the account holder. See sections
3.02(C) and 10.05(C)(9) of the 2023 QI
Agreement (covering, respectively, a QI's
residual withholding requirement and a QI
reviewer's requirement to determine any
underwithholding when a QI acts as a dis-
closing QI).

In consideration of the comments,
however, the 2023 QI Agreement clarifies
the requirements of a disclosing QI with
respect to the specific payee documenta-
tion it provides to its withholding agent
for a foreign partner. Under the 2023 QI
Agreement, this documentation must
be a Form W-8 for each foreign partner
receiving the payment, but without regard
to whether the Form W-8 includes a U.S.
TIN. This provision addresses concerns
that a QI would not otherwise be permit-
ted to act as a disclosing QI for the entire
amount of a payment made to multiple
account holders due to any account holder

failing to provide its U.S. TIN despite
the QI's efforts to obtain the TIN under
section 5.01(A) of the 2023 QI Agree-
ment. See section 4.01(1) of this Revenue
Procedure.

Concerning whether a QI may act as a
disclosing QI for a payment allocable to a
U.S. account holder, the Treasury Depart-
ment and the IRS intended this result as
part of Notice 2022-23. For clarification,
the 2023 QI Agreement adds a reference
to Form W-9, Request for Taxpayer Identi-
fication Number and Certification, as part
of the specific payee documentation that a
disclosing QI may provide to its withhold-
ing agent.

(3) Partner information reporting. For
a QI not acting as a disclosing QI for a
PTP distribution or amount realized paid
to an account holder, Notice 2022-23
proposed to require that the QI issue to
the account holder the statement that is
described in §1.6031(c)-1T(h). Section
1.6031(c)-1T(h) requires this statement
to include information that generally cor-
responds to the information that the PTP
would have provided the account holder
on a Schedule K-1 (Form 1065)). The
requirement to issue this statement would
apply unless the QI is able to provide to
the PTP (or the PTP's agent) the statement
specified in §1.6031(c)-1T(a) with respect
to the account holder.

A comment on this proposed require-
ment requested the allowance of a simpli-
fied or modified Schedule K-1 that a QI
would be permitted to issue to an account
holder in lieu of a separate statement for
purposes of §1.6031(c)-1T(h). In response
to this comment, the 2023 QI Agreement
permits a QI to issue the statement by pro-
viding to the account holder the Schedule
K-1 issued by the PTP to the QI when the
QI includes with the Schedule K-1 supple-
mental information determined by the QI
indicating the percentage of each amount
on the Schedule K-1 applicable to the
account holder.

For a QI acting as a disclosing QI
for a PTP distribution or amount real-
ized paid to an account holder, Notice
2022-23 proposed a requirement for the
QI to provide the statement specified
in §1.6031(c)-1T(a) to the PTP (or the
PTP's agent) or to the QI's nominee for
the payment. Comments asserted that
providing this statement to a nominee is

unnecessary when the nominee maintains
fully segregated and disclosed accounts
for the account holders of a disclosing QI
receiving these payments because the QI
would already have provided the nomi-
nee with the partner information for the
nominee to report under §1.6031(c)-1T(a)
with respect to the PTP interests held by
the QI. In response to these comments,
the 2023 QI Agreement provides that the
statement specified in §1.6031(c)-1T(a) is
not required to be provided to a QI's nom-
inee to the extent the nominee maintains
fully segregated and disclosed accounts
for the disclosing QI's account holders
that include the information for the PTP
to issue the statement. With respect to the
information required on a statement pro-
vided by a QI under §1.6031(c)-1T(a), the
2023 QI Agreement specifies that it must
include a U.S. TIN for a foreign account
holder only when provided by the account
holder to the QI.

With respect to the definition of a
nominee included in Notice 2022-23,
one comment noted that the term "nom-
inee" is defined by reference to the defi-
nition under §1.1446-4(b)(3) (cover-
ing only nominees permitted to assume
withholding on PTP distributions under
section 1446(a)) and questioned whether
this definition should apply for purposes
of proposed section 8.07 of the 2023 QI
Agreement. In response to this comment,
the 2023 QI Agreement defines a nominee
for purposes of section 8.07 to mean any
entity that holds a PTP interest directly or
indirectly for another person (similar to
the term as used in §1.6031(c)-1T(a)).

(4) Validity period for section 1446
documentation. Comments requested
clarification on whether a QI would be
required to obtain revised documentation
from account holders for each payment of
a PTP distribution or amount realized from
the sale of a PTP interest, noting that cer-
tain proposed revisions in Notice 2022-23
suggested a payment-by-payment require-
ment for collecting documentation. The
Treasury Department and the IRS did not
intend to establish a requirement as raised
in these comments and note that refer-
ences in Notice 2022-23 to a QI's assump-
tion of withholding on a payment of a PTP
distribution or amount realized from the
sale of a PTP interest were intended to
distinguish those payments from chapter 3

payments (for which a QI may separately
assume withholding responsibilities).
In response to these comments, section
5.11(A) of the 2023 QI Agreement indi-
cates that the validity period of documen-
tation for purposes of section 1446(a) or
(f) is the same as the validity period that
otherwise applies to documentation under
section 5.11(A) of the 2023 QI Agreement
(covering documentation other than a
Form W-9).

(5) Allowance for collective refunds. A
comment requested that QIs be permitted
to file collective refunds for overwithhold-
ing under sections 1446(a) and (f) with
respect to their account holders to the same
extent permitted for chapter 3 payments.
This comment is not adopted as account
holders receiving payments subject to
withholding under section 1446(a) or (f)
are required to file U.S. income tax returns
to report these payments and should claim
any associated credits or refunds of the
withholding on those returns (and report
any other income required on the return).
See §§1.6012-1(b) and 1.6012-2(g). Thus,
the 2023 QI Agreement includes the same
restriction on a QI's use of the collective
refund procedures for overwithholding
under section 1446(f) or on a PTP distri-
bution as in Notice 2022-23.

(6) Presumption rule for section
1446(a) withholding. Section 5.13(C)
of the 2017 QI Agreement provides pre-
sumption rules for a QI withholding on
payments that cannot be reliably associ-
ated with valid documentation under sec-
tion 5.13(B) of the 2017 QI Agreement.
For a payment subject to withholding
under section 1446(a), Notice 2022-23
proposed to allow QIs to presume the sta-
tus of an account holder when they cannot
reliably associate the payment with valid
documentation, which would require the
QI to treat a partner in a PTP as a foreign
person, with the rate of withholding deter-
mined under §1.1446-4(d)(1)(iii). Because
§1.1446-4(d)(1)(iii) applies for determin-
ing the rate of withholding in those cases
only when a nominee also does not receive
a qualified notice for a PTP distribution (or
otherwise cannot determine the income
associated with the distribution based on
the notice), the reference to §1.1446-4(d)
(1)(iii) does not cover all cases in which
a QI would be required to determine the
rate of withholding under section 1446(a)

due to the absence of valid documentation
associated with a partner. As a result, the
2023 QI Agreement also includes a refer-
ence to the presumption rule of §1.1446-
1(c)(3) for a QI to determine the status of
a partner as a foreign individual or corpo-
ration (and, thus, the rate of withholding)
when the QI cannot reliably associate a
payment subject to section 1446(a) with-
holding with valid documentation from a
partner in cases not covered by the rule in
§1.1446-4(d)(1)(iii).

.02 Provisions Applicable to Quali-
fied Derivatives Dealers and Qualified
Security Lenders. The 2017 QI Agree-
ment includes the requirements for QIs
acting as QDDs and the requirements of
QIs with respect to payments of dividend
equivalents they receive in an intermedi-
ary capacity for purposes of regulations
issued under sections 871(m), 1441, 1461,
and 1473 (section 871(m) regulations).
The 2017 QI Agreement requires a QI act-
ing as a QDD to act as a QDD for all pay-
ments made as a principal with respect to
potential section 871(m) transactions and
all payments received as a principal with
respect to potential section 871(m) trans-
actions and underlying securities, exclud-
ing any payments made or received to the
extent treated as effectively connected
with the conduct of a trade or business
within the United States. The 2017 QI
Agreement generally provides that a QDD
must assume primary withholding respon-
sibility for purposes of chapters 3 and 4
and section 3406 for all payments it makes
as a QDD and that a QDD is subject to
withholding on dividends (including
deemed dividends) other than dividends
the QDD receives in its equity derivatives
dealer capacity in calendar year 2017. The
2017 QI Agreement requires that a QI
must act as a QDD for any securities lend-
ing or sale-repurchase transaction it enters
into that is a section 871(m) transaction
unless it is acting as an intermediary in the
transaction. The 2017 QI Agreement also
provides rules for how a QDD calculates
its section 871(m) amount and determines
its QDD Tax Liability and its requirements
to report payments on Forms 1042-S. For
further information on the requirements
for QIs to act as QDDs and for withhold-
ing on payments of dividend equivalents
and on dividends paid to QDDs, see
§§1.1441-1(e)(6) and 1.871-15. Finally,

the 2017 QI Agreement permits a QI to
act as a qualified securities lender (QSL)
in accordance with Notice 2010-46, 2010-
24 I.R.B. 757, but only to the extent that
a QI acts as an intermediary with respect
to payments of substitute dividends when
the QI is not acting as a QDD, and only
for 2017.

Following the publication of the 2017
QI Agreement, the Treasury Department
and the IRS published a series of notices
that deferred the full application of cer-
tain provisions of the section 871(m)
regulations, including certain of the
requirements applicable to QDDs, and the
requirement for withholding on payments
of dividends received by QDDs in their
equity derivatives dealer capacity. These
notices also extended the allowance for
QIs to continue to act as QSLs and apply
the provisions of Notice 2010-46, Part III
after 2017. Most recently, on September
12, 2022, the Treasury Department and the
IRS published Notice 2022-37, 2022-37
IRB 234, which extended the prior transi-
tion relief for another two years, generally
through calendar year 2024. The portions
of Notice 2022-37 that are relevant to the
2023 QI Agreement are discussed herein.

Similar to the 2017 QI Agreement, Part
V of Appendix 1 to the 2023 QI Agree-
ment reserves on the factual information
required to be reported for a QDD with the
periodic certification, and Appendix II to
the 2023 QI Agreement does not include
a sample of QDD accounts. This informa-
tion is anticipated to be added to the 2023
QI Agreement in a notice or revenue pro-
cedure that will set forth a rider to include
this information and any changes to the
requirements of QDDs deemed necessary.

For the QDD provisions, the 2023 QI
Agreement generally retains the provi-
sions of the 2017 QI Agreement with
some clarifications, including some guid-
ance for QDDs that are a partnership or
a branch of partnership (either, a "QDD
Partnership"). The 2023 QI Agreement
also reflects portions of prior Frequently
Asked Questions (FAQs) to supplement
the 2017 QI Agreement, which are avail-
able at: https://www.irs.gov/businesses/
corporations/qualified-intermediary-gen-
eral-faqs and Notice 2022-37. Consistent
with the 2017 QI Agreement, if a QI acts
as a QDD with respect to the home office
or branch, the home office or branch, as

applicable, must act as a QDD for all pay-
ments made as a principal with respect to
potential section 871(m) transactions and
all payments received as a principal with
respect to potential section 871(m) trans-
actions and underlying securities, exclud-
ing any payments made or received to the
extent treated as effectively connected
with the conduct of a trade or business
within the United States. It may not act as
a QDD with respect to any other payments.
It is expected that additional guidance will
be provided regarding dividend equiva-
lents and QDDs in the future. Below is a
summary of the significant changes from
the 2017 QI Agreement relating to section
871(m).

(1) QSL. Notice 2022-37 extended
the period that withholding agents may
apply the QSL rules provided in Notice
2010-46, Part III, for U.S. source substi-
tute dividend payments made in calendar
year 2023 and 2024. Under the 2023 QI
Agreement, a withholding agent may not
act as a QSL for payments made after
calendar year 2024. Until December 31,
2024, if a QI that is not acting as a QDD
acts as a QSL, it must act as a QSL and
assume primary withholding responsibil-
ity (including Form 1099 reporting) for all
substitute dividends received and paid by
the QI when acting as an intermediary or
dealer with respect to securities lending
and similar transactions. A QI that acts
as a QDD may not act as a QSL, except
as described in the prior sentence with
respect to payments on securities lending
or sale-repurchase transactions for which
the QI has determined that it is acting as an
intermediary. QIs acting as intermediaries
(but not as QSLs) for substitute dividends
must also assume primary withholding
responsibility with respect to all substitute
dividends when acting as intermediaries.

(2) Reporting and compliance.

(a) Reporting. Under the 2023 QI
Agreement, a QDD must assume primary
chapter 3 and chapter 4 withholding and
reporting responsibility and primary Form
1099 reporting and backup withhold-
ing responsibility under section 3406 for
payments made as a QDD with respect
to potential section 871(m) transactions.
In addition, a QI acting as a QDD (other
than a QDD that is a foreign branch of a
U.S. financial institution and as modified
for QDD Partnerships, discussed below)

remains liable for its QDD Tax Liabil-
ity and must report that liability on the
appropriate U.S. tax returns. U.S. finan-
cial institutions and U.S. partners of any
QDD Partnership must pay appropriate
U.S. taxes on the relevant QDD's activi-
ties. The 2023 QI Agreement clarifies that
a QI that is a QDD (or has a branch that is
a QDD) should file (1) a Form 1120 if it is
a domestic corporation, (2) a Form 1120-F
if it is a foreign corporation, or (3) a Form
1065 if it is a partnership. In addition, all
QDD Partnerships must file Forms 1042-S
with respect to any amounts under section
3.09 of the 2023 QI Agreement, as mod-
ified for a QDD Partnership, allocated to
each of their foreign partners. The Form
1120-F or 1065, as applicable, must be
filed whether or not it would have to be
filed if the entity were not a QDD (for
example, a foreign corporation cannot
rely on the exceptions to filing in the
Form 1120-F). Although the Form 1065
does not have a Schedule Q, each QDD
of a QDD Partnership must provide com-
parable information, as detailed in section
7.01(C) of the 2023 QI Agreement.

(b) Compliance. While a QDD is not
required to perform a periodic review for
calendar years 2023 and 2024 with respect
to its QDD activities, the 2023 QI Agree-
ment requires a QDD to certify, as part
of its periodic certification, that it made a
good faith effort to comply with the sec-
tion 871(m) regulations and relevant pro-
visions of the 2023 QI Agreement. The
2023 QI Agreement clarifies that in order
to rely on the good faith effort standard,
a QI must provide the information previ-
ously specified by FAQ #19 - Certifica-
tions and Periodic Reviews for the 2017
QI Agreement.

In addition, the 2023 QI Agreement
adds that a QDD must include informa-
tion about dividends that are received in
its equity derivatives dealer capacity on its
withholding statement for calendar years
2023 and 2024 (which may be done by
designating one or more accounts, if the
only dividends that can be received by
those accounts are in the QDD's equity
derivatives dealer capacity).

(3) QDD partnership. The 2023 QI
Agreement provides guidance on how
the agreement applies to a QDD Part-
nership. For example, the 2023 QI
Agreement provides that the QDD Tax

Liability for each QDD of a QDD Part-
nership is the gross income components
of the section 3.09 amounts, instead of
the amounts of tax liability under section
881, and that it includes any withhold-
ing required to be done by the partner-
ship with respect to its partners. It also
ensures that QDD Partnerships and
their partners retain the same dividend
equivalent payment timing as non-part-
nerships, and therefore requires that a
QDD Partnership determine the QDD
Tax Liability of its partners and any div-
idend equivalent payments in the QDD's
non-equity derivative dealer capacity on
the date provided in §1.871-15(j)(2) for
the applicable dividend for withhold-
ing and reporting purposes. In addition,
a QDD partnership must include either
withholding rate pool information or
specific payee information regarding its
partners when it provides a withholding
statement under section 6.02 of the 2023
QI Agreement and must file a recipient
specific Form 1042-S for each foreign
partner in connection with its withhold-
ing requirement under section 3.09 of
the 2023 QI Agreement.

(4) Clarifications and FAQ
incorporations.

(a) Naming convention. Under the
2023 QI Agreement, each QDD must sep-
arately qualify and be approved for QDD
status. In applying for QDD status, the
applicant must follow the naming con-
vention described in section 2.63 of the
2023 QI Agreement on its application
and, if approved as a QDD, on any other
tax forms or other materials for which the
QDD must be identified. This is the same
naming convention that was previously
described in an FAQ #13 - Certifications
and Periodic Reviews for the 2017 QI
Agreement.

(b) Eligible entity. The 2023 QI Agree-
ment revises the eligible entity definition
in section 2.23 to conform to §1.1441-
1(e)(6)(ii). As noted in a prior FAQ #14
\- New Applications/Renewals, the "any
other person otherwise acceptable to the
IRS" category is not intended to function
as a significant expansion of the definition
of eligible entity. If an applicant does not
satisfy one of the specific categories, the
applicant should explain why its facts are
very similar to a specified category and
describe how it is regulated.

.03 Stakeholder Remarks on 2017
QI Agreement. Following publication
of the 2017 QI Agreement, stakeholders
requested clarification on certain of its
provisions, some of which were addressed
as part of FAQs (in addition to the FAQs
related to QDDs referenced in section
4.02 of this Revenue Procedure). This sec-
tion 4.03 summarizes those stakeholders'
remarks and the related changes that are
included in the 2023 QI Agreement.

(1) Beneficiaries of certain tax-free
plans as direct account holders - Sec.
2.02. The 2017 QI Agreement defines
a direct account holder as any account
holder who has a direct relationship with
a QI that is an FFI (which includes a flow-
through entity such as a grantor trust). A
stakeholder noted uncertainty in the 2017
QI Agreement on whether this definition
could be applied to certain tax-free sav-
ings accounts that are treated as trusts
under applicable non-U.S. local law but
have a single grantor and beneficiary
who is treated as the account holder for
purposes of a QI's anti-money launder-
ing/know-your-customer (AML/KYC)
requirements. The stakeholder requested
clarification on whether a QI may treat the
sole beneficiary of the trust in these cases
as a direct account holder of an account
held by the trust, a treatment that would
result in more favorable documentation
requirements for a QI than treating the
beneficiary as an indirect account holder.

In response, the IRS issued FAQ #4 -
Provisions for 2017 QI Agreement, which
allows a QI to treat the beneficiary of a
tax-free plan as a direct account holder,
provided that several requirements are
met. The 2023 QI Agreement adopts the
requirements of FAQ #4 in the defini-
tion of a direct account holder in section
2.02(A).

(2) KYC Attachments as part of QI
agreement - Sec. 2.03. Unlike QI agree-
ments that preceded the 2017 QI Agree-
ment, the 2017 QI Agreement was not
printed and signed in hard copy. As a
result, the 2017 QI Agreement did not
include the references to "KYC Attach-
ments" for purposes of the IRS-approved
attachments applicable to a QI that had
been affixed to prior QI agreements. Due
to this change, a stakeholder raised its

concern that the 2017 QI Agreement did
not incorporate the KYC Attachments rel-
evant to a QI. As a result, the IRS issued
FAQ #3 - Provisions for 2017 QI Agree-
ment, which states that the IRS did not
intend to change the applicability of the
approved KYC Attachments in the 2017
QI Agreement, and that QIs may treat
an approved KYC Attachment as incor-
porated into their agreements. The 2023
QI Agreement incorporates this FAQ
by defining "Agreement" to include the
know-your-customer rules included in a
country attachment on IRS.gov relevant
to the QI (or a branch of the QI).

(3) Joint account treatment and cer-
tification of chapter 4 status - Sec. 4.05.
Under section 4.05(A)(1) of the 2017 QI
Agreement, a foreign partnership or trust
to which a QI applies joint account treat-
ment must have a chapter 4 status as a cer-
tified deemed-compliant FFI (other than
a registered deemed-compliant Model
1 IGA FFI), an owner-documented FFI
with respect to a QI, an exempt bene-
ficial owner, or an NFFE, or it must be
covered as an account that is excluded
from the definition of financial account
under Annex II of an applicable IGA or
under §1.1471-5(a). Additionally, a QI is
required to obtain from each partnership
or trust a certification indicating that the
partnership or trust maintained a per-
missible chapter 4 status during the QI's
entire certification period and must, as
part of Appendix I to the 2017 QI Agree-
ment, indicate that it was provided these
certifications.

Stakeholders remarked that requiring
QIs to obtain chapter 4 certifications for
each certification period is burdensome
given the significant number of partner-
ships and trusts to which many QIs apply
joint account treatment. The stakeholders
noted that, aside from this requirement, a
withholding agent or QI may continue to
rely on a chapter 4 status represented on a
Form W-8IMY from a partnership or trust
until the QI has reason to know or actual
knowledge that it is unreliable or incorrect
(and which a partnership or trust must oth-
erwise update when applicable).

In response, the IRS released FAQ #11
\- Certifications and Periodic Reviews.
This FAQ allows a QI to rely upon a valid
Form W-8IMY it has on file (and which a
QI may rely on under section 5.10 of the

2017 QI Agreement) to determine a per-
missible chapter 4 status of a partnership
or trust for purposes of section 4.05 of the
2017 QI Agreement. Thus, if a QI prop-
erly relies on a Form W-8IMY described
in the previous sentence, it is not required
to obtain an additional certification of
chapter 4 status from the partnership or
trust. Consistent with the FAQ, the 2023
QI Agreement omits the requirement
included in the 2017 QI Agreement for a
QI to obtain the additional certifications
regarding the chapter 4 statuses of part-
nerships and trusts for purposes of section
4.05 and the related requirement to make
the representation in Appendix I that it
received these certifications.

(4) Reporting limitation on benefits
category - Sec. 5.03. The 2017 QI Agree-
ment requires QIs to collect and report on
Forms 1042-S the specific category of the
limitation on benefits (LOB) provision
claimed by an entity account holder. A
stakeholder requested that the IRS require
specific LOB information to be reported
only when a QI files a recipient-specific
Form 1042-S as otherwise QIs would be
required to report withholding rate pool
information separately for each LOB
category when filing Forms 1042-S. In
response to this request, section 5.03(B)
of the 2023 QI Agreement clarifies that
QIs are required to report the specific LOB
category claimed by an entity account
holder only on a recipient-specific Form
1042-S. See also section 8.02(P) of the
2023 QI Agreement and section 4.03(7) of
this Revenue Procedure.

(5) Validity standards for documenta-
tion - 5.10(B). Under section 5.10(B) of
the 2017 QI Agreement (providing valid-
ity standards for reliance on documenta-
tion), a QI that is a financial institution, an
insurance company, or a broker or dealer
in securities has reason to know that doc-
umentation provided by a direct account
holder is incorrect or unreliable only as
prescribed in §1.1441-7(b)(3). Section
1.1441-7(b)(3) cross-references §1.1441-
7(b)(4) through (b)(9), which provides
requirements for reliance on documen-
tation for claims of foreign status and
reduced withholding under an income tax
treaty. Section 1.1441-7(b)(5)(i) provides
that a withholding certificate furnished
to establish foreign status is incorrect or
unreliable if the withholding agent has

a current residence or mailing address
as part of its account information that is
an address in the United States. For an
account holder claiming treaty benefits
based on documentary evidence, §1.1441-
7(b)(9)(i) provides that documentary
evidence is unreliable or incorrect if the
withholding agent has a current mailing or
current permanent residence address for
the direct account holder (whether or not
on the documentary evidence) that is out-
side the applicable treaty country or has
no permanent residence address for the
account holder.

Stakeholders noted that the cross-ref-
erence to §1.1441-7(b)(3) broadened the
validity standard applicable to a claim
of foreign status from that included in
prior versions of the QI agreement, which
required a QI to treat the claim as unreli-
able or incorrect based on having a U.S.
address for an account holder (rather than
a U.S. address in the account informa-
tion). Stakeholders also remarked that by
requiring a permanent residence address
for an account holder claiming treaty ben-
efits based on documentary evidence, the
2017 QI Agreement imposed a further
requirement for reliance on a treaty claim
not included in prior QI agreements.

In response, the IRS issued FAQs #1
and #2 - Provisions for 2017 QI Agree-
ment. FAQ #1 states that a QI is required
to treat a Form W-8 provided by a direct
account holder as unreliable for purposes
of a claim of foreign status if the QI has
a U.S. mailing or permanent address for
the account holder. Additionally, FAQ #2
states that the IRS would not require a QI
to re-document a direct account holder
claiming treaty benefits for purposes of
section 5.10(B) of the 2017 QI Agree-
ment, provided that it had documented the
account holder before January 1, 2018,
in accordance with the prior guidance
applicable to a QI. For a direct account
holder claiming treaty benefits and docu-
mented on or after January 1, 2018, FAQ
#2 did require that a QI have a permanent
residence address for the direct account
holder in the jurisdiction associated with
the documentary evidence.

Section 5.10(B) of the 2023 QI Agree-
ment incorporates the conditions spec-
ified in both FAQs for a QI's validity
requirements for relying on documenta-
tion. Additionally, as section 5.10(A) of

the 2017 QI Agreement included only
a limited number of cross references to
regulations covering the validity require-
ments for withholding agents, the 2023
QI Agreement provides additional cross
references to the specific provisions of
those regulations and reorganizes section
5.10 with additional subsections for easier
reference. Section 5.10(A) also includes
cross references to regulations addressing
general validity standards applicable to
documentation for purposes of sections
1446(a) and (f).

(6) Curing hold mail instruction - Sec.
5.10(D). In 2017, in TD 9808, 82 FR
29719, the Treasury Department and the
IRS promulgated temporary regulations
(the 2017 temporary regulations), which
allow a withholding agent to treat an
address subject to a hold mail instruction
as a beneficial owner's or account holder's
permanent residence address, provided
that the withholding agent obtained doc-
umentary evidence establishing the per-
son's residence in the country for which
the person claimed to be a resident for
tax purposes. Comments received on the
2017 temporary regulations requested that
the hold mail rule be eliminated or other-
wise that a withholding agent be allowed
to rely on documentary evidence merely
establishing a person's foreign status
(including documentary evidence that
does not indicate an address). With respect
to the 2017 QI Agreement, a stakeholder
requested similar relief for QIs that receive
addresses subject to hold mail instructions
from their account holders.

In 2020, in TD 9890, 85 FR 192, the
Treasury Department and the IRS pub-
lished final regulations (the 2020 final reg-
ulations) that modify the hold mail rules
set forth in the 2017 temporary regulations
to allow a withholding agent to treat an
account holder's address subject to a hold
mail instruction as a permanent residence
address if the withholding agent obtains
documentary evidence that supports the
person's claim of foreign status or, for a
claim of treaty benefits, the person's res-
idence in the country where the benefits
are claimed. For these purposes, the 2020
final regulations allow a withholding
agent to rely on documentary evidence
described in §1.1471-3(c)(5)(i), with-
out regard to whether the documentation
contains a permanent residence address.

Section 5.10(D) of the 2023 QI Agree-
ment includes the same requirements as
the 2020 final regulations regarding when
a QI may treat an address subject to a hold
mail instruction as a permanent residence
address.

(7) Furnishing recipient-specific Form
1042-S to account holder - Sec. 8.02.
When overwithholding is applied to a pay-
ment made to a QI's account holder and the
QI does not apply for a collective refund,
the 2017 QI Agreement requires the QI to
provide a recipient-specific Form 1042-S
when requested by the account holder. In
response to this requirement, stakeholders
raised various concerns. Some stakehold-
ers requested a specified time limitation
regarding when an account holder should
be able to obtain a recipient-specific Form
1042-S from a QI. Additionally, a stake-
holder further requested that QIs not be
required to issue a recipient-specific Form
1042-S to an account holder that does not
provide a U.S. TIN. Lastly, another stake-
holder noted that an account holder may
need a Form 1042-S to support a credit for
withholding on its U.S. income tax return
even when no overwithholding occurred.

Notice 2022-23 proposed a modifica-
tion to the QI agreement for the issuance
of a recipient-specific Form 1042-S for a
payment subject to withholding on a PTP
distribution or under section 1446(f). This
modification would require a QI to pro-
vide a recipient-specific Form 1042-S to
a foreign partner for a payment in those
cases only when the partner provides its
U.S. TIN (or indicates it has applied for
a TIN) to the QI and requests the form
within three calendar years of the year
of the payment for which the form is
requested. Comments on this proposed
requirement questioned whether a QI
should in all cases defer issuing a Form
1042-S until the account holder provides
its U.S. TIN to the QI.

In response to concerns and to broaden
the proposed modification in Notice 2022-
23 to cover additional payments subject to
withholding, section 8.02(P) of the 2023
QI Agreement generally requires a QI to
provide an account holder with a recipi-
ent-specific Form 1042-S if the account
holder makes a written request for the
form within two calendar years follow-
ing the year of the payment for which the
form is requested. If, however, a QI files a

Form 1042-S to report a payment subject
to section 1446(a) or (f) withholding with
respect to an account holder that requests
a Form 1042-S for the same calendar year,
the request must be made in writing within
three calendar years of the year of the pay-
ment, and the QI must provide the account
holder with a separate Form 1042-S for
each amount reportable on Form 1042-S
that was paid to the account holder for the
calendar year.

The three-year period referenced in
the preceding sentence is intended to pro-
vide a foreign account holder additional
time to request a Form 1042-S due to its
own requirement to file a U.S. income
tax return to report an amount subject to
section 1446(a) or (f) withholding, which
applies regardless of whether its tax lia-
bility on the payment was fully satisfied
through the withholding. Also, since an
account holder may be required to file a
U.S. income tax return in those and cer-
tain other cases, even when not requesting
a refund of overwithholding, the 2023 QI
Agreement does not limit a QI's require-
ment to issue a recipient-specific Form
1042-S to cases of overwithholding. Addi-
tionally, because the IRS requires that a
Form 1042-S used to support an account
holder's credit for withholding claimed on
an income tax return include the account
holder's U.S. TIN, the 2023 QI Agree-
ment omits the allowance in Notice 2022-
23 that permitted the account holder to
represent to a QI that it had applied for a
U.S. TIN when requesting a recipient-spe-
cific Form 1042-S. The requirement for
an account holder's U.S. TIN applies to
any request for a recipient-specific Form
1042-S.

Finally, in the case of a recipient-spe-
cific Form 1042-S issued by a QI to an
account holder of a disclosing QI, the
2023 QI Agreement requires that the QI
also issue a recipient copy of the Form
1042-S to the disclosing QI. This require-
ment, which was not included in Notice
2022-23, was also added to the 2023
instructions for Form 1042-S for a with-
holding agent making payments of PTP
distributions or amounts realized to a QI
acting as a disclosing QI.

(8) Certification due date for third-year
review - Sec. 10.03. The 2017 QI Agree-
ment requires a QI conducting a periodic
review for the third year of a certification

period to submit its periodic certification
by December 31 of the year following the
end of the certification period. Citing a
QI's dependence on other parties in com-
pleting a periodic review, a stakeholder
requested that the IRS allow QIs selecting
the third year of a certification period for
their periodic reviews to have until June
30 of the second year following the certifi-
cation period to submit their periodic cer-
tifications. The 2023 QI Agreement retains
the December 31 due date included in the
2017 QI Agreement. A QI, may, however,
seek an extension to this due date, which
will be considered on a case-by-case basis
by the IRS and granted under appropriate
circumstances.

(9) Standards of independence for
external reviewers - Sec. 10.04. A QI may
use either an internal or external reviewer
to conduct the periodic review required
by section 10.04 of the 2017 QI Agree-
ment. The 2017 QI Agreement generally
describes the standard of independence
required of an external reviewer by spec-
ifying that the reviewer cannot review
systems, policies, or procedures that the
reviewer (or the reviewer's firm) was
involved in designing, implementing, or
maintaining for a QI. Similarly, the pre-
amble to the 2017 QI Agreement states
that a reviewer's independence should be
determined on a firm-wide basis and that
the reviewer must have sufficient indepen-
dence to objectively conduct the review
and cannot review his or her own work or
the work of others in the reviewer's firm.

A stakeholder requested clarification
on the 2017 QI Agreement's standard of
independence applicable to an external
reviewer and raised questions concerning
the application of the standard in certain
scenarios. In consideration of this request
and that the 2017 QI Agreement may have
prescribed an independence standard that
goes beyond external reviewers' profes-
sional standards, the IRS issued FAQ #2
\- Certifications and Periodic Reviews.
The FAQ states that the IRS will allow
an external reviewer of a QI to apply
the same standards of independence that
would otherwise apply to its engagement
to conduct the periodic review (such as
an engagement to perform "agreed upon
procedures"). In Section 10.04(A)(2), the
2023 QI Agreement adopts the allowance
provided in FAQ #2 for purposes of the

standard of independence for an external
reviewer.

(10) Final certification and periodic
review for terminating QIs - Sec. 11.05.
Section 11.02(B) of the 2017 QI Agree-
ment requires a QI terminating its QI
agreement to submit a final certification
within six months of the date of termi-
nation regardless of whether a periodic
review has been completed for the por-
tion of the certification period preceding
termination. For a case in which a QI ter-
minates its QI agreement (predecessor QI)
and merges into or is acquired by another
QI that assumes the predecessor QI's obli-
gations relating to the predecessor QI's QI
agreement (successor QI), section 11.05
of the 2017 QI Agreement provides that
either QI must deliver a notice of termina-
tion and merger to the IRS. Additionally,
the successor QI must provide the prede-
cessor QI's final certification and include
the predecessor QI in its periodic review
following the merger.

After publication of the 2017 QI Agree-
ment, a stakeholder requested that the IRS
establish a coordinated approach for QIs
to conduct periodic reviews and make
periodic certifications following a merger
of QIs or an acquisition of a QI by another
QI to avoid duplicative certifications and
periodic reviews. The stakeholder sug-
gested that the IRS allow separate certi-
fications to be made by the predecessor
QI and successor QI or a consolidated
certification that covers both entities to be
submitted by the successor QI. In the case
of a consolidated certification, the stake-
holder requested that the deadline for the
successor QI to submit a certification for
the predecessor QI be deferred from the
deadline for a terminating QI's final certi-
fication to align with the deadline for the
successor QI's next periodic certification.
The stakeholder also requested that, in
the event of a merger or acquisition, the
IRS require only one periodic review to
be conducted by the successor QI, which
would cover both entities for the final cer-
tification period of the predecessor QI.

Similar to the 2017 QI Agreement, the
2023 QI Agreement provides that a QI ter-
minating its QI agreement must submit a
final certification within six months of ter-
mination. The 2023 QI Agreement specifi-
cally provides, however, that if a QI termi-
nates its QI agreement in the final year of

a certification period, the QI must submit
a periodic review report covering one of
the two years before the year of termina-
tion that meets the requirements of section
10.06, unless the QI is granted a waiver
pursuant to section 10.07. Otherwise, no
periodic review is required for the final
certification period of a QI terminating its
QI agreement.

In consideration of the stakeholder
remarks above, the 2023 QI Agreement
includes certain changes to specify the
requirements for a QI's termination that
are applicable to a predecessor QI and
successor QI. The 2023 QI Agreement
provides that if a predecessor QI merges
into or is acquired by a successor QI and
the predecessor QI is required to submit a
periodic review report due to its termina-
tion, the predecessor QI may satisfy this
requirement through a combined periodic
review.

Under the 2023 QI Agreement, a com-
bined periodic review is a review that
covers one of the two years before the
year of the predecessor QI's termination
and that includes accounts of both the
predecessor QI and successor QI for pur-
poses of the review procedures in section
10.05 relating to documentation and with-
holding. This allowance should provide
for a reduced number of accounts to be
reviewed when a QI's reviewer applies
a sampling methodology. See Appendix
II of the 2023 QI Agreement for require-
ments for a combined periodic review
based on a sampling of accounts.

Notwithstanding the performance of
a combined periodic review, the prede-
cessor QI and successor QI must make
separate certifications for the period cov-
ered by the combined periodic review. A
predecessor QI may, however, obtain a
six-month extension from the deadline
to submit its final certification under sec-
tion 11.02(B) of the 2023 QI Agreement,
provided that the request for extension
indicates that it is being made due to the
combined periodic review and is delivered
to the IRS before the deadline for the final
certification under section 11.02(B).

(11) Waiver of periodic review for
QI assuming withholding on substitute
interest - Appendix I. A QI may seek a
waiver of the requirement to conduct a
periodic review if the eligibility require-
ments in section 10.07(B) of the 2017 QI

Agreement are met. Section 10.07(C) of
the 2017 QI Agreement also requires a QI
seeking a waiver to provide the informa-
tion described in Appendix I of the 2017
QI Agreement. For a QI assuming primary
withholding responsibility on payments of
substitute interest, Part VI of Appendix
I to the 2017 QI Agreement requires the
QI to provide certain information regard-
ing these payments as part of its periodic
certification.

A stakeholder noted that a periodic
review must be completed for QIs to pro-
vide certain information requested in Part
VI of Appendix I. Because this informa-
tion is required even when a QI requests
a waiver of the periodic review, a QI
assuming primary withholding responsi-
bility on payments of substitute interest
would be unable to request a waiver. In
response, the IRS issued FAQ #12 - Cer-
tifications and Periodic Reviews, which
states that QIs assuming primary with-
holding responsibility for payments of
substitute interest and that are eligible for
a waiver of the periodic review require-
ment do not need to complete Part VI of
Appendix I of the 2017 QI Agreement.
The 2023 QI Agreement incorporates this
allowance in the general instructions to
Appendix I.

.04 Compliance Requirements for QIs.
The 2017 QI Agreement sets forth review
steps in sections 10.05(A) through (E) for
a QI's reviewer to apply in conducting the
periodic review of a QI. These steps relate
to a QI's compliance with its documenta-
tion, withholding and reporting require-
ments under chapters 3, 4 and 61 (includ-
ing for payments of substitute interest and
QDD activities) and related provisions of
the 2017 QI Agreement. Appendix I to the
2017 QI Agreement includes the certifi-
cations and the factual information to be
furnished by a QI and the material failures
and events of default that a responsible
officer must consider in making a QI's
periodic certifications. Appendix I fur-
ther includes information and representa-
tions for a QI applying for a waiver of its
periodic review requirement. Appendix II
of the 2017 QI Agreement describes sta-
tistical sampling procedures that a QI's
reviewer may use in conducting a peri-
odic review, which take into account the
review steps set forth in section 10.05 of
the 2017 QI Agreement.

The 2023 QI Agreement largely incor-
porates the review steps and compliance
requirements in the 2017 QI Agreement
and adds to those requirements for pur-
poses of a QI's responsibilities under sec-
tions 1446(a) and (f) which, as described
in section 4.01 of this Revenue Procedure,
were not included in Notice 2022-23
(except for material failures and events
of default relating to sections 1446(a) and
(f)). This section 4.04 sets forth a sum-
mary of the significant revisions made to
section 10 and Appendices I and II of the
2017 QI Agreement that are included in
the 2023 QI Agreement relating to a QI's
requirements under sections 1446(a) and
(f) and other requirements that the Trea-
sury Department and IRS have determined
are appropriate to add to the 2023 QI
Agreement for evaluating a QI's compli-
ance. This section 4.04 also describes new
Appendix III of the 2023 QI Agreement.

Although the 2023 QI Agreement adds
certain review steps and compliance pro-
cedures for QIs, the 2023 QI Agreement
does not amend the allowance that a QI's
periodic review may be conducted for
any calendar year covered by the certifi-
cation period. Thus, a QI acting as a QI
for purposes of withholding under sec-
tion 1446(a) or (f) (in addition to its other
withholding responsibilities as a QI) may
select any year of its certification period
for the periodic review to the same extent
permitted under the 2017 QI Agreement.

(1) Revisions to section 10 of the QI
agreement.

(a) Periodic review procedures. The
2023 QI Agreement expands the scope
of the periodic review procedures in sec-
tion 10.05 of the 2017 QI Agreement to
include a QI's requirements under sec-
tions 1446(a) and (f) and other withhold-
ing on PTP distributions. For this purpose,
the procedures include a review of doc-
umentation associated with QI accounts
receiving PTP distributions and amounts
realized from the sale of PTP interests
to determine any documentation failures
and underwithholding on those payments.
A review step is specifically included to
determine any underwithholding appli-
cable to a QI acting as a disclosing QI.
This step requires a reviewer to com-
pare copies of the Forms 1042-S issued
by a QI's withholding agent to the QI's
account holders to determine whether the

withholding reported was sufficient based
on the results of the documentation review
in section 10.05(A). A review step is also
added for purposes of a QI's compliance
with the reporting required under section
8.07 of the 2023 QI Agreement. Another
review step is added to confirm that a QI
did not apply the joint account option
for purposes of section 1446(a) or (f) (a
restriction consistent with a proposed
modification in Notice 2022-23).

The review steps include certain other
changes from the 2017 QI Agreement.
Review steps are added to determine
whether a partnership or trust to which a
QI applies the joint account option has a
permitted chapter 4 status and, more gen-
erally, that a review for underwithholding
in these cases is performed when a QI
assumes withholding (in addition to when
a QI provides withholding rate pools). See
section 4.03(1) of this Revenue Procedure
and sections 10.05(B) and (C) of the 2023
QI Agreement. For the review steps for
payments included in withholding rate
pools, section 10.05(B) indicates that the
last payment of each income type made by
the QI for the year may (at a minimum)
be reviewed for determining any under-
withholding. For a QI acting as a QSL
or otherwise acting as an intermediary
for substitute dividends, a review step is
added in section 10.05(C) for the require-
ment that a QI assume withholding on all
such payments (with a similar review step
added for a QI assuming withholding on
substitute interest payments). For section
10.05(D), a review step is added for a
reviewer to determine whether a QI failed
to report with respect to any of its U.S.
account holders. Finally, certain descrip-
tions of review steps include a limited
number of non-substantive changes for
clarification.

(b) Designating compliance QI to exe-
cute Form 872. Under the 2017 QI Agree-
ment, two or more QIs that are members
of a group of entities under common
ownership may establish a consolidated
compliance group (CCG) upon approval
by the IRS. Each QI that is a member of
a CCG (CCG member) must designate a
QI (Compliance QI) in the group to act
on its behalf for purposes of conducting
a consolidated periodic review and mak-
ing a periodic certification. Additionally,
a Compliance QI must agree to be jointly

and severally liable for the obligations and
liabilities relating to the QI agreement of
any CCG member for the period covered
by the CCG.

The 2023 QI Agreement adopts the
2017 QI Agreement's provisions regard-
ing CCGs and adds a requirement that
each CCG member designate, in writing,
the Compliance QI to act as its agent to
execute Form 872, Consent to Extend
the Time to Assess Tax, for extending the
period to assess tax relevant to the 2023 QI
Agreement. As part of this requirement, a
Compliance QI must retain these desig-
nations and its agreement with the CCG
members to act as their agent. The IRS
anticipates that these requirements will
provide a more efficient process for exe-
cuting and providing Forms 872 requested
as part of an IRS review of a CCG's com-
pliance or consolidated review plan.

(c) Submission of periodic review
report. The 2017 QI Agreement generally
requires the responsible officer of a QI to
arrange for the performance of a periodic
review, the results of which must be doc-
umented in a written report addressed to
the responsible officer. Section 10.06 of
the 2017 QI Agreement does not require
a QI to submit the periodic review report
with its periodic certification absent an
IRS request for the report. However, the
IRS considers its analysis of a periodic
review report integral to ensuring a QI's
compliance (and thus typically requests
the reports in its reviews). For efficiency,
the 2023 QI Agreement requires QIs to
submit a copy of their periodic review
report with their periodic certification.

(d) Submission of remediation plan.
Section 10.03 of the 2017 QI Agreement
requires a QI to submit a qualified certi-
fication in accordance with Part II.B of
Appendix I when it has identified a mate-
rial failure that has not been corrected as
of the date of the periodic certification or
has identified an event of default applica-
ble to the certification period (and which
the QI must disclose). Under Part II.B.3
of Appendix I of the 2017 QI Agreement,
a QI must take appropriate actions to pre-
vent such failures from recurring and may
be required to provide the IRS with a writ-
ten plan to correct each failure.

The IRS views remediation plans
as critical to ensuring that all QIs insti-
tute appropriate and timely actions to

address any material failures and events
of default. As a result, the 2023 QI Agree-
ment requires a QI that submits a qualified
certification to complete the remediation
plan information detailed in Part II.B.3 of
Appendix I and submit this information
with the certification.

(e) Waiver of periodic review. Section
10.07 of the 2017 QI Agreement generally
allows a QI that has not received more
than $5 million in reportable amounts in
each calendar year of a certification period
to apply for a waiver of its periodic review
requirement. To obtain a waiver, a QI must
meet the eligibility requirements set forth
in section 10.07(B) of the 2017 QI Agree-
ment and provide certain representations
and factual information with its periodic
certification, which are detailed in Part III
of Appendix I. Additionally, a QI may not
obtain a waiver when it acts as a QDD.

The 2023 QI Agreement adopts the
requirements for a waiver in the 2017 QI
Agreement with certain modifications.
Under the 2023 QI Agreement, to be eli-
gible to apply for the waiver a QI must, in
determining whether it received more than
$5 million in reportable amounts in each
calendar year of a certification period,
include the amount of PTP distributions
subject to withholding under chapter 3 or
4. Additionally, in Part III of Appendix I
of the 2023 QI Agreement, a QI must pro-
vide specified information regarding its
receipt of PTP distributions and amounts
realized from sales of PTP interests and
the amount of tax withheld under sections
1446(a) and (f). A QI must also provide the
information shown on Appendix III of the
2023 QI Agreement for each year of the
certification period. See section 4.04(4) of
this Revenue Procedure. Finally, the 2023
QI Agreement clarifies that, although a QI
acting as a QDD may not obtain a waiver,
this restriction does not apply for the 2023
and 2024 years and clarifies when the
curing of documentation is permitted to
be reflected in the reporting of the factual
information required for the waiver.

(2) Revisions to Appendix I.

(a) General information with certifi-
cation. Part I of Appendix I of the 2017
QI Agreement requests certain general
information to be submitted with a QI's
periodic certification, such as whether the
QI assumed primary withholding respon-
sibility, was part of a CCG, or applied the

agency or joint account option during the
applicable certification period. The 2023
QI Agreement adds certain information
requests to Part I of Appendix I regarding
a QI's activities related to withholding
under sections 1446(a) and (f).

(b) Certification of internal controls.
Part II.A of Appendix I of the 2017 QI
Agreement contains the certification of
internal controls that a QI is required to
make for a certification period and a list
of material failures and events of default
a QI must identify (when applicable).
The 2023 QI Agreement adds a new cer-
tification regarding a QI's procedures for
complying with sections 1446(a) and (f)
and (more generally) that the QI has acted
only to the extent permitted under the QI
agreement. Thus, for example, a QI would
not be able to make this certification if it
represents its status as a QI with respect
to an amount realized paid to an account
holder for an interest in a partnership that
is not a PTP. The 2023 QI Agreement
also adds material failures and an event
of default specific to sections 1446(a) and
(f) to Part II of Appendix I. The material
failures added to Part II.D of Appendix I
are as proposed in section 10.03 of Notice
2022-23, with the addition of a material
failure for a QI failing to comply with sec-
tion 5.01(A) of the 2023 QI Agreement in
requesting U.S. TINs from account hold-
ers. See section 4.01(1) of this Revenue
Procedure. Part II.D of Appendix I of the
2023 QI Agreement also reflects the 2023
and 2024 transitional relief for section
871(m) purposes discussed in section 4.02
of this Revenue Procedure by referencing
a QI or QDD's material failures based on
a good faith standard.

(c) Part IV: chapters 3, 4, and 61. Part
IV of Appendix I of the 2017 QI Agreement
generally sets forth factual information
for purposes of chapters 3, 4, and 61 (and
backup withholding under section 3406)
that QIs are required to provide regarding
their accounts, documentation of account
holders, withholding, and reconciliation
of the reporting of payments made and
withholding. The 2023 QI Agreement
generally includes the factual information
included in Part IV of the 2017 QI Agree-
ment and, to coordinate with new Part VII
of Appendix I of the 2023 QI Agreement,
specifically excludes the factual infor-
mation regarding PTP-related payments

that is reported in Part VII. The factual
information relevant to PTP distributions
attributable to amounts subject to with-
holding under chapters 3 and 4 is, how-
ever, to be reported in Part IV of Appendix
I of the 2023 QI Agreement. See section
4.04(2)(d) of this Revenue Procedure
(directly below) for the scope of reporting
in new Part VII.

Part IV of Appendix I to the 2023 QI
Agreement also requires other new infor-
mation. A chart is to be completed by QIs
using the safe harbor sampling method
in Appendix II for their periodic review
to specify the allocation of accounts to
each certainty stratum (as referenced in
section II.A.3(a) of Appendix II of the
2023 QI Agreement). Part IV of Appen-
dix I also requires QIs to provide certain
information regarding documentation
failures (and resulting underwithholding)
on a post-cure basis (that is, by obtaining
valid documentation to support reduced
withholding applied by the QI) and infor-
mation regarding collective refunds for
which a QI did not obtain documentation
supporting reduced withholding for any
account holders. Finally, Part IV includes
new section G, Other Information (includ-
ing reporting of U.S. account holders), to
indicate the number of a QI's reporting
failures with respect to its U.S. account
holders and, for a QI acting as a QSL (or
otherwise assuming primary withholding
responsibility for a U.S. source substitute
dividend payment), to verify that the QI
assumes withholding on all such pay-
ments. See sections 10.05(C)(11) and (D)
(2) through (4) of the 2023 QI Agreement
for the review steps that relate to the infor-
mation for new section G.

(d) Part VII: PTP-related payments.
Part VII of Appendix I is added to the
2023 QI Agreement to set forth the fac-
tual information a QI must report when it
receives payments of PTP distributions or
amounts realized from sales of PTP inter-
ests on behalf of account holders during
the certification period. Part VII refer-
ences the payments relevant for reporting
as "PTP-related payments," which are
described as those payments applicable to
Form 1042-S income codes 27 (PTP dis-
tributions subject to section 1446(a)), 57
(amounts realized under section 1446(f)),
or 58 (PTP distribution with undeter-
mined income), including when made to

a U.S. partner and regardless of whether
the income is subject to withholding. Part
VII requires a QI to provide certain pay-
ment information depending on whether it
assumed primary withholding responsibil-
ity for PTP distributions or amounts real-
ized from sales of PTP interests or whether
the QI acted as a disclosing QI when
not assuming the withholding on these
amounts. Similar to Part IV of Appendix
I, Part VII requests factual information
relating to a QI's accounts, documenta-
tion, withholding, and reconciliation of
payments reported. For the information
relating to the review of account docu-
mentation, Part VII also applies to part-
ners in a partnership claiming a modified
amount realized under section 1446(f) and
to grantors or owners of a trust. Part VII
also requires information related to a QI's
reporting under section 8.07 of the 2023
QI Agreement.

(3) Revisions to Appendix II: statistical
sampling procedures. Under the 2017 QI
Agreement, a reviewer performing a peri-
odic review may generally use a sampling
methodology whenever examination of
all accounts within a particular class of
accounts would be prohibitive due to time
or expense. For this purpose, Appendix II
of the 2017 QI Agreement provides safe
harbor procedures covering basic sample
design parameters and methodologies,
including sample size, strata allocation,
and projection of underwithholding. For
purposes of the review procedures in sec-
tions 10.05(B) through (D), Appendix II
of the 2017 QI Agreement also prescribes
"spot check" procedures, which provide
for a limited review of certain accounts
included in the sample of accounts fol-
lowing the review of a QI's documenta-
tion under section 10.05(A).

Appendix II of the 2023 QI Agreement
(Appendix II) adds to the procedures in
Appendix II of the 2017 QI Agreement
to include a sample of a QI's accounts
receiving payments for which withhold-
ing may apply under sections 1446(a) and
(f). For this purpose, Appendix II expands
the population of accounts to be sampled
to include all accounts receiving a PTP
distribution or an amount realized from
the sale of a PTP interest. To sample these
accounts, Appendix II requires a stratum
of the thirty top-dollar value accounts,
as determined by the total of PTP

distributions and amounts realized from
sales of PTP interests paid to an account,
to be segregated from the population of
accounts and reviewed (referenced as a
"certainty stratum" in Appendix II). For
accounts held by partnerships and trusts
for which documentation with respect
to their partners and grantors is relevant
for determining withholding under sec-
tion 1446(a) or (f), Appendix II permits a
reviewer to sample partners and grantors
using the same chart in Appendix II for
sampling accounts to which a QI applies
the joint account option.

The 2023 QI Agreement includes a lim-
ited number of other changes in Appendix
II. As discussed in section 4.03(10) of this
Revenue Procedure, the 2023 QI Agree-
ment permits a combined periodic review
in certain cases of a merger of QIs or an
acquisition of a QI by another QI (with
QIs in those cases referenced as "prede-
cessor" and "successor" QIs). Appendix
II includes additional certainty strata for
sampling accounts of a predecessor QI in a
combined periodic review. The additional
strata are to contain the fifteen top-dol-
lar value accounts of the predecessor QI
as measured by the total of reportable
amounts paid to foreign recipients, report-
able payments paid to U.S. recipients,
PTP distributions paid to accounts, and
amounts realized from sales of PTP inter-
ests paid to accounts. The remainder of
the predecessor QI's accounts, and all the
successor QI's accounts, are then placed
into the remaining strata identified in
Appendix II for further sampling. Appen-
dix II also incorporates the provisions of
certain FAQs to the 2017 QI Agreement
that detail the allocation of sample units
over strata and the maximum sample size.

For projecting underwithholding in
a sample, the 2017 QI Agreement states
that the IRS will determine if a projec-
tion of underwithholding is necessary
when it reviews a QI's periodic certifica-
tion. If projection is necessary, the IRS
will instruct the QI or the QI's reviewer
on the use of the procedures in Rev. Proc.
2011-42 to project underwithholding.
Appendix II also incorporates the proce-
dures of Rev. Proc. 2011-42 but provides
more detailed explanations of the projec-
tion process and an example that illus-
trates the stratification of a QI's accounts
to accurately project underwithholding.

Appendix II also provides a revised pro-
vision for the IRS to project underwith-
holding on a post-cure basis, and for this
purpose, Appendix II allows a QI to con-
tinue to cure invalid documentation up to
60 days after the date on which the IRS
proposes a deficiency.

Finally, Appendix II specifies the num-
ber of accounts includible in a spot check
for a certainty stratum (other than when
using optional further stratification) and
for a stratum that includes accounts fail-
ing the documentation review (limited to
when underwithholding would result).

(4) Addition of Appendix III. Appen-
dix III is added to the 2023 QI Agreement
to assist the IRS in determining whether
Forms 1042 and 1042-S were filed accu-
rately by a QI for the years of a certifi-
cation period not covered by a periodic
review (or all such years if a waiver of the
periodic review is requested). This Appen-
dix requires QIs to provide, for each appli-
cable year, certain information reported
on Form 1042 and Forms 1042-S (includ-
ing amended forms), by box and line, and
reconcile certain information included on
the Forms 1042-S issued to the QI to the
Form 1042 and Forms 1042-S filed by
the QI (and between the Form 1042 and
Forms 1042-S filed by the QI). QIs will
be required to upload a completed copy
of Appendix III as part of their periodic
certifications using the attachment fea-
ture in the Qualified Intermediary Appli-
cation and Account Management System
(QAAMS).

.05 Miscellaneous Changes. This sec-
tion 4.05 describes a limited number of
modifications to the 2017 QI Agreement
included in the 2023 QI Agreement that
are unrelated to a QI's requirements under
sections 1446(a) and (f), stakeholder
remarks on the 2017 QI Agreement, or
to provisions of the 2023 QI Agreement
addressing requirements for QDDs and
QSLs.

(1) Adjustments for overwithholding.
The 2017 QI Agreement permits a QI
to apply the reimbursement and set-off
procedures in §§1.1461-2 and 1.1474-2
to adjust overwithholding and describes
certain deadlines in these regulations for
applying the procedures for the repayment
of overwithheld tax to an account holder
and for filing a Form 1042-S to report the
overwithholding and repayment.

On December 18, 2018, the Trea-
sury Department and the IRS published
a notice of proposed rulemaking (the
NPRM) in the Federal Register, 83 FR
64757, to reduce certain taxpayer bur-
dens under chapters 3 and 4. The NPRM
would modify the reimbursement and
set-off procedures under §§1.1461-2 and
1.1474-2 to allow a withholding agent
to use the extended due dates for fil-
ing Forms 1042 and 1042-S to report a
repayment and claim a credit (rather than
the due dates without extension under
the current final regulations). The NPRM
would not, however, permit a withhold-
ing agent to apply the reimbursement or
set-off procedures after the date the Form
1042-S has been furnished to the bene-
ficial owner or payee or is filed with the
IRS. The NPRM permits a QI to rely on
its provisions until finalization.

For consistency with the NPRM and
any modifications to the final requirements
of §§1.1461-2 and 1.1474-2, sections
9.01 and 9.02 of the 2023 QI Agreement
cross reference §§1.1461-2 and 1.1474-2
for the timing requirements to use these
procedures in lieu of the explanations of
these requirements set forth in the 2017 QI
Agreement.

(2) Chapter 3 withholding rate pools.
The 2017 QI Agreement states in sec-
tion 6.03(C) that a chapter 3 withholding
rate pool is a payment of a single type of
income subject to chapter 3 withholding
that is subject to a single rate of with-
holding under chapter 3, and for which
no chapter 4 withholding is required, on
Form 1042-S. Certain prior guidance for
QIs, however, included amounts reported
on Form 1042-S and Form 1099 in a chap-
ter 3 withholding rate pool (rather than
only chapter 3 payments). See Rev. Proc.
2000-12, 2000-4 IRB 387. Additionally,
the description of a chapter 3 withholding
rate pool in §1.1441-1(e)(5)(v)(C) refer-
ences no limitation to an amount subject
to chapter 3 withholding. Because chap-
ter 3 withholding rate pool information
may be provided by a QI to a withholding
agent for payments other than amounts
subject to chapter 3 withholding (such as
an amount realized or bank deposit inter-
est), the 2023 QI Agreement does not
include the reference to an "amount sub-
ject to chapter 3 withholding" for describ-
ing a chapter 3 withholding rate pool.

(3) Defining account for substitute
interest. For a QI assuming primary with-
holding responsibility for payments of
substitute interest, the 2017 QI Agreement
includes a person receiving a payment
of substitute interest in the definition of
"account holder" in section 2.02 but did
not define an "account" for these cases in
section 2.01. The 2023 QI Agreement adds
to the definition of an "account" by pro-
viding that for a QI that assumes primary
withholding responsibility for a substitute
interest payment, as described in section
3.03(A) of the 2023 QI Agreement, an
account is treated as held with a QI for an
account holder described in section 2.02
of the 2023 QI Agreement.

(4) Communications under QI agree-
ment. The 2017 QI Agreement generally
requires all notices sent by a QI or the IRS
to be mailed via registered, first-class air-
mail. For better efficiency in communica-
tions between the IRS and QIs, the 2023
QI Agreement allows written notices sent
by QIs to the IRS to be either mailed via
registered, first-class mail or e-mailed to
the IRS e-mail address specified in section
12.06. With respect to notices sent by IRS
to a QI, the 2023 QI Agreement specifies
that the IRS will send notices to a QI by
secure e-mail to the QI's responsible offi-
cer and other contact persons designated
by the QI.

## SECTION 5. APPLICATION AND RENEWAL FOR QI STATUS

.01 Prospective QI (Including a QI
Acting as a QDD). Before submitting the
information specified in Form 14345,
Application for Qualified Intermediary,
Withholding Foreign Partnership, or With-
holding Foreign Trust Status, a prospective
QI (other than an NFFE that is acting as an
intermediary on behalf of persons other than
its shareholders and certain foreign central
banks of issue) must have submitted the
information specified in Form 8957, For-
eign Account Tax Compliance Act (FATCA)
Registration, through the FATCA regis-
tration website available at www.irs.gov/
FATCA, and obtained its chapter 4 status as
a participating FFI (including a reporting
Model 2 FFI), registered deemed-compli-
ant FFI (including a reporting Model 1 FFI
and a nonreporting Model 2 FFI treated as
registered deemed-compliant), registered

deemed-compliant Model 1 IGA FFI, or
sponsoring entity of a direct reporting
NFFE, as applicable, along with a global
intermediary identification number (GIIN)
to be used to identify itself to withhold-
ing agents and to tax administrators for
FATCA reporting. A GIIN is separate from
a QI-EIN.

The IRS will not enter into a QI agree-
ment with an FFI if the IRS has not
approved the know-your-customer prac-
tices and procedures for opening accounts
of the jurisdiction where the FFI is located
because the QI agreement as applicable
to an FFI allows for the use of documen-
tary evidence obtained under a jurisdic-
tion's know-your-customer practices. A
list of jurisdictions for which the IRS has
received know-your-customer informa-
tion and for which the know-your-cus-
tomer rules have been approved is avail-
able at: http://www.irs.gov/Businesses/
International-Businesses/List-of-Ap-
proved-KYC-Rules. To request approval
of a jurisdiction's know-your-customer
rules, contact the KYC coordinator in the
Foreign Intermediaries Program at lbi.
fi.qiwpissues@irs.gov.

A QI that is an NFFE generally is not
required to be located in an approved KYC
jurisdiction because an NFFE is required
to collect Forms W-8 and W-9 and may
not use KYC documentation. See section
5.01(B)(2) of the 2023 QI Agreement for
the documentation requirements applica-
ble to a QI that is an NFFE.

To become a QI, a prospective QI must
submit the information specified in Form
14345 through QAAMS, which is acces-
sible through the QI landing page avail-
able at: https://www.irs.gov/businesses/
corporations/qualified-intermediary-sys-
tem. An application must also include any
additional information and documenta-
tion requested by the IRS. The applica-
tion must establish to the satisfaction of
the IRS that the applicant has adequate
resources and procedures to comply with
the terms of the agreement. An entity that
would like to become a QI to act as a QDD
must apply to enter into a QI agreement
and include the information on the appli-
cation relating to QDDs. If a QI (existing
or new) would like a branch to act as a
QDD, it must fill out a separate applica-
tion for the QDD branch and be approved
for QDD status.

If the IRS approves the QI application,
it will notify the QI of its approval. The
approval notice will include a QI-EIN for
fulfilling the requirements of a QI (includ-
ing a QI acting as a QDD if approved for
such purpose) under the QI agreement.
Similarly, if the IRS approves the QDD
application, it will notify the QI of its
approval.

.02 Effective Date for Existing QIs. A
QI agreement in effect before December
31, 2022, expires on December 31, 2022,
such that a QI must agree to the terms of
the 2023 QI Agreement to continue its sta-
tus as a QI after that date. For this purpose,
a QI that seeks to renew its QI agreement
with an effective date of January 1, 2023,
must do so through QAAMS between Jan-
uary 1, 2023, to March 31, 2023. The QI
will retain its QI-EIN to fulfill the require-
ments of a QI under chapters 3, 4, and 61
and sections 871, 881, 1446, and 3406,
including making tax deposits and filing
Forms 945, 1042, 1042-S, 1099, and 8966.

A QI that seeks to renew its QI agree-
ment and also apply to act as a QDD
(when not having applied previously)
must supplement the renewal request by
providing all of the information required
by the application relating to a QDD.

.03 Effective Date for New QI Appli-
cants. The effective date of the QI agree-
ment for a new QI applicant will depend
on when the QI submits its application and
whether the QI has received any report-
able payments before it submits its appli-
cation. Beginning on January 1, 2023, a
prospective QI that applies for QI status
on or before March 31 of a calendar year
and is approved will have a QI agreement
with an effective date of January 1 of that
year. If a prospective QI applies for QI
status after March 31 of a calendar year
and has not received a reportable payment
before the date it applies for QI status and
is approved, it will have a QI agreement
with an effective date of January 1 of that
year. If a prospective QI applies for QI
status after March 31 and has received
a reportable payment before the date it
applies and is approved, it will have a QI
agreement with an effective date of the
first of the month in which its QI appli-
cation is approved and the prospective QI
is issued a QI-EIN. Regardless of whether
a new QI applicant obtains QI status for
a year after 2023, its QI agreement will

terminate upon expiration of the 2023 QI
Agreement, unless renewed.

.04 Consent for Published List of QIs.
Beginning in 2023, a QI that either applies
for a QI agreement or seeks to renew its
QI agreement will be required to, as part
of its application or renewal, consent to
have its name, status as a QI, and QI-EIN
disclosed on a public list of QIs to be pub-
lished by the IRS on irs.gov. This list will
be published in an effort to ensure that
entities that are not QIs do not represent
themselves as QIs to withholding agents.

.05 Responsible Officer Authentication.
The IRS is in the process of transitioning
QAAMS to a modernized sign-in system
with applicable multi-factor authentica-
tion procedures. As a result, to log in to
QAAMS, new users must register with
the applicable credential service provider
(CSP). Responsible officers can visit
QAAMS page to create an account with
the relevant CSP. When responsible offi-
cers create an account, they will be redi-
rected to the CSP website where they will
begin the credentialing process. The final
step in the credentialing process requires
responsible officers to provide consent
for the CSP to share responsible officers'
account information with the IRS. Once
this consent is given, the responsible offi-
cer will be redirected to the IRS website
and can access QAAMS.

Currently, users that have an existing
QAAMS account may choose whether to
continue to login using their IRS username
and password or complete the credential-
ing process as described above. Beginning
in the spring of 2023, all users of QAAMS
will be required to have completed the
credentialing process with the relevant
CSP and utilize multi-factor authentica-
tion to access QAAMS.

.06 Contact Information. For questions
regarding the QI application process, con-
tact the Foreign Intermediaries Program at
lbi.fi.qiwpissues@irs.gov.

## SECTION 6. QUALIFIED INTERMEDIARY AGREEMENT

The text of the 2023 QI Agreement
is set forth below. The IRS will not
provide signed copies of the QI agree-
ment. A reporting Model 2 FFI should
apply this Agreement by substituting
the term "reporting Model 2 FFI" for

"participating FFI" throughout this
Agreement, except in cases where this
Agreement explicitly refers to a reporting
Model 2 FFI. A reporting Model 1 FFI
and nonreporting Model 2 FFI treated
as a registered deemed-compliant FFI
should apply this Agreement by substi-
tuting the term "reporting Model 1 FFI"
or "nonreporting Model 2 FFI" (as appli-
cable) for "registered deemed-compliant
FFI" throughout this Agreement, except
in cases where this Agreement explicitly
refers to a reporting Model 1 FFI or non-
reporting Model 2 FFI treated as a regis-
tered deemed-compliant FFI.

THIS AGREEMENT is made under and
in pursuance of sections 871(m), 1441,
1442, 1443, 1446, 1471, and 1472 and
§§1.1441-1(e)(5) and 1.1441-1(e)(6):

WHEREAS, QI has submitted an
application in accordance with Reve-
nue Procedure 2022-43 to be a qualified
intermediary;

WHEREAS, QI and the IRS desire to
enter into an agreement to establish QI's
rights and obligations regarding documen-
tation, withholding, information reporting,
tax return filing, deposit, and refund pro-
cedures under sections 1441, 1442, 1443,
1446, 1461, 1471, 1472, 1474, 3406, 6041,
6042, 6045, 6049, 6050N, 6302, 6402,
and 6414, and tax liability under sections
871(a) and 881 for a QI that is acting as
a qualified derivatives dealer (QDD), with
respect to certain types of payments;

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

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

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 QI agreement with
a foreign person or a foreign branch of
a U.S. person, that foreign person (or
foreign branch) becomes a QI. QI is a
withholding agent under chapters 3 and
4, and a payor under chapter 61 and sec-
tion 3406, for amounts that it pays to its
account holders. QI is also a withholding
agent when it receives a PTP distribution
for an account holder or it acts as a bro-
ker under §1.1446(f)-4 for a payment of
an amount realized from the sale of a PTP
interest by an account holder.

If QI is an FFI, the requirements that
QI has agreed to as a participating FFI,
registered deemed-compliant FFI, or reg-
istered deemed-compliant Model 1 IGA
FFI apply in addition to the requirements
under this Agreement. If QI acts as a QI
with respect to an account, this Agreement
will reference QI's chapter 4 obligations
when necessary to facilitate coordination
with the QI's obligations under chapters 3,
4, and 61 and section 3406 with respect
to such account holders. A participating
FFI's (including a reporting Model 2 FFI)
obligations are provided in the FFI agree-
ment, a registered deemed-compliant
FFI's (other than a reporting Model 1 FFI)
obligations are provided in §1.1471-5(f)
(1) or the applicable Model 2 IGA, and
the obligations of a reporting Model 1 FFI
or a registered deemed-compliant Model
1 IGA FFI are provided in the applicable
Model 1 IGA. For purposes of chapter 4,
QI must comply with its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI
(as applicable) in order to maintain its
required chapter 4 status, as well as the
requirements of a withholding agent for
any payee that is a nonparticipating FFI
or a NFFE that is not an account holder.
If QI is an FFI, QI must also, pursuant to
this Agreement, assume primary report-
ing responsibility for purposes of section
1472, for certain indirect account holders
for which it acts as a QI. If QI is an NFFE
acting on behalf of persons other than its
shareholders, QI must assume primary
reporting responsibility for purposes of
section 1472 for any person for which it
acts as a QI.

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

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

When QI acts as a QI for an account
and assumes primary chapter 3 withhold-
ing responsibility for payments to the
account, QI must also assume primary
withholding responsibility for withhold-
able payments made to such account for
chapter 4 purposes.

For amounts subject to withholding on
a PTP distribution, QI acts in its capacity
as a QI when QI provides a valid with-
holding certificate described in section 6
of this Agreement indicating that it acts as
a nominee for the distribution, provides
chapter 3 withholding rate pool informa-
tion with respect to the distribution under
section 6.03 of this Agreement, or acts as
a disclosing QI for the distribution. For
an amount realized, QI acts in its capacity
as a QI when QI provides a valid with-
holding certificate described in section
6 of this Agreement associated with the
amount indicating that QI assumes pri-
mary withholding responsibility for the
amount under section 1446(f), provides
withholding rate pool information with
respect to the amount under section 6.03

of this Agreement, or acts as a disclosing
QI for the amount.

If QI acts as a QI with respect to pay-
ments of substitute interest, as described in
section 3.03(A) of this Agreement, it must
act as a QI and assume primary withhold-
ing responsibility for all such payments of
substitute interest.

A QI is permitted to act as a QSL only
until December 31, 2024. If QI that is not
acting as a QDD acts as a qualified secu-
rities lender (QSL) with respect to sub-
stitute dividend payments (as defined in
§1.861-3(a)(6)), QI is required to act as
a QSL and assume primary withholding
responsibility for all substitute dividends
received and paid by QI when acting as
an intermediary or dealer with respect to
securities lending and similar transac-
tions. A QI that acts as a QDD may not
act as a QSL, except as described in the
prior sentence with respect to payments
on securities lending or sale-repurchase
transactions for which the QI has deter-
mined that it is acting as an intermediary.
A QI may qualify as a QDD with respect
to certain payments on securities lending
and sale-repurchase transactions in its
qualified derivatives dealer capacity. See
below for the requirements, including the
eligible entity requirement and which pay-
ments are covered.

A QI that is not acting as a QSL may
still act as a QI for substitute dividend
payments received or paid by QI as an
intermediary by assuming primary with-
holding responsibility for all substitute
dividends received and paid by QI as an
intermediary. QI also may act as a QDD
for the transactions covered by the QDD
regime.

The home office (as defined in section
2.43 of this Agreement) and each branch
of a foreign person that intends to act as
a QDD must each separately qualify and
be approved for QDD status, as provided
in section 1.02 of this Agreement. QDD
applicants must follow the naming con-
vention described in section 2.63 of this
Agreement on their application and, if
approved as a QDD, on any other U.S.
tax form, schedule, statement, or other
tax material and for any other tax purpose
for which the QDD must be identified. A
foreign branch of a U.S. financial insti-
tution may also apply for QI and QDD
status provided it separately qualifies as

an eligible entity. If QI acts as a QDD
with respect to the home office or branch,
the home office or branch, as applicable,
must act as a QDD for all payments made
as a principal with respect to potential
section 871(m) transactions and all pay-
ments received as a principal with respect
to potential section 871(m) transactions
and underlying securities, excluding any
payments made or received by the QDD
to the extent the payment is treated as
effectively connected with the conduct
of a trade or business within the United
States within the meaning of section 864.
A QI may not act as a QDD with respect
to any other payments. For purposes of
this Agreement, any securities lending or
sale-repurchase transaction (as defined in
§1.871-15(a)(13)) QI enters into that is a
section 871(m) transaction is treated as
entered into by QI as a principal unless
QI determines that it is acting as an inter-
mediary with respect to that transaction.
A QI may not act as a QDD when it
receives or makes payments as an inter-
mediary and must act as either a QI or
NQI for the payment. A QI acting as a
QDD must assume primary chapter 3 and
chapter 4 withholding responsibility and
primary Form 1099 reporting and backup
withholding responsibility under section
3406 for payments made as a QDD with
respect to any potential section 871(m)
transaction provided the amount paid is
an amount subject to chapter 3 or 4 with-
holding or a reportable payment under
chapter 61. A QI acting as a QDD (other
than a QDD that is a foreign branch of a
U.S. financial institution) also must sat-
isfy its QDD tax liability as determined
under section 3.09 of this Agreement.
The QDD must report its withholding tax
liability under chapters 3 and 4 on Form
1042. In addition, a QDD (other than a
QDD that is a foreign branch of a U.S.
financial institution or that is a partner-
ship or branch of a partnership) must file
a Form 1120-F and report its QDD tax
liability on that form, whether or not it
would be required to file if it were not
a QDD. Similarly, a QDD that is a part-
nership or a branch of a partnership must
file a Form 1065 and report its QDD tax
liability on that form, whether or not it
would be required to file if it were not a
QDD, as well as report on Forms 1042-S
with respect to its foreign partners on

amounts under section 3.09 of this
Agreement as modified for a QDD that is
a partnership (or branch of a partnership).
A U.S. financial institution with a foreign
branch that acts as a QDD must file the
appropriate U.S. income tax return (e.g.,
Form 1120, U.S. Corporation Income
Tax Return) for the tax year covered by
this Agreement to report and pay its tax
liability under chapter 1 and would not
have a separate QDD tax liability. In each
case, the form will be filed by the QI on
behalf of its QDD(s).

A dividend or dividend equivalent is
treated as received by a QDD acting in
its non-equity derivatives dealer capacity
if the dividend or dividend equivalent is
received by a QDD acting as a proprietary
trader. Transactions properly reflected in
a QDD's equity derivatives dealer book
are presumed to be held by a dealer in
its equity derivatives dealer capacity for
purposes of determining the QDD tax lia-
bility. In addition, for purposes of deter-
mining whether a dealer is acting in its
equity derivatives dealer capacity, only
the dealer's activities as an equity deriva-
tives dealer are taken into account.

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

(A) QI; and

(B) The Internal Revenue Service.

If QI is an FFI, QI can only act as a
QI for an account if the branch of QI that
holds the account operates in a KYC juris-
diction identified on the IRS's Approved
KYC List. QI may add any jurisdiction in
which it operates a branch that is not ini-
tially included in its QI application with-
out prior IRS approval if the jurisdiction
is identified on the IRS's Approved KYC
List and QI updates its information on the
Qualified Intermediary Application and
Account Management System (QAAMS)
with respect to such branch before treat-
ing such branch as a QI. Notwithstanding
the preceding sentence, a QI may not add
a branch that will act as a QDD through
QAAMS. Instead, the branch must sepa-
rately qualify and be approved for QDD
status in accordance with the procedures
prescribed by the IRS. A branch of a QI
that is not subject to the provisions of
this Agreement remains subject to the
rules of chapters 3, 4, and 61 and section
3406, as provided in section 1.01 of this
Agreement.

## SECTION 2. DEFINITIONS

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

Sec. 2.01. Account. "Account" or
"financial account" has the meaning given
to that term in §1.1471-1(b) with respect
to QI's obligations for chapter 4 purposes.
For other purposes under this Agreement,
"account" or "financial account" means
any account for which QI acts as a QI.
With respect to a QI acting as a QDD,
"account" means any potential section
871(m) transaction or underlying secu-
rity where QDD receives payments as a
principal and any potential section 871(m)
transaction where QDD makes payments
as a principal. With respect to a QI that
assumes primary withholding responsi-
bility for a substitute interest payment as
described in section 3.03(A) of this Agree-
ment, an account is treated as held with QI
for an account holder described in section
2.02 of this Agreement.

Sec. 2.02. Account Holder. If QI is an
FFI, an "account holder" means any per-
son that is a direct account holder or an
indirect account holder of an account that
QI has identified to a withholding agent as
an account for which it is acting as a QI
and also includes any person that receives
a U.S. source substitute dividend payment
from a QI that is a QSL or is otherwise
acting as an intermediary for the payment.
"Account holder" also means any person
that enters into or holds a potential section
871(m) transaction with a QI acting as a
QDD. If QI is an NFFE acting as a QI on
behalf of persons other than its sharehold-
ers, an "account holder" means any person
for whom QI is acting as an intermediary
with respect to a reportable payment or
withholdable payment. With respect to
a QI that assumes primary withholding
responsibility for a substitute interest
payment, as described in section 3.03(A)
of this Agreement, an "account holder"
includes any person that receives such a
payment from the QI.

### (A) Direct Account Holder.

A direct account holder is any account
holder who has a direct relationship with
QI. In the case of an NFFE acting as
a QI on behalf of persons other than its
shareholders, a direct account holder is

any person for whom QI is acting with
respect to a reportable payment regardless
of whether such person is the beneficial
owner. In addition, a direct account holder
includes a beneficiary of a trust that holds
an account with QI provided the following
requirements are satisfied:

(1) the trust is registered with the appli-
cable government as a tax-free plan;

(2) in order to qualify as a tax-free
plan, applicable non-U.S. law mandates
that where the plan holds assets in a bro-
kerage account, a trust be established for
the account holder that is the sole benefi-
ciary under the plan;

(3) the account holder maintains gen-
eral control over investments in the plan
and can withdraw the funds at any time;

(4) QI is required to document the
account holder under applicable anti-
money laundering/know-your-customer
regulations or procedures; and

(5) the trust itself is not eligible for
a reduced rate of withholding under an
applicable income tax treaty.

(B) Indirect Account Holder. An indi-
rect account holder is any account holder
who does not have a direct relationship
with QI, excluding a beneficiary of a trust
described in section 2.02(A) of this Agree-
ment. For example, a person that holds an
account with a foreign intermediary that
has a direct relationship with QI is an indi-
rect account holder of QI. For chapter 3
and 4 purposes, an indirect account holder
also includes a person holding an interest
in a foreign flow-through entity that has a
direct relationship with QI. A person is an
indirect account holder even if there are
multiple tiers of intermediaries or flow-
through entities between the person and
QI.

Sec. 2.03. Agreement. "Agreement"
means this Agreement, the Appendices
to this Agreement and any amendment to
this Agreement in accordance with section
12.02 of this Agreement. QI's application
to become a QI, and the know-your-cus-
tomer rules included in a country attach-
ment on IRS.gov relevant to QI (or a
branch of QI) are incorporated into this
Agreement by reference.

Sec. 2.04. Amount Subject to Chap-
ter 3 Withholding. An "amount subject
to chapter 3 withholding" is an amount
described in §1.1441-2(a) regardless of
whether such amount is withheld upon.

Unless indicated otherwise in this Agree-
ment, an amount subject to chapter 3
withholding includes an amount sub-
ject to chapter 3 withholding on a PTP
distribution. See section 2.91(C) of this
Agreement.

Sec. 2.05. Amount Subject to Chap-
ter 4 Withholding. An "amount subject
to chapter 4 withholding" is a withhold-
able payment (as defined in §1.1473-
1(a)) for which withholding is required
under chapter 4 or an amount for which
withholding was otherwise applied under
chapter 4. Unless indicated otherwise
in this Agreement, an amount subject to
chapter 4 withholding includes an amount
subject to chapter 4 withholding on a PTP
distribution. See section 2.91(C) of this
Agreement

Sec. 2.06. Assuming Primary With-
holding Responsibility. "Assuming pri-
mary withholding responsibility" refers
to when a QI 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 respon-
sibility. "Assuming primary withholding
responsibility" further includes when QI
acts as a nominee for a PTP distribution
or assumes primary withholding responsi-
bility under section 1446(f) for an amount
realized from the sale of a PTP interest.
A QI that assumes primary withhold-
ing responsibility assumes the primary
responsibility for deducting, withholding,
and depositing the appropriate amount
from a payment. Generally, a QI assum-
ing primary withholding responsibility
or assuming primary backup withhold-
ing responsibility relieves the person
who makes a payment to the QI from the
responsibility to withhold. Notwithstand-
ing the preceding sentence, a QI acting as
a QDD (that assumes primary withhold-
ing responsibility as required by section 3
of this Agreement) remains liable for the
tax under section 881 (or in the case of a
partnership, its partners remain liable for
tax under section 871(a) or 881, as appli-
cable) and remains subject to withholding
on all U.S. source FDAP payments with
respect to underlying securities; however,
a QDD (including a QDD that is a part-
nership or a branch of a partnership) will
not be subject to withholding on amounts
described in sections 3.03(A)(1) through

(3) of this Agreement, and in the case of
a QDD that is a partnership or branch of a
partnership, its partners will not be subject
to withholding on dividends received by
the QDD in its equity derivatives dealer
capacity in calendar year 2023 or 2024.

Sec. 2.07. Backup Withholding.
"Backup withholding" means the with-
holding required under section 3406.

Sec. 2.08. Beneficial Owner. A "bene-
ficial owner" has the meaning given to that
term in §1.1441-1(c)(6) with respect to an
amount subject to chapter 3 withholding.

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

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

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

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

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

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

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

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

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

(A) Certified Deemed-Compliant
FFI. "Certified deemed-compliant FFI"
means an FFI described in §1.1471-5(f)
(2) and includes a nonreporting IGA FFI
but excludes a nonreporting Model 2 FFI

that is treated as a registered deemed-com-
pliant FFI.

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

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

Sec. 2.18. Deposit Interest. "Deposit
interest" means interest described in sec-
tion 871(i)(2)(A).

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

Sec. 2.20. Documentary Evidence.
"Documentary evidence" means any doc-
umentation obtained under the appropri-
ate know-your-customer rules, any docu-
mentary evidence described in §1.1441-6
sufficient to establish entitlement to a
reduced rate of withholding under an
income tax treaty, or any documentary
evidence described in §1.6049-5(c) suf-
ficient to establish an account holder's
status as a foreign person for purposes of
chapter 61. Documentary evidence does
not include a Form W-8 or Form W-9
(or an acceptable substitute Form W-8 or
Form W-9).

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

Sec. 2.22. Effective Date. For a pro-
spective QI that applies to be a QI on or

before March 31 of a given calendar year,
the effective date of this Agreement will
be January 1 of that year. For a prospec-
tive QI that applies after March 31 of a
given calendar year and that has not
received any reportable payments before
the date the application is submitted, the
effective date of this Agreement will be
January 1 of that year. For a prospec-
tive QI that applies after March 31 of a
given calendar year and that has received
a reportable payment in the calendar year
before the date the application is submit-
ted, the effective date of this Agreement
will be the first of the month in which the
QI application is complete and the QI has
received its QI-EIN.

Sec. 2.23. Eligible Entity. "Eligible
entity" for QDD status means a home
office or branch that is a QI and that is-

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

(B) A bank or bank holding company
subject to regulatory supervision as a
bank or bank holding company, as appli-
cable, by a governmental authority in the
jurisdiction in which it was organized or
operates and that, in its equity derivatives
dealer capacity, (1) issues potential section
871(m) transactions to customers, and (2)
receives dividends with respect to stock or
dividend equivalent payments pursuant to
potential section 871(m) transactions that
hedge potential section 871(m) transac-
tions that it issued;

(C) An entity that is wholly-owned
(directly or indirectly) by a bank or bank
holding company subject to regulatory
supervision as a bank or bank holding
company, as applicable, by a govern-
mental authority in the jurisdiction in
which the bank or bank holding company
was organized or operates and that, in
its equity derivatives dealer capacity, (1)
issues potential section 871(m) transac-
tions to customers, and (2) receives div-
idends with respect to stock or dividend
equivalent payments pursuant to potential
section 871(m) transactions that hedge
potential section 871(m) transactions that
it issued; or

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

The home office or any branch that
wants to be a QDD must separately meet
the requirements of paragraph (A), (B), or
(C) as if it were a separate entity.

Eligible entity also includes any other
home office or branch that is acceptable to
the IRS as provided in §1.1441-1(e)(6)(ii)
(D).

Sec. 2.24. Excepted NFFE. "Excepted
NFFE" means a person described in
§1.1471-1(b)(41).

Sec. 2.25. 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 or Model 2 IGA.

Sec. 2.26. Exempt Recipient. For pur-
poses of Form 1099 reporting and backup
withholding, an "exempt recipient" means
a person described in §1.6049-4(c)(1)
(ii) (for interest, dividends, and royal-
ties), a person described in §1.6045-2(b)
(2)(i) (for broker proceeds), and a per-
son described in §1.6041-3(q) (for rents,
amounts paid on notional principal con-
tracts, and other fixed or determinable
income), for which no Form 1099 report-
ing is required. Exempt recipients are not
exempt from reporting or withholding
under chapter 3 or 4.

Sec. 2.27. FATCA Requirements
as a Participating FFI, Registered
Deemed-Compliant FFI, or Registered
Deemed-Compliant Model 1 IGA FFI.
"FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI" means-

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

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

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

Sec. 2.28. Financial Institution (FI).
"Financial institution" or "FI" is defined

in §1.1471-5(d) and includes a financial
institution as defined under an applicable
Model 1 or Model 2 IGA.

Sec. 2.29. Foreign Financial Insti-
tution (FFI). "Foreign Financial Institu-
tion" or "FFI" means a foreign entity (as
defined in §1.1473-1(e)) that is a financial
institution.

Sec. 2.30. FFI Agreement. "FFI
Agreement" means an agreement
described in §1.1471-4(a) and provided
in Rev. Proc. 2017-16, 2017-3 I.R.B. 501
(and any superseding revenue procedure).

Sec. 2.31. 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 (other than a withholding
foreign trust) that is described in section
651(a), or a foreign trust if all or a portion
of such trust is treated as owned by the
grantor or other person under sections 671
through 679. For an item of income for
which a treaty benefit is claimed, an entity
is also a flow-through entity to the extent it
is treated as fiscally transparent under sec-
tion 894 and the regulations thereunder.
For an amount realized or amount subject
to withholding under section 1446(a) on
a PTP distribution, a flow-through entity
includes a U.S. grantor trust.

Sec. 2.32. Foreign Person. A "foreign
person" is any person that is not a "United
States person" and includes a "nonresident
alien individual," a "foreign corporation,"
a "foreign partnership," a "foreign trust,"
and a "foreign estate," as those terms are
defined in section 7701. For purposes of
chapters 3 and 4, the term foreign person
also means, with respect to a payment
by a withholding agent, a foreign branch
(including a foreign disregarded entity) of
a U.S. person that provides a valid Form
W-8IMY on which it represents that it is
a QI. A foreign branch of a U.S. person
that is a QI is, however, a U.S. payor for
purposes of chapter 61 and section 3406.

Sec. 2.33. Foreign TIN. A "foreign
TIN" is a taxpayer identification number
issued by a foreign person's country of
residence.

Sec. 2.34. Form W-8. "Form W-8"
means IRS Form W-8BEN, Certificate
of Foreign Status of Beneficial Owner for
United States Tax Withholding (Individ-
uals); 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 Organi-
zation for United States Tax Withholding
and Reporting; and IRS Form W-8IMY,
Certificate of Foreign Intermediary, For-
eign Flow-Through Entity, or Certain U.S.
Branches for United States Tax Withhold-
ing and Reporting, as appropriate. It also
includes any acceptable substitute Form
W-8.

Sec. 2.35. 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.

Sec. 2.36. Form 945. "Form 945"
means IRS Form 945, Annual Return of
Withheld Federal Income Tax.

Sec. 2.37. Form 1042. "Form 1042"
means IRS Form 1042, Annual Withhold-
ing Tax Return for U.S. Source Income of
Foreign Persons.

Sec. 2.38. Form 1042-S. "Form 1042-
S" means IRS Form 1042-S, Foreign
Person's U.S. Source Income Subject to
Withholding.

Sec. 2.39. 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, Inter-
est Income; IRS Form 1099-MISC, Mis-
cellaneous Income; IRS Form 1099-OID,
Original Issue Discount; and any other
form in the IRS Form 1099 series appro-
priate to the type of payment required to
be reported.

Sec. 2.40. Form 8966. "Form 8966"
means IRS Form 8966, FATCA Report.

Sec. 2.41. Form 1099 Reporting.
"Form 1099 reporting" means the report-
ing required on Form 1099.

Sec. 2.42. Global Intermediary Iden-
tification Number (GIIN). "Global inter-
mediary identification number" or "GIIN"
means the identification number that is
assigned to a participating FFI, registered
deemed-compliant FFI, direct reporting
NFFE, or sponsoring entity of a direct
reporting NFFE. The term also includes
the identification number assigned to
a reporting Model 1 FFI or registered

deemed-compliant Model 1 IGA FFI that
is a QI for the purpose of identifying itself
to withholding agents.

Sec. 2.43. Home Office. "Home
office" means a foreign person, excluding
any branches of the foreign person, that
applies for QDD status.

Sec. 2.44. Intermediary. An "inter-
mediary" means any person that acts on
behalf of another person such as a custo-
dian, broker, nominee, or other agent.

Sec. 2.45. Know-Your-Customer
Rules. "Know-your-customer rules"
refers to the applicable laws, regulations,
rules, and administrative practices and
procedures governing the requirements
of QI to obtain documentation confirming
the identity of QI's account holders.

Sec. 2.46. 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 obtain treaty benefits with respect to an
amount subject to chapter 3 withholding.

Sec. 2.47. Net Delta Exposure. Net
delta exposure to an underlying secu-
rity is the amount (measured in number
of shares) by which (A) the aggregate
number of shares in an underlying secu-
rity that the QDD has exposure to as
a result of positions in the underlying
security (including as a result of own-
ing the underlying security) with values
that move in the same direction as the
underlying security (the "long positions")
exceeds (B) the aggregate number of
shares of in an underlying security that
the QDD has exposure to as a result of
positions in the underlying security with
values that move in the opposite direction
from the underlying security (the "short
positions"). The net delta exposure cal-
culation only includes long positions and
short positions that the QDD holds in its
equity derivatives dealer business. Any
long positions or short positions that are
treated as effectively connected with the
QDD's conduct of a trade or business in
the United States for U.S. federal income
tax purposes are excluded from the net
delta exposure computation. The net delta
exposure to an underlying security is
determined at the end of the day on the
date provided in §1.871-15(j)(2) for the
applicable dividend. For purposes of this
calculation, net delta must be determined

in a commercially reasonable manner. If
a QDD calculates net delta for non-tax
business purposes, the net delta ordinary
will be the delta used for this purpose,
subject to the modifications required by
this definition. Each QDD must deter-
mine its net delta exposure separately
only taking into account transactions that
exist and are attributable to that QDD for
U.S. federal income tax purposes.

Sec. 2.48. Non-Consenting U.S.
Account. For purposes of a report-
ing Model 2 FFI, "non-consenting U.S.
account" has the meaning that such term
has under an applicable Model 2 IGA.

Sec. 2.49. Non-Exempt Recipient.
A "non-exempt recipient" means a per-
son that is not an exempt recipient under
the definition in section 2.26 of this
Agreement.

Sec. 2.50. Non-Financial Foreign
Entity (NFFE). A "non-financial foreign
entity" or "NFFE" means a foreign entity
that is not a financial institution (including
an entity that is incorporated or organized
under the laws of any U.S. territory and
that is not a financial institution). The term
also means a foreign entity treated as an
NFFE pursuant to a Model 1 or Model 2
IGA.

Sec. 2.51. Nonparticipating FFI. A
"nonparticipating FFI" means an FFI other
than a participating FFI, a deemed-com-
pliant FFI, or an exempt beneficial owner.
Sec. 2.52. Nonqualified Intermediary
(NQI). A "nonqualified intermediary" or
"NQI" is any intermediary that is not a
qualified intermediary. An NQI includes
any intermediary that is a foreign person
unless such person enters an agreement to
be a QI and acts in such capacity. An NQI
also includes an intermediary that is a ter-
ritory FI unless such institution agrees to
be treated as a U.S. person.

Sec. 2.53. Non-U.S. Payor. A "non-
U.S. payor" means a payor other than a
U.S. payor as defined in this section 2.81
of this Agreement.

Sec. 2.54. Nonwithholding Foreign
Partnership. A "nonwithholding foreign
partnership" means a foreign partnership
other than a withholding foreign partner-
ship as defined in §1.1441-5(c)(2)(i).

Sec. 2.55. Nonwithholding Foreign
Trust. A "nonwithholding foreign trust"
means a foreign trust (as defined in section
7701(a)(31)(B)) that is a foreign simple

trust or a foreign grantor trust and that is
not a withholding foreign trust.

Sec. 2.56. Overwithholding. The term
"overwithholding" means any amount
actually withheld (determined before
application of the adjustment procedures
described in section 9 of this Agreement)
from an item of income or other payment
that is in excess of:

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

(B) In the case of an amount subject to
chapter 3 withholding, the actual tax liabil-
ity of the beneficial owner of the income
or payment to which the withheld amount
is attributable, regardless of whether such
overwithholding was in error or appeared
correct when it occurred; and,

(C) In the case of the withholding
required under section 1446(a) or (f), the
excess of the amount withheld over the
amount required to be withheld under
§1.1446-4 or §1.1446(f)-4, respectively.

For purposes of section 3406, the term
"overwithholding" means the excess of
the amount actually withheld under sec-
tion 3406 over the amount required to be
withheld.

Sec. 2.57. Participating FFI. A "par-
ticipating FFI" means an FFI described in
§1.1471-1(b)(91). The term participating
FFI also includes a QI branch of a U.S.
financial institution unless such branch is
a reporting Model 1 FFI.

Sec. 2.58. Payee. For chapter 4 pur-
poses, a "payee" means a person described
in §1.1471-3(a). For purposes of chapter
61, a "payee" means the person to whom a
payment is made. For purposes of chapter
3, a "payee" means a person described in
§1.1441-1(c)(12).

Sec. 2.59. Payment. A "payment" is
considered made to a person if that per-
son realizes income, whether or not such
income results from an actual transfer of
cash or other property. See §1.1441-2(e).
For example, a payment includes crediting
an amount to an account. For any payment
of a dividend equivalent, a "payment" has
the meaning provided in §1.871-15(i).

Sec. 2.60. 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 chap-
ter 61. The term includes any person that
makes a payment, directly or indirectly, to

QI and to whom QI provides information,
pursuant to this Agreement, so that such
person can report a payment on Form 1099
and, if appropriate, backup withhold. See
also sections 2.81 and 2.53 of this Agree-
ment for the definition of U.S. payor and
non-U.S. payor.

Sec. 2.61. Potential Section 871(m)
Transaction. A "potential section 871(m)
transaction" is any securities lending or
sale-repurchase transaction, notional prin-
cipal contract (NPC), or equity linked
instrument (ELI) that references one
or more underlying securities. For pur-
poses of this definition, securities lend-
ing or sale-repurchase transaction, NPC,
ELI, reference, and underlying security
have the meaning given to the terms in
§§1.871-15(a)(13), (7), (4), (11), and (15),
respectively.

Sec. 2.62. Private Arrangement
Intermediary (PAI). A "private arrange-
ment intermediary" or "PAI" is an inter-
mediary described in section 4 of this
Agreement.

Sec. 2.63. Qualified Derivatives Dealer
(QDD). A "qualified derivatives dealer"
or "QDD" is an eligible entity that agrees
to meet the requirements of §1.1441-1(e)
(6)(i) and of this Agreement with respect
to payments on potential section 871(m)
transactions and underlying securities that
it receives or makes as a principal. In order
to act as a QDD, the home office or branch,
as applicable, must qualify and be approved
for QDD status and must represent itself
as a QDD on its Form W-8IMY and sepa-
rately identify the home office or branch as
the recipient on a withholding statement (if
necessary). Each home office or branch that
obtains QDD status is treated as a separate
QDD and must use the name specified on
its application for QDD status when repre-
senting its status as a QDD. For the QDD's
application, a home office must use the
name of the legal entity applying for QDD
status, and a branch of the legal entity must
add the following to the Home Office Name:
QDD-BRANCH-(Branch QDD COUN-
TRY, and branch identifier, if necessary),
for example: ABC Bank-QDD-BRANCH-
SINGAPORE (Disregarded Entity Name)).
Each QDD of a QI must have a different
name.

Sec. 2.64. QDD Tax Liability. A "QDD
tax liability" is the amount described in
section 3.09 of this Agreement.

Sec. 2.65. 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.

Sec. 2.66. QI-EIN. A "QI-EIN"
means the employer identification num-
ber assigned by the IRS to a QI. QI's
QI-EIN is only to be used when QI is act-
ing as a QI. For example, QI must give a
withholding agent its EIN (other than its
QI-EIN), if any, if it is receiving income
as a beneficial owner (excluding when it
receives income as a principal when act-
ing as either a QDD or QSL, or when a
QI assumes primary withholding respon-
sibility for a substitute interest payment
under this Agreement). QI must also use
its non-QI EIN, if any, when acting as an
NQI. Each signatory to this Agreement
must have its own QI-EIN.

Sec. 2.67. Qualified Securities Lender
(QSL). A "qualified securities lender" or
"QSL" is a person described as a quali-
fied securities lender in Notice 2010-46,
2010-24 I.R.B. 757. A QI that acts as a
QSL with respect to a substitute dividend
payment (as defined in §1.861-3(a)(6)) is
required to act as a QSL for all U.S. source
substitute dividends received by the QI
when acting as an intermediary or dealer
with respect to securities lending and sim-
ilar transactions, except as otherwise pro-
vided in section 1.01 of this Agreement. A
QI is only permitted to act as a QSL until
December 31, 2024.

Sec. 2.68. Reportable Amount. A
"reportable amount" means U.S. source
FDAP income that is an amount subject to
chapter 3 withholding, U.S. source deposit
interest, and U.S. source interest or origi-
nal issue discount paid on the redemption
of short-term obligations. 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 origi-
nal 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 regis-
tered obligations and certain obligations
issued in bearer form).

Sec. 2.69. Reportable Payment. For
purposes of this Agreement, a "reportable

payment" means an amount described
in section 2.69(A) of this Agreement, in
the case of a U.S. payor, and an amount
described in section 2.69(B) of this Agree-
ment, in the case of a non-U.S. payor.

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

(1) Any reportable amount;

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

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

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

(1) Any reportable amount;

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

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

Sec. 2.70. 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 a nonparticipating
FFI under an applicable Model 1 IGA.

Sec. 2.71. Reporting Pool. A "report-
ing pool" is defined in section 8 of this
Agreement.

Sec. 2.72. Responsible Officer. A
"responsible officer" of a QI means an
officer of the QI with sufficient authority
to fulfill the duties of a responsible officer
as described in section 10 of this Agree-
ment, including the requirements to peri-
odically certify and to respond to requests
by the IRS for additional information to
review the QI's compliance.

Sec. 2.73. Section 871(m) Amount.
For each dividend on each underlying
security, the "section 871(m) amount" is
(A) the QDD's net delta exposure to the
underlying security for the applicable

dividend multiplied by (B) the applica-
ble dividend amount per share. These
amounts are treated as dividend equiva-
lent amounts under section 871(m).

Sec. 2.74. Section 871(m) Transac-
tion. A "section 871(m) transaction" is
any securities lending or sale-repurchase
transaction, specified NPC, or specified
ELI described in §1.871-15(a)(13), (d),
and (e), respectively.

Sec. 2.75. Short-Term Obligation. A
"short-term obligation" is any obligation
described in section 871(g)(1)(B)(i).

Sec. 2.76. Substitute Interest. "Sub-
stitute interest" means a substitute interest
payment described in §1.861-2(a)(7).

Sec. 2.77. Underlying Security. For
purposes of a QI acting as a QDD or any
determination relating to section 871(m),
"underlying security" has the meaning
provided in §1.871-15(a)(15).

Sec. 2.78. Underwithholding.
"Underwithholding" means the excess of
the amount required to be withheld under
chapter 3 or 4 or section 3406 over the
amount actually withheld.

Sec. 2.79. Undocumented Account
Holder. An "undocumented account
holder" is an account holder for whom QI
does not hold valid documentation.

Sec. 2.80. U.S. Account. A "U.S.
account" is any financial account main-
tained by an FFI that is held by one or more
specified U.S. persons or U.S .- owned for-
eign entities that such FFI reports or elects
to report under the FFI Agreement or
§1.1471-5(f), as applicable.

Sec. 2.81. U.S. Payor. The term
"U.S. payor" has the same meaning as in
§1.6049-5(c)(5).

Sec. 2.82. U.S. Person. A "U.S. per-
son" (or "United States person") is a per-
son described in section 7701(a)(30), the
U.S. government (including an agency
or instrumentality thereof), a State of the
United States (including an agency or
instrumentality thereof), or the District of
Columbia (including an agency or instru-
mentality thereof). An individual will not
be treated as a U.S. person for purposes
of this section for a taxable year or any
portion of a taxable year that the 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 com-
puting his or her U.S. tax liability. The

term "U.S. person" or "United States
person" also means a foreign insurance
company that has made an election under
section 953(d), provided that either the
foreign insurance company is not a spec-
ified insurance company (as described in
§1.1471-5(e)(1)(iv)), or the foreign insur-
ance company is a specified insurance
company and is licensed to do business in
any State of the United States.

Sec. 2.83. U.S. Reportable Account. A
"U.S. reportable account" means a finan-
cial account maintained by a reporting
Model 1 FFI or registered deemed-com-
pliant 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. 2.84. U.S. Source FDAP. "U.S.
source FDAP" means amounts from
sources within the United States that con-
stitute fixed or determinable annual or
periodical income, as defined in §1.1441-
2(b)(1).

Sec. 2.85. U.S. TIN. A "U.S. TIN"
means a U.S. taxpayer identification num-
ber assigned under section 6109.

Sec. 2.86. Withholding Agent. A
"withholding agent" has the same mean-
ing as set forth in §1.1441-7(a) for pur-
poses of chapter 3 and as set forth in
§1.1473-1(d) for purposes of chapter 4
and includes a payor (as defined in sec-
tion 2.60 of this Agreement), a broker (as
defined in section 2.91(D) of this Agree-
ment), or a nominee (as defined in section
2.91(G) of this Agreement with respect to
§1.1446-4).

Sec. 2.87. Withholding Foreign Part-
nership (WP). A "withholding foreign
partnership" or "WP" means a partner-
ship, described in §1.1441-5(c)(2), that
has entered into a withholding agreement
with the IRS to be treated as a withholding
foreign partnership.

Sec. 2.88. Withholding Foreign Trust
(WT). A "withholding foreign trust"
or "WT" means a trust, described in
§1.1441-5(e)(5)(v), that has entered into a
withholding agreement with the IRS to be
treated as a withholding foreign trust.

Sec. 2.89. Withholdable Payment. A
"withholdable payment" means an amount
described in §1.1473-1(a).

Sec. 2.90. Withholding Rate Pool. A
"withholding rate pool" is defined in sec-
tion 6.03 of this Agreement and includes

a chapter 3 withholding rate pool and a
chapter 4 withholding rate pool.

Sec. 2.91. Terms Applicable to Sec-
tion 1446(a) and (f) Requirements. The
following terms apply in connection with
QI's requirements with respect to QI's
account holders holding PTP interests for
purposes of section 1446(a) and (f):

(A) Amount Realized. For purposes
of section 1446(f), an "amount realized"
on a sale of a PTP interest is the amount
of gross proceeds (as defined in §1.6045-
1(d)(5)) paid or credited to the partner or
broker that is the transferor of the inter-
est. The "amount realized" on a PTP dis-
tribution is the amount of the distribution
reduced by the portion of the distribution
that is attributable to the cumulative net
income of the partnership (as determined
under §1.1446(f)-4(c)(2)(iii)).

(B) Amount Subject to Reporting
under Section 1446(f). An "amount sub-
ject to reporting under section 1446(f)"
is the amount realized on the transfer of
a PTP interest paid to a foreign partner
(including a partner presumed to be for-
eign) unless an exception to withholding
applies under §1.1446(f)-4(b)(2) through
(4). See §1.1461-1(c)(2)(i)(Q).

(C) Amount Subject to Withholding
on a PTP Distribution. An "amount sub-
ject to withholding on a PTP distribution"
is the amount of the distribution subject to
withholding under chapter 3 or 4 and/or
under section 1446(a) or (f).

(D) Broker. The term "broker" has the
meaning described in §1.1446(f)-1(b)(1),
when referenced in connection with the
transfer of a PTP interest.

(E) Disclosing QI. For purposes of
section 1446(a) or (f), a "disclosing QI"
is a QI that does not assume the primary
withholding obligation under section
1446(a) or (f) for a payment and that
provides with its withholding statement
the specific payee documentation refer-
enced in §1.1446(f)-4(a)(7)(iii) (for an
amount realized) or §1.1446-4(e)(4) (for
withholding on a PTP distribution under
section 1446(a)) instead of the chapter 3
withholding rate pool information oth-
erwise permitted to be included on the
withholding statement and, for an amount
realized, a chapter 4 withholding rate pool
of U.S. payees when permitted for chapter
4 purposes in lieu of specific payee docu-
mentation (that is, Forms W-9) for those

payees. A QI that acts as a disclosing QI
for a payment must act as a disclosing
QI for the entire payment of an amount
realized from the sale of a PTP interest
or a PTP distribution (regardless of the
number of account holders that are part-
ners receiving the payment). For purposes
of the preceding sentence, a QI will be
treated as having acted as a disclosing QI
with respect to an account holder that is a
foreign person regardless of whether the
Form W-8 that QI provides with its with-
holding statement for the foreign person
includes a U.S. TIN. See, however, sec-
tion 5.01(A) of this Agreement for a QI's
requirement to request U.S. TINs from its
account holders for purposes of sections
1446(a) and (f).

(F) Modified Amount Realized. In
the case of an amount realized paid to a
transferor of a PTP interest that is a for-
eign partnership, the "modified amount
realized" is the amount determined under
§1.1446(f)-4(c)(2)(ii), as modified by
section 4.06 or 5 of this Agreement with
respect to the partner information required
for determining the amount.

(G) Nominee. Except as otherwise
provided in this Agreement, the term
"nominee" means a person that, under
§1.1446-4(b)(3), holds an interest in a
PTP on behalf of a foreign person and that
is either a U.S. person or QI that assumes
primary withholding responsibility for
a PTP distribution or a U.S. branch of a
foreign person (or territory financial insti-
tution) that agrees to be treated as a U.S.
person with respect to the distribution.

(H) Partner. When referenced in con-
nection with section 1446(a) and (f), a
"partner" is a person holding a PTP inter-
est, including a partnership or trust but
excluding a grantor trust and including the
trust's grantors or owners to the extent of
their respective interests in the trust, and
excluding an intermediary. When refer-
enced in connection with §1.6031(c)-1T,
a partner is a person to whom a partner-
ship is required to issue a statement under
section 6031(b). See section 8.07 of this
Agreement.

(I) PTP Interest. A "PTP interest" is
an interest in a publicly traded partner-
ship if the interest is publicly traded on an
established securities market or is readily
tradable on a secondary market (or the
substantial equivalent thereof).

(J) PTP Distribution. A "PTP distri-
bution" is a distribution made by a pub-
licly traded partnership.

(K) Publicly Traded Partnership
(PTP). The term "publicly traded part-
nership" (PTP) has the same meaning as
in section 7704 and §§1.7704-1 through
1.7704-4 but does not include a publicly
traded partnership treated as a corporation
under that section.

(L) Qualified Notice. A "qualified
notice" is a notice issued by a PTP for a
PTP distribution as described in §1.1446-
4(b)(4).

(M) Transfer. A "transfer" is a sale,
exchange, or other disposition of a PTP
interest and includes a distribution from a
partnership to a partner, as well as a trans-
fer treated as a sale or exchange under
section 707(a)(2)(B). With respect to a
PTP distribution, however, see sections
2.91(A) and 3.01(C)(2) of this Agreement
for the extent of an amount realized on the
distribution for purposes of QI's require-
ment to withhold under section 1446(f).

(N) Transferor. A "transferor" is any
person, foreign or domestic, that transfers
a PTP interest. In the case of a trust, to the
extent all or a portion of the income of the
trust is treated as owned by the grantor or
another person under sections 671 through
679, the term transferor means the grantor
or other person.

Sec. 2.92. Other Terms. Any term not
defined in this section has the same mean-
ing that it has under the Code, including
the income tax regulations under the Code,
any applicable income tax treaty, or any
applicable Model 1 or Model 2 IGA with
respect to a QI's FATCA requirements as a
participating FFI, registered deemed-com-
pliant FFI, or registered deemed-compli-
ant Model 1 IGA FFI. Except as expressly
provided in this Agreement, any term
relating to a QDD or section 871(m) has
the same meaning given to the term in
§1.871-15.

## SECTION 3. WITHHOLDING RESPONSIBILITY AND QDD TAX LIABILITY

Sec. 3.01. Chapters 3 and 4 With-
holding Responsibilities and Withhold-
ing with respect to PTP Interests.

(A) Chapter 4 Withholding. QI
is a withholding agent for purposes of

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

If QI is a participating FFI or regis-
tered deemed-compliant FFI (other than
a reporting Model 1 FFI), QI will satisfy
its requirement to withhold under sections
1471(a) and 1472(a) with respect to direct
account holders that are entities by with-
holding on withholdable payments made
to nonparticipating FFIs and recalcitrant
account holders to the extent required
under its FATCA requirements as a partic-
ipating FFI or registered deemed-compli-
ant FFI. See the FFI Agreement, §1.1471-
5(f)(1), or the applicable Model 2 IGA for
the withholding requirements that apply to
withholdable payments made to account
holders of the FFI that are individuals
treated as recalcitrant account holders or
non-consenting U.S. accounts. If QI is
a reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI,
QI will satisfy its requirement to with-
hold under section 1471(a) with respect
to direct account holders by withholding
on withholdable payments made to non-
participating FFIs to the extent required
under its FATCA requirements as a regis-
tered deemed-compliant FFI or registered
deemed-compliant Model 1 IGA FFI. QI
must, however, withhold in the manner
described in sections 3.02 and 3.03 of this
Agreement for when QI assumes or does

not assume primary withholding respon-
sibility for purposes of chapters 3 and 4
regardless of its chapter 4 status.

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

(1) Withholding on an Amount Real-
ized. If QI acts as a broker with respect to
a payment of an amount realized from a
transfer of a PTP interest, QI is required to
withhold under section 1446(f) 10-percent
of the amount realized paid to an account
holder of QI that is the transferor and
is (or is presumed to be) a foreign part-
ner when QI assumes primary withhold-
ing responsibility for the payment under
section 3.03(C)(1) of this Agreement. QI
is further required to withhold on a pay-
ment of an amount realized made to a
foreign broker to the extent provided in
§1.1446(f)-4(a)(2). QI is not required to
withhold on a payment of an amount real-
ized when an exception to withholding
under §1.1446(f)-4(b) applies. Thus, for
example, QI is not required to withhold
under section 1446(f) when it may rely on
a qualified notice that states the applicabil-
ity of the exception under §1.1446(f)-4(b)
(3). See section 5 of this Agreement
regarding documentation requirements

for other exceptions to withhold under
§1.1446(f)-4(b).

(2) Withholding on a PTP Distribu-
tion. If QI acts as a nominee for a PTP
distribution under section 3.03(C)(2) of
this Agreement, QI is a withholding agent
for purposes of the distribution and is
required to withhold as described in this
section 3.01(C)(2). For an amount sub-
ject to withholding under section 1446(a)
identified on a qualified notice for a PTP
distribution, QI is required to withhold on
the amount paid to an account holder that
is (or is presumed to be) a foreign partner
except when an exception to withholding
applies to an account holder that is a for-
eign entity described in section 501(c)(3)
or that claims an exemption from with-
holding under an income tax treaty. See
sections 5.03 and 5.06(A) of this Agree-
ment for documentation requirements
for these exceptions and section 1446(b)
for the rate of withholding that applies
under section 1446(a). See also §1.1446-
5(c) and (d) for how QI determines its
withholding under section 1446(a) on
a PTP distribution paid to an account
holder that is a foreign partnership. For
an amount subject to withholding under
chapter 3 and 4 on a PTP distribution,
QI is required to withhold under sections
3.01(A) and (B) of this Agreement to the
extent such amounts are identified on a
qualified notice for the distribution. For
an amount realized on a PTP distribution,
QI's requirement to withhold under sec-
tion 1446(f) is limited to the amount iden-
tified on a qualified notice as in excess of
the PTP's cumulative net income, subject
to the withholding exceptions referenced
in section 3.01(C)(1) of this Agreement.
If QI does not receive a qualified notice
for a distribution or to the extent the qual-
ified notice for the distribution does not
specify an amount attributable to the dis-
tribution, QI is required to withhold only
to the extent provided in §1.1446-4(d)(1).

Sec. 3.02. Primary Withholding
Responsibility Not Assumed under
Chapters 3 and 4 or with respect to PTP
interests. Notwithstanding anything in
sections 1.01 and 3.01 of this Agreement
to the contrary, QI is not required to with-
hold to the extent provided in this section
3.02.

(A) Withholding under Chapters
3 and 4. QI is not required to withhold

with respect to a payment of U.S. source
FDAP income if it: (a) does not assume
primary withholding responsibility
under section 3.03(A) of this Agreement
by electing to be withheld upon under
§1.1471-2(a)(2)(iii) for purposes of chap-
ter 4, (b) provides the withholding agent
from which QI receives the payment with
a valid withholding certificate described
in section 6 of this Agreement that indi-
cates that QI does not assume primary
withholding responsibility for chapters 3
and 4 purposes, and (c) provides correct
withholding statements (including infor-
mation regarding any account holders
or interest holders of an intermediary or
flow-through entity that holds an account
with QI, other than a QI that assumes pri-
mary withholding responsibility, or a WP
or WT) as described in section 6.02 of
this Agreement.

(B) Withholding with respect to
PTP interest. QI is not required to with-
hold on a payment of a PTP distribution
or an amount realized from the sale of a
PTP interest except when QI assumes pri-
mary withholding responsibility for either
of those payments under section 3.03(C)
(1) or (2) of this Agreement. QI does not
assume primary withholding responsibil-
ity for a payment of a PTP distribution or
amount realized from the sale of a PTP
interest by providing to its withholding
agent or broker a valid withholding certif-
icate described in section 6 of this Agree-
ment indicating that it is a QI that does not
assume primary withholding responsibil-
ity for the payment and provides correct
withholding statements as described in
section 6.02 of this Agreement. See sec-
tion 3.05(C) of this Agreement for when
QI is not responsible for primary Form
1099 reporting and backup withholding
for broker proceeds that are an amount
realized.

(C) Residual Withholding Require-
ment. Notwithstanding its election not to
assume primary withholding responsibil-
ity for a payment as described in section
3.02(A) or (B) of this Agreement, QI shall,
however, withhold the difference between
the amount of withholding required and
the amount actually withheld by another
withholding agent if QI-

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

(2) Made an error which results in the
withholding agent's failure to withhold
the correct amount due (e.g., QI fails to
provide an accurate withholding statement
with respect to the payment, including a
failure to provide information regarding
any account holders or any interest hold-
ers of an intermediary or flow-through
entity that holds an account with QI to the
extent required in section 6 of this Agree-
ment), and QI has not corrected the under-
withholding under section 9.05 of this
Agreement.

Sec. 3.03. Assumption of Primary
Withholding Responsibilities under
Chapters 3 and 4 (including by QDDs)
or with respect to PTP interests.

(A) Withholding Assumed under
Chapters 3 and 4. QI may assume pri-
mary withholding responsibility for pur-
poses of chapters 3 and 4 by providing
a valid withholding certificate described
in section 6 of this Agreement to a with-
holding agent that makes a payment of
U.S. source FDAP income to QI and by
designating on the withholding state-
ment associated with such certificate
the account(s) for which QI assumes
primary withholding responsibility (if
required). QI is not required to assume
primary withholding responsibility for
all accounts it holds with a withholding
agent. If QI assumes primary withhold-
ing responsibility for any account, it must
assume that responsibility under chapters
3 and 4 for all withholdable payments
and amounts subject to chapter 3 with-
holding made by the withholding agent
to that account. Notwithstanding the
preceding sentence, QI assumes primary
withholding responsibility on a PTP dis-
tribution (which includes an amount sub-
ject to withholding under chapter 3 or 4
on the distribution) only as provided in
section 3.03(C)(2) of this Agreement.

If QI is acting as a QSL for a substi-
tute dividend payment, QI must assume
primary withholding responsibility for
any such payment made to any account
holder receiving a U.S. source substitute
dividend payment, subject to the restric-
tions related to QDDs described in section
1.01 of this Agreement. A QI not acting as
a QSL and acting as an intermediary under
this Agreement for a U.S. source substi-
tute dividend payment must also assume
primary withholding responsibility for all

U.S. source substitute dividends received
and paid by QI as an intermediary.

QI may assume primary withholding
responsibility for U.S. source FDAP pay-
ments of substitute interest as described
in §1.861-2(a)(7). If QI assumes primary
withholding responsibility for payments
of substitute interest (as described in this
paragraph), it must assume primary with-
holding responsibility with respect to
all such payments. QI assumes primary
withholding responsibility for payments
of substitute interest for purposes of this
Agreement when it assumes such respon-
sibility for payments of interest and sub-
stitute interest it receives in connection
with a sale-repurchase or similar agree-
ment, a securities lending transaction, or
collateral that it holds in connection with
its activities as a dealer in securities. As a
result, QI may represent its status as a QI
on the withholding certificate described
in section 6.01 of this Agreement with
respect to payments it receives of inter-
est and substitute interest described in the
preceding sentence regardless of whether
it acts as an intermediary or as a principal
with respect to these payments.

To the extent that QI assumes pri-
mary withholding responsibility under
this section 3.03(A), QI must withhold
as described in section 3.01(A) and (B)
of this Agreement. QI is not required to
withhold on amounts it pays to another
QI that has assumed primary withholding
responsibility with respect to the payment
under chapters 3 and 4 or to a WP or a WT.
A QI is not required to withhold on only
the following payments to a QI acting as
a QDD-

(1) a payment with respect to a poten-
tial section 871(m) transaction that is not
an underlying security,

(2) a payment of a dividend equivalent,
and

(3) a payment of a dividend received in
calendar year 2023 or 2024 by that QDD
in its equity derivatives dealer capacity.

(B) Assumption of Withholding
Responsibility by a QDD. If QI is acting
as a QDD, it must assume primary chap-
ters 3 and 4 withholding responsibility for
any dividend equivalent payment that it

makes and must withhold with respect to
a dividend equivalent payment on the div-
idend payment date for the applicable div-
idend (as determined in §1.1441-2(e)(4)).
A QDD must treat any dividend equivalent
(including any section 871(m) amount) as
a dividend from sources within the United
States for purposes of sections 871(a) and
881 and chapter 3 and chapter 4 consistent
with section 871(m) and the regulations
thereunder. A QDD may reduce the rate of
withholding under chapter 3 on dividends
and dividend equivalents only based on
a beneficial owner's claim of treaty-re-
duced withholding for portfolio dividends
under the dividends article of an applica-
ble income tax treaty. A QDD must also
assume primary chapter 3 and chapter 4
withholding responsibility for payments
made with respect to a potential section
871(m) transaction even if the payment
is not a dividend equivalent if the amount
paid is an amount subject to chapter 3 or
4 withholding. See section 3.03(A) of this
Agreement for when a QDD makes a pay-
ment subject to withholding under chapter
3 or 4 to another QI (including a QDD). If
the QDD is a partnership or a branch of a
partnership, it must also assume primary
chapters 3 and 4 withholding responsi-
bility for its partners on the section 3.09
amounts as modified for a QDD that is a
partnership (or branch of a partnership),
treating the dividend equivalent payment
as made on the dividend payment date for
the applicable dividend (as determined in
§1.1441-2(e)(4)). In addition, the QDD
must notify each payee in writing that it
will withhold on the dividend payment
date before the time for determining the
payee's first dividend equivalent payment
(as determined under §1.871-15(j)(2)).

(1) Withholding Assumed on Amount
Realized. QI may assume primary with-
holding responsibility for a payment of
an amount realized from the sale of a
PTP interest only when the QI provides
to the broker making the payment to QI
a valid withholding certificate described
in section 6 of this Agreement stating that
it assumes primary responsibility for the

payment. In such a case, QI is required
to withhold on the payment as described
in section 3.01(C)(1) of this Agreement,
excluding an amount realized paid to
another QI that has assumed primary
withholding responsibility with respect to
the amount realized.

(2) Withholding Assumed on PTP
Distribution. QI may assume primary
withholding responsibility for a payment
of a PTP distribution only when the QI
provides to the PTP or nominee paying
the distribution to QI a valid withholding
certificate described in section 6 of this
Agreement stating that QI assumes pri-
mary responsibility by acting as a nominee
for the distribution under §1.1446-4(b)(3).
QI may act as a nominee for a PTP dis-
tribution only when QI assumes primary
withholding responsibility for all of the
amounts subject to withholding on the
PTP distribution under sections 1446(a)
and (f) and chapters 3 and 4. When act-
ing as a nominee, QI is required to with-
hold on a PTP distribution as required
under section 3.01(C)(2) of this Agree-
ment, excluding a PTP distribution paid
to another QI that has assumed primary
withholding responsibility as a nominee
with respect to the distribution or paid to a
WP or WT with respect to an amount sub-
ject to withholding under chapter 3 or 4 on
the distribution.

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

(A) Backup Withholding. QI is a
payor under section 3406 with respect to
reportable payments. Under section 3406,
unless an exception to backup withhold-
ing applies, a payor is required to deduct
and withhold 241 percent from a report-
able payment to an account holder that is
a U.S. non-exempt recipient if the U.S.
non-exempt recipient has not provided
its U.S. TIN in the manner required under
that section; the IRS notifies the payor
that the U.S. TIN furnished by the payee
is incorrect; there has been a notified
payee under-reporting described in sec-
tion 3406(c); or there has been a payee
certification failure described in section
3406(d).

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

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

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

Sec. 3.05. Primary Form 1099
Reporting and Backup Withholding
Responsibility for Reportable Payments
Other Than Reportable Amounts. QI
is responsible for Form 1099 reporting
and backup withholding on reportable
payments other than reportable amounts
to the extent required under this section
3.05 and section 8.06 of this Agreement,
whether or not QI assumes primary Form
1099 reporting and backup withhold-
ing responsibility with respect to report-
able amounts under section 3.07 of this
Agreement. Further, no provision of this
Agreement which requires QI to provide
another withholding agent with informa-
tion regarding reportable amounts shall be
construed as relieving QI of its Form 1099
reporting and backup withholding obliga-
tions with respect to reportable payments
that are not reportable amounts. For when
withholding under section 1446(a) or (f)
is applied on a payment to an account
holder that is a U.S. person, however, see
section 8.02 of this Agreement. Also see,
§31.3406(g)-1(e), providing that a payor

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

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

(B) Non-U.S. Payor. If QI is a non-U.S.
payor, QI has primary Form 1099 report-
ing and backup withholding responsibility
for broker proceeds described in section
2.69(B)(2) of this Agreement and foreign
source fixed and determinable income
other than income paid and received out-
side United States as described in section
2.69(B)(3) of this Agreement if such pay-
ments are made (or presumed made) to
U.S. non-exempt recipients.

(C) Special Procedure for Broker
Proceeds. If QI is a U.S. payor, QI may
request another payor that is either a U.S.
financial institution or another QI to report
on Form 1099 and, if required, backup
withhold with respect to broker proceeds
from a sale that is effected at an office
outside the United States (as defined in
§1.6045-1(g)(3)(iii)) that QI is otherwise
required to report under section 3.05(A)
and section 8.05 of this Agreement, pro-
vided the other payor actually receives the
broker proceeds. In such a case, QI will
not be responsible for primary Form 1099
reporting and backup withholding with
respect to broker proceeds, provided that
the other payor agrees to do the reporting
and backup withholding and QI provides
all of the information necessary for the
other payor to properly report and backup
withhold. QI, however, remains responsi-
ble for primary Form 1099 reporting and
backup withholding if the other payor does
not agree to report and backup withhold,

or if QI knows that the other payor failed
to do so. If, however, QI is a participat-
ing FFI or registered deemed-compliant
FFI (other than a reporting Model 1 FFI)
that reports an account on Form 1099 in
order to satisfy its U.S. account reporting
requirement under chapter 4, as described
in section 8.04 of this Agreement, QI is
responsible for reporting on Form 1099
with respect to reportable payments made
to such U.S. account and must report in the
manner described in the FFI Agreement.

Notwithstanding the preceding provi-
sions of this section 3.05, for a payment of
broker proceeds that is an amount realized
from the sale of a PTP interest, QI will
not be excepted from responsibility for
primary Form 1099 reporting and backup
withholding if QI provides a valid with-
holding certificate described in section 6
of this Agreement to the broker paying
the proceeds to QI that indicates that QI
assumes primary withholding responsibil-
ity for the amount realized.

Sec. 3.06. Primary Form 1099
Reporting and Backup Withholding
Responsibility for Reportable Amounts
Not Assumed. Notwithstanding sections
1.01 and 3.04 of this Agreement, QI shall
not be required to report on Form 1099
and backup withhold with respect to a
reportable amount if QI does not assume
primary Form 1099 reporting and backup
withholding responsibility and it provides
a payor from which it receives a reportable
amount the Forms W-9 of its U.S. non-ex-
empt recipient account holders (or, if a
U.S. non-exempt recipient fails to provide
a Form W-9 or information regarding the
account holder's name, address, and U.S.
TIN, if a U.S. TIN is available) together
with the withholding rate pools attribut-
able to U.S. non-exempt recipient account
holders so that such payor may report
on Form 1099 and, if required, backup
withhold. If QI elects to backup withhold
on withholdable payments that are also
reportable amounts made to recalcitrant
account holders that are also U.S. non-ex-
empt recipients, QI shall not be required
to report on Form 1099 and backup with-
hold with respect to a reportable amount if
it provides a payor from which it receives
a reportable amount information regard-
ing such recalcitrant account holders. See
section 6.03 of this Agreement and sec-
tion 4 of the FFI Agreement. If QI reports

its U.S. accounts on Forms 1099 under
its FATCA requirements as a participat-
ing FFI or registered deemed-compliant
FFI, see section 8.04(A) of this Agree-
ment providing that QI cannot delegate
to a withholding agent its requirement to
report its U.S. accounts. If QI elects not
to assume primary Form 1099 reporting
and backup withholding responsibility, QI
must provide the withholding agent with
such information regarding any account
holders or interest holders of an interme-
diary or flow-through entity that holds
an account with QI. Notwithstanding its
election not to assume primary Form 1099
reporting and backup withholding respon-
sibility, QI shall backup withhold and
report a reportable amount to the extent
required under sections 3.04 and 8.06 of
this Agreement if-

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

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

Sec. 3.07. Primary Form 1099
Reporting and Backup Withholding
Responsibility Assumed. QI may assume
primary Form 1099 reporting backup
withholding responsibility with respect
to reportable amounts without obtaining
approval from the IRS. QI that assumes
such responsibility is subject to all of the
obligations imposed by chapter 61 and
section 3406, as modified by this Agree-
ment, and QI shall be subject to any appli-
cable penalties for failure to meet those
obligations. QI shall inform a payor from
which it receives a reportable amount that
it has assumed primary Form 1099 report-
ing and backup withholding responsibility
by providing the payor with a valid with-
holding certificate described in section 6
of this Agreement and by identifying on

the withholding statement associated with
such certificate the account(s) for which
QI assumes primary Form 1099 reporting
and backup withholding responsibility (if
required).

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

If QI is acting as a QDD, it must
assume primary Form 1099 reporting and
backup withholding responsibility for
any reportable payments that are made
with respect to a potential section 871(m)
transaction. Thus, for example, if QI acts
as a QDD with respect to an NPC that is
a potential section 871(m) transaction and
makes a payment pursuant to the NPC to
a U.S. person that is a U.S. non-exempt
recipient, QI must backup withhold and
report any amount paid to the U.S. person
to the extent required under section 3406
and §1.6041-1(d)(5).

In addition, if QI is assuming primary
withholding responsibility for payments
of substitute interest (as described in sec-
tion 3.03(A) of this Agreement), it must
assume primary Form 1099 reporting and
backup withholding responsibility with
respect to all such payments (with a simi-
lar requirement for Form 1099 reporting if
QI assumes primary withholding respon-
sibility for any payments of substitute
dividends or acts as a QSL under section
3.02(A) of this Agreement).

QI is not required to backup withhold
on a reportable amount it makes to a WP,
WT, or another QI that has assumed pri-
mary Form 1099 reporting and backup
withholding responsibility with respect
to the reportable amount. QI is also not
required to backup withhold on a report-
able amount that QI makes to an inter-
mediary or flow-through entity that is a
participating FFI, registered deemed-com-
pliant FFI, or another QI that does not
assume primary Form 1099 reporting
and backup withholding responsibility
with respect to the payment provided that
such intermediary or flow-through entity
allocates the payment on its withholding
statement to a chapter 4 withholding rate

pool of U.S. payees and the withholding
statement is associated with a valid Form
W-8IMY that provides the applicable cer-
tification(s) for allocating the payment to
this pool or allocates the payment on its
withholding statement to a chapter 4 with-
holding rate pool of recalcitrant account
holders.

Sec. 3.08. Deposit Requirements. If
QI assumes primary withholding respon-
sibility for a payment under section
3.03 of this Agreement, it must deposit
amounts withheld at the time and in the
manner provided under section 6302 (see
§1.6302-2) by electronic funds transfer
as provided under §31.6302-1(h). If QI
is a non-U.S. payor that does not assume
primary withholding responsibility under
section 3.03 of this Agreement but with-
holds under section 3.02(C) of this Agree-
ment, QI must deposit amounts withheld
by the 15th day following the month in
which the withholding occurred.

Sec. 3.09. QDD Tax Liability. In addi-
tion to satisfying its withholding tax lia-
bility as described in this Agreement, a
QDD must satisfy its QDD tax liability.
The QDD's QDD tax liability is the sum
of:

(A) its tax liability under section 881
for its section 871(m) amount (as defined
in section 2.73 of this Agreement) for
each dividend on each underlying secu-
rity reduced (but not below zero) by the
amount of tax paid by the QDD under sec-
tion 881(a)(1) on dividends received with
respect to that underlying security on that
same dividend in its capacity as an equity
derivatives dealer;

(B) its tax liability under section 881 for
dividend equivalent payments received as
a QDD in its non-equity derivatives dealer
capacity; and

(C) its tax liability under section 881
for any payments, such as dividends or
interest, received as a QDD with respect
to potential section 871(m) transactions or
underlying securities that are not dividend
equivalent payments, to the extent the full
liability was not satisfied by withholding.

A QDD that is a foreign branch of a
U.S. financial institution does not have a
QDD tax liability. Instead, such a QDD
must determine and report its tax liabil-
ity in accordance with chapter 1 and the
appropriate U.S. tax return for the U.S.
corporation.

In the case of a QDD that is a part-
nership or a branch of a partnership, the
QDD tax liability for each QDD will be
the gross income components of this sec-
tion 3.09 instead of the tax liability under
section 881 amounts. More specifically,
the amount under section 3.09(B) is the
dividend equivalent payments received
as a QDD in its non-equity derivatives
dealer capacity, and the amount under
section 3.09(C) is any payments, such as
dividends or interest, received as a QDD
with respect to potential section 871(m)
transactions or underlying securities that
are not dividend equivalent payments. The
section 3.09(C) amount is not reduced by
withholding, although QDD will take
any prior withholding into account when
reporting the amounts covered by section
3.09(C) to the QI's partners and determin-
ing the appropriate withholding to those
partners. Further, the QDD tax liability
includes any withholding required of the
partnership with respect to its partners on
the section 3.09 amounts as modified for a
QDD that is a partnership (or branch of a
partnership).

For calendar years 2023 and 2024, the
QDD (and its partners when the QDD is
a partnership or a branch of a partner-
ship) will not be liable for tax under sec-
tion 871(a) or 881 on actual dividends
on physical shares or deemed dividends
or dividend equivalents that the QDD
receives in its equity derivatives dealer
capacity. The QDD is (and in the case of a
QDD that is a partnership or a branch of a
partnership, the QDD's direct and indirect
partners are) liable for tax on actual divi-
dends on physical shares or deemed divi-
dends or dividend equivalents received in
its non-equity derivatives dealer capacity
and on any other U.S. source FDAP pay-
ments received by the QDD.

(D) Timing for Determining QDD
Tax Liability. A QDD must determine
its QDD tax liability due under sections
3.09(A) and (B) on the date provided in
§1.871-15(j)(2) for the applicable divi-
dend. A QDD must determine its QDD tax
liability due under section 3.09(C) when
the payments are treated as received under
the Code and the regulations promulgated
thereunder. A QDD that is a partnership
or a branch of a partnership must deter-
mine its QDD tax liability under sections
3.09(A) and (B), including the dividend

equivalent payments received as a QDD
in its non-equity derivatives dealer capac-
ity, on the date provided in §1.871-15(j)
(2) for the applicable dividend for with-
holding and reporting purposes.

See section 7.01(C) of this Agreement
regarding a QI that is acting as a QDD's
responsibility to report QDD tax liability
on the appropriate U.S. tax return and to
maintain a reconciliation schedule for its
section 871(m) amount and other amounts
related to its QDD tax liability. See also
section 7.01(C) of this Agreement for
additional information regarding the
reporting and other responsibilities of a
QDD that is a partnership or branch of a
partnership.

## SECTION 4. PRIVATE ARRANGEMENT INTERMEDIARIES AND CERTAIN PARTNERSHIPS AND TRUSTS

Sec. 4.01. Private Arrangement
Intermediaries-In General. If QI is an
FFI, QI may enter into a private arrange-
ment with another intermediary under
which the other intermediary agrees
to perform all of the obligations of QI
under this Agreement, except as modi-
fied in section 4.02 of this Agreement.
QI, however, may not enter into a private
arrangement under this section 4.01 with
any account holder for which it acts as a
QDD. The agreement between QI and the
other intermediary shall be between QI
and all the offices of the other interme-
diary located in a particular jurisdiction,
which must be one for which the IRS has
approved the know-your-customer rules.
Such an intermediary is referred to in this
Agreement as a private arrangement inter-
mediary (PAI). By entering into a PAI
agreement, QI is not assigning its liability
for the performance of any of its obliga-
tions under this Agreement. Therefore,
QI shall remain liable for any tax, penal-
ties, interest, and any other sanctions that
may result from the failure of the PAI to
meet any of the obligations imposed by
its agreement with QI. QI agrees not to
assert any defenses against the IRS for the
failures of the PAI or any defenses that
the PAI may assert against QI. For pur-
poses of this Agreement, the PAI's actual
knowledge or reason to know of facts rel-
evant to withholding or reporting shall be

imputed to QI. QI's liability for the fail-
ures of the PAI shall apply even though
the PAI is itself a withholding agent and
a payor under chapter 61 and section
3406 and is itself separately liable for its
failure to meet its obligations under the
Code. Notwithstanding the foregoing, QI
shall not be liable for tax, interest, or pen-
alties for failure to withhold and report
under chapters 3, 4, and 61 and sections
1446(a), 1446(f), and 3406 unless the
underwithholding or the failure to report
amounts correctly on Forms 945, 1042,
1042-S, 1099, or 8966 is due to QI's or its
PAI's failure to properly perform its obli-
gations under this Agreement. The PAI is
not required to enter into an agreement
with the IRS but must respond (either
directly or through QI) to IRS inquiries
related to its compliance, as described
in section 10.08 of this Agreement. The
IRS may, however, in its sole discretion,
refuse to permit an intermediary to oper-
ate as a PAI by providing notice to QI. QI
may, however, appeal the IRS's determi-
nation by following the notice and cure
provisions in section 11.06 of this Agree-
ment. For purposes of this Agreement, an
intermediary shall be considered a PAI
only if the following conditions are met:

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

(B) The PAI does not act as an interme-
diary for a direct account holder that is a
QI, WP, WT, participating FFI, registered
deemed-compliant FFI, or a registered
deemed-compliant Model 1 IGA FFI;

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

(D) For purposes of chapter 4, the PAI
agrees to comply with the FATCA require-
ments applicable to its chapter 4 status
as a certified deemed-compliant FFI, as
modified by sections 4.02 and 4.03 of this
Agreement, and is not required to fulfill
QI's FATCA requirements as a partici-
pating FFI, registered deemed-compliant

FFI, or registered deemed-compliant
Model 1 IGA FFI;

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

(F) The PAI agrees, to the extent neces-
sary for QI to satisfy its compliance obliga-
tions (i.e., if QI does not receive a waiver
described in section 10.07 of this Agree-
ment), either to provide its documentation
and other information to QI for inclusion
in QI's periodic review described in sec-
tion 10.04 of this Agreement or to conduct
an independent periodic review in accor-
dance with the procedures described in
section 10.05 of this Agreement and pro-
vide QI with the same certification as is
required for QI's responsible officer under
section 10.03 of this Agreement for each
certification period in order to allow the
responsible officer of QI to make a certi-
fication to the IRS regarding PAI's com-
pliance. The PAI agrees to respond (either
directly or through QI) to IRS inquiries
regarding its periodic review and agrees
to provide QI (and the IRS, upon request)
with a periodic review report (as described
in section 10.06 of this Agreement);

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

the payments made to those account hold-
ers and interest holders to the extent
required by sections 8.02(B) and 8.05 of
this Agreement. Except to the extent the
PAI provides its information to QI for pur-
poses of performing the periodic review,
the PAI is not required to disclose to QI,
or another withholding agent, its direct
account holders that are foreign persons
other than a passive NFFE with one or
more substantial U.S. owners (or one or
more controlling persons that is a speci-
fied U.S. person). The limitations on a
PAI's disclosure of its direct account hold-
ers do not, however, apply with respect to
the PAI's direct account holders' receipt of
payments of PTP distributions or amounts
realized from sales of PTP interests. For
either such payment, a PAI is required to
disclose to QI its direct account holders
and provide any information requested
by QI for QI to meet its withholding and
reporting requirements specified in sec-
tion 4.02(D) of this Agreement; and

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

Sec. 4.02. Modification of Obliga-
tions for PAI Agreements.

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

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

(2) A direct foreign account holder
of the PAI for which no withholding is
required under chapter 4 (other than an
intermediary, custodian, nominee, agent,
or flow-through entity described below),
QI shall, except as otherwise provided in
section 4.02(D) of this Agreement, report
an amount subject to chapter 3 withholding

(excluding an amount subject to chapter 3
withholding on a PTP distribution) using
the chapter 3 reporting pools as described
in section 8.03 of this Agreement, with the
PAI reported as the recipient.

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

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

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

(D) Payments of Amounts Realized
or PTP Distributions. The agreement
between QI and a PAI must provide that
QI will satisfy the requirements set forth
in section 8.07 of this Agreement with

respect to each account holder of PAI that
is a partner receiving from QI a PTP distri-
bution or amount realized from the sale of
a PTP interest for which a statement under
section 6031(b) is required for the taxable
year (and for which the PAI will provide
QI the necessary partner information).
The agreement between QI and a PAI
must further provide that QI shall treat the
PAI as if the PAI were a disclosing QI with
respect to both of the following-

(1) QI's reporting on Forms 1042 and
1042-S of an amount realized from the
sale of a PTP interest or an amount sub-
ject to withholding on a PTP distribution
paid to a direct account holder of the PAI
(as further described in section 8 of this
Agreement); and

(2) QI's determination of the withhold-
ing required on any such amount.

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

Sec. 4.04. Termination of Arrange-
ment. Except as otherwise provided in
section 4.01(H) of this Agreement, QI
shall cease to treat an intermediary as a
PAI within 90 days from the day QI knows
that the PAI is in default of its agreement
with QI unless the PAI has cured the event

of default before the expiration of such
90-day period. QI must provide the IRS
with notice of any PAI agreement that has
been terminated within 30 days of the ter-
mination by removing the intermediary as
a PAI on QAAMS.

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

(A) In General. If QI is an FFI, QI
may enter an agreement with a non-
withholding foreign partnership or non-
withholding foreign trust that is either a
simple or grantor trust described in this
section 4.05(A) to apply the simplified
joint account documentation, reporting,
and withholding procedures provided in
section 4.05(B) of this Agreement. QI
and a partnership or trust that apply this
section 4.05 to any calendar year must
apply these rules to the calendar year in
its entirety. QI and the partnership or trust
may not apply this section 4.05 to any
calendar year in which the partnership or
trust has failed to make available to QI
or QI's reviewer the records described in
this section 4.05(A) within 90 days after
these records are requested, and the part-
nership or trust must waive any legal pro-
hibitions against providing such records
to QI. If the partnership or trust has failed
to make these records available within the
90-day period, or if QI and the partner-
ship or trust fail to comply with any other
requirements of this section 4.05, QI must
apply the provisions of §§1.1441-1(c) and
1.1441-5(e) to the partnership or trust as
a nonwithholding foreign partnership or
nonwithholding foreign trust, must cor-
rect its withholding for the period during
which the failure occurred in accordance
with section 9.05 of this Agreement, and
cannot apply this section 4.05 to subse-
quent calendar years. QI and a partner-
ship or trust that apply this section 4.05
to any calendar year are not required to
apply this section 4.05 to subsequent cal-
endar years.

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

(1) The partnership or trust has a chap-
ter 4 status as a certified deemed-compliant
FFI (other than a registered deemed-com-
pliant Model 1 IGA FFI), an owner-docu-
mented FFI with respect to QI, an exempt
beneficial owner, or an NFFE or is cov-
ered as an account that is excluded from

the definition of financial account under
Annex II of an applicable IGA or under
§1.1471-5(a);

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

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

(4) None of the partnership's or trust's
partners, beneficiaries, or owners is a U.S.
person and none of its foreign partners,
beneficiaries, or owners is subject to with-
holding or reporting under chapter 4 (e.g.,
a nonparticipating FFI and certain passive
NFFEs); and

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

(B) Modification of Obligations for
QI.

(1) QI may rely on a valid Form
W-8IMY provided by the partnership
or trust and may rely on a withholding
statement that meets the requirements
of §1.1441-5(c)(3)(iv) or (e)(5)(iv), and
§1.1471-3(c)(3)(iii)(B) (if the payment is
a withholdable payment) and that provides
information for all partners, beneficiaries,
or owners together with valid Forms W-8
or, in the case of a partnership or trust
that is a certified deemed-compliant FFI,
documentary evidence permitted under
the applicable know-your-customer rules
from each partner, beneficiary, or owner,
and, for a withholdable payment, docu-
mentation that meets the requirements of
§1.1471-3(d) to establish the partner's,
beneficiary's, or owner's chapter 4 status.
The withholding statement need not pro-
vide any allocation information. QI may
not, however, rely on a Form W-8IMY
that is associated with a PTP distribution
or amount realized from the sale of a PTP
interest for purposes of this section 4.05.

(2) QI must treat payments to the
partnership or trust as allocated solely
to a partner, beneficiary, or owner that is
subject to the highest rate of withholding

under chapter 3 and must withhold at that
rate.

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

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

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

Sec. 4.06. Agency Option for Certain
Partnerships and Trusts.

(A) In General. QI may enter an
agreement with a nonwithholding foreign
partnership or nonwithholding foreign
trust that is either a simple or grantor trust
described in section 4.06(A) of this Agree-
ment under which the partnership or trust
agrees to act as an agent of QI with respect
to its partners, beneficiaries, or owners,
and, as QI's agent, to apply the provisions
of the QI agreement to the partners, bene-
ficiaries, or owners. QI, however, may not
enter an agreement under this section 4.06
with any account holder for which it acts
as a QDD. By entering into an agreement
with a partnership or trust as described in

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

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

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

(2) The partnership or trust has a chap-
ter 4 status as a certified deemed-com-
pliant FFI (other than a registered

deemed-compliant Model 1 IGA FFI),
an owner-documented FFI, an NFFE, an
exempt beneficial owner, or is covered as
an account that is excluded from the defi-
nition of financial account under Annex II
of an applicable IGA or under §1.1471-
5(a) and has provided QI with a certifica-
tion that it has maintained such chapter 4
status during each certification period;

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

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

(5) The partnership or trust agrees, to
the extent necessary for QI to satisfy its
compliance obligations (e.g., if the QI
does not receive a waiver described in
section 10.07 of this Agreement), either
to provide its documentation and other
information to QI for inclusion in QI's
periodic review described in section 10.04
of this Agreement or to conduct an inde-
pendent periodic review in accordance
with the procedures described in section
10.05 of this Agreement, provide QI with
the certification required under section
10.03 of this Agreement for each certifi-
cation period in order to allow the respon-
sible officer of QI to make a certification
to the IRS regarding the partnership's or
trust's compliance with this section 4.06,
and respond (either directly or through
QI) to IRS inquiries regarding its compli-
ance review, as described in section 10.08
of this Agreement, including providing
the QI and the IRS with the results of
the reviewer's testing of transactions and
accounts described in section 10.06 of this
Agreement.

(6) For a partnership or trust to which
QI pays an amount subject to withholding
under section 1446(a) on a PTP distribu-
tion, the partnership is not a PTP, and the
trust is a grantor trust (with the partner-
ship or trust providing its U.S. TIN to QI).
For a partnership or trust to which QI pays

an amount realized, the partnership is a
partnership providing a certification for
a modified amount realized, and the trust
is a grantor trust (with the partnership or
trust providing its U.S. TIN to QI).

(B) Modification of Obligations for
QI.

(1) In General. QI 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
QI to fulfill its withholding, reporting, and
filing obligations under this Agreement.
The withholding statement may 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 partnership
or trust through such entities), U.S. per-
sons, or passive NFFEs with one or more
substantial U.S. owners (or one or more
controlling persons that is a specified U.S.
person), and the partnership or trust need
not provide to QI documentation for these
partners, beneficiaries, or owners. The
withholding statement may also include
a chapter 4 withholding rate pool of non-
participating FFIs described in section
6.03 of this Agreement for payments of
amounts subject to chapter 4 withholding.
Notwithstanding the preceding sentences
of this section 4.06(B)(1), the partnership
or trust is required to disclose to QI any
interest holder that is a passive NFFE with
substantial U.S. owners (or controlling
persons that are specified U.S. persons)
or that is a U.S. non-exempt recipient,
as well as the account holders or interest
holders of any nonqualified intermediary
or flow-through entity, respectively, which
has an interest in the partnership or trust,
and to provide all of the documentation
and other information relating to those
account holders and interest holders that is
required for the QI, or another withhold-
ing agent, to report the payments made to
those account holders and interest holders
to the extent required by sections 8.02(B)
and 8.05 of this Agreement.

(2) Timing of Withholding. QI must
withhold on the date it makes a payment
to the partnership or trust based on a with-
holding statement provided by the partner-
ship or trust on which QI is permitted to

rely. The amount allocated to each partner,
beneficiary, or owner in the withholding
statement may be based on a reasonable
estimate of the partner's, beneficiary's,
or owner's distributive share of income
subject to withholding for the year. The
partnership or trust must correct the esti-
mated allocations to reflect the partner's,
beneficiary's, or owner's actual distribu-
tive share and must provide this corrected
information to QI on the earlier of the date
that the statement required under section
6031(b) (i.e., Schedule K-1) or the 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 (with-
out regard to extensions) for QI's Forms
1042 and 1042-S for the calendar year, QI
may withhold and report any adjustments
required by the corrected information in
the following calendar year.

(3) Payments Reportable Under
Chapters 3 and 4. QI shall report on
Form 1042-S all amounts subject to chap-
ters 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, QI shall report
an amount subject to withholding using
the chapter 4 reporting pool described
in section 8.03(A) of this Agreement
with the partnership or trust reported as
a recipient.

(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 entity described below),
QI shall report an amount subject to
chapter 3 withholding using the chap-
ter 3 reporting pools described in sec-
tion 8.03(B) of this Agreement with
the partnership or trust reported as a
recipient.

(iii) For a direct or indirect partner,
beneficiary, or owner of the partnership
or trust that is a nonqualified interme-
diary or foreign flow-through entity,
QI shall report payments of amounts
subject to chapter 4 withholding in a

chapter 4 withholding rate pool of non-
participating FFIs using the chapter 4
reporting pool for such partner, bene-
ficiary, or owner with the nonqualified
intermediary or foreign flow-through
entity reported as the recipient, and QI
shall report payments of amounts sub-
ject to chapter 3 withholding for which
no chapter 4 withholding is required by
reporting the payments as made to spe-
cific recipients as described in section
8.02 of this Agreement.

(4) Payments Reportable under Sec-
tion 1446(a) or (f). QI shall report on
Form 1042-S payments of amounts real-
ized or amounts subject to withholding
under section 1446(a) in accordance with
section 4.06(B)(3) of this Agreement, tak-
ing into account the reporting required on
these payments under section 8.02 of this
Agreement with respect to a flow-through
entity or nonqualified intermediary.

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

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

(C) Other Requirements of Agency
Agreement. QI shall require the partner-
ship or trust to provide QI with all the
information necessary for QI to meet its
obligations under this Agreement. No

provisions shall be contained in the agree-
ment between QI and the partnership or
trust that preclude, and no provisions of
this Agreement shall be construed to pre-
clude, the partnership or trust's joint and
several liability for tax, penalties, and
interest under chapters 3, 4, and 61 and
section 3406, to the extent that the under-
withholding, penalties, and interest have
not been collected from QI and the under-
withholding or failure to report amounts
correctly on Forms 945, 1042, 1042-S,
1099, or 8966 is due to the partnership's
or trust's failure to properly perform its
obligations under its agreement with QI.
Nothing in the agreement between QI
and the partnership or trust shall be con-
strued to limit the partnership or trust's
requirements under chapter 4 as a certi-
fied deemed-compliant FFI, owner-docu-
mented FFI, NFFE, or exempt beneficial
owner. Further, nothing in the agreement
between QI and the partnership or trust
shall permit the partnership or trust to
assume primary chapters 3 and 4 with-
holding responsibility or primary Form
1099 reporting and backup withholding
responsibility.

## SECTION 5. DOCUMENTATION REQUIREMENTS

Sec. 5.01. Documentation Require-
ments.

(A) General Documentation Require-
ments. QI agrees to use its best efforts to
obtain documentation from account hold-
ers that receive a reportable payment to
determine whether withholding applies or
whether a payment is reportable under this
Agreement. Under section 11.06 of this
Agreement, failure to obtain documenta-
tion from a significant number of direct
account holders constitutes an event of
default. If QI is an FFI obtaining documen-
tary evidence, QI also agrees to adhere to
the know-your-customer rules that apply
to QI with respect to the account holder
from whom the documentary evidence is
obtained. If QI cannot reliably associate a
reportable payment with valid documen-
tation from the account holder, it must
apply the applicable presumption rules to
determine if withholding is required under
chapter 3 or 4 or if backup withholding
is required under section 3406. QI agrees
to review and maintain documentation in

accordance with this section 5 and, in the
case of documentary evidence obtained
from direct account holders, in accordance
with the applicable know-your-customer
rules. QI also agrees, if the performance
of an external review is requested by the
IRS (as described in section 10.08(C) of
this Agreement), to make documentation
(together with any associated withholding
statements and other documents or infor-
mation) available upon request for inspec-
tion by QI's external reviewer. QI rep-
resents that none of the laws to which it is
subject prohibit disclosure of the identity
of any account holder or account informa-
tion to QI's reviewer.

If QI is acting as a QDD, QI is required
to apply the rules of this section 5 to each
account holder of an account for which it
is acting as a QDD and to which it makes a
reportable payment in accordance with the
applicable requirements in section 5.01(A)
and (B) of this Agreement. In addition, if
QI is a partnership and is or has a branch
that is a QDD, QI is required to apply the
rules of this section 5 to each of its part-
ners (looking through partners that are
flow-through entities) in determining its
withholding under section 3.03(A) of this
Agreement.

If QI makes a payment of an amount
realized on a sale of a PTP interest or a
payment of a PTP distribution, QI also
agrees to use its best efforts to obtain the
documentation that is described in section
5.02 of this Agreement. For purposes of
obtaining a U.S. TIN from an account
holder that is a partner with respect to
documentation required under section
5.02(B) or (C) of this Agreement, QI is
treated as using its best efforts when QI
makes a written solicitation (initial solic-
itation) for the account holder's U.S. TIN
in 2023 or the calendar year in which an
account holder acquires a PTP interest
through QI (if later). If an account hold-
er's U.S. TIN is not provided based on the
initial solicitation, QI is required to make
an additional written solicitation for the
account holder's U.S. TIN in the calendar
year following the calendar year of the ini-
tial solicitation, and, if necessary, a further
written solicitation in the calendar year
following the year of the additional solic-
itation. Nothing in the preceding sentence
shall, however, be construed to allow QI
to apply a reduced rate of withholding

under section 1446(a) or (f) with respect
to a payment made to a foreign account
holder that fails to provide a U.S. TIN to
QI for any calendar year. QI further agrees
to treat a partner as a foreign partner and a
broker as a foreign broker when required
under section 5.13(C)(5) of this Agree-
ment for a payment of an amount realized
or the amount of a PTP distribution sub-
ject to withholding under section 1446(a).

(B) Coordination of Chapter
3 and Chapter 4 Documentation
Requirements.

(1) QI that is an FFI. If QI is an
FFI, for each account holder for whom
QI is acting under this Agreement, QI
is required to perform the due diligence
procedures under its FATCA require-
ments as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI to
determine if the account is a U.S. account
(or U.S. reportable account) and to deter-
mine each account holder that is a nonpar-
ticipating FFI and, if applicable, recalci-
trant account holder (or non-consenting
U.S. account). If an account holder receiv-
ing the payment is not the payee, QI is also
required to establish the chapter 4 status of
the payee or payees to determine whether
withholding applies under chapter 4. For
purposes of this section 5, with respect to
documenting an account holder for chap-
ter 4 purposes, documentary evidence
also includes any documentary evidence
allowed under an applicable IGA.

To the extent an account holder
receives a payment with respect to which
QI has determined that withholding is not
required under chapter 4, QI shall obtain,
unless already collected, documentation
that meets the requirements of this sec-
tion 5 to determine whether the account
holder is a foreign person for which QI
is required to withhold under chapter 3
or a U.S. payee for which QI is required
to backup withhold under section 3406
or report on Form 1099 under chapter 61.
See, however, section 8.06 of this Agree-
ment providing the circumstances in
which reporting of U.S. accounts (or U.S.
reportable accounts) under its FATCA
requirements as a participating FFI, reg-
istered deemed-compliant FFI, or regis-
tered deemed-compliant Model 1 IGA
FFI satisfies QI's Form 1099 reporting
responsibilities.

(2) QI that is an NFFE. If QI is an
NFFE, QI is required to document the
chapter 4 status of each account holder for
whom QI is acting to determine if with-
holding and reporting apply under section
1471 or 1472 on withholdable payments
made to the account holder. QI is required
to obtain, unless already collected, a
valid Form W-8 or Form W-9 from each
account holder to determine whether QI is
required to withhold under chapter 3 or 4
or report on Form 1099 under chapter 61
and backup withhold under section 3406.
The allowance in this section 5 for QI to
obtain documentary evidence does not
apply if QI is an NFFE. QI may, however,
obtain appropriate documentary evidence
as additional documentation to establish
the foreign status of an account holder.

Sec. 5.02. Documentation for For-
eign Account Holders.

(A) Documentation for Chapters 3
and 4. QI may treat an account holder as a
foreign beneficial owner of an amount for
purposes of chapter 3 or 4 if the account
holder provides a valid Form W-8 (other
than Form W-8IMY unless provided by a
QI that is acting as a QDD that is a corpo-
ration (or a branch of a corporation) and
meets the requirements of section 5.07(E)
of this Agreement or a QI that is assuming
primary withholding responsibility for a
substitute interest payment) or valid docu-
mentary evidence that supports the account
holder's status as a foreign person. QI may
not treat an account holder that provides
documentation indicating that it is a bank,
broker, intermediary, or agent (such as an
attorney) as a beneficial owner unless QI
receives a statement, in writing and signed
by a person with authority to sign such a
statement, stating that such account holder
is the beneficial owner of the income.
Further, QI may not reduce the rate of
withholding with respect to an indirect
account holder that is a foreign beneficial
owner unless the certification provided by
the direct account holder is a valid Form
W-8IMY, and then only to the extent that
QI can reliably associate the payment with
valid documentation that establishes that
withholding does not apply under chapter
4 in the case of a withholdable payment
made to the account holder and estab-
lishes that the indirect account holder is
entitled to a reduced rate of withholding
under chapter 3.

(B) Documentation for Section
1446(a). QI must treat an account holder
that is a partner receiving a payment of a
PTP distribution subject to withholding
under section 1446(a) as a foreign part-
ner if the account holder provides a valid
Form W-8 other than a Form W-8IMY
provided by an intermediary, grantor trust,
or partnership (excluding a PTP) that
includes the account holder's U.S. TIN.
Alternatively, QI must treat an account
holder described in the preceding sen-
tence as a foreign partner when QI has
both valid documentary evidence that sup-
ports the account holder's status as a for-
eign person and the account holder's U.S.
TIN. See, however, §1.1446-4(e)(4) for
QI's requirement to provide Forms W-8
for the amount of a PTP distribution sub-
ject to withholding under section 1446(a)
when acting as a disclosing QI and section
5.01(A) of this Agreement for the extent
of QI's requirement to collect U.S. TINs
from its account holders for purposes of
section 1446(a).

(C) Documentation for Section
1446(f). QI must treat an account holder
receiving a payment of an amount realized
as a foreign partner if the account holder
provides a valid Form W-8 (other than a
Form W-8IMY provided by a broker or
grantor trust) that includes the account
holder's U.S. TIN. Alternatively, QI must
treat an account holder described in the
preceding sentence as a foreign partner
when QI has both valid documentary
evidence that supports the account hold-
er's status as a foreign person and the
account holder's U.S. TIN. See, however,
§1.1446(f)-4(a)(7)(iii) for QI's require-
ment to provide Forms W-8 when acting
as a disclosing QI for an amount realized
and section 5.01(A) of this Agreement for
the extent of QI's requirement to collect
U.S. TINs from its account holders for
purposes of section 1446(f). With respect
to an amount realized QI pays to a broker,
QI may rely on documentation that is per-
mitted under §1.1446(f)-4(a)(5) for treat-
ing the broker as a foreign person.

Sec. 5.03. Beneficial Owner's Claim
of Treaty Benefits. To the extent an
account holder receives a payment that is
not subject to withholding under chapter
4, QI may not reduce the rate of withhold-
ing under chapter 3 based on a beneficial
owner's claim of treaty benefits unless

QI obtains the documentation required
by section 5.03(A) of this Agreement. In
addition, QI agrees to establish procedures
to inform account holders of the terms of
limitation on benefits provisions of a treaty
(whether or not those provisions are con-
tained in a separate article entitled Limita-
tion on Benefits) under which the account
holder is claiming benefits. QI is required
to obtain a Form W-8BEN-E with the
appropriate limitation on benefits certifi-
cation or, if QI is allowed to and obtains
documentary evidence, the written certi-
fication included in the treaty statement
as described in section 5.03(B) of this
Agreement. For a direct account holder
documented by QI on or after January 1,
2018, using documentary evidence, QI
must have a permanent residence address
for the account holder in the jurisdiction
associated with the documentary evidence
to reduce the rate of withholding under
this section 5.03.

If an account holder that is a foreign
partner receives an amount subject to
withholding under section 1446(a) on a
PTP distribution or an amount realized,
the documentation described in section
5.03(A)(1) of this Agreement shall be
permitted for the partner's claim of treaty
benefits (except that a U.S. TIN for the
foreign partner is required), and sections
5.03(A)(2) and (3) of this Agreement
shall not apply. See, however, section
5.07 of this Agreement in the case of an
amount realized paid to a nonqualified
intermediary.

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

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

(2) The account holder has provided doc-
umentary evidence that has been obtained
pursuant to the know-your-customer rules

that apply to the account holder, and
the account holder, if it is an entity, has
made the treaty statement (if applicable)
required by section 5.03(B) of this Agree-
ment; or

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

(B) Treaty Statement. The treaty state-
ment required by an entity account holder
under this section 5.03(B) is as follows:

[Name of entity account holder] meets
all provisions of the applicable treaty that
are necessary to claim a reduced rate of
withholding, including any limitation
on benefits provisions, and derives the
income within the meaning of section 894,
and the regulations thereunder, as the ben-
eficial owner.

QI is only required to obtain the treaty
statement required by this section 5.03(B)
from an account holder that is an entity.
QI shall not be required to obtain a treaty
statement required by this section 5.03(B)
from an individual who is a resident of
an applicable treaty country or from the
government, or its political subdivisions,
of a treaty country. QI is also required to
collect and to report, on a Form 1042-S
issued under section 8.02(P) of this Agree-
ment, the specific category of limitation
on benefits provision claimed from all of
its entity account holders (i.e., the spe-
cific article of the treaty or that no article
applies), including a government (or its
political subdivisions).

Sec. 5.04. Documentation for Inter-
national Organizations. To the extent an
account holder receives a payment that is
not subject to withholding under chapter
4, QI may not treat the account holder
as an international organization entitled
to an exemption from withholding under
section 892 unless the name provided
on the documentation (including a Form
W-8EXP) is the name of an entity des-
ignated as an international organization
by executive order pursuant to 22 United
States Code 288 through 288(f) and the
documentation is valid under section 5.10
of this Agreement. An international orga-
nization may not, however, claim benefits

under this section 5.04 with respect to
QI's requirement to withhold under sec-
tion 1446(a) or (f).

If an international organization is not
claiming benefits under section 892 but
under another Code exception, the pro-
visions of section 5.02 of this Agreement
shall apply rather than the provisions of
this section 5.04.

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

(A) Documentation From a Foreign
Government or Foreign Central Bank
of Issue Claiming an Exemption from
Withholding Under Section 892 or Sec-
tion 895. To the extent an account holder
receives a payment subject to withholding
under chapter 3 that is not subject to with-
holding under chapter 4, QI may not treat
an account holder as a foreign government
or foreign central bank of issue exempt
from withholding under section 892 or
895 unless-

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

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

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

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

section 892 or under an income tax treaty
but under another Code exception (e.g.,
the portfolio interest exception under
section 871(h) or 881(c)), the provisions
of section 5.02 of this Agreement apply
rather than the provisions of this section
5.05. A foreign government or foreign
central bank of issue may not claim bene-
fits under section 892 with respect to QI's
requirement to withhold under section
1446(a) or (f).

Sec. 5.06. Documentation for For-
eign Tax-Exempt Organizations. To the
extent an account holder receives a pay-
ment that is subject to withholding under
chapter 3 or section 1446(a) on a PTP dis-
tribution but not under chapter 4, QI may
not treat an account holder as a foreign
tax-exempt organization and reduce the
rate of or exempt the account holder from
withholding unless it satisfies the require-
ments provided in section 5.06(A), (B), or
(C) of this Agreement.

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

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

(C) Other Exceptions. If a tax-ex-
empt entity is not claiming a reduced
rate of withholding because it is a for-
eign organization described under sec-
tion 501(c) or under a treaty article that
applies to exempt certain foreign organi-
zations from tax but is claiming a reduced
rate of withholding under another Code
or income tax treaty exception, the pro-
visions of section 5.02 or 5.03 (as appli-
cable) of this Agreement shall apply
rather than the provisions of this section

5.06. A tax-exempt entity may not claim
a reduced rate of withholding under sec-
tion 501 for purposes of QI's withholding
under section 1446(f).

Sec. 5.07. Documentation from
Intermediaries or Flow-Through Enti-
ties and QDDs. QI must apply the pre-
sumption rules to a payment made to a
nonqualified intermediary or flow-through
entity that is a direct account holder of QI
to the extent QI fails to obtain the docu-
mentation set forth below. If QI receives
documentation for the account holders
or interest holders of an intermediary or
flow-through entity, QI must apply the
rules of this section 5 to determine the
validity of such documentation.

Notwithstanding the previous provi-
sions of this section 5.07, for an amount
realized paid to a nonqualified intermedi-
ary, QI is required to apply the presump-
tion rule provided in section 5.13(C)(5) of
this Agreement regardless of whether the
nonqualified intermediary provides a valid
Form W-8IMY and documentation with
respect to the account holders receiving
the amount realized.

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

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

(2) If the payment is not subject to
withholding under chapter 4 based on
such entity's chapter 4 status (or to the
extent the payment is received on behalf of
exempt beneficial owners), QI can reliably
associate the payment with a withholding
statement that meets the requirements
of §1.1471-3(c)(iii)(B) that includes the
account holders or interest holders of the
intermediary or flow-through entity in
chapter 4 withholding rate pools to the
extent permitted or with valid documen-
tation described in this section 5 provided
by account holders or interest holders of
the intermediary or flow-through entity
that are not themselves nonqualified inter-
mediaries or flow-through entities and that
QI can treat as not subject to withholding
under chapter 4.

(B) Reportable Payments Other than
Withholdable Payments or Payments
with respect to PTP interests Made
to Nonqualified Intermediaries and
Flow-Through Entities. With respect to
a reportable payment that is not a with-
holdable payment or an amount realized
made to a nonqualified intermediary or
flow-through entity-

(1) QI receives a valid Form W-8IMY
and a withholding statement with the
information specified in §1.1441-1(e)(3)
(iv)(C) (which includes an alternative
withholding statement) provided by the
nonqualified intermediary or the flow-
through entity regardless of whether the
form includes a chapter 4 status of the
nonqualified intermediary or flow-through
entity unless such entity provides a with-
holding statement allocating a payment to
a chapter 4 withholding rate pool of U.S.
payees; and

(2) QI can reliably associate the pay-
ment with a chapter 4 withholding rate
pool of U.S. payees or valid documenta-
tion described in this section 5 provided by
account holders or interest holders of the
nonqualified intermediary or flow-through
entity that are not themselves nonqualified
intermediaries or flow-through entities.

(1) Amount Realized. With respect
to a payment by QI of an amount real-
ized from the sale of a PTP interest made
to a flow-through entity or nonqualified
intermediary, the documentation that QI
receives is a valid Form W-8IMY from
the entity except for a foreign simple
trust (for which a Form W-8BEN-E may
instead be received) and a U.S. grantor
trust (for which a document similar to
Form W-8IMY may be received). In
the case of a foreign partnership pro-
viding the certification on a valid Form
W-8IMY for a modified amount realized
(which requires a U.S. TIN for the part-
nership) QI is required to obtain from the
partnership the documentation described
in this section 5 with respect to the part-
ners that QI can reliably associate with
the payment. For a grantor trust to which
QI pays an amount realized, QI is further
required to obtain valid documentation
described in this section 5 that QI can
reliably associate with each grantor or

owner of the trust and must obtain a U.S.
TIN for the trust.

(2) PTP Distribution. With respect to
a payment by QI of a PTP distribution to
a nonqualified intermediary, the documen-
tation that QI receives from the interme-
diary is a valid Form W-8IMY (including
its chapter 4 status for an amount of a
distribution attributable to a withholdable
payment) and documentation for each
of the account holders of the nonquali-
fied intermediary that are partners in the
PTP that QI can reliably associate with
each amount subject to withholding on
the distribution (including by applying
section 5.13(B)(1) of this Agreement for
any amount realized on the distribution).
With respect to a payment by QI of a PTP
distribution to a flow-through entity, the
documentation that QI receives from the
flow-through entity is as follows-

(i) For the amount of the distribution
subject to withholding under section
1446(a) made to a foreign partnership,
QI receives a valid Form W-8IMY
from the partnership and, for a foreign
partnership other than a PTP, valid
documentation described in this sec-
tion 5 on each of the partners in the
partnership that QI can reliably asso-
ciate with the distribution (including
a U.S. TIN for the partnership in both
cases). See §§1.1446-4 and 1.1446-
5(c). For the portion of the distribution
subject to withholding under section
1446(a) made to a trust, QI receives
a valid Form W-8BEN-E or W-8IMY
from a simple trust or, in the case of
a foreign grantor trust, a valid Form
W-8IMY from the trust (or similar doc-
ument from a U.S. grantor trust) and
valid documentation on each grantor or
owner of the trust permitted under this
section 5 for a payment subject to sec-
tion 1446(a) withholding that QI can
reliably associate with the distribution
(including a U.S. TIN for the grantor
trust).

(ii) For the amount of the distribution
subject to withholding under chapter 3
or 4, QI receives a valid Form W-8IMY
from the flow-through entity (which
includes the entity's chapter 4 status
with respect to any amount of a distri-
bution attributable to a withholdable
payment) and valid documentation on
the interest holders in the entity (other

than nonqualified intermediaries or
flow-through entities) permitted under
this section 5 for a payment subject to
chapter 3 or 4 withholding that QI can
reliably associate with the distribution.
(iii) For the amount realized on the
distribution, QI receives from the
flow-through entity valid documenta-
tion specified in section 5.07(C)(1) of
this Agreement applicable to a flow-
through entity that QI can reliably
associate with the distribution.

(D) Reportable Payments and Pay-
ments with respect to PTP Interests
Made to QIs, WPs, and WTs. With
respect to a reportable payment made to a
QI, WP, or WT, QI receives a valid Form
W-8IMY provided by the QI, WP, or WT
that includes the entity's chapter 4 status
for a payment that is a withholdable pay-
ment and, for those payments for which
a QI has not assumed primary chapters 3
and 4 withholding responsibility or pri-
mary Form 1099 reporting and backup
withholding responsibility, QI can reliably
associate the payment with withholding
rate pools, as described in section 6.03 of
this Agreement, or a valid Form W-9 for a
U.S. non-exempt recipient account holder
not included in a withholding rate pool.

With respect to a payment of an amount
realized on the sale of a PTP interest made
by QI to a QI, QI receives a valid Form
W-8IMY provided by the other QI that
includes the QI's chapter 4 status if the QI
provides a withholding statement allocat-
ing a payment to a chapter 4 withholding
rate pool of U.S. payees. Additionally, for
an amount realized for which the other
QI does not assume primary withhold-
ing responsibility nor act as a disclosing
QI, QI can reliably associate the payment
with withholding rate pools, as described
in section 6.03 of this Agreement, or a
valid Form W-9 for a U.S. partner not
includible in a chapter 4 withholding rate
pool of U.S. payees under chapter 4. See
§1.1446(f)-4(a)(7)(iv). For an amount
realized described in the preceding sen-
tence that QI pays to a QI acting as a dis-
closing QI, QI receives valid documen-
tation permitted under section 5.02(C) of
this Agreement with respect to the account
holders of the other QI, including a valid
Form W-9 for a U.S. partner not includi-
ble in a chapter 4 withholding rate pool of
U.S. payees permitted under chapter 4.

With respect to a PTP distribution paid
by QI to a QI, QI receives a valid Form
W-8IMY provided by the other QI that
includes the QI's chapter 4 status for any
portion of the PTP distribution attributable
to a withholdable payment. Additionally,
for a PTP distribution for which the other
QI does not assume primary withholding
responsibility nor act as a disclosing QI,
QI can reliably associate the payment
with withholding rate pools, as described
in section 6.03 of this Agreement, or a
valid Form W-9 for each partner that is a
U.S. person. For a PTP distribution that
QI pays to a QI acting as a disclosing QI,
QI receives with respect to the account
holders of the other QI valid documen-
tation required of a disclosing QI under
section 5.02(B) of this Agreement for
an amount subject to withholding under
section 1446(a) on the distribution, valid
documentation permitted under the pre-
ceding paragraph of this section 5.07(D)
for an amount realized on the distribution,
and, for an amount subject to withholding
under chapter 3 or 4 on the distribution,
valid documentation described in section
5.07(A) or (B) of this Agreement.

With respect to a PTP distribution paid
to a WP or WT, QI receives a valid Form
W-8IMY provided by the WP or WT that
QI can reliably associate with an amount
subject to withholding under chapter 3 or
4 on the distribution.

(E) Payments Made to QIs Acting
as QDDs. For payments with respect to
potential section 871(m) transactions or
underlying securities made to a QI acting
as a QDD, if QI receives a valid Form
W-8IMY provided by the QI acting as a
QDD that includes the QI's chapter 4 sta-
tus and the required certification that the
QI is acting as a QDD and assumes pri-
mary withholding responsibility for pay-
ments it makes when the QI is acting as
a QDD and QDD withholding statement,
then QI can reliably associate the pay-
ments as made to the QI acting as a QDD.
Additionally, in the case of a QDD identi-
fied on a valid Form W-8IMY as a partner-
ship (or a branch of a partnership), the QI
can reliably associate a payment described
in section 3.09 of this Agreement, as mod-
ified for a QDD that is a partnership or
branch of a partnership, with withholding
rate pools to the extent permitted in sec-
tion 6.03 of this Agreement for an account

holder, or specific partner information,
with respect to the QDD partners (look-
ing through partners that are foreign flow-
through entities). The requirement for the
partner information specified in the pre-
ceding sentence does not apply to a pay-
ment described in sections 3.03(A)(1)-(3)
of this Agreement.

(F) Private Arrangement Interme-
diaries. If QI has an agreement with
a PAI, QI obtains from the PAI a Form
W-8IMY completed as if the PAI were a
QI that is an FFI (with the exception that
the PAI must not provide a QI-EIN on
the Form W-8IMY) and QI can reliably
associate the payment with a withhold-
ing statement, as described in section
4.01(G) of this Agreement, and the infor-
mation described in this section 5.07 for
any account holders of the PAI that are
intermediaries or flow-through entities
and the documentation for any passive
NFFE with one or more substantial U.S.
owners (or one or more controlling per-
sons that is a specified U.S. person if QI
is a reporting Model 1 or reporting Model
2 FFI). For a payment of an amount real-
ized from the sale of a PTP interest or
PTP distribution, however, QI must reli-
ably associate the payment with a with-
holding statement and the information
described in this section 5 with respect to
both the direct account holders of the PAI
and account holders of an intermediary
or flow-through entity that is an account
holder of the PAI.

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

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

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

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

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

Sec. 5.09. Documentation for U.S.
Non-Exempt Recipients. QI shall not
treat an account holder as a U.S. non-ex-
empt recipient unless QI obtains a valid
Form W-9 or other similar agreed form
under its FATCA requirements as a par-
ticipating FFI, registered deemed-compli-
ant FFI, or registered deemed-compliant
Model 1 IGA FFI from the account holder,
QI knows an account holder is a U.S.
non-exempt recipient, or QI must presume
a person is a U.S. non-exempt recipient to
the extent required under section 5.13(C)
(3) or (4) of this Agreement.

### Sec. 5.10. Documentation Validity.

(A) In General. QI may not rely on
documentation if QI has actual knowledge
or, for a payment other than an amount
realized, reason to know that the infor-
mation or certifications contained in the
documentation or account information
are unreliable or incorrect, or if there is a
change in circumstances with respect to
the information or statements contained in
the documentation or account information
that affects the reliability of the account
holder's claim. See §§1.1441-1(e)(4)
(viii), 1.1441-6(b)(1)(ii), and 1.1441-7(b)
(2) for general rules for reliance on doc-
umentation for purposes of chapter 3,
section 1446(a) (including for a claim of
treaty benefits), and §1.1446(f)-4(b) for
reliance on documentation for purposes
of section 1446(f). For purposes of chap-
ter 3, also see §1.1441-7(b)(4) for general
rules applicable to withholding certifi-
cates, §1.1441-7(b)(7) for general rules

applicable to documentary evidence, and
§1.1441-7(b)(8)(i) for rules regarding
documentary evidence received before
January 1, 2001. See section 5.10(B) of
this Agreement for limitations that apply
to certain QIs for when they are consid-
ered to have reason to know that documen-
tation is unreliable or incorrect for chapter
3 purposes and section 5.10(C) of this
Agreement for when QI may rely on doc-
umentation notwithstanding the preceding
requirements of this section 5.10(A). See
§31.3406(h)-3(e) for rules regarding when
QI may rely on a Form W-9.

A change in circumstances affecting
withholding information, including allo-
cation information or withholding rate
pools contained in a withholding state-
ment, will also cause the documentation
provided with respect to that information
to no longer be reliable. See §1.1441-1(e)
(4)(ii)(D) for the definition of change in
circumstances and a withholding agent's
obligation with respect to a change in cir-
cumstances for purposes of chapter 3.

In addition to the above requirements
for reliance on documentation, QI may
not rely on a permanent residence address
provided by an account holder that is sub-
ject to a hold mail instruction except as
provided in section 5.10(D) of this Agree-
ment. See §1.1441-1(c)(38)(i) for the defi-
nition of permanent residence address and
§1.1441-1(c)(38)(ii) for the definition of
a hold mail instruction. See §1.1441-7(b)
(8)(ii) for the requirement that documen-
tary evidence received after December 31,
2001, may not be treated as valid if a with-
holding agent does not have a permanent
residence address for the account holder.

If QI becomes aware of information
resulting in the documentation no longer
being reliable or correct and QI has not
assumed primary withholding responsi-
bility under chapters 3 and 4 or primary
Form 1099 reporting and backup with-
holding responsibility, QI agrees that it
will promptly provide a withholding agent
with corrected information (e.g., corrected
withholding rate pools, corrected Forms
W-9, or corrected U.S. TINs) within 30
days after QI knows or has reason to
know that the documentation upon which
it has relied is unreliable or incorrect. If
QI receives notification from the IRS that
documentation provided by an account
holder is unreliable or incorrect (e.g.,

that the U.S. TIN provided by an account
holder is incorrect), QI shall follow the
procedures set forth in §31.3406(d)-5. See
also QI's FATCA requirements as a par-
ticipating FFI, registered deemed-compli-
ant FFI, or registered deemed-compliant
Model 1 IGA FFI or an NFFE's require-
ments as a withholding agent under sec-
tions 1471 and 1472 following a change
in circumstances

(B) Limits on Reason to Know.

(1) Direct Account Holders. If QI is a
financial institution as defined in §1.1471-
5(e), an insurance company (without
regard to whether such company is a spec-
ified insurance company), or a broker or
dealer in securities, QI shall be considered
to have reason to know that documenta-
tion provided by a direct account holder
is unreliable or incorrect with respect to
the account holder's claim of foreign sta-
tus for purposes of chapter 3 or 4 only as
prescribed in §1.1441-7(b)(5) or (8), with-
out regard, however, to §1.1441-7(b)(5)
(i) and §1.1441-7(b)(8)(ii), with respect
to the conditions for when documentation
is considered to be unreliable or incorrect
based on QI having a U.S. mailing address
or U.S. residence address in its account
information. In place of those conditions
in §1.1441-7(b)(5)(i) and §1.1441-7(b)(8)
(ii), QI is required to treat documentation
as unreliable or incorrect only if QI has
a U.S. mailing address or U.S. residence
address for the account holder.

A QI that is an entity described in
the first sentence of this section 5.10(B)
(1) shall be considered to have reason to
know that documentation provided by
a direct account holder is unreliable or
incorrect with respect to the account hold-
er's residence for purposes of a claim of
treaty benefits for chapter 3 and 4 only
as prescribed in §1.1441-7(b)(6) and (9)
(including when QI does not have a per-
manent residence address for an account
holder in the jurisdiction for which treaty
benefits are claimed). For a direct account
holder that QI documented before January
1, 2018, however, a QI is not required to
treat an account holder's claim of treaty
benefits as unreliable or incorrect solely
because QI does not have an address for
the account holder in the jurisdiction for
which the treaty benefits are claimed pro-
vided that QI does not have an address
for the account holder outside of the

jurisdiction for which the treaty benefits
are claimed (or QI otherwise satisfies the
validity requirements for relying on the
documentation for such a case).

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

(3) Limitation on Benefits Provisions
(Entity Account Holders). With respect
to a specific limitation on benefits provi-
sion cited by an entity for purposes of a
claim of treaty benefits (including when
identified on a treaty statement under sec-
tion 5.03(B) of this Agreement), QI may
rely on the provision cited absent actual
knowledge that it is unreliable or incorrect.

(C) Curative Rules for Reliance on
Documentation. If under section 5.10(A)
of this Agreement QI knows, or has reason
to know, that documentation provided by
an account holder is unreliable or incor-
rect to establish the account holder's
foreign status for purposes of chapter 3
(including on account of a change in cir-
cumstances), QI may rely (or continue to
rely) on the documentation when it obtains

the additional documentation described in
§1.1441-7(b)(5) or (b)(8) (as applicable
depending on whether a Form W-8 or doc-
umentary evidence was collected from the
account holder). If under section 5.10(A)
of this Agreement QI knows, or has reason
to know, that documentation provided by
an account holder is unreliable or incorrect
to establish the account holder's residence
for purposes of claiming benefits under an
applicable income tax treaty for purposes
of chapter 3 (including on account of a
change in circumstances), QI may rely
(or continue to rely) on the documentation
when it obtains the additional documen-
tation described in §1.1441-7(b)(6) or (b)
(9) (as applicable depending on whether a
Form W-8 or documentary evidence was
collected from the account holder). For a
payment subject to withholding under sec-
tion 1446(a), QI must obtain a valid Form
W-8 for the account holder once it knows
or has reason to know that the documen-
tation provided is unreliable or incorrect
(including on account of a change in
circumstances).

(D) Curative Documentation for
Hold Mail Instruction. QI may rely on
a permanent residence address subject to
a hold mail instruction as an account hold-
er's permanent residence address when
the account holder provides the documen-
tary evidence described in §1.1471-3(c)
(5)(i) (without regard to the requirement
in §1.1471-3(c)(5)(i) that the documen-
tary evidence contain a permanent res-
idence address). The documentary evi-
dence must support the account holder's
claim of foreign status, or in the case of
an account holder claiming treaty bene-
fits, the account holder's residence in the
country where the account holder is claim-
ing a reduced rate of withholding under an
income tax treaty.

If, after documentation is provided,
an account holder's permanent residence
address is subsequently subject to a hold
mail instruction, the addition of the hold
mail instruction is a change in circum-
stances under section 5.10(A) of this
Agreement requiring an account holder
to provide the documentary evidence
described in this section 5.10(D) in order
for QI to continue to rely on the perma-
nent residence address.

Sec. 5.11. Documentation Validity
Period.

(A) Documentation Other than Form
W-9. QI may rely on valid documentary
evidence obtained from account holders
in accordance with applicable know-your-
customer rules as long as the documentary
evidence remains valid under those rules
or until QI knows, or has reason to know,
that the information contained in the doc-
umentary evidence is incorrect. However,
for purposes of a claim of treaty benefits,
QI may only rely on documentary evi-
dence provided pursuant to §1.1441-6(c)
(3) or (4) (i.e., not provided under appli-
cable know-your-customer rules), and
statements regarding entitlement to treaty
benefits described in §1.1441-6(c)(5)(i) or
section 5.03(B) of this Agreement until
their validity expires under §1.1441-1(e)
(4)(ii)(A)(2). For establishing an account
holder's chapter 3 status (as defined in
§1.1441-1(c)(45)) or foreign status for
chapter 61 purposes, QI may rely on a
Form W-8 until its validity expires under
§1.1441-1(e)(4)(ii) and may rely on doc-
umentary evidence (other than documen-
tary evidence obtained pursuant to appli-
cable know-your-customer rules) until its
validity expires under §1.6049-5(c). The
validity periods referenced in the preced-
ing sentence also apply for purposes of
sections 1446(a) and (f).

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

Sec. 5.12. Maintenance and Reten-
tion of Documentation.

(A) Maintaining Documentation. QI
shall maintain documentation by retain-
ing the original documentation, a certi-
fied copy, a photocopy, a scanned copy,
a microfiche, or other means that allow
reproduction (provided that the QI has
recorded receipt of the documentation
and is able to produce a hard copy). For
a direct account, if QI is not required to
retain copies of documentary evidence
under its know-your-customer rules, QI
may instead retain a notation of the type
of documentation reviewed, the date the
documentation was reviewed, the docu-
ment's identification number (if any, e.g.,

a passport number), and whether such
documentation contained any U.S. indi-
cia. For direct accounts opened before
January 1, 2001, if QI was not required
under its know-your-customer rules to
maintain originals or copies of documen-
tation, QI may rely on its account infor-
mation if it has complied with all other
aspects of its know-your-customer rules
regarding establishment of an account
holder's identity, it has a record that the
documentation required under the know-
your-customer rules was actually exam-
ined by an employee of QI in accordance
with the know-your-customer rules, and it
has no information in its possession that
would require QI to treat the documenta-
tion as invalid.

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

Sec. 5.13. Application of Presump-
tion Rules.

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

(B) Reliably Associating a Payment
with Documentation. Generally, QI can

reliably associate a payment with docu-
mentation if, for that payment, it holds
valid documentation from the account
holder; it can reliably determine how
much of the payment relates to the valid
documentation provided by such account
holder; and it has no actual knowledge
or reason to know that any of the infor-
mation, certifications, or statements
in or associated with the documenta-
tion are incorrect. See §1.1441-1(b)(2)
(vii) or, for a withholdable payment,
§1.1471-3(c) for rules regarding when a
payment can be reliably associated with
documentation. See also §1.1471-3(e)
(4)(vi)(B) for when a QI that is an FFI
may rely on documentation and infor-
mation permitted in an applicable IGA
to document an account holder's chap-
ter 4 status. For documentation reliance
rules for purposes of sections 1446(a)
and (f), see §§1.1446-1(c)(2)(iii) and
1.1446(f)-4(b). Sections 5.13(B)(1)
through (7) of this Agreement describe
when a payment is reliably associated
with documentation if the payment is
made to an account holder that is an
intermediary or flow-through entity
(other than a nonparticipating FFI that
is not acting on behalf of exempt ben-
eficial owners or that is paid an amount
realized).

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

If the payment is a withholdable
payment, the Form W-8IMY must pro-
vide the nonqualified intermediary's or

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

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

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

to that other nonqualified intermediary or
flow-through entity.

With respect to a payment of an amount
realized from the sale of a PTP interest,
QI can reliably associate the payment
with documentation when QI can reliably
associate the payment with a valid Form
W-8IMY provided by a flow-through
entity except for a trust that is a simple trust
(for which a valid Form W-8BEN-E may
instead be provided). Additionally, QI can
reliably associate the payment with doc-
umentation to permit a modified amount
realized paid to a foreign partnership to
the extent that QI can reliably associate
the payment with a valid Form W-8IMY
provided by the partnership that includes
the certification for a modified amount
realized and the partnership provides valid
documentation for each partner allocated
an amount of gain (if any) arising from the
sale. For a payment of an amount realized
made to a grantor trust, QI can reliably
associate the payment with documentation
when it can reliably associate the payment
with a valid Form W-8IMY from the trust
indicating its status as a foreign grantor
trust (or similar document from a U.S.
trust) and can determine the percentage of
the amount realized that is associated with
valid documentation provided by each
grantor or owner of the trust.

With respect to QI's payment of an
amount realized from the sale of a PTP
interest made to a nonqualified interme-
diary, QI cannot reliably associate the
payment with documentation regardless
of whether a valid Form W-8IMY is pro-
vided by the nonqualified intermediary
together with valid documentation for its
account holders that QI can associate with
the payment. See section 8.02(N) of this
Agreement, however, for when a QI may
rely on account holder documentation
provided by a nonqualified intermediary
for purposes of reporting under section 8
of this Agreement.

With respect to a PTP distribution QI
pays to a nonqualified intermediary, QI
can reliably associate the distribution
with documentation when QI can reliably
associate the payment with a valid Form
W-8IMY provided by the nonqualified
intermediary (including its chapter 4 sta-
tus for an amount of a distribution attrib-
utable to a withholdable payment) and
can determine the portion of each amount

subject to withholding on the distribution
(as determined under section 3.01(C)(2)
of this Agreement) that is associated with
valid documentation for each partner or
beneficial owner with respect to the dis-
tribution that is an account holder of the
nonqualified intermediary (as applicable,
depending on the amount subject to with-
holding on the distribution and taking into
account the preceding paragraph of this
section 5.13(B)(1) for an amount realized
on the distribution).

With respect to a PTP distribution QI
pays to a flow-through entity, QI can reli-
ably associate the distribution with doc-
umentation to the extent it reliably asso-
ciates with documentation each amount
subject to withholding on the distribution
as follows-

(i) For an amount subject to with-
holding under section 1446(a), QI can
determine the portion of the amount
associated with-

(a) A valid Form W-8IMY from a
partnership and, for a partnership
other than a PTP, when QI can
determine the amount associated
with valid documentation pro-
vided by each of the partners of the
partnership;

(b) A valid Form W-8BEN-E or
Form W-8IMY from a simple trust;
or

(c) A valid Form W-8IMY from a
trust that identifies itself as a foreign
grantor trust (or similar document
from a U.S. grantor trust), when
QI can associate the portion of the
amount with valid documentation
provided by each grantor or owner
of the trust.

(ii) For an amount subject to withhold-
ing under chapter 3 or 4 that QI can
determine is reliably associated with a
valid Form W-8IMY provided by the
flow-through entity (which includes the
entity's chapter 4 status with respect to
an amount of a distribution attribut-
able to a withholdable payment) and
the portion of the amount associated
with valid documentation provided by
each interest holder in the flow-through
entity other than an intermediary or
flow-through entity.

(iii) For an amount realized that QI can
determine is reliably associated with
valid documentation provided by the

flow-through entity and the portion of
the amount associated with an interest
holder in the entity to the extent spec-
ified in this section 5.13(B)(1) for an
amount realized paid to a flow-through
entity.

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

If the payment is a reportable amount,
QI can reliably associate the payment
with documentation provided by another
QI if the withholding statement allocates
the payment to withholding rate pools
attributable to U.S. non-exempt recip-
ients and the documentation includes a
valid Form W-9 for each U.S. non-ex-
empt recipient account holder for which
the other QI is required to report on
Form 1099 and, if required, backup
withhold. QI can also reliably asso-
ciate a reportable amount with valid
documentation provided by another QI
that is a participating FFI or registered
deemed-compliant FFI if, in lieu of
providing documentation for each U.S.
non-exempt recipient account holder, the
QI allocates the payment to a chapter 4
withholding rate pool of U.S. payees and

provides the applicable certification(s)
on a valid Form W-8IMY for allocating
the payment to this pool or allocates a
payment that is a withholdable payment
to a chapter 4 withholding rate pool of
recalcitrant account holders. Notwith-
standing the preceding sentences in this
section 5.13(B)(2), the presumption
rules shall not apply if a payment can-
not be allocated to each U.S. non-exempt
recipient account holder or to a chapter 4
withholding rate pool of U.S. payees to
the extent the alternative procedures of
section 6.03(D) of this Agreement apply.

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

If the payment is a reportable amount,
QI can reliably associate the payment
with documentation provided by another
QI if the withholding statement allo-
cates the payment to withholding rate
pools attributable to each U.S. non-ex-
empt recipient, as described in section
6.03(D), and the documentation includes
a valid Form W-9 for each U.S. non-ex-
empt recipient account holder for which
the other QI is required to report on Form
1099 and, if required, backup withhold.
QI can also reliably associate such pay-
ment with valid documentation provided
by another QI that is a participating FFI
or registered deemed-compliant FFI if, in

lieu of providing documentation for each
U.S. non-exempt recipient account holder,
the QI allocates the payment made to the
U.S. non-exempt recipient to a chapter 4
withholding rate pool of U.S. payees and
provides the applicable certifications on
a valid Form W-8IMY for allocating the
payment to this pool or allocates a pay-
ment that is a withholdable payment to a
chapter 4 withholding rate pool of recal-
citrant account holders. Notwithstanding
the preceding sentences in this section
5.13(B)(3), the presumption rules shall
not apply if a payment cannot be allocated
to each U.S. non-exempt recipient account
holder or to a chapter 4 withholding rate
pool of U.S. payees to the extent the alter-
native procedures of section 6.03(D) of
this Agreement apply.

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

(5) Reliably Associating a Payment
with Documentation Provided by a QI
that Assumes Both Primary Chapters
3 and 4 Withholding Responsibility

and Primary Form 1099 Reporting and
Backup Withholding Responsibility.
Generally, QI can reliably associate a pay-
ment with valid documentation provided
by another QI that assumes both primary
chapters 3 and 4 withholding responsi-
bility and primary Form 1099 reporting
and backup withholding responsibility
if QI can associate the payment with a
valid Form W-8IMY from the QI that, if
the payment is a withholdable payment,
includes the QI's chapter 4 status. Addi-
tionally, the Form W-8IMY must also des-
ignate the accounts for which the other QI
is acting as a QI and is assuming primary
chapters 3 and 4 withholding and primary
Form 1099 reporting and backup with-
holding responsibility. If the other QI is
acting as a QDD, the Form W-8IMY (or
withholding statement) must also des-
ignate those accounts (1) for which the
QDD is receiving payments with respect
to potential section 871(m) transactions
or underlying securities as a QDD, (2)
for which the QDD is receiving payments
with respect to potential section 871(m)
transactions (and that are not also under-
lying securities) for which withholding is
not required, and (3) for which the QDD is
receiving payments with respect to under-
lying securities for which withholding is
required. The QDD's Form W-8IMY must
also (1) for calendar years 2023 and 2024,
identify the dividends that are received by
the QDD that year in its equity derivatives
dealer capacity (which may be done by
designating one or more accounts, if the
only dividends that can be received by
those accounts are in the QDD's equity
derivatives dealer capacity) and (2) if
the QDD is a partnership or branch of a
partnership, provide valid documenta-
tion or withholding rate pool information
with respect to the QDD's partners to the
extent required under section 5.07(E) of
this Agreement. If the other QI is acting as
a QDD, the Form W-8IMY (or withhold-
ing statement) must also identify the home
office or branch acting as a QDD that is
receiving the payment. If the QI receiving
a payment assumes both primary chapters
3 and 4 withholding responsibility and
primary Form 1099 reporting and backup
withholding responsibility for substitute
interest payments as described in sec-
tion 3.03(A), the Form W-8IMY must
indicate that the QI is assuming primary

withholding responsibility for all such
payments.

(6) Reliably Associating a Payment
with Documentation Provided by a QI
that Assumes Primary Withholding
Responsibility for a PTP Distribution or
Amount Realized from the Sale of a PTP
Interest. QI can reliably associate with
documentation a payment of a PTP dis-
tribution or amount realized from the sale
of a PTP interest made to another QI that
assumes withholding responsibility for the
payment when QI can reliably associate
the payment with a valid Form W-8IMY
provided by the QI that indicates that the
QI assumes primary responsibility for the
amount realized or PTP distribution.

(7) Reliably Associating a Payment
with Documentation Provided by a QI
that Does not Assume Primary With-
holding Responsibility for a PTP Dis-
tribution or Amount Realized from the
Sale of a PTP Interest. QI can reliably
associate with documentation a payment of
an amount realized from the sale of a PTP
interest made to a QI that does not assume
primary withholding responsibility for the
payment when QI reliably associates the
payment with a valid Form W-8IMY pro-
vided by the other QI and can determine
the portion of the payment associated with
a valid Form W-9 for a U.S. partner (or a
chapter 4 withholding rate pool of U.S.
payees when permitted under chapter 4)
and, with respect to other partners, either
withholding rate pools, as described in
section 6.03(C) of this Agreement or, for a
disclosing QI, when QI can determine the
portion of the payment that is associated
with valid documentation for each of the
account holders of the disclosing QI not
includible in a chapter 4 withholding rate
pool of U.S. payees under chapter 4.

QI can reliably associate with docu-
mentation a payment of a PTP distribution
made to another QI that does not assume
primary withholding responsibility for the
payment when QI can reliably associate
the payment with a valid Form W-8IMY
provided by the QI and can determine
the portion of the distribution associated
with withholding rate pools, as described
in section 6.03(C) of this Agreement, or
a valid Form W-9 for a U.S. partner, or,
for a disclosing QI, when QI can deter-
mine the portion of each amount subject
to withholding on the distribution that is

associated with valid documentation for
each of the account holders of the disclos-
ing QI as described in section 5.07(D) of
this Agreement.

(C) Presumption Rules. With respect
to a withholdable payment made to a
foreign entity, if QI is an NFFE, it must
follow the presumption rules of §1.1471-
3(f) when it cannot reliably associ-
ate a withholdable payment with valid
documentation.

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

(1) Certain Withholdable Payments
Made with Respect to an Offshore Obli-
gation. A withholdable payment paid out-
side of the United States as defined under
§1.6049-5(e) with respect to an offshore
obligation (as defined in §1.1471-1(b)(88))
that is made to an entity is presumed made
to a nonparticipating FFI for purposes of
chapter 4. A withholdable payment that is
not an amount subject to chapter 3 with-
holding, that is paid outside the U.S. with
respect to an offshore obligation, and that
is treated as made to a payee that is an indi-
vidual is presumed made to a U.S. person
when the payee has any of the indicia of
U.S. status that are described in §1.1441-
7(b)(5). If QI is a participating FFI or regis-
tered deemed-compliant FFI (other than a
reporting Model 1 FFI), see the rules under
its FATCA requirements as a participating
FFI or registered deemed-compliant FFI
for classifying account holders as recalci-
trant account holders. If QI is an FFI, see
also section 8.06 of this Agreement for

whether QI is required to report such pay-
ments on Form 1099.

(2) Amounts Subject to Withhold-
ing under Chapter 3 that are Paid with
Respect to an Offshore Obligation.
An amount that is subject to chapter 3
withholding that is not a withholdable
payment is presumed made to an undoc-
umented foreign account holder if the
payment is made outside of the United
States with respect to an offshore obliga-
tion. If QI is an NFFE or an FFI that is
not required to withhold on recalcitrant
account holders pursuant to the terms of
an applicable Model 1 or Model 2 IGA,
an amount subject to chapter 3 withhold-
ing that is a withholdable payment and
that is treated as made to a payee that is
an individual is also presumed made to an
undocumented foreign account holder if
the payment is made outside of the United
States with respect to an offshore obliga-
tion. QI must treat an amount described in
this section 5.13(C)(2) as subject to with-
holding under chapter 3 at a rate of 30 per-
cent on the gross amount of the payment
and must report the payment as made to an
unknown recipient on Form 1042-S.

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

(4) Foreign Source Income, Broker
Proceeds, and Certain Other Amounts
Made with Respect to an Offshore Obli-
gation. A payment of an amount that is
not a withholdable payment and is not an
amount subject to chapter 3 withholding
(other than payments of short-term OID
and bank deposit interest described in
section 5.13(C) of this Agreement) that is
paid outside the United States with respect

to an offshore obligation and that is made
to a payee that is an individual is pre-
sumed made to a U.S. non-exempt recipi-
ent when the payee has any of the indicia
of U.S. status that are described in section
5.10(B) of this Agreement. If the pay-
ment is made to a payee that is an entity,
QI must apply the principles of §1.1441-
1(b)(3)(ii), §1.1441-5(d)(2), or §1.1441-
5(e)(6) (as applicable) without regard to
§1.1441-1(b)(3)(ii)(D) for purposes of
this paragraph 5.13(C)(4). For a payment
of gross proceeds for which QI is a broker
under §1.6045-1, similar rules apply to a
payment made with respect to a sale that
is effected at an office outside the United
States under §1.6045-1(g)(1)(ii). QI must
report an amount described in this section
5.13(C)(3) as paid to a presumed U.S.
non-exempt recipient on Form 1099 to the
extent required under section 8.06 of this
Agreement. Backup withholding shall not
be required, however, if the exception pro-
vided in §31.3406(g)-1(e) applies.

(5) Other Payments. For any payment
not covered in sections 5.13(C)(1), (2),
(3), or (4) of this Agreement, see the pre-
sumption rules provided in §1.1441-1(b)
(3) or §1.6049-5(d)(2) (as applicable). In
the case of a payment of an amount real-
ized, an account holder that is the partner
or a broker receiving the payment shall
be presumed a foreign person for which
a reduced rate of withholding under sec-
tion 1446(f) shall not apply. See, how-
ever, §1.1446(f)-4(b)(4) in the case of an
amount realized for which withholding
under section 3406 is required. In the
case of an amount subject to withholding
under section 1446(a) on a PTP distribu-
tion, an account holder that is a partner in
the PTP receiving the distribution shall be
presumed a foreign person, with the rate
of withholding based on the status of the
partner (as an individual or corporation)
as determined under §1.1446-1(c)(3), or
as otherwise determined under §1.1446-
4(d)(1)(iii) (when applicable).

## SECTION 6. QUALIFIED INTERMEDIARY WITHHOLDING CERTIFICATE AND DISCLOSURE OF ACCOUNT HOLDERS TO WITHHOLDING AGENT

Sec. 6.01. Qualified Intermediary
Withholding Certificate. QI agrees to

furnish a qualified intermediary with-
holding certificate to each withholding
agent from which it receives a reportable
amount as a QI or to each withholding
agent or broker from which QI receives a
PTP distribution or amount realized from
the sale of a PTP interest (including when
QI acts as a disclosing QI for the distri-
bution or amount realized). The qualified
intermediary withholding certificate is a
Form W-8IMY (or acceptable substitute
form) that certifies that QI is acting as a
QI, contains QI's QI-EIN, and provides
all other information required by the form.
If QI receives a withholdable payment
(including on a PTP distribution), QI must
certify to its chapter 4 status and provide
its GIIN (if applicable). QI must also cer-
tify its chapter 4 status as a participating
FFI or registered deemed-compliant FFI
when QI provides a Form W-8IMY that
certifies that it meets the requirements of
§1.6049-4(c)(4)(iii) with respect to any
account holder of an account it maintains
that is included in a chapter 4 withhold-
ing rate pool of U.S. payees on QI's with-
holding statement for a payment subject
to withholding under chapter 3 or 4 or an
amount realized from the sale of a PTP
interest.

If QI is acting as a QSL for a substitute
dividend payment, QI must also certify
that it is acting as a qualified securities
lender and provide all other information
required by Form W-8IMY.

If QI is acting as a QDD for payments
with respect to potential section 871(m)
transactions or underlying securities, it
must certify that it is acting as a QDD
for those payments and assumes primary
chapters 3 and 4 withholding responsibil-
ity and primary Form 1099 reporting and
backup withholding responsibility for any
payments with respect to potential sec-
tion 871(m) transactions that it makes as
required by this Agreement, and it must
provide all other information required
by Form W-8IMY with respect to the
certification.

If QI is acting with respect to pay-
ments of substitute interest as described
in section 3.03(A) of this Agreement, it
must certify that it is assuming primary
chapters 3 and 4 withholding responsi-
bility and primary Form 1099 reporting
and backup withholding responsibility
for all such payments, in addition to the

other certifications it makes and informa-
tion it provides as a QI as required by this
Agreement.

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

### Sec. 6.02. Withholding Statement.

(A) In General. QI agrees to provide
to each withholding agent from which
QI receives reportable amounts as a QI
a withholding statement described in
this section 6.02 and §1.1441-1(e)(3)
(iv). A withholding statement shall not
be provided to a withholding agent if
QI assumes both primary chapters 3 and
4 withholding responsibility and pri-
mary Form 1099 reporting and backup
withholding responsibility for all of its
accounts for which QI receives reportable
amounts as a QI, unless QI is acting as a
QDD. The withholding statement forms
an integral part of the Form W-8IMY. The
withholding statement shall be updated
as often as necessary for the withholding
agent to meet its reporting and withhold-
ing obligations under chapters 3, 4, and 61
and section 3406. For a payment received
by QI of a PTP distribution or an amount
realized from the sale of a PTP interest, QI
agrees to provide a withholding statement
described in this section 6.02 unless QI
assumes primary withholding responsibil-
ity for the payment.

(B) Content of Withholding State-
ment. The withholding statement must
contain sufficient information for a

withholding agent to apply the correct rate
of withholding on payments allocable to
the accounts identified on the statement
and to properly report such payments on
Forms 1042-S and Forms 1099, as appli-
cable. The withholding statement must-

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

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

(3) If QI is acting as a QDD, desig-
nate the accounts (1) for which the QDD
is receiving payments with respect to
potential section 871(m) transactions or
underlying securities as a QDD, (2) for
which the QDD is receiving payments
with respect to potential section 871(m)
transactions (and that are not underly-
ing securities) for which withholding is
not required, and (3) for which QDD is
receiving payments with respect to under-
lying securities for which withholding is
required, and, if applicable, identifying
the home office or branch that is treated as
the owner for U.S. income tax purposes.
In addition, for calendar years 2023 and
2024, the withholding statement must
identify the dividends that it receives in its
equity derivatives dealer capacity (which
may be done by designating one or more
accounts, if the only dividends that can
be received by those accounts are in the
QDD's equity derivatives dealer capac-
ity). Also, for a QDD that is a partnership
or a branch of a partnership, the with-
holding statement must, for a payment
of an amount under section 3.09 of this
Agreement (as modified for a QDD that is
a partnership or branch of a partnership),
include withholding rate pool information
to the exent permitted in section 6.03 of
this Agreement for an account holder, or
specific partner information, with respect
to its partners receiving the amount (look-
ing through partners that are foreign
flow-through entities). The requirement
to include the partner information spec-
ified in the preceding sentence does not
apply to a payment described in sections
3.03(A)(1)-(3) of this Agreement.

(4) If applicable, designate the
accounts for which QI is acting as a QSL
with respect to any U.S. source substi-
tute dividend payments received from the
withholding agent;

(5) Designate those accounts for which
QI assumes primary withholding respon-
sibility for a payment of a PTP distribu-
tion or an amount realized from the sale of
a PTP interest; and

(6) Provide information regarding
withholding rate pools, as described in
section 6.03 of this Agreement, when nec-
essary, except that section 6.03(C) of this
Agreement shall not apply when QI acts
as a disclosing QI for a payment (includ-
ing for an amount subject to chapter 3 or
4 withholding on a PTP distribution), and
references to a chapter 4 withholding rate
pool of U.S. payees in section 6.03(B)
of this Agreement shall not apply to an
amount subject to withholding under sec-
tion 1446(a) on a PTP distribution. See
also section 2.91(E) of this Agreement for
a disclosing QI's requirement to provide
specific payee information on a withhold-
ing statement for a PTP distribution or
amount realized from the sale of a PTP
interest.

Sec. 6.03. Chapters 3 and 4 With-
holding Rate Pools.

(A) In General. QI shall provide as
part of its withholding statement with-
holding rate pool information in a man-
ner sufficient for the withholding agent
to meet its chapters 3 and 4 and backup
withholding responsibilities and its Form
1042-S and Form 1099 reporting respon-
sibilities. QI's requirement for its with-
holding statement described in the preced-
ing sentence also applies to a withholding
statement QI provides to the withholding
agent or broker for a payment of a PTP
distribution or amount realized from the
sale of a PTP interest. Additionally, for
a PTP distribution, the withholding rate
pool information provided by QI on its
withholding statement must take into
account each amount subject to withhold-
ing on the distribution as determined by
the withholding agent that pays the distri-
bution to QI.

(B) Chapter 4 Withholding Rate
Pools. If QI receives a withholdable pay-
ment on behalf of its account holders,
QI may allocate the payment to a chap-
ter 4 withholding rate pool. A chapter 4

withholding rate pool is a payment of a
single type of income (e.g., interest or div-
idends) that is allocated to payees that are
nonparticipating FFIs. If QI is a participat-
ing FFI or registered deemed-compliant
FFI (other than reporting Model 1 FFI),
it may also allocate a withholdable pay-
ment to a chapter 4 withholding rate pool
of recalcitrant account holders (if applica-
ble). If QI is a participating FFI or regis-
tered deemed-compliant FFI receiving a
reportable amount that is excepted from
reporting under section 8.06(A) of this
Agreement (excluding sections 8.06(A)
(2) and (A)(3) of this Agreement when the
payment is subject to chapter 4 withhold-
ing and section 8.06(A)(4) of this Agree-
ment), QI may allocate the payment to a
chapter 4 withholding rate pool of U.S.
payees. See section 6.03(D) of this Agree-
ment for the alternative procedures that
may be used in this case. Except as oth-
erwise provided in this section 6.03(B),
if QI receives a withholdable payment,
QI must provide the information required
under §1.1471-3(c)(3)(iii)(B)(2).

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

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

(C) Chapter 3 Withholding Rate
Pools. With respect to any portion of the
payment that is attributable to payees
for which no chapter 4 withholding is
required, a chapter 3 withholding rate pool
is a payment of a single type of income,
determined in accordance with the catego-
ries of income reported on Form 1042-S,
that is subject to a single rate of withhold-
ing (e.g., 0%, 10%, 15%, 30%, or 37%)
and a single chapter 4 exemption code.
QI shall determine chapter 3 withholding
rate pools based on valid documentation
obtained under section 5 of this Agreement
or, if a payment cannot be reliably associ-
ated with valid documentation, on the pre-
sumption rules of section 5.13(C) of this
Agreement. If QI has an account holder
that is another intermediary (whether a
QI, NQI, or PAI) or a flow-through entity
(other than a nonparticipating FFI that is
not acting on behalf of any exempt benefi-
cial owners), QI may combine the account
holder information provided by the inter-
mediary or flow-through entity with QI's
direct account holder information to
determine the amounts allocable to each
of QI's chapter 3 withholding rate pools
with respect to the portion of the payment
allocable to an account holder to which
chapter 4 withholding does not apply. For
a payment of an amount realized, how-
ever, QI may combine its account holder
information with the account holder infor-
mation provided by an intermediary only
if the intermediary is a QI other than a dis-
closing QI.

(D) U.S. Non-Exempt Recipients
Subject to Backup Withholding or
Form 1099 Reporting and Alternative
Procedures for Allocating Payments on
Withholding Statements. To the extent
QI does not assume primary Form 1099
reporting and backup withholding respon-
sibility and is not excepted from reporting
on Form 1099 under section 8.04 of this
Agreement, QI's withholding statement
must establish a separate withholding rate
pool for each U.S. non-exempt recipi-
ent account holder that QI is required to
report on Form 1099 and has disclosed to
the withholding agent. QI may, by mutual
agreement with the withholding agent,
establish a single withholding rate pool
(not subject to backup withholding) for all
U.S. non-exempt recipient account hold-
ers for whom QI is required to report on

Form 1099 and has provided Forms W-9
before the withholding agent paying any
reportable amounts or, if applicable, des-
ignated broker proceeds to which backup
withholding does not apply. QI must
establish a separate withholding rate pool
for all U.S. non-exempt recipient account
holders subject to backup withholding
before the withholding agent paying any
reportable amounts or, if applicable, des-
ignated broker proceeds.

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

## SECTION 7. TAX RETURN OBLIGATIONS

### Sec. 7.01. Form 1042 (or Other Tax Return) Filing Requirement.

(A) In General. QI shall file a return
on Form 1042, whether or not QI withheld
any amounts under chapter 3 or 4, on or
before March 15 of the year following any
calendar year in which QI acts as a QI and
makes a payment of an amount subject
to chapter 3 or 4 withholding. A separate
Form 1042 must be filed by each legal
entity that is a QI covered by this Agree-
ment in accordance with the instructions to
Form 1042 (including to the extent of any
requirement to reconcile amounts reported
on Form 1042 with amounts reported on
Forms 1042-S). Form 1042 shall be filed
at the address indicated on the form, at the

address at which the IRS notifies QI to
file the return, or in accordance with the
instructions to file Form 1042 electroni-
cally. In addition to the information spe-
cifically requested on Form 1042 and the
accompanying instructions, if QI made
any overwithholding or underwithhold-
ing adjustments under §§1.1461-2 and
1.1474-2 and sections 9.02 and 9.05 of this
Agreement, QI must attach a statement
setting forth the amounts of any overwith-
holding or underwithholding adjustments
and an explanation of the circumstances
that resulted in the overwithholding or
underwithholding.

(B) Extensions for Filing Returns. QI
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.

(C) QDD Tax Liability Requirements
for QDDs. In addition to its requirements
under section 7.01(A) of this Agreement, a
QI that is acting as a QDD also must report
its QDD tax liability on the appropriate
U.S. tax return (in the manner prescribed
by the IRS), including separately identi-
fying each part of the QDD tax liability
described in section 3.09(A) through (C)
of this Agreement separately for the home
office and each branch that is acting as a
QDD (if applicable), and in the case of a
QDD that is a partnership or branch of a
partnership, taking into account the mod-
ifications in section 3.09 and separately
stating the withholding associated with
any of the QDD tax liability amounts).
For QDDs that are foreign corporations
or branches of foreign corporations, the
appropriate U.S. tax return is a Form
1120-F, including all required Schedules
Q. For QDDs that are partnerships or
branches of partnerships, the appropriate
U.S. tax return is a Form 1065, including
all required attachments and schedules,
and to the extent any amount is subject to
withholding with respect to a foreign part-
ner of the QDD, Forms 1042 and 1042-S.
In addition, if the QDD is a partnership or
a branch of a partnership, the partnership
must attach a statement to its Form 1065
for each QDD and, if the QDD has a fiscal
year rather than a calendar year, a separate

statement for each QDD for each portion
of the fiscal year that falls within the cal-
endar year that includes the information
that would have been included on the
Form 1120-F Schedule Q, in the manner
specified in the instructions to the Form
1065. A QDD must also report any other
information required by the appropriate
return with respect to its QDD tax liabil-
ity (including any part thereof). In each
case, the form will be filed by the QI on
behalf of its QDD(s) and the Form 1120-F
or Form 1065, as applicable, must be filed
whether or not the QI would be required
to file the form if it were not a QDD.
U.S financial institutions with a foreign
branch that acts as a QDD must file the
appropriate U.S. income tax return (e.g.,
Form 1120, U.S. Corporation Income Tax
Return) for the tax year covered by this
Agreement to report and pay its tax lia-
bility under chapter 1 and will not have a
separate QDD tax liability. Similarly, any
United States person that is an individual
or a corporation and a direct or indirect
partner of a QI partnership that is or has
a QDD must report and pay its tax liabil-
ity under chapter 1 and would not have a
separate QDD tax liability for the amounts
from the QDD.

A QDD must also maintain, and make
available to the IRS upon request, a rec-
onciliation schedule that tracks across
calendar years the section 871(m) amount
for each dividend with respect to each
underlying security referenced by a poten-
tial section 871(m) transaction separately
for the home office and each branch that
is a QDD (if applicable). The reconcilia-
tion schedule must separately state total
amounts received as a QDD, as well as
the dividends received in its equity deriv-
atives dealer capacity and the section 881
tax paid on those amounts (or in the case
of a QI that is a partnership, the withhold-
ing by the partnership on its partners for
those amounts and the reporting of the
amounts to its partners), the amount of
dividends that were effectively connected
with the conduct of a trade or business
in the United States, the amount of stock
owned in its equity derivatives dealer
capacity that was not effectively con-
nected with the conduct of a trade or busi-
ness in the United States, the amount of
dividend equivalent payments it received
in its equity derivatives dealer capacity,

its long positions, its short positions, its
net delta for business purposes (if any),
its adjustments to the net delta used for
business purposes (if any, such as adjust-
ments to exclude transactions that, for fed-
eral income tax purposes, are not treated
as transactions of a QDD, do not exist,
or that are effectively connected with
the conduct of a trade or business in the
United States), the dividend amount per
share, its tax liability under section 881
(or if QI is a partnership, the withholding
by the partnership on its partners and the
reporting of the amounts to its partners)
for its section 871(m) amount, its net delta
exposure, and the section 871(m) amount
for each dividend with respect to each
underlying security referenced by a poten-
tial section 871(m) transaction it received
as a QDD, and any adjustments thereto,
for transactions in its equity derivatives
dealer capacity. The reconciliation sched-
ule may be maintained in any manner or
format that permits the IRS to reconcile
the amount reported by the QDD for the
calendar year.

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

Sec. 7.03. Retention of Returns. QI
shall retain Forms 945 and 1042 (includ-
ing, with respect to a QI acting as a QDD,
its reconciliation schedule) for the appli-
cable statute of limitations on assessment
under section 6501.

## SECTION 8. INFORMATION REPORTING OBLIGATIONS

Sec. 8.01. Form 1042-S Reporting.
Except as otherwise provided in sec-
tion 8.02 of this Agreement, QI is not
required to file Forms 1042-S for amounts
paid to each separate account holder for
whom such reporting would otherwise
be required. Instead, QI shall file a Form

1042-S reporting the pools of income
(reporting pools) as determined in sec-
tion 8.03 of this Agreement. QI must file
its Forms 1042-S in the manner required
by the regulations under chapters 3 and
4 (or in the case of a participating FFI,
in the manner required under the FFI
Agreement) and the instructions to the
form, including any requirement to file
the forms magnetically or electronically.
Separate Forms 1042-S must be filed by
each legal entity that is a QI covered by
this Agreement. A QI acting as a QDD
that also has QI activities must file sep-
arate Forms 1042-S in its QDD capacity
and its QI capacity (i.e., other than when
acting as a QDD). Each QI covered by this
Agreement may also allow its individual
branches not acting as QDDs to file Forms
1042-S provided that all Forms 1042-S
contain the QI-EIN of the legal entity of
which the branch forms a part and, to the
extent required for chapter 4 purposes, the
GIIN of the branch. If QI is acting as a
QDD, the home office and each branch
acting as a QDD must file separate Forms
1042-S for payments made as a QDD.
Any Form 1042-S required by this sec-
tion 8 shall be filed on or before March 15
following the calendar year in which the
payment reported on the form was made.
QI may request an extension of time to file
Forms 1042-S by submitting Form 8809,
Application for Extension of Time to File
Information Returns, by the due date of
Forms 1042-S in the manner required by
(and to the extent permitted on) Form
8809. For when a payment is subject to
reporting on Form 1042-S, see generally
§1.1461-1(c)(2). For when an amount
realized from a transfer of a PTP interest
under section 1446(f) or an amount sub-
ject to withholding under section 1446(a)
on a PTP distribution is subject to report-
ing on Form 1042-S, see section 2.91(B)
of this Agreement and §1.1461-1(c)(2)(i)
(P).

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

rate. In the case of a payment to a QDD,
separate Forms 1042-S must be filed for
each QDD, even if a single legal entity.
For when a Form 1042-S is issued to an
account holder that is a U.S. person to
report withholding under section 1446(a)
or (f), see the instructions for Form 1042-
S. In addition, in the case of a QDD that
is a partnership or a branch of a partner-
ship, separate Forms 1042-S must be filed
for each of the QDD's foreign partners
with respect to each partner's share of the
QDD's QDD tax liability subject to with-
holding under section 3.09 of this Agree-
ment, as modified for a QDD that is a part-
nership or branch of a partnership.

(A) QI must file a separate Form
1042-S for each account holder that is a
QI (to the extent such payment is required
to be reported under §1.1461-1) WP, WT,
or QSL that receives from QI an amount
subject to withholding under chapter 3 or
4 (or, in the case of a QSL, that receives a
U.S. source substitute dividend payment),
regardless of whether such account holder
is a direct or indirect account holder of QI.

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

(C) QI must file a separate Form 1042-S
for each account holder that is a nonqual-
ified intermediary or flow-through entity
that is not described in section 8.02(B)
of this Agreement (other than a nonpar-
ticipating FFI) that receives from QI an
amount subject to chapter 4 withholding
allocable to such entity's chapter 4 with-
holding rate pool of payees that are non-
participating FFIs, regardless of whether
such intermediary or flow-through entity
is a direct or indirect account holder of QI.

(D) QI must file a separate Form
1042-S for each account holder of QI that
is a PAI or a partnership or trust to which
QI applies the agency option that receives
from QI an amount subject to chapter 4

withholding allocable to such entity's
chapter 4 withholding rate pool of pay-
ees that are nonparticipating FFIs or an
amount subject to chapter 3 withholding
that is either not a withholdable payment
or a withholdable payment for which no
chapter 4 withholding is required and that
is allocable to such entity's chapter 3 with-
holding rate pools.

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

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

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

Forms 1042-S in the same manner for
each foreign account holder (or interest
holder) of a nonqualified intermediary or
flow-through entity that is described in the
preceding sentence and that is a direct or
indirect account holder (or interest holder)
of a PAI of QI or a partnership or trust to
which QI applies the agency option.

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

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

(J) If QI acts as a disclosing QI with
respect to a payment of a PTP distribu-
tion or an amount subject to reporting
under section 1446(f) made to an account
holder that is a foreign partner, QI must
file a Form 1042-S to report the payment
when QI knows or has reason to know
that the Form 1042-S has not been filed
with respect to the partner or the rate of
withholding shown on the Form 1042-S is
incorrect. In the case of a PTP distribution
that QI must report in accordance with the
preceding sentence, QI must file a sepa-
rate Form 1042-S for each amount asso-
ciated with the distribution by the PTP to
the extent required in the instructions for
Form 1042-S. Notwithstanding the pre-
ceding provisions of this section 8.02(J),
see section 8.02(M) of this Agreement
for an amount subject to reporting under
section 1446(f) paid to a nonqualified
intermediary.

(K) If a QI makes a payment of a
PTP distribution or an amount subject
to reporting under section 1446(f) to an
account holder that is a QI not acting as
a disclosing QI for the payment, QI must
file a Form 1042-S for the other QI. If QI
instead receives information on a foreign
partner from a QI that is an account holder
and that acts as a disclosing QI for a pay-
ment referenced in the preceding sentence,
QI must file a separate Form 1042-S to
report the payment when QI assumes pri-
mary withholding responsibility for the

payment or knows or has reason to know
that the Form 1042-S has not been issued
with respect to the foreign partner. In
such a case, QI must file the Form 1042-S
reporting the disclosing QI as an interme-
diary, with the foreign partner reported as
the recipient. In the case of a payment of a
PTP distribution made to a QI that acts as a
disclosing QI for the distribution and that
QI is required to report in accordance with
this section 8.02(K), QI must file a sep-
arate Form 1042-S to the extent required
in the instructions to Form 1042-S. For
any Form 1042-S QI files with respect to
a payment made to an account holder of a
disclosing QI, QI must also furnish to the
disclosing QI a recipient copy of the Form
1042-S.

(L) If QI receives specific information
on a foreign partner that is a direct account
holder of a PAI that receives from QI a pay-
ment of an amount subject to withholding
on a PTP distribution or an amount sub-
ject to reporting under section 1446(f), QI
must file a separate Form 1042-S to report
each amount paid to the partner to the
extent required in accordance with section
8.02(K) of this Agreement for a QI that is
a disclosing QI (but as applied to a PAI
instead of a disclosing QI).

(M) If QI makes a payment of a PTP
distribution to a nonqualified inter-
mediary, QI must file a separate Form
1042-S for each foreign partner or ben-
eficial owner of the distribution that is
an account holder of the nonqualified
intermediary. If QI makes a payment of
an amount subject to reporting under sec-
tion 1446(f) to a nonqualified interme-
diary, QI shall file the Form 1042-S for
an unknown recipient of the nonqualified
intermediary, except that QI may instead
file the Form 1042-S for an account
holder of the nonqualified intermediary
receiving the payment when-

(1) QI has in place an agreement with
the nonqualified intermediary that QI will
report (or ensures that another QI or bro-
ker will report) under section 1461 with
respect to the amount allocated to each of
the transferors of the PTP interest (and, if
required, under section 6045) and that QI
will provide the nonqualified intermedi-
ary a recipient copy of each Form 1042-S
issued as a result of QI's reporting;

(2) QI can reliably associate the
payment with documentation for each

transferor under section 5.13 of this
Agreement;

(3) QI receives from the nonqualified
intermediary the statement described in
§1.6031(c)-1T(a)(1) with respect to each
partner that is an account holder of the non-
qualified intermediary for which a state-
ment under section 6031(b) is required to
be issued (which meets the requirements
in section 8.07 of this Agreement) with
respect to the partner's PTP interest for the
year in which the payment was made; and

(4) The nonqualified intermediary
appoints the QI as its agent for providing
the statement to the PTP (or PTP's agent).
See §1.6031(c)-1T(f).

(N) QI must file a separate Form
1042-S for a grantor or owner of a grantor
trust for purposes of section 1446(a) or
(f), except when QI applies the provisions
of section 4.06 of this Agreement with
respect to the trust.

(O) QI must file a separate Form
1042-S for a foreign partnership hold-
ing a PTP interest directly with QI to
the extent that QI determines a modified
amount realized with respect to the part-
nership for purposes of section 1446(f),
or to the extent the partnership receives
a payment subject to withholding under
section 1446(a), when the foreign partner-
ship is not a PTP, but excluding either case
when QI applies the provisions of section
4.06 of this Agreement with respect to the
partnership.

(P) QI must file a separate Form
1042-S with respect to an account holder
that requests a Form 1042-S from QI by a
written request made within two full cal-
endar years following the year in which
QI made the payment for which the Form
1042-S is requested. If, however, QI filed
a Form 1042-S to report a payment of an
amount subject to withholding under sec-
tion 1446(a) on a PTP distribution or an
amount subject to reporting under section
1446(f) with respect to an account holder
for the same calendar year for which the
account holder requests a separate Form
1042-S for any payment, QI must file a
separate Form 1042-S for each amount
reportable on Form 1042-S that was paid
to the account holder for the calendar
year. A request made in a case described
in the preceding sentence must be made
in writing within three full calendar years
following the year in which QI made the

payment for which the Form 1042-S is
requested. Any request by an account
holder for a separate Form 1042-S refer-
enced in this section 8.02(P) requires that
the account holder provide its U.S. TIN to
QI.

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

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

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

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

(B) Chapter 3 Reporting Pools.
Except for amounts required to be reported
under section 8.02 of this Agreement or
when QI acts as a disclosing QI for a pay-
ment, QI shall report an amount subject
to chapter 3 withholding or withholding

under section 1446(a) or (f) for which
no chapter 4 withholding is required and
that is paid to a foreign account holder by
reporting pools on a Form 1042-S if paid
to a direct account holder of QI, or to a
direct account holder of a PAI of QI or a
partnership or trust, to the extent permit-
ted undersection 4 of this Agreement. A
separate Form 1042-S shall be filed for
each type of reporting pool. A chapter 3
reporting pool is a payment of a single
type of income that falls within a particu-
lar withholding rate, chapter 3 exemption
code, and, if the payment is a withhold-
able payment, chapter 4 exemption code
as determined on Form 1042-S. QI may
use a single chapter 3 pool reporting code
(e.g., QI- withholding rate pool- general)
for all reporting pools except for amounts
paid to foreign tax-exempt recipients, for
which a separate chapter 3 pool reporting
code (e.g., QI- withholding rate pool-
exempt organization) must be used. For
this purpose, a foreign tax-exempt recip-
ient includes any organization that is not
subject to chapter 3 withholding and is not
liable to tax in its jurisdiction of residence
because it is a charitable organization, a
pension fund, or a foreign government.

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

(A) QI that is an FFI. If QI is an FFI,
QI is required to report each U.S. account
(or, in the case of an FFI that is a reporting
Model 1 FFI or a registered deemed-com-
pliant Model 1 IGA FFI, each U.S. report-
able account) that it maintains and for
whom QI is acting consistent with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI. If QI is a participating FFI or
registered deemed-compliant FFI (other
than a reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI), QI
must report its U.S. accounts on Form
8966 in the time and manner required
under its FATCA requirements as a partic-
ipating FFI or registered deemed-compli-
ant FFI except to the extent QI is report-
ing under §1.1471-4(d)(5) on Form 1099
with respect to its U.S. accounts. If QI
is a reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI, QI
must report each U.S. reportable account
on Form 8966 as required under the appli-
cable Model 1 IGA. QI cannot delegate to

its withholding agent its requirements to
report U.S. accounts (or U.S. reportable
accounts) regardless of whether QI does
or does not assume primary Form 1099
reporting and backup withholding respon-
sibility under section 3 of this Agreement.
See section 8.06 of this Agreement for
when the reporting described in this sec-
tion 8.04 satisfies QI's Form 1099 report-
ing responsibilities with respect to report-
able payments under chapter 61.

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

Sec. 8.05. Form 8966 Reporting for
Payees that are NFFEs. QI shall file Form
8966 to report withholdable payments
made to an intermediary or flow-through
entity that provides information regarding
an account holder (or interest holder) that
is an NFFE other than an excepted NFFE
with one or more substantial U.S. own-
ers (or one or more controlling persons
that is a specified U.S. person under an
applicable IGA). QI must report on Form
8966 in the time and manner provided in
§1.1474-1(i)(2). Such report must include
the name of the NFFE that is owned by
a substantial U.S. owner (or controlling
person); the name, address, and U.S. TIN
of each substantial U.S. owner; the total
of all withholdable payments made to the

NFFE during the calendar year (or report-
able period under the applicable IGA); and
any other information as required by the
form and its accompanying instructions.
QI is not required to report, however, to
the extent permitted under §1.1474-1(i)
(2) on a payment made to a participating
FFI or registered deemed-compliant FFI
if such information is reported pursuant
to section 8.04 of this Agreement or if the
intermediary or flow-through entity certi-
fies on its withholding statement that it is
reporting the account holder (or interest
holder) as a U.S. account pursuant to its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI.

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

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

(1) QI is a non-U.S. payor reporting the
account holder of a U.S. account under its
FATCA requirements as a participating
FFI or registered deemed-compliant FFI
(including a reporting Model 1 FFI) and

the other conditions of §1.6049-4(c)(4)(i)
are satisfied;

(2) QI reports the account holder's
account as held by a recalcitrant account
holder or, in the case of a QI that is a
reporting Model 2 FFI or nonreport-
ing Model 2 FFI treated as registered
deemed-compliant, as a non-consenting
U.S. account under its FATCA require-
ments as a participating FFI or registered
deemed-compliant FFI and the other con-
ditions of §1.6049-4(c)(4)(ii) are satisfied;

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

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

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

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

(B) Reportable Payments other
than Reportable Amounts. QI must file
a Form 1099 for a reportable payment
(other than a reportable amount) paid to
each U.S. non-exempt recipient (whether
a direct or indirect account holder), or to

any account holder that is presumed to be
a U.S. non-exempt recipient under sec-
tion 5.13(C) of this Agreement. Notwith-
standing the previous sentence, QI is not
required to file a Form 1099 for a report-
able payment (other than a reportable
amount) paid to a direct account holder
that is (or is presumed) a U.S. non-exempt
recipient if-

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

Sec. 8.07. Section 6031 Reporting
Responsibility with respect to Partner
Holding PTP Interest.

(A) In General. A QI must comply
with the requirements of this section 8.07
for each calendar year for purposes of QI's
requirement to report under §1.6031(c)-
1T with respect to its account holders.
A nominee for purposes of this section
8.07 is an entity (including a broker) that
holds a PTP interest directly or indirectly
on behalf of another person. An account
holder for purposes of this section 8.07

is a partner or intermediary that during a
calendar year receives from QI a PTP dis-
tribution or sells a PTP interest for which
QI pays to it an amount realized and is-

(1) A direct account holder of QI
excluding an account holder that is a
QI or nonqualified intermediary refer-
enced in section 8.07(A)(2) or (3) of this
Agreement;

(2) An account holder of another QI
acting as a disclosing QI for a PTP dis-
tribution or amount realized (including an
account holder of the other QI that is itself
a QI but not acting as a disclosing QI); or

(3) An account holder of a nonquali-
fied intermediary when QI either receives
the information required for reporting
under this section 8.07 with respect to an
account holder receiving the distribution
or, for the amount realized paid to the
account holder, satisfies the conditions of
section 8.02(M) of this Agreement (or is
otherwise a PAI).

(B) QI not Acting as Disclosing QI.
A QI that does not act as a disclosing QI
for a PTP distribution or amount realized
paid to an account holder for a calendar
year with respect to the account holder's
PTP interest may provide the statement
with respect to the account holder spec-
ified in §1.6031(c)-1T(a) to the PTP in
which the interest is held (or PTP's agent),
in the time specified in §1.6031(c)-1T(b).
For purposes of this section 8.07(B), the
statement specified in §1.6031(c)-1T(a)
must include a U.S. TIN for a foreign
account holder only when provided by
the account holder to QI. If QI does not
provide the statement described in the
two preceding sentences, QI must issue
to each account holder receiving the dis-
tribution or amount realized the statement
that is described in §1.6031(c)-1T(h)
for the calendar year with respect to the
PTP interest for which the distribution
or amount realized was paid, in the time
specified in §1.6031(c)-1T(h). For pur-
poses of this section 8.07(B), the state-
ment described in §1.6031(c)-1T(h) may
be a copy of the statement issued under
section 6031(b) to QI for the year when
QI includes with the statement an accu-
rate designation of the percentage of each
amount shown on the statement attribut-
able to the account holder's PTP interest
held with QI. In a case in which QI pro-
vides to an account holder the statement

described in §1.6031(c)-1T(h) or the pre-
ceding sentence, QI is also required to
request from the PTP the PTP's deemed
sale information for purposes of §1.864(c)
(8)-2(b)(2) with respect to an account
holder requesting (directly or through
another intermediary) this information
from QI (which, in turn, QI must provide
to the account holder).

(C) QI Acting as Disclosing QI. A
QI that acts as a disclosing QI for a PTP
distribution or amount realized paid to
an account holder for a calendar year
with respect to the account holder's PTP
interest is required to provide the state-
ment with respect to the account holder
specified in §1.6031(c)-1T(a) (including
with a U.S. TIN only when required under
section 8.07(B) of this Agreement) to the
PTP in which the interest is held (or PTP's
agent), or QI's nominee for the payment,
in the time specified in §1.6031(c)-1T(b).
A QI need not provide the statement
described in the preceding sentence to
the extent that QI's nominee maintains a
fully segregated and disclosed account for
which QI has already provided the infor-
mation required for the statement (includ-
ing a U.S. TIN only when required under
section 8.07(B) of this Agreement). Addi-
tionally, in a case in which QI provides the
statement to QI's nominee or the informa-
tion referenced in the preceding sentence
to its nominee, QI must obtain from the
nominee a written representation that the
nominee is acting as an agent of the PTP
for purposes of §1.6031(c)-1T(a) unless
QI otherwise appoints the nominee as its
agent for purposes of §1.6031(c)-1T(a).
See §1.6031(c)-1T(f).

SECTION 9. ADJUSTMENTS FOR
OVER AND UNDER-WITHHOLD-
ING; REFUNDS

Sec. 9.01. Adjustments for Overwith-
holding by Withholding Agent When
QI Does not Assume Primary With-
holding Responsibility. QI may request
that a withholding agent make an adjust-
ment for amounts paid to QI when the
withholding agent has overwithheld under
chapter 3 or 4 by applying either the reim-
bursement procedure described in section
9.01(A) of this Agreement or the set-off
procedure described in section 9.01(B)
of this Agreement within the time period
prescribed for those procedures. Noth-
ing in this section shall be interpreted to

require a withholding agent to apply the
reimbursement or set off procedures under
sections 9.01(A) or (B) of this Agreement.
See §1.1474-2(a)(2) for the definition of
overwithholding that applies for purposes
of this section 9 with respect to an amount
withheld under chapter 4.

The reimbursement and set-off proce-
dures that apply to an amount overwith-
held by QI's withholding agent under
chapter 3 and 4 also apply to an amount
overwithheld on an amount realized or
an amount subject to withholding under
section 1446(a) on a PTP distribution by
QI's broker (for an amount realized), or a
nominee or PTP (for a PTP distribution).

(A) Reimbursement Procedure. QI
may request that a withholding agent
repay QI for any amount overwithheld
and for the withholding agent to reim-
burse itself under the reimbursement pro-
cedures described in §§1.1461-2(a)(2)(i)
and 1.1474-2(a)(3) by making the request
in the time permitted to apply those pro-
cedures with respect to a beneficial owner
or payee.

(B) Set-off Procedure. QI may request
that a withholding agent repay QI by
applying the amount overwithheld against
any amount which otherwise would be
required to be withheld under chapter 3
or 4 from income paid by the withholding
agent to QI under the set-off procedures of
§§1.1461-2(a)(3) and 1.1474-2(a)(4). QI
must make the request in the time permit-
ted to apply those procedures with respect
to a beneficial owner or payee.

Sec. 9.02. Adjustments for Overwith-
holding by QI Assuming Primary With-
holding Responsibility. QI may make an
adjustment for amounts paid to its account
holders when QI has overwithheld by
applying either the reimbursement or set-
off procedures described in this section
9.02 within the time period prescribed for
those procedures. The reimbursement and
set-off procedures that apply to an amount
QI overwithheld under chapter 3 and 4
also apply to an amount QI overwithheld
on an amount realized or an amount sub-
ject to withholding under section 1446(a)
on a PTP distribution.

(A) Reimbursement Procedure.
QI may repay its account holders for an
amount overwithheld under chapter 3 or
4 and reimburse itself by reducing, by
the amount of tax actually repaid to the

account holders, the amount of any sub-
sequent deposit of tax required to be made
by QI under section 3.08 of this Agree-
ment. For purposes of this section 9.02(A),
an amount that is overwithheld shall be
applied in order of time (i.e., sequentially)
to each of the QI's subsequent deposit
periods in the same calendar year to the
extent that the withholding taxes required
to be deposited for a subsequent deposit
period exceed the amount actually depos-
ited. An amount overwithheld in a calen-
dar year may be applied to deposit periods
in the calendar year following the calen-
dar year of overwithholding only if:

(1) The repayment occurs in the time
specified in §§1.1461-2(a)(2) and 1.1474-
2(a)(3);

(2) QI states on a Form 1042-S (issued,
if applicable, to the account holder or oth-
erwise to a chapter 3 or 4 reporting pool),
filed in the time specified in §§1.1461-2(a)
(2) and 1.1474-2(a)(3), the amount of tax
withheld and the amount of any actual
repayments; and

(3) QI states on a Form 1042, filed in
the time specified in §§1.1461-2(a)(2)
and 1.1474-2(a)(3), that the filing of the
Form 1042 constitutes a claim for credit
in accordance with §1.6414-1.

(B) Set-Off Procedure. QI may repay
its account holders by applying the amount
overwithheld against any amount which
otherwise would be required under chap-
ter 3 or 4 to be withheld from a payment
made by QI to the account holders when
the requirements of §1.1461-2(a)(3) (for
chapter 3 withholding) or §1.1474-2(a)(4)
(for chapter 4 withholding) are satisfied.
For purposes of making a return on Form
1042 or 1042-S for the calendar year of
overwithholding, and for purposes of
making a deposit of the amount withheld,
the reduced amount shall be considered
the amount required to be withheld from
such income under chapter 3 or 4.

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

Sec. 9.04. Collective Credit or
Refund Procedures for Overwithhold-
ing. If there has been overwithholding
on amounts subject to chapter 3 or 4

withholding paid to QI's account holders
during a calendar year and the amount has
not been recovered under the reimburse-
ment or set-off procedures as described in
section 9.01 or 9.02 of this Agreement, QI
may request a credit or refund of the total
amount overwithheld by following the
procedures of this section 9.04. QI shall
follow the procedures set forth under sec-
tions 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.

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

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

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

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

(i) The reason(s) for the overwithhold-
ing;

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

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

(v) QI retains valid documentation
that meets the requirements of chap-
ter 3 or 4 (as applicable) to substan-
tiate the amount of overwithholding
with respect to each account holder for
which the refund is being sought; and
(vi) QI has not issued and will not issue
a Form 1042-S (or such other form as
the IRS may prescribe) to any account
holder with respect to the payments for
which the refund is being sought.

Sec. 9.05. Adjustments for Under-
withholding. If QI knows that an amount
should have been withheld under chapter
3 or 4 from a previous payment made to an
account holder but was not withheld, QI
may either withhold from future payments
made pursuant to chapter 3 or chapter 4 to
the same account holder or payee or sat-
isfy the tax from property that it holds in
custody for such person or property over
which it has control. QI may also with-
hold from future payments as described
in the preceding sentence with respect
underwithholding on an amount realized
or PTP distribution. The additional with-
holding or satisfaction of the tax owed
described in the previous sentence must
be made before the due date (not includ-
ing extensions) of the Form 1042 for the
calendar year in which the underwithhold-
ing occurred. QI's responsibilities under
this section 9.05 will be met if it informs a
withholding agent from which it received
the payment of the underwithholding

and the withholding agent satisfies the
underwithholding.

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

## SECTION 10. COMPLIANCE PROCEDURES

### Sec. 10.01. Compliance Program

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

(B) Coordination with FATCA
Requirements as a Participating FFI,
Registered Deemed-Compliant FFI, or
Registered Deemed-Compliant Model
1 IGA FFI and, for a Direct Reporting
NFFE, the Requirements of §1.1472-
1(c)(3). As a condition for maintaining
QI status, QI must maintain its chapter 4
status with respect to each branch of QI
operating under this Agreement. There-
fore, QI must, as part of the compliance
procedures described in this section 10
determine whether it is compliant with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI.

(C) Phase-in Years for 871(m). In
enforcing the regulations issued with
respect to dividend equivalents under sec-
tions 871(m), 1441, 1461, and 1473 (the
"section 871(m) regulations"), the IRS
will take into account the extent to which
the QI (including QIs that are not QDDs)
made a good faith effort to comply with
the section 871(m) regulations for any
delta-one section 871(m) transaction in
calendar years 2023 and 2024 and any
non-delta-one section 871(m) transac-
tion in calendar year 2025. Similarly, for
purposes of the IRS's enforcement and
administration of the QDD rules in the sec-
tion 871(m) regulations and the relevant
provisions of this Agreement, the IRS will
take into account the extent to which the
QDD made a good faith effort to comply
with the section 871(m) regulations and
the relevant provisions of this Agreement
for calendar years 2023 and 2024. For
calendar years 2023 and 2024, a QDD is
not required to perform a periodic review
with respect to its QDD activities (as oth-
erwise required by section 10.04 of this
Agreement) or provide factual informa-
tion in Appendix I with respect to its QDD
activities. In addition, for the QI certifica-
tion on material failures in calendar years
2023 and 2024, the only certification that
a QDD is required to make with respect
to its QDD activities for this period is that
it has made a good faith effort to comply
with the section 871(m) regulations and
the relevant provisions of this Agreement
for those activities. A revised certification
of internal controls (and factual informa-
tion and other certifications) applicable
to a QI's QDD activities will be added to

this Agreement for purposes of certifica-
tion periods ending after December 31,
2024. For calendar years 2023 and 2024, a
material failure relevant to a QDD has not
occurred unless the QDD failed to make a
good faith effort to comply with the sec-
tion 871(m) regulations and the relevant
provisions of this Agreement. Similarly,
for calendar years 2023 and 2024, a QI
will not be considered to have a material
failure with respect to a delta-one section
871(m) transaction unless the QI failed
to make a good faith effort to comply
with the section 871(m) regulations for
any of those transactions in those years.
For calendar year 2025, a QI will not be
considered to have a material failure with
respect to a non-delta-one section 871(m)
transaction unless the QI failed to make a
good faith effort to comply with the sec-
tion 871(m) regulations for any of those
transactions in that year. For any reliance
on the good faith standard, the QI must
disclose any section 871(m) transactions
included in the review that the QI believes
should be subject to the good faith stan-
dard for purposes of reporting the factual
information with its periodic certification
and include a brief description of the rea-
son QI relied on the good faith standard,
how the QI will address it, and why the
good faith standard should apply.

A QI will be considered to satisfy its
obligations for purposes of this section 10
that apply specifically to section 871(m)
transactions for calendar years 2023 and
2024 provided that the QI made a good
faith effort to comply with the relevant
terms of this Agreement. Any QI that has
not made a good faith effort to comply with
its section 871(m) requirements or QDD
obligations under this Agreement will not
be given any relief from IRS administra-
tion or enforcement for calendar years
2023 and 2024, including penalties.

10.02. Responsible Officer. QI must
appoint an individual as a responsible
officer as defined in section 2.72 of this
Agreement. The responsible officer must
be identified on QAAMS as QI's respon-
sible party, and such person may, but is
not required to, be the same responsible
officer for purposes of compliance with
QI's FATCA requirements as a partici-
pating FFI, registered deemed-compli-
ant FFI, or registered deemed-compliant
Model 1 IGA FFI. The responsible officer

must establish a compliance program that
meets the requirements of this section
10.02 and must make the periodic certi-
fications to the IRS described in section
10.03 of this Agreement. The respon-
sible officer of QI must be an officer of
QI with sufficient authority to fulfill the
duties of a responsible officer described
in this section 10. The responsible officer
(or a delegate appointed by the 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 sec-
tion 10.07 of this Agreement. References
in this section 10.02 to the responsible
officer include a responsible officer's
designee, where appropriate.

(A) Compliance Program. The
responsible officer must establish a pro-
gram for QI to comply with the require-
ments of this Agreement that includes the
following-

(1) Written Policies and Procedures.
The responsible officer must ensure the
drafting and updating, as necessary, of
written policies and procedures sufficient
for QI to satisfy the documentation, with-
holding, reporting, and other obligations
of this Agreement, including, with respect
to QI that is acting as a QDD, satisfying
its QDD tax liability. Such written poli-
cies and procedures must include a pro-
cess for employees of QI to raise issues to
the responsible officer (or the responsible
officer's designee) that concern QI's com-
pliance with this Agreement.

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

(3) Systems. The responsible officer
must ensure that systems and processes
are in place that will allow QI to fulfill
its obligations under this Agreement. For
example, in order to fulfill QI's obliga-
tions to report on Forms 1042-S, 1099,

and 8966 under section 8 of this Agree-
ment, QI must establish systems for docu-
menting account holders and for recording
the information with respect to each such
account that QI is required to report under
that section.

(4) Monitoring of Business Changes.
The responsible officer must monitor
business practices and arrangements that
affect QI's compliance with this Agree-
ment, including, for example, QI's acqui-
sition of lines of businesses or accounts
that give rise to documentation, withhold-
ing, or reporting obligations under this
Agreement.

(5) QDD Tax Liability Determina-
tions. If QI is (or has a branch that is)
acting as a QDD, the responsible officer
must ensure that each QDD has appropri-
ate systems in place to make the necessary
determinations and calculations to iden-
tify section 871(m) transactions, potential
section 871(m) transactions, the amount
of dividends received in its QDD equity
derivatives dealer capacity and the sec-
tion 881 taxes paid thereon, its net delta
exposure, the dividend amount per share,
the stock owned by the QDD included in
its net delta exposure long position, its
long position, its short position, its section
871(m) amount and the section 881 taxes
paid thereon, its QDD tax liability amount,
and the amount of dividend equivalent
payments made by the QDD, as well as
any other necessary information. In the
case of a QDD that is a partnership or a
branch of a partnership, instead of deter-
mining the section 881 taxes, the part-
nership must have appropriate systems to
determine the section 3.09 amounts on a
gross basis and the chapter 3 and 4 with-
holding required with respect to any of its
partners with respect to those amounts (as
well as any other amounts required to be
determined under section 7.01(C) of this
Agreement). In addition, the responsi-
ble officer must ensure that the QDD has
appropriate systems in place to determine
whether a transaction is as a principal or
non-principal, whether a transaction is in
an equity derivatives dealer or non-eq-
uity derivatives dealer capacity, whether
the transaction exists for federal income
tax purposes, whether the transaction
is owned by the QDD, and whether the
transaction is effectively connected with
the conduct of a trade or business in the

United States. This includes appropri-
ate systems to, where required, calculate
the delta for a potential section 871(m)
transaction, perform the substantial equiv-
alence test described in §1.871-15(h),
calculate the amount of a dividend equiv-
alent, determine any QDD tax liability
amount (and each part thereof) and its
timing, and determine what payments are
received or made with respect to potential
section 871(m) transactions and underly-
ing securities as a principal and whether
in its equity derivatives dealer capacity or
non-equity derivatives dealer capacity and
by which home office or branch that is act-
ing as a QDD. The systems must also take
into account information received pursu-
ant to §1.871-15(p).

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

(7) Certification of Internal Con-
trols. The responsible officer must make
the periodic certification as described in
section 10.03 of this Agreement, includ-
ing ensuring that corrective actions are
taken in response to any material failures
(as defined in section 10.03(B) of this
Agreement).

(B) Consolidated Compliance Pro-
gram. The IRS, in its discretion, may per-
mit a consolidated compliance program
that includes two or more QIs that are
members of a group of entities under com-
mon ownership when the QIs: (i) operate
under a uniform compliance program for
purposes of this Agreement; (ii) share
practices, procedures, and systems subject
to uniform monitoring and control; and
(iii) are subject to a consolidated periodic
review that includes a review of internal
controls and testing of transactions rel-
evant to this Agreement with respect to
each QI in the consolidated compliance
program. Each QI that is a member of a
consolidated compliance program (CCG
member) must designate a Compliance
QI to act on its behalf, and the responsible
officer of the Compliance QI must identify
itself as such when making its periodic

certification and must comply with the
identification, certification of internal
controls, and periodic review require-
ments for the QI consolidated compliance
program as the IRS may prescribe. Each
CCG member must further designate the
Compliance QI as its agent for executing
a Form 872, Consent to Extend the Time to
Assess Tax, with respect to any assessment
of tax relevant to this Agreement for the
period covered by the consolidated com-
pliance program. The Compliance QI must
agree to execute any Form 872 on behalf
of all of its CCG members and be jointly
and severally liable for the obligations and
liabilities of any CCG member relating to
this Agreement for the period covered by
the consolidated compliance program.
For purposes of this section 10.02(B),
a Compliance QI is required to provide
this agreement and the designations from
its CCG members in connection with a
request by the IRS Foreign Intermediaries
Program for an executed Form 872 from
the Compliance QI. QIs that want to oper-
ate a consolidated compliance program
must contact the IRS Foreign Intermedi-
aries Program for approval.

10.03. Certification of Internal Con-
trols by Responsible Officer. A QI's
responsible officer must make the certifi-
cation described in either Part II.A (Cer-
tification of Effective Internal Controls)
or Part II.B (Qualified Certification)
of Appendix I to this Agreement and
must disclose any material failures that
occurred during the certification period
or during any prior period if the mate-
rial failure was not disclosed as part of
a prior certification or written disclosure
made by QI to the IRS. If the responsible
officer has identified a material failure
that QI has not corrected as of the date
of the certification or an event of default
applicable to the certification period,
the responsible officer cannot make the
certification in Part II.A of Appendix I
(Certification of Effective Internal Con-
trols) and must make the certification in
Part II.B of Appendix I (Qualified Cer-
tification) and attach the remediation
plan described in Part II.B.3 of Appen-
dix I. Regardless of which certification is
made, QI must provide with its certifica-
tion a copy of the periodic review report
that is described in section 10.05 of this
Agreement unless QI applies for a waiver

of its review requirement under section
10.07(B) of this Agreement.

For a QI that uses the third year of the
certification period for its periodic review,
the certification is due on or before Decem-
ber 31 of the year following the certifica-
tion period. For a QI that uses the first or
second year of the certification period for
its periodic review or a QI that obtains a
waiver of the periodic review require-
ment, the certification is due on or before
July 1 of the year following the certifica-
tion period. The initial certification period
is the period ending on the third full cal-
endar year that this Agreement is in effect
(including renewals of this Agreement).
Subsequent certification periods are every
three calendar years following the initial
certification period (including renewals of
this Agreement).

The certification of internal controls
required by this section 10.03 applies
only to the internal controls related to QI's
compliance with this Agreement and its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model
1 IGA FFI and, in the case of a direct
reporting NFFE, its requirements under
§1.1472-1(c)(3), with respect to accounts
for which it acts as a QI, and does not
relate to any other obligations or require-
ments. The responsible officer may rely
on any reasonable procedure, process,
review, or certification that enables the
responsible officer to make the certifica-
tion described in this section 10.03. If the
responsible officer relies on an internal or
external review for this purpose (i.e., for
purposes of determining whether QI has
effective internal controls), the internal or
external reviewer must be independent, as
described in section 10.04 of this Agree-
ment. The responsible officer must docu-
ment the procedures, processes, reviews,
or certifications relied upon in making the
certification. QI's responsible officer (or
the responsible officer of its Compliance
QI) must make the certifications of com-
pliance in such manner as the IRS may
prescribe.

(A) PAIs and Partnership or Trust to
which QI Applies the Agency Option.
Unless QI has received a waiver of the
periodic review requirement, any PAI
with which QI has an agreement and any
partnership or trust to which QI applies

the agency option must provide its doc-
umentation and other information to QI
for inclusion in QI's periodic review or
conduct an independent periodic review
and provide a written certification to QI
regarding its compliance with the require-
ments of the PAI or agency agreement.
Such certification must be available to the
IRS upon a request made as part of the
review described in section 10.08 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 QI
to fulfill the requirements of this Agree-
ment or its FATCA requirements as a par-
ticipating FFI, registered deemed-compli-
ant FFI, or registered deemed-compliant
Model 1 IGA FFI. For purposes of the cer-
tifications described in Parts II.A and B of
Appendix I to this Agreement, a material
failure is limited to the following:

(i) QI's establishing of, for financial
statement purposes, a tax reserve or
provision for a potential future tax
liability related to QI's failure to com-
ply with this Agreement, including its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model
1 IGA FFI, and with respect to QI that
is acting as a QDD, failure to satisfy
its QDD tax liability and its obligations
pursuant to section 871(m) and the reg-
ulations under that section.

(ii) QI's failure to establish written pol-
icies, procedures, or systems sufficient
for the relevant personnel of QI to take
actions consistent with QI's obliga-
tions under this Agreement, or if QI is
acting as a QDD, its obligations as a
QDD under this Agreement or pursuant
to section 871(m) and the regulations
under that section.

(iii) A criminal or civil penalty or sanc-
tion imposed on QI (or any branch or
office thereof) by a regulator or other
governmental authority or agency with
oversight over QI's compliance with
AML/KYC procedures to which QI (or
any branch or office thereof) is subject
and that is imposed due to QI's fail-
ure to properly identify account hold-
ers under the requirements of those
procedures.

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

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

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

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

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

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

(f) Report or report accurately on
Forms 1042 and 1042-S under sec-
tions 7 and 8 of this Agreement;

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

(h) Withhold an amount required
to be withheld or report accurately
with respect to U.S. source substi-
tute dividend payments or make
timely and adequate deposits of tax
due with respect to such payments
for which QI is a QSL and acts as a
dealer or intermediary;

(i) Withhold an amount that QI was
required to withhold on a payment
of an amount realized from the sale
of a PTP interest or on a PTP dis-
tribution as required under section
3 of this Agreement or provide
correct information to a withhold-
ing agent or broker when QI does
not assume primary withholding
responsibility for either payment
under section 3.02 of this Agree-
ment; or

(j) Comply with the requirements
of sections 5.01(A) and 8.07 of this
Agreement with respect to one or
more account holders that are part-
ners holding PTP interests (includ-
ing, for purposes of section 8.07
of this Agreement, account holders
of another intermediary when QI
acts as an agent for meeting these
requirements).

(2) Limitations on Material Failures.
A failure described in section 10.03(B)(1)
(iv) of this Agreement is a material failure
only if the failure was the result of a delib-
erate action on the part of one or more
employees of QI to avoid the require-
ments of this Agreement with respect to
one or more account holders of QI or was
an error attributable to a failure of QI to
establish or implement internal controls
necessary for QI to meet the requirements
of this Agreement. Regardless of these
limitations for certification purposes, QI is
required to correct a failure to withhold or
deposit tax under section 3 of this Agree-
ment, or to report under section 7 or 8 of
this Agreement, or, for a QI that is acting
as a QDD, to timely pay its QDD tax lia-
bility and timely file the appropriate return
(or amended return).

Sec. 10.04. Periodic Review Absent
Waiver. Unless the QI receives a waiver
(the requirements of which are described
in section 10.07(B) of this Agreement),
when QI provides the certification
described in section 10.03 of this Agree-
ment, QI must also provide certain fac-
tual information regarding its accounts,
withholdable payments, amounts subject
to chapter 3 withholding and withholding
under sections 1446(a) and (f), and, if QI
is acting as a QDD, section 871(m) trans-
actions, potential section 871(m) trans-
actions, and its QDD tax liability based
on the results of a periodic review. The

factual information requested is included
in Appendix I to this Agreement.

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

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

In the case of a consolidated compli-
ance program, the Compliance QI may
designate an internal reviewer to perform
the consolidated periodic review (or a por-
tion of the consolidated periodic review).
See section 10.02(B) of this Agreement.
The internal reviewer of the Compliance
QI must meet the requirements of this sec-
tion with respect to both the Compliance
QI and each QI that is a member of the
consolidated compliance program.

If QI designates an internal reviewer
that is an employee of an affiliate of QI but
is not part of a consolidated compliance
program, QI must ensure that the internal

reviewer has access to all necessary infor-
mation in order to complete the review.
In addition, QI must permit the IRS to
communicate directly with such internal
reviewer.

(2) External Reviewer. QI may engage
an external reviewer that is a certified
public accountant, attorney, or third-party
consultant that is regularly engaged in the
practice of performing reviews of clients'
policies, procedures, and processes for
complying with accounting, tax, or reg-
ulatory requirements (including assisting
clients in determining such compliance)
and that is sufficiently independent of the
QI to conduct the review objectively. For
this purpose, an external reviewer must
(as a minimum) apply the standards of
independence that would otherwise apply
to its engagement to conduct the peri-
odic review (such as the standards for an
agreed-upon procedures engagement by a
certified public accountant). The external
reviewer must be in good standing with
and comply with any applicable profes-
sional standards for maintaining its license
as an accountant or attorney (or other
third-party consultant that has similar
professional standards or requirements).
The external reviewer is not required to
make an attestation or render an opin-
ion regarding QI's compliance with this
Agreement or QI's compliance with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI, but the reviewer must be able
to perform the periodic review as speci-
fied in section 10.05 of this Agreement.
QI must permit the external reviewer to
have access to all relevant records of QI
for purposes of performing the review,
including information regarding specific
account holders. Additionally, the engage-
ment between the external reviewer and
QI must impose no restrictions on QI's
ability to provide the results of the review
to the IRS. However, the external reviewer
is not required to divulge the identity of
QI's account holders to the IRS, except
as otherwise provided under QI's FATCA
requirements as a participating FFI, reg-
istered deemed-compliant FFI, or regis-
tered deemed-compliant Model 1 IGA
FFI. QI must permit the IRS to commu-
nicate directly with the external reviewer,
and any legal prohibitions that prevent the

IRS from communicating directly with the
reviewer must be waived.

Sec. 10.05. Scope and Timing of
Review. The responsible officer of QI (or
of the Compliance QI) must require the
reviewer to test accounts related to QI's
documentation, withholding, reporting,
and other obligations under this Agree-
ment, including its requirements related
to withholding and reporting under sec-
tions 1446(a) and (f), its QDD tax liability
if QI is acting as a QDD, and its FATCA
requirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI for
accounts for which it is acting as a QI, and
to identify deficiencies in meeting these
obligations. Any PAI with which QI has
an agreement and any partnership or trust
to which QI applies the agency option
must provide the information necessary
for QI to test accounts and transactions of
such entity as part of QI's periodic review
unless such entity conducts its own peri-
odic review and provides QI with the
report documenting the results of such
review as described in section 10.06 of this
Agreement. Unless otherwise approved by
the IRS, the review must include the steps
described in section 10.05(A) through (E)
of this Agreement.

QI is required to arrange for the per-
formance of one review for the certi-
fication period to evaluate QI's docu-
mentation, withholding, and reporting
practices. If QI is acting as a QDD, this
review should also include a review of
its determination as to whether transac-
tions are section 871(m) transactions,
its computations and determinations of
dividend equivalent amounts, dividends
and taxes paid thereon, whether transac-
tions are in its equity derivatives dealer
capacity, net delta exposure, its section
871(m) amount, and its calculation of its
QDD tax liability, as well as any other
amounts required to be included on the
reconciliation schedule. The review may
be conducted for any calendar year cov-
ered by the certification period. How-
ever, all results of the review must relate
to one calendar year. QI may conduct a
review for a particular calendar year if,
on the due date for reporting the fac-
tual information relating to the periodic
review (provided in section 10.04 of this
Agreement), there are 15 or more months

available on the period for assessment
under section 6501(a) of the calendar
year for which the review is to be con-
ducted or the QI submits, upon request, a
Form 872, Consent to Extend the Time to
Assess Tax, that will satisfy the 15-month
requirement. The Form 872 must be
mailed to the IRS at the address provided
in section 12.06 of this Agreement.

QI may use a sample to test accounts
if there are more than 60 accounts to
review. If QI has fewer than 60 accounts,
it must review all accounts and cannot use
a sample to test accounts. To the extent
applicable, the reviewer must separately
review its QI activities (when not acting
in its QDD capacity) and QDD activi-
ties. The reviewer is required to record its
sampling procedures and to maintain the
ability to reconstruct the sample. Further,
the review is not required to include sta-
tistical sampling procedures for testing
transactions, but the reviewer must docu-
ment its methodology for sampling deter-
minations. A safe harbor methodology and
additional information on the use of statis-
tical sampling is provided in Appendix II
to this Agreement.

If the reviewer determines that under-
withholding has occurred, QI shall report
and pay any amount due. QI must also
notify the IRS Foreign Intermediaries Pro-
gram in accordance with section 12.06 of
this Agreement if the underwithholding is
discovered in the review. See Appendix II
to this Agreement for information required
to be provided when reporting underwith-
holding and information regarding any
projection of underwithholding deter-
mined when using a sampling method.

(A) Documentation. The reviewer
must-

(1) Review QI's accounts, to ensure
that QI obtained documentation that
meets the requirements described in sec-
tions 5.01 through 5.09 of this Agreement
with respect to payments subject to with-
holding under chapter 3 (including when
attributable to PTP distributions);

(2) Review QI's accounts for which
treaty benefits are claimed to ensure that
QI obtained the treaty statements and lim-
itation on benefits information required
by section 5.03(B) of this Agreement for
entity account holders;

(3) Review information contained in
account holder files to determine if the

documentation validity standards of sec-
tion 5.10 of this Agreement have been
met for a QI to rely on documentation.
For example, the reviewer must verify
that changes in account holder informa-
tion (e.g., a change of an account hold-
er's foreign address to a U.S. address,
a change of account holder status from
foreign to U.S., or a change in an entity's
chapter 4 status from participating FFI to
non-participating FFI) are being conveyed
by QI to QI's withholding agents and
are otherwise being taken into account
by the QI for determining its reliance on
documentation;

(4) Review the accounts for which
QI is acting as a QI to ensure that QI is
obtaining, reviewing, and maintaining
documentation in accordance with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model
1 IGA FFI and determining the status of
account holders for purposes of chapter 4
or an applicable IGA;

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

(6) Review accounts to which QI
makes payments of PTP distributions sub-
ject to withholding under section 1446(a)
to determine whether QI has documented
the status of the account holders under the
requirements described in sections 5.01
through 5.09 of this Agreement applicable
to those payments (including documenting
partners of account holders that are for-

eign partnerships (other than PTPs), doc-
umenting grantors and owners of grantor
trusts, and requesting the U.S. TINs of
account holders receiving these payments
under section 5.01(A) of this Agreement);

(7) Review accounts to which QI
makes payments of amounts realized to
determine whether QI has documented
the status of account holders under the
requirements described in sections 5.01
through 5.09 of this Agreement applicable
to those payments (including document-
ing partners of account holders that are
foreign partnerships certifying to modified
amounts realized, documenting grantors

and owners of grantor trusts, and request-
ing the U.S. TINs of account holders
receiving these payments under section
5.01(A) of this Agreement);

(8) For a QI that is a QDD, review
accounts that received a reportable pay-
ment for which QI is acting as a QDD to
determine whether QI has documented
the status of account holders under the
requirements described in sections 5.01
through 5.09 of this Agreement;

(9) For a QI that assumes primary chap-
ters 3 and 4 withholding responsibility for
payments of U.S. source substitute inter-
est, review accounts of persons to which
QI pays the interest to determine whether
QI has documented the status of such per-
sons under the requirements described in
sections 5.01 through 5.09 of this Agree-
ment; and

(10) For QI that is a QSL or that oth-
erwise assumes primary withholding
responsibility as an intermediary for U.S.
source substitute dividend payments,
review accounts to which QI pays U.S.
source substitute dividends to determine
whether QI has documented the status
of the account holders under the require-
ments described in sections 5.01 through
5.09 of this Agreement.

(B) Withholding Rate Pools. The
reviewer must-

(1) Perform checks using account
holders assigned to each withholding rate
pool, and cross check that assignment
against the documentation provided by the
account holder (or the presumption rule
applied under section 5.13 of this Agree-
ment), the type of income earned, and the
withholding rate applied to the pool, tak-
ing into account the results of the docu-
mentation review under section 10.05(A)
of this Agreement and the appropriate
withholding rate to be applied to a treaty
claim (or withholding rate otherwise
applicable to the income paid), to deter-
mine any underwithholding. For purposes
of these checks, at a minimum the last
payment of each income type paid to the
account for the year (by reference to the
income classifications on Form 1042-S
as compared (for accuracy) to the income
reported in QI's account statements for the
account holder) may be used.

(2) Determine that appropriate with-
holding rate pools are established for
U.S. non-exempt recipients that received

reportable amounts, and if QI is using the
procedure for U.S. non-exempt recipients
described in section 6.03(D) of this Agree-
ment, verify that QI is providing sufficient
and timely information to withholding
agents to allocate reportable amounts to
U.S. non-exempt recipients; and

(3) With respect to a partnership or
trust described in section 4.05 of this
Agreement, determine whether the part-
nership or trust has a chapter 4 status
permitted under section 4.05(A) of this
Agreement and perform test checks using
account holder documentation for the
selected partners, beneficiaries, or own-
ers and records of each type of reportable
amount paid by QI to the entity to deter-
mine whether the highest rate of withhold-
ing applicable to each type of reportable
amount is reflected in QI's withholding
rate pools. Determine any underwithhold-
ing resulting from either of these review
steps.

(C) Withholding Responsibilities.
Taking into account the results of the doc-
umentation review under sections 5.10(A)
of this Agreement, the appropriate with-
holding rate applied to a treaty claim (or
otherwise applicable to the income paid),
and the presumption rules (when appli-
cable) under 5.13 of this Agreement, the
reviewer must determine any underwith-
holding by applying the review steps
below-

(1) To the extent QI has assumed pri-
mary chapters 3 and 4 withholding respon-
sibilities, perform test checks, using recal-
citrant account holders (when applicable)
and nonparticipating FFIs, to verify that
QI withheld the proper amounts under
chapter 4;

(2) To the extent QI has assumed pri-
mary chapters 3 and 4 withholding respon-
sibility, perform test checks, using foreign
account holders for which no withholding
is required under chapter 4 based on the
payee's chapter 4 status, to verify that QI
withheld the proper amounts under chap-
ter 3 and properly applied the exemptions
from chapter 4 withholding;

(3) To the extent QI has not assumed
primary chapters 3 and 4 withholding
responsibility, perform test checks to
verify that QI has fulfilled its withhold-
ing responsibilities under section 3.02 of
this Agreement (including any required
withholding by QI if QI provided to its

withholding agent any incorrect withhold-
ing rate pools by comparison to the correct
withholding rates for payments associated
with a withholding rate pool);

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

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

(6) To the extent QI has assumed pri-
mary withholding responsibility on pay-
ments of PTP distributions, perform test
checks of payments to accounts to which
QI pays PTP distributions, to verify QI
withheld the proper amounts under chap-
ters 3 and 4, and sections 1446(a) and (f)
on the distributions, including by deter-
mining the amounts subject to withhold-
ing by reference to the qualified notice
issued for a distribution or applying the
default rule of §1.1446-4(d)(1);

(7) To the extent QI has assumed
primary withholding responsibility on
amounts realized from sales of PTP inter-
ests, perform test checks of payments to
accounts to which QI pays amounts real-
ized, to verify QI withheld the proper
amounts for purposes of section 1446(f),
including that QI applied the "10-per-
cent exception" of §1.1446(f)-4(b)(3) to
exempt any amounts from withholding
only as permitted under that section;

(8) To the extent QI has not assumed
primary withholding responsibility on
payments of PTP distributions or amounts
realized from sales of PTP interests and
provides withholding rate pools to a with-
holding agent, perform test checks to
determine whether QI has satisfied any
withholding required under section 3.02
of this Agreement by comparison to the
correct withholding rates for payments
associated with a withholding rate pool;

(9) To the extent that QI acts as a dis-
closing QI, perform test checks to com-
pare the withholding reported on Forms

1042-S issued to QI and QI's direct
account holders (other than QIs or NQIs)
to the correct withholding to verify that QI
withheld to the extent required under sec-
tion 3.02 of this Agreement;

(10) To the extent that QI is acting as
a QDD, perform test checks to determine
that QI withheld when required on pay-
ments that it made with respect to poten-
tial section 871(m) transactions;

(11) To the extent that QI acts as a QSL
or otherwise assumes primary chapter
3 and 4 withholding responsibility as an
intermediary on payments of U.S. source
substitute dividends, perform test checks
to determine that QI withheld when
required on such payments and deter-
mine whether QI has a policy in effect to
assume primary withholding responsibili-
ties on all such payments;

(12) To the extent that QI assumes
chapter 3 and 4 withholding responsibil-
ity on payments of U.S. source substitute
interest, perform test checks to deter-
mine that QI withheld when required on
such payments and determine whether QI
has a policy in effect to assume primary
withholding responsibilities on all such
payments;

(13) To the extent that QI assumes pri-
mary withholding responsibility for pay-
ments to a partnership or trust described
in section 4.05 of this Agreement, per-
form the review steps described in section
10.05(b)(3) of this Agreement (as applied
to QI's own withholding rather than QI's
withholding rate pools); and

(14) Perform test checks to verify that
amounts withheld by QI were timely
deposited in accordance with section 3.08
of this Agreement.

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

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

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

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

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

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

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

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

(vii) To the extent QI acts as a QSL,
determine that QI properly reported the
gross amount of the U.S. source pay-
ments of substitute dividends to which
the recipient would have otherwise
been entitled before consideration of
any withholding tax obligations; the
amount of tax withheld by the with-
holding agent; and the amount of tax
withheld by other withholding agents
in the series of securities lending or
sale-repurchase transaction;

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

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

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

(c) Determine that QI did not
include payments made to a part-
nership or trust described in section
4.05 of this Agreement or a payment
of an amount subject to withholding
under section 1446(f) or on a PTP
distribution.

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

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

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

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

(iv) Determining, in the case in which
QI utilized the reimbursement or set-off
procedure, that QI satisfied the require-
ments of section 9.02 of this Agree-
ment 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, for QI that is
a reporting Model 1 FFI, any analogous
forms used for reporting account informa-
tion pursuant to the applicable Model 1
IGA) of accounts for which QI is acting as
a QI, and determine whether the amounts
of income and other information reported
on Forms 8966 are accurate by-

(i) Reviewing U.S. accounts (or U.S.
reportable accounts for which QI acts
as a QI) to determine that such accounts
were reported in accordance with QI's

FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model
1 IGA FFI;

(ii) If QI is an NFFE acting as a QI on
behalf of persons other than its share-
holders, confirming that if QI is act-
ing on behalf of a passive NFFE with
substantial U.S. owners, withholdable
payments made to the passive NFFE
and the information regarding its sub-
stantial U.S. owners were reported;

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

(iv) Reviewing the documentation pro-
vided by a PAI or a partnership or trust
to which QI applied the agency option
to determine that QI reported on Form
8966 to the extent required under sec-
tion 4 of this Agreement; and

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

(4) Obtain records of any reportable
payments paid by QI to its U.S. account
holders to identify any U.S. account hold-
ers for which QI failed to file an appli-
cable Form 1099 (to the extent required)
or report on a Form 8966 (or analogous
reporting under an applicable Model 1
IGA).

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

(6) Obtain records of account holders
to which QI paid a PTP distribution or an
amount realized from a sale of a PTP inter-
est to verify that QI properly provided the
statements or other information required
under section 8.07 of this Agreement with
respect to the account holders.

(7) Determine whether QI has any
agreements in place under section 8.02(M)
of this Agreement to report on Form
1042-S amounts realized paid to an NQI's
account holders and, if so, verify that QI
reported on Form 1042-S as agreed or oth-
erwise has a written agreement in place
with another withholding agent to report
these amounts.

(E) Significant Change in Circum-
stances. The reviewer must verify that
in the course of the review it has not dis-
covered any significant change in circum-
stances, as described in section 11.04(A),
(D), or (E) of this Agreement.

Sec. 10.06 Periodic Review Report.

(A) In General. The results of the
periodic review must be documented in
a written report addressed to the respon-
sible officer of QI and submitted to the
IRS with the certification described in
section 10.03 of this Agreement (with a
certified translation into English if the
report is not in English). The report must
describe the scope of the review and the
actions performed to satisfy each require-
ment of section 10.05(A) through (E),
including the methodology for sampling
determinations. The report may include
explanatory footnotes to clarify the results
of the report. Recommendations may be
included but are not required to be pro-
vided in the report. The periodic review
report should form the basis for the fac-
tual information provided by QI that is set
forth in Appendix I.

In addition to the findings of section
10.05 of this Agreement, the periodic
review report should also include details
regarding the documentation and tax
deposit and payment failures identified
by the reviewer but then cured before
the periodic review report is finalized.
While the curing of inadequate documen-
tation is permissible, the factual informa-
tion reported (as set forth in Appendix I)
should report the results of the review as
it was performed and should not reflect
the results after curing (unless stated oth-
erwise). Any curing process should not
delay certification of internal controls or
factual information required in Appendix I
to this Agreement. To the extent necessary,
the periodic review report should include
the dates on (or time period during) which
curative documentation was received
for accounts with respect to which the

reviewer determined that underwithhold-
ing had occurred, the number of accounts
for which curative documentation was
obtained and a revised calculation of the
underwithholding or additional backup
withholding.

(B) Periodic Review Report for
QDDs. If QI is acting as a QDD, the
periodic review report should also
include the number of accounts that
were not correctly treated as (i) princi-
pal accounts (except accounts that are
effectively connected with the conduct
or a trade or business within the United
States within the meaning of section
864), (ii) non-principal accounts, (iii)
principal accounts that are effectively
connected with the conduct or a trade or
business within the United States within
the meaning of section 864, (iv) equity
derivatives dealer accounts, and (v)
non-equity derivatives dealer accounts.
The report should also include any other
issues related to the QDD tax liability
(e.g., incorrect determination of whether
an account is a potential section 871(m)
transaction or a section 871(m) transac-
tion, the dividends received in the QDD's
equity derivatives dealer capacity and
the taxes paid on those dividends, the
net delta exposure, the section 871(m)
amount and the taxes on the section
871(m) amount, the amount of dividend
equivalent payments made, or any other
amounts subject to tax (or required to
compute the tax liability) under section
871(a) and 881 (including the QDD tax
liability)) for each QDD.

(C) PAI Certification and Partner-
ship or Trust to which QI Applies the
Agency Option. Any PAI with which QI
has an agreement and any partnership or
trust to which QI applies the agency option
that does not provide its documentation
and other information to QI for inclusion
in QI's periodic review described in sec-
tion 10.04 of this Agreement, must con-
duct an independent periodic review in
accordance with the compliance proce-
dures described in section 10.05 of this
Agreement. The performance results of
the periodic review must be documented
in a written report addressed to the respon-
sible officer of QI and must be available
to the IRS upon request (with a certified
translation into English if the report is not
in English).

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

Sec. 10.07. Waiver of Periodic
Review Requirement.

(A) In General. A QI that is not acting
as a QDD and that is an FFI that meets
the requirements of section 10.07(B) may
apply for a waiver of the periodic review
requirement. Notwithstanding the prior
sentence, a QI that is acting as a QDD and
otherwise qualifies to apply for a waiver
of the periodic review requirement, may
do so for calendar year 2023 or 2024.
QI must request a waiver of the periodic
review requirement under this section
10.07 when the responsible officer makes
the certification described in section
10.03 of this Agreement. QI's application
for such a waiver must be approved by
the IRS, and waiver applications are not
approved automatically. QI must apply
for a waiver for each certification period
for which a waiver is requested. If QI's
request for a waiver of the periodic review
requirement is granted, such approval is
only to waive QI's obligations under sec-
tions 10.04 and 10.05 of this Agreement,
and QI is still required to make the certi-
fication described in section 10.03 of this
Agreement. The waiver also does not pre-
clude the IRS from requesting information
or conducting a correspondence review as
described in section 10.07 of this Agree-
ment. QI must include the information of
any PAI with which QI has an agreement
and any partnership or trust to which QI
applies the agency option in its waiver
application which is set forth in Part III
of Appendix I to this Agreement. QI must
also provide the information set forth on
Appendix III to this Agreement for each
year of the certification period.

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

(1) QI must be an FFI and, for calendar
years after 2024, that is not also acting as
a QDD;

(2) QI is not part of a consolidated
compliance program;

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

$5 million (including the amount of PTP
distributions subject to withholding under
chapter 3 or 4);

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

(5) QI made all periodic certifications
and reviews required by sections 10.02
and 10.03 of this Agreement as well as
all certifications required pursuant to QI's
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model 1
IGA FFI; and

(C) Documentation Required with
Waiver Application. When applying
for a waiver under this section 10.07, QI
must include the information described
in Appendix I to this Agreement using
the most recent calendar year covered by
the certification period and reporting such
results without any curing or remediation.

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

### Sec. 10.08. Periodic Review.

(A) In General. Based upon the certi-
fications made by the responsible officer
and the disclosure of material failures, the
information reported on Forms 945, 1042,
1042-S, 1099, and 8966 filed with the IRS
during the certification period, or other-
wise at the IRS's discretion for compliance
purposes, the IRS may initiate requests of
QI under this section 10.08. The IRS may
preemptively request remediation or the
conduct of a limited periodic review ear-
lier than the time period provided in this
section 10 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 QI. The IRS may also request that
QI designate a replacement responsible
officer if QI's responsible officer has not
complied with its responsibilities (includ-
ing responding to requests by the IRS for

additional information) or the IRS has
information that indicates the responsible
officer may not be relied upon to comply
with its responsibilities.

(B) Correspondence Review. The
IRS may, in its discretion, conduct addi-
tional fact finding through a correspon-
dence review. In such a review, the IRS
will contact the responsible officer of QI
(or the Compliance QI) in writing and
request information about QI's compli-
ance with this Agreement or the com-
pliance of a PAI or a partnership or trust
to which QI applied the agency option,
including, for example, information
about documentation, withholding, or
reporting processes, its periodic review,
and information about any material
failures that were disclosed to the IRS
(including remediation plans). The IRS
may request phone or video interviews
with employees of QI (and the Compli-
ance QI), a PAI, or a partnership or trust
to which QI applied the agency option as
part of the IRS's correspondence review.
QI is required to respond in a reasonable
time to any such requests.

(C) Additional Review Procedures.
In limited circumstances, the IRS may
direct QI (or the Compliance FFI) or any
PAI or partnership or trust to which QI
applies the agency option to perform addi-
tional, specified review procedures. The
IRS reserves the right to require QI (or the
Compliance QI) or a PAI, or a partnership
or trust to which QI applied the agency
option to engage an external reviewer to
perform the additional review procedures
regardless of whether such reviewer per-
formed the periodic review. The IRS will
provide the responsible officer of QI with
a written plan describing the additional
review procedures and will provide a due
date of not more than 120 days for the QI
to provide to the IRS a report covering the
reviewer's findings.

## SECTION 11. EXPIRATION, TERMINATION, MERGER AND DEFAULT

Sec. 11.01. Term of Agreement. This
Agreement begins on the effective date
referenced in section 2.22 of this Agree-
ment and expires on December 31, 2028,
unless terminated before that time under
section 11.02 of this Agreement. This

Agreement may be renewed for a further
term as provided in section 11.08 of this
Agreement.

Sec. 11.02. Termination of
Agreement.

(A) In General. This Agreement may
be terminated by either the IRS or QI
before the end of its term by delivery of
a notice of termination to the other party,
in accordance with section 12.06 of this
Agreement. The IRS, however, shall not
terminate this Agreement unless there
has been a significant change in circum-
stances, as defined in section 11.04 of this
Agreement, or an event of default has
occurred, as defined in section 11.06 of
this Agreement, and the IRS determines,
in its sole discretion, that the significant
change in circumstances or the event
of default warrants termination of this
Agreement. In addition, the IRS may also
terminate this Agreement before the end
of its term if as a result of an amendment
in accordance with section 12.02 of this
Agreement, the QDD is no longer enti-
tled to act as a QDD. The IRS shall not
terminate this Agreement for an event of
default if QI can establish to the satisfac-
tion of the IRS that all events of default
for which it has received notice have been
cured within the time period agreed upon.
The IRS shall notify QI that an event of
default has occurred and that the IRS
intends to terminate the Agreement unless
QI cures the default or establishes that
no event of default occurred. A notice of
termination sent by either party shall take
effect on the date specified in the notice,
and QI is required to notify its withhold-
ing agent of the date that its status as a QI
is terminated.

The termination of the Agreement
shall not affect any of QI's reporting,
tax filing, withholding, depositing, or
payment responsibilities arising in the
calendar years for which this Agreement
was in effect and portion of the calendar
year in which termination is requested.
The IRS shall revoke QI's QI-EIN within
a reasonable time after the reporting, tax
filing, and depositing requirements for
such years are satisfied. The termina-
tion of this Agreement is not intended
to affect any other federal income tax
consequences.

(B) Periodic Review and Final Certi-
fication after Termination of Agreement.

Upon termination of this Agreement, QI
must provide to the IRS, within six months
of the date of termination, the certification
described in section 10.03 of this Agree-
ment covering the period from the end of
the most recent certification period (or, if
the first certification period has not ended,
the effective date of this Agreement) to the
date of termination. Additionally, QI must
submit a periodic review report that meets
the requirements of section 10.06 of this
Agreement with its final certification if
this Agreement is terminated in the final
year of QI's certification period. QI may
request a waiver of the periodic review
requirement for this purpose if it is oth-
erwise eligible for a waiver under section
10.07 of this Agreement. If a waiver is
not granted, QI must use one of the two
prior years of the certification period for
its periodic review. Regardless of whether
QI is required to submit a periodic review
report under this section 11.02(B), the
IRS may request that QI perform speci-
fied review procedures in accordance with
section 10.08(C) of this Agreement with
respect to QI's final certification period.
See section 11.05(B) of this Agreement
for a case in which a QI terminating this
Agreement merges into or is acquired by
another QI.

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

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

(A) An acquisition of all, or substan-
tially all, of QI's assets in any transaction

in which QI is not the surviving legal
entity;

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

(D) A material change in the appli-
cable know-your-customer rules and
procedures;

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

(F) If QI is an FFI, QI's failure to main-
tain its status as a participating FFI, regis-
tered deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI;

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

(H) If QI is acting as a QDD, the home
office or branch, as applicable, ceases to
qualify as an eligible entity, including as a
result of a change in its business or regu-
latory status (see section 11.03).

### Sec. 11.05. Merger.

(A) In General. If a QI (predecessor
QI) merges with or is acquired by another
QI (successor QI), and the successor QI
assumes all the rights, debts, and obliga-
tions of the predecessor QI as it relates to
the predecessor QI's QI agreement, the
predecessor QI must notify the IRS that
it intends to terminate this Agreement
before the end of its term by delivery of a
notice of termination and merger in accor-
dance with section 12.06 of this Agree-
ment. A notice of termination and merger
shall take effect on the date specified in
the notice, and QI is required to notify
its withholding agent of the date that its
status as a QI is terminated and designate
the successor QI to receive payments in its
capacity as a QI for any accounts previ-
ously covered by the predecessor QI's QI
agreement.

The successor QI must ensure that all
reporting and tax filing obligations are ful-
filled and any withholding is deposited in

accordance with the procedures outlined in
Rev. Proc. 99-50, 1999-2 C.B. 757, when
applicable, that arose in the calendar years
and portion of the calendar year in which
termination is requested and for which
this Agreement was in effect (including
for Form 1042-S filed to report withhold-
ing under chapter 4). To the extent QI is
acting as a QDD, it must use the standard
procedure outlined in Rev. Proc. 99-50
and cannot use the alternative procedures.
See QI's FATCA Requirements as a par-
ticipating FFI, registered deemed-compli-
ant FFI, or registered deemed-compliant
Model 1 IGA FFI for the procedures, if
any, for reporting on Form 8966 in the
case of a merger or acquisition.

The IRS shall revoke the predecessor
QI's QI-EIN within a reasonable time
after the reporting, tax filing, and depos-
iting requirements for such years are sat-
isfied. The termination of this Agreement
is not intended to affect any other federal
income tax consequences.

(B) Periodic Review and Certifica-
tion after Merger. A predecessor QI that
is terminating its QI agreement and that
is required to submit a periodic review
report under section 11.02(B) of this
Agreement may satisfy this requirement
through a combined periodic review. A
combined periodic review for purposes of
this section 11.05(B) is a periodic review
that covers a calendar year that the prede-
cessor QI is permitted to use under sec-
tion 11.02(B) of this Agreement and that
includes accounts of both the predecessor
QI and successor QI in the population
of accounts for purposes of the review
steps of section 10.05 of this Agreement
covering documentation and withhold-
ing requirements. See Appendix II of this
Agreement for information on designing
a statistical sample for a combined peri-
odic review. The certifications required
for both the predecessor QI and successor
QI for the period covered by the combined
review must include the factual informa-
tion specific to each QI that is required
under Appendix I of this Agreement. A
predecessor QI may obtain a six-month
extension of the time to submit a final cer-
tification under section 11.02(B) of this
Agreement for purposes of this section
11.05(B). The request for an extension
must indicate that it is being made due
to the combined periodic review and be

delivered to the IRS in accordance with
section 12.06 of this Agreement before
the time otherwise required for the final
certification.

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

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

(B) QI underwithholds a material
amount of tax that QI is required to with-
hold under chapter 3, section 1446(a),
section 1446(f), or chapter 4, or backup
withhold under section 3406 and fails to
correct the underwithholding by filing an
amended Form 1042 or 945 reporting, and
paying, the appropriate tax;

(C) QI makes excessive refund claims;
(D) Documentation described in sec-
tion 5 of this Agreement is lacking, incor-
rect, or unreliable for a significant num-
ber of direct account holders under the
requirements of section 5.01(A) of this
Agreement;

(E) QI files Forms 945, 1042, 1042-S,
1099, or 8966 that are materially incorrect
or fraudulent, or fails to comply materi-
ally with the requirements of section 8.07
of this Agreement with respect to account
holders that are partners holding PTP
interests (including account holders of
another intermediary when QI acts as an
agent for meeting these requirements);

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

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

(H) QI fails to materially comply with
the requirements of a nonqualified inter-
mediary under chapters 3 and 61, and sec-
tions 1446 and 3406 with respect to any
account for which QI does not act as a QI.

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

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

(K) QI fails to inform the IRS of any
change in the applicable know-your-cus-
tomer rules within 90 days of the change
becoming effective;

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

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

(N) QI fails to cure a material failure
identified in the qualified certification
described in Part II.B of Appendix I to this
Agreement or identified by the IRS;

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

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

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

(R) A partnership or trust to which QI
applies the agency option is in default
with that agreement and QI fails to termi-
nate that agreement within the time period
specified in section 4.06 of this Agree-
ment; and

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

Sec. 11.07. Notice and Cure. Upon
the occurrence of an event of default,
the IRS will deliver to QI a notice of
default specifying each event of default.
QI must respond to the notice of default
within 60 days (60-day response) from
the date of the notice of default. The
60-day response shall contain an offer

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

Sec. 11.08. Renewal. If QI intends
to renew this Agreement, it must submit
an application for renewal to the IRS
on QAAMS. This Agreement will be
renewed only upon the agreement of both
QI and the IRS. A QI that seeks to renew
its QI agreement and also seeks to become
a QDD (that was not previously acting
as a QDD) must supplement the renewal
request by providing a statement con-
taining all information required by Form
14345 relating to a QDD.

## SECTION 12. MISCELLANEOUS PROVISIONS

Sec. 12.01. QI's application to become
a QI, all Appendices to this Agreement and
know-your-customer rules included in a
country attachment on IRS.gov relevant to
QI (or a branch of QI), and, if QI is an FFI,
its FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
or registered deemed-compliant Model
1 IGA FFI, are hereby incorporated into
and made an integral part of this Agree-
ment. This Agreement constitutes the
complete agreement between the parties.
A QI may only represent its status as a QI
for payments described in this Agreement
and may not act as a QI for any payments
without having the Agreement in effect for
the applicable year.

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

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

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

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

Sec. 12.06. Except as otherwise pro-
vided on QAAMS, all written notices sent
to the IRS by QI must be sent by either
e-mail to lbi.fi.qiwpissues@IRS.gov or by
registered, first class airmail (with each
such notice to include the QI's name,
QI-EIN, GIIN (if applicable), and the
name of its responsible officer), addressed
as follows:

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

Written notices provided to QI under this
Agreement shall be sent by IRS by secure
e-mail to the responsible officer of the QI
and all contact persons identified by QI.

Sec. 12.07. QI, acting in its capacity as
a QI 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 7. EFFECTIVE DATE

The effective date of the 2023 QI
Agreement contained in section 6 of this
revenue procedure is on or after January
1, 2023.

## SECTION 8. PAPERWORK REDUCTION ACT

The collections of information con-
tained in this revenue procedure have been
reviewed and approved by the Office of
Management and Budget in accordance with
the Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545-1597.

## SECTION 9. DRAFTING INFORMATION

The principal author of this revenue
procedure is W. Shawver Adams of the
Office of Associate Chief Counsel (Inter-
national). For further information regard-
ing this revenue procedure, contact John
Sweeney at (202) 317-5002 (not a toll-
free call) or, with respect to QDDs, Peter
Merkel or Karen Walny at (202) 317-6938
(not a toll-free number).

# APPENDIX I

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

Part I: Part II:

All QIs. All QIs.

Part III:

QIs eligible pursuant to section 10.07(A) and (B) of the QI agreement to apply for a waiver of the periodic review requirement (as described in section 10.07 of the QI agreement) and who wish to apply for such a waiver. Under sec- tion 10.07(A) and (B) of the QI agreement, the following QIs are not eligible for a waiver: (a) QIs that are NFFEs, (b) QIs that are acting as QDDs (for calendar years after 2024), and (c) QIs that are part of a consolidated compliance program.

Part IV.A:

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

Part IV.B-F:

All QIs, excluding QIs that are only acting as QDDs and have no other QI activities, that have not applied for or have not been approved for a waiver.

Part V:

All QIs that are acting as QDDs.

Part VI:

All QIs that assume primary withholding responsibility for payments of substitute interest, except QIs seeking a waiver in Part III of Appendix I. A QI that assumes primary withholding responsibility for payments of substitute interest and that applies for a waiver need not complete Part VI of this Appendix I. Such QI should complete Parts I, II, and III of Appendix I, and in Part III.B of Appendix I, include information relating to payments of substitute inter- est for which the QI assumed primary withholding responsibility (in addition to its other QI activities, other than its activities as a QDD).

Part VII:

All QIs acting as QIs with respect to PTP-related payments (as described in Part VII), excluding QIs seeking a waiver in Part III of Appendix I. A QI that makes any of the payments described in the preceding sentence and that applies for a waiver need not complete Part VII of Appendix I and should only complete Parts I, II, and III of this Appendix I.

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

# PART I. GENERAL INFORMATION

A. Did QI assume primary chapters 3 and 4 withholding responsibility for any calendar year covered by the certification period
(excluding withholding under chapter 3 or 4 on PTP distributions)? Y/N

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

C. Did QI assume primary withholding responsibility for any payments of PTP distributions or amounts realized from sales of PTP
interests subject to section 1446(f) withholding for any calendar year covered by the certification period? Y/N

D. Did QI act as a Disclosing QI (as defined in Section 2.91(E) of the QI agreement) for any payments of PTP distributions or
amount realized from sales of PTP interests subject to section 1446(f) withholding for any calendar year covered by the certifi-
cation period? Y/N

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

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

2\. If yes, did each such member of the group consent to make QI its agent for execution of a Form 872 on behalf of the member
under section 10.02(B) of the QI agreement?

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

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

a. Provide the names and addresses of those PAIS.

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

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

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

a. Each partnership or trust to which QI applies the agency option has provided QI with a certification that it has main-
tained status as a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI), an

owner-documented FFI with respect to QI, an NFFE, or an exempt beneficial owner, or that it is covered as an account
that is excluded from the definition of financial account under Annex II of an applicable IGA or under Treas. Reg. §
1.1471-5(a), as required under section 4.06(A)(2) of the QI agreement. Y/N

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

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

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

### A. Certification of Effective Internal Controls

If the responsible officer has identified a material failure (as defined in section 10.03(B) of the QI agreement) that QI has not corrected
as of the date of this certification or an event of default (as defined in section 11.06 of the QI agreement) applicable to the certification
period, QI cannot make the certification of effective internal controls under this Part A and must make the qualified certification under
Part B below.

Note: If a statement in this Part II.A is not applicable to QI, the responsible officer should check the statement as if responding in the
affirmative.

The responsible officer certifies to the following. Check each statement below to confirm:

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

2\. Based on the information known (or information that reasonably should have been known) by the responsible officer, including
the findings of any procedure, process, review, or certification undertaken in preparation for the responsible officer's certification
of internal controls, QI maintains effective internal controls over its documentation, withholding, and reporting obligations under
the QI agreement and according to its applicable FATCA requirements with respect to accounts for which it acts as a QI (and acts
as a QI for only payments permitted under the QI agreement).

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 certification undertaken in preparation for the responsible officer's certification
of internal controls, there are no material failures, as defined in section 10.03(B) of the QI agreement. If there are any material
failures, they have been corrected as of the date of this certification and disclosed in this certification. See Part II.D.3 of this
Appendix I.

4\.
With respect to any failure to withhold, deposit, or report, to the extent required under the QI agreement, QI has corrected such
failure by paying any taxes due (including interest and penalties) and filing the appropriate return (or amended return).

5\.
All PAIs of QI and partnerships and trusts to which QI applies the agency option have either (a) provided (or will provide, to the
extent QI does not obtain a waiver under section 10.07 of the QI agreement) documentation and other necessary information for
inclusion in the QI's periodic review or (b) provided the responsible officer of QI with a certification of effective internal controls
described in Part II.A of Appendix I to the QI agreement and have represented to QI that there are no material failures, or, if there
are such failures, they have been corrected as of the time of this certification, and the PAIs, partnerships, or trusts have disclosed
any such failures to QI and provided QI with a remediation plan as described in Part II.B.3 of this Appendix I.

6\. QI's policies, procedures, and processes are applied consistently to all branches covered by the QI agreement (except as other-
wise required by a jurisdiction's AML/KYC procedures, as applicable).

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

8\. If QI is acting as a QI with respect to payments of PTP distributions or amounts realized from sales of PTP interests, QI has
implemented procedures to comply with the withholding and reporting requirements for those payments, including the reporting
required under Section 8.07 of the QI agreement and the procedures for collecting U.S. TINs from account holders holding PTP
interests specified in section 5.01(A) of the QI agreement.

9\. A periodic review was conducted for the certification period in accordance with section 10.04 of the QI agreement, with the
review report submitted with this certification as required by section 10.06 of the QI agreement.

10\. If in making this certification for 2023 or 2024 the QI relied on the good faith standard with respect to any section 871(m) trans-
actions included in the periodic review, the QI disclosed the information required by section 10.01(C) of the QI agreement with
this certification.

### B. Qualified Certification

1\. The responsible officer (or designee) has determined that there are one or more material failures that have not been corrected as
of the date of this certification or has identified an event of default with respect to QI's compliance, its PAI's compliance, or the
compliance of a partnership or trust to which QI applies the agency option.

2\. With respect to any failure to withhold, deposit, or report, to the extent required under the QI agreement, QI will correct such
failure by paying any taxes due (including interest and penalties) and filing the appropriate return (or amended return).

3\. The responsible officer (or an officer of the PAI or partnership or trust to which QI applies the agency option if the PAI or part-
nership or trust performs its own periodic review) will respond to any notice of default (if applicable) and has provided with this
certification a remediation plan to correct each material failure or event of default that contains the following information:

a. A description of each material failure or event of default;

b. How and when the material failure or event of default was identified;

c. If a tax deficiency resulted from a material failure or event of default and, if so, whether the deficiency was satisfied (includ-
ing interest and any penalties);

d. The steps taken to remediate the material failure or event of default (including a timeline of steps);

e. The steps taken to prevent the material failure or event of default from recurring (including a timeline of the steps); and

f. Whether the material failure or event of default affects a prior or subsequent review period.

### C. Amended Form 1042

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

D. Material Failures

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

For calendar years 2023 and 2024, a material failure relevant to a QDD has not occurred unless the QDD failed to make a good faith
effort to comply with the regulations under sections 871(m), 1441, 1461, and 1473 (the "section 871(m) regulations") and the relevant
provisions of the QI agreement. In calendar years 2023 or 2024, a QI will not be considered to have a material failure with respect to
a delta-one section 871(m) transaction unless the QI failed to make a good faith effort to comply with the section 871(m) regulations.
In calendar year 2025, a QI will not be considered to have a material failure with respect to a non-delta-one section 871(m) transaction
unless the QI failed to make a good faith effort to comply with the section 871(m) regulations. Notwithstanding the foregoing, QI may
only rely on the good faith standard if QI discloses any section 871(m) transactions included in the review that QI believes should be
subject to the good faith standard and includes a brief description of the reason QI needs to rely on the good faith standard, how QI
will address it, and why the good faith standard should apply.

1\. The responsible officer has determined that as of the date of the review, there are no material failures with respect to QI's com-
pliance with the QI agreement.

2\. The responsible officer has determined that as of the date of the review, there are one or more material failures with respect to
QI's compliance with the QI agreement and that appropriate actions have been or will be taken to prevent such failures from
reoccurring.

a. The following material failures were identified:

i. QI's establishment of, for financial statement purposes, a tax reserve or provision for a potential future tax liability
related to QI's failure to comply with the QI agreement, including its FATCA requirements as a participating FFI, regis-
tered deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI, and with respect to QI that is acting as
a QDD, failure to satisfy its QDD tax liability and its obligations pursuant to section 871(m) and the regulations under
that section.

ii. QI's failure to establish written policies, procedures, or systems sufficient for the relevant personnel of QI to take actions
consistent with QI's obligations under the QI agreement, or if QI is acting as a QDD, its obligations as a QDD under the
QI agreement and pursuant to section 871(m) and the regulations under that section.

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

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

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

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

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

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

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

6\. Report or report accurately on Forms 1042 and 1042-S under sections 7 and 8 of the QI agreement;

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

8\. Withhold an amount required to be withheld or report accurately with respect to U.S. source substitute dividend
payments or make timely and adequate deposits of tax due with respect to such payments for which QI is a QSL
and acts as a dealer or intermediary;

9\. Withhold an amount that QI was required to withhold on a payment of an amount realized from the sale of a PTP
interest or on a PTP distribution as required under section 3 of the QI agreement or provide correct information to a
withholding agent or broker when QI does not assume primary withholding responsibility for either payment under
section 3.02 of the QI agreement; or

10\. Comply with the requirements of sections 5.01(A) and 8.07 of the QI agreement with respect to one or more
account holders that are partners holding PTP interests (including for purposes of section 8.07 account holders of
another intermediary when QI acts as an agent for meeting these requirements).

v. Other (include a detailed explanation).

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

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

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

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

5\. Did any partnerships or trusts to which QI applies the agency and/or joint account option inform QI that they had a material
failure with respect to their obligations as described in the QI 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 material failure or the proposed steps to be taken to correct the material failure and the
timeframe for completing such steps.

## E. Events of Default

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

1\. The responsible officer has determined that, as of the date of the review, there are no events of default with respect to QI's com-
pliance with the QI agreement.

2\. The responsible officer has determined that, as of the date of the review, there are one or more events of default as defined in
section 11.06 of the QI agreement.

a. The following events of default were identified:

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

ii.
QI underwithheld a material amount of tax that QI was required to withhold under chapter 3, section 1446(a), section
1446(f), or chapter 4, or backup withhold under section 3406 and failed to correct the underwithholding or to file an
amended Form 1042 or 945 reporting, and paying, the appropriate tax;

iii.
QI made excessive refund claims;

iv.
Documentation described in section 5 of the QI agreement was lacking, incorrect, or unreliable for a significant num-
ber of direct account holders;

V.
QI filed Forms 945, 1042, 1042-S, 1099, or 8966 that were materially incorrect or fraudulent, or failed to comply
materially with the requirements of section 8.07 of the QI agreement with respect to account holders that are partners
holding PTP interests (including account holders of another intermediary when QI acts as an agent for meeting these
requirements);

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

vii. If QI is a sponsoring entity, QI failed to materially comply with the due diligence, withholding, reporting, and compli-
ance requirements of a sponsoring entity;

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

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

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

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

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

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

xiv.
QI failed to cure a material failure identified in the qualified certification described in Part II.B of Appendix I to the QI
agreement or identified by the IRS;

v. QI made any fraudulent statement or a misrepresentation of material fact with regard to the QI agreement to the IRS,
a withholding agent, or QI's reviewer;

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

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

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

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

xx. Other (please describe).

## F. Significant Change in Circumstances

Check the applicable statements to confirm.

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

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

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

b. A material change in the applicable know-your-customer rules and procedures.

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

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

e. Other.

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

## G. Chapter 4 Status

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

Participating FFIs

1\. For the most recent certification period under the QI agreement, QI (or a branch of QI) has obtained status as a participating
FFI and made the following certification of compliance with respect to its FFI agreement for the most recent certification period
under the FFI agreement (check one). Note: You may only check N/A if, during the certification period, your chapter 4 status
changed from one of the other applicable chapter 4 statuses to participating FFI or if your certification under the FFI agreement
is not due as of the date of this certification.

a. Certification of Effective Internal Controls

b. Qualified Certification

c. N/A

Registered Deemed-Compliant FFIs

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

Registered Deemed-Compliant Model 1 IGA FFIs

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

### PART III. WAIVER OF PERIODIC REVIEW

Provide the below information for the most recent calendar year within the certification period. For calendar years 2023 and
2024, exclude QI's QDD activities from the below information. Also provide the information shown in Appendix III of the QI
agreement for each year of the certification period.

For Parts B.1 through 6, the information reported must not reflect any curing that is initiated, by contacting an account
holder for revised documentation, after the last year covered by the periodic certification.

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

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

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

1\. QI is an FFI and, for calendar years after 2024, is not acting as a QDD;

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

3\. For each calendar year covered by the certification period, the reportable amounts received by QI do not exceed $5 million
(including the amount of PTP distributions subject to withholding under chapter 3 or 4);

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

5\. QI made all periodic certifications and reviews required by sections 10.02 and 10.03 of the QI agreement, as well as all
certifications required pursuant to QI's FATCA requirements as a participating FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1 IGA FFI.

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

1\. The total number of accounts

a. Total number of direct account holders

i. Foreign persons

ii. U.S. exempt recipients

iii. U.S. non-exempt recipients

iv. Intermediaries and flow-through entities

b. Total number of indirect account holders

i. Foreign persons

ii. U.S. exempt recipients

iii. U.S. non-exempt recipients

iv. Intermediaries and flow-through entities

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

3\. The total number of non-U.S. account holders that received reportable amounts.

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

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

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

7\. Total of reportable amounts received for non-U.S. accounts.

8\. Total of reportable payments received for U.S. accounts.

9\. Total PTP distributions received by QI subject to withholding under §1446(a) (regardless of whether paid to a U.S. partner).

10\. Total of amounts realized received by QI from sales of PTP interests.

11\. The aggregate amount of tax withheld under chapter 3 and 4 (by QI or QI's withholding agent(s), including withholding
under chapter 3 and 4 on PTP distributions).

12\. The aggregate amount of tax withheld under sections 1446(a) and (f) (by QI or QI's withholding agent(s).

13\. The total number of Forms 1099 filed by QI.

14\. The aggregate amount of backup withholding under section 3406 by QI or QI's payor(s).

PART IV. PERIODIC REVIEW: QI FACTUAL INFORMATION-To be completed by all QIs that have not applied for or
obtained a waiver.

If QI acts solely as a QDD and has no other QI activities, QI is not required to complete Part IV.B through F.

Note: For completing sections C, D, E, F and G of this Part IV, QI should exclude any information with respect to pay-
ments (and related withholding) applicable to income code 27 (PTP distributions subject to section 1446(a)), income code
57 (amounts realized under section 1446(f), including when associated with a PTP distribution), and income code 58 (PTP
distribution with undetermined income) (collectively, "PTP-related payments"). See Form 1042-S for these income codes. A
PTP-related payment includes a payment included in any of these codes made to an account holder that is a U.S. person and
otherwise without regard to whether withholding is required on the payment. PTP-related payments are covered in Part VII
of this Appendix I

A. General Information

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

2\. Provide below the information for external reviewer(s). You may list up to 2 external reviewers.

a. External Reviewer 1 Information:

b. External Reviewer 2 information:

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

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

4\. Calendar year reviewed for periodic review.

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

B. General Information on Accounts and Review of Accounts

For Parts B through G, while the curing of documentation is permissible, unless otherwise indicated, the information reported shall be
based on the periodic review and should not take into account the curing of documentation that resulted from the periodic review. For
purposes of this Part, "account" means, unless otherwise specified, any account for which QI acts as a QI. However, do not include
accounts for purposes of Parts C through F that are reportable in Parts V through VII of this Appendix I.

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

2\. Did QI assume primary Form 1099 reporting and backup withholding responsibility for any accounts for the calendar year pro-
vided in Question 4 in Part A, above? Y/N

3\.
Total accounts reviewed for periodic review.

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

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

b. If no, describe the method used.

5\. Total accounts reviewed that received reportable amounts.

If you used the safe harbor method set forth in Appendix II, complete the following table:

Stratum A

Stratum B

Stratum C

Stratum D

Number of Accounts in the Population

Number of Accounts in the Sample

Total Underwithholding in the Sample Post-Curing

## C. Documentation

1\. Total accounts reviewed held by direct account holders.

2\.
Total accounts reviewed held by indirect account holders.

3\.
Total accounts reviewed with valid documentation.

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

a. Total pre-curing:

b. Total post-curing:

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

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

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

a. Total pre-curing:

b. Total post-curing:

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

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

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

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

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

13\. Total accounts reviewed that are U.S. accounts (or U.S. reportable accounts under an applicable IGA) (if applicable).

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

## D. Withholding

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

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

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

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

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

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

7\. Additional withholding required under chapter 3 based on results of periodic review.

a. Total pre-curing:

b. Total post curing:

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

a. Total pre-curing:

b. Total post-curing:

9\. Additional backup withholding required under section 3406 based on results of periodic review.

a. Total pre-curing:

b. Total post-curing:

10\. The aggregate amount of deposits made in accordance with section 3.08 of the QI agreement.

11\. Number of partnerships or trusts to which the joint account treatment of section 4.05 of the QI agreement was applied.

a. Total accounts to which joint account treatment applied for which appropriate documentation was obtained and the appro-
priate rate of withholding was applied.

b. Total accounts to which joint account treatment applied for which appropriate documentation was obtained and the appro-
priate rate of withholding was not applied.

c. Total accounts to which joint account treatment applied for which appropriate documentation was not obtained and the
appropriate rate of withholding was not applied.

i. Total pre-curing:

ii. Total post-curing:

d. Aggregate amount of underwithholding resulting from the appropriate rate of withholding not being applied with respect to
an account to which the joint account treatment applied.

i. Total pre-curing:

ii. Total post-curing:

E. Reconciliation of Reporting on Payments of Reportable Amounts

1\. The aggregate amount reported paid to QI (as a recipient) on all Forms 1042-S issued to QI.

2\. The aggregate amount reported paid by QI on Forms 1042-S to QI's chapter 4 reporting pools (other than the U.S. payee pool)
(including a chapter 4 reporting pool of a PAI or a partnership or trust to which QI applies the agency option).

3\. The aggregate amount reported paid by QI on Forms 1042-S to QI's chapter 4 reporting pool-U.S. payee pool.

4\. The aggregate amount reported paid by QI on Forms 1042-S to QI's chapter 3 reporting pools (including chapter 3 reporting
pools of a PAI or partnership or trust to which QI applies the joint account or agency option).

5\. The aggregate amount reported paid by QI on Forms 1042-S to other QIs (excluding QIs that are acting as QDDs), QSLs, and
WPs and WTs as a class.

6\.
. The aggregate amount reported paid by QI on Forms 1042-S to QIs that are acting as QDDs.

7\. The aggregate amount reported paid by QI on Forms 1042-S to participating FFIs, registered deemed-compliant FFIs, and reg-
istered deemed-compliant Model 1 IGA FFIs that are intermediaries or flow-through entities as a class and with respect to their
chapter 4 reporting pools (excluding amounts referenced in Questions 5 and 6 directly above).

8\. The aggregate amount reported paid by QI on Forms 1042-S to indirect account holders (not included in Question 2 or 7 above
and including an account holder of an intermediary or flow through entity reported by QI as made to an unknown recipient on
Form 1042-S).

9\. The aggregate amount subject to reporting on Form 1042-S paid by QI to U.S. non-exempt recipients as a class not includable in
a chapter 4 withholding rate pool of QI.

10\. The aggregate amount subject to reporting on Form 1042-S paid by QI to U.S. exempt recipients as a class not includable in a
chapter 4 withholding rate pool of QI.

11\. The aggregate amount paid by QI to its direct account holders (including account holders of any PAI or partner, beneficiary, or
owner of a partnership or trust to which QI applies the joint account or agency option) that requested individual Form(s) 1042-S.

12\. Total of questions 2 through 11.

13\. The amount of variance (if Question 1 minus Question 12 is other than 0) and attach an explanation for any variance.

F. Reconciliation of Withholding on Reportable Amounts

1\. The aggregate amount reported as withheld by another withholding agent on Forms 1042-S issued to QI (as a recipient).

2\. The aggregate amount reported by QI as withheld by QI on Forms 1042-S filed by QI.

3\. The total withholding reported by QI on Forms 1042-S.

4\. Amount of variance (if question 1 plus question 2 does not equal question 3) and attach an explanation for any variance.

5\. The aggregate amount reported by QI as amounts it backup withheld on Forms 1099.

6\. If QI did not assume primary withholding responsibility and amounts are entered for questions 2 or 5, attach an explanation of
any underwithholding that occurred by the withholding agent.

7\. If QI assumed primary withholding responsibility and an amount is entered for question 1, attach an explanation of the amount
withheld by others.

8\. The aggregate amount of any collective claims for refund or credit made by QI.

9\. For question 8 directly above, the amount of credit or refund claimed by QI for account holders not supported by appropriate
documentation for reduced withholding.

G. Other Information (including reporting of U.S. account holders).

1\. The aggregate number of Forms 1099 QI failed to file (when required) with respect to account holders receiving reportable
payments.

2\. The aggregate number of Forms 8966 (or analogous forms under an applicable IGA) that QI failed to file under its applicable
requirements as an FFI (for accounts receiving reportable payments).

3\. The number of Forms 1099 and Forms 8966 (or analogous forms under an applicable IGA) that QI filed but that failed to include
accurate information on the income and other information required.

4\. If QI acted as a QSL or otherwise assumed primary withholding responsibility for a payment of U.S. source substitute dividends
as an intermediary, indicate whether QI has a policy in effect to assume primary withholding responsibility for all such payments.
Y/N

# Part V. Qualified Derivatives Dealers

[RESERVED]

## Part VI. Substitute Interest

Complete only if QI has assumed primary withholding responsibility for payments of substitute interest (as described in sec-
tion 3.03(A) of the QI agreement).

A. General Information

1\. Total number of accounts receiving substitute interest payments.

2\. Total number of accounts receiving substitute interest reviewed as part of the periodic review.

B. Documentation

1\. Total accounts reviewed with valid documentation.

2\. Total accounts reviewed with invalid documentation or no documentation for which documentation or additional documentation
was obtained after the initial review.

3\. Total accounts reviewed for which treaty benefits were claimed.

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

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

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

C. Withholding

1\. The aggregate amount reported as withheld under chapter 3 by QI on Forms 1042-S with respect to substitute interest payments.

2\. Number of accounts for which amounts were withheld under chapter 3 with respect to substitute interest payments.

3\. The aggregate amount reported as withheld under chapter 4 by QI on Forms 1042-S with respect to substitute interest payments.

4\. Number of accounts for which amounts were withheld under chapter 4 with respect to substitute interest payments.

5\. Additional withholding required under chapter 3 based on results of periodic review.

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

7\. Aggregate amount reported as withheld on Forms 1099 on reportable payments (including reportable amounts) subject to backup
withholding.

8\. Additional backup withholding required based on results of periodic review.

9\. The aggregate amount of deposits made in accordance with section 3.08 of the QI agreement with respect to substitute interest
payments.

### D. Reporting

1\. Total amount of interest or substitute interest payments received for which QI represented itself as assuming primary withholding
responsibility.

2\. Aggregate amount of substitute interest payments made.

3\. Total amount of payments in Question 2 that were reported on Forms 1099.

4\. Total amount of payments in Question 2 that were amounts subject to chapter 3 reporting reported on Form 1042-S.

5\. Total amount of payments in Question 2 that were amounts subject to chapter 4 reporting reported on Form 1042-S.

6\. Aggregate amount of any claims for credit or refund made by QI with respect to payments of substitute interest.

### Part VII. PTP-Related Payments

Complete this Part only to the extent QI acts as a QI with respect to PTP-related payments (payments included in each below
income code shown on Form 1042-S, but including when made to an account holder that is a U.S. person and otherwise
without regard to whether withholding is required on the payment). All of the information for this Part VII relates only to
PTP-related payments, unless indicated otherwise. For amounts subject to chapter 3 or 4 withholding attributable to a PTP
distribution and account documentation reviewed with respect to those payments (and reporting of underwithholding on
those payments), report those amounts in Part IV of this Appendix I.

A. General Information

1\. Total number of accounts that received a PTP-related payment applicable to each below income code.

a. 27:

b. 57:

c.
58:

2\. Total number of accounts reviewed as part of the periodic review that received a PTP-related payment applicable to each below
income code.

a. 27:

b. 57:

c. 58:

3\. Total number of accounts reviewed as part of the periodic review that received a PTP-related payment for which the procedures
of Section 8.07 of the QI agreement were not satisfied with respect to the partner associated with the account.

B. Disclosing QI

1\. Did QI act as a Disclosing QI for PTP-related payments for the periodic review year? Y/N

If yes, complete the following questions with respect to payments received by QI acting as a Disclosing QI. Otherwise, go to the
next section of this Part VII.

2\. Total number of accounts that received a PTP-related payment applicable to each below income code.

a. 27:

b. 57:

c. 58:

3\. Total number of accounts reviewed as part of the periodic review that received a PTP-related payment applicable to each below
income code.

a. 27:

b. 57:

c.
58:

4\. Total number of accounts for which the Disclosing QI withheld on a PTP-related payment to comply with Section 3.02(C) of the
QI agreement.

5\. Total amount of withholding by the Disclosing QI to comply with Section 3.02(C) of the QI agreement.

#### C. QI Assuming Primary Withholding Responsibility

1\. Did QI assume primary withholding responsibility for any PTP-related payments for the periodic review year? Y/N
If yes, complete the following questions for payments for which QI assumed primary withholding responsibility. Otherwise, go
to the next section of this Part VII.

2\. Total number of accounts that received a PTP-related payment applicable to each below income code.

a. 27:

b.
57:

c.
58:

3\. Total number of accounts reviewed as part of the periodic review that received a PTP-related payment applicable to each below
income code.

a. 27:

b.
57:

c.
58:

4\. Total number of accounts holding a PTP interest for which QI determined the applicability of the "10-percent exception" of
§1.1446(f)-4(b)(3) for one or more PTP-related payments.

#### D. QI Providing Withholding Rate Pools

1\. Did QI provide withholding rate pool information to a withholding agent for any PTP-related payments for the periodic review
year? Y/N

If yes, complete the following questions with respect to payments for which QI provided withholding rate pool information.
Otherwise, go to the next section of this Part VII.

2\. Total number of accounts that received a PTP-related payment applicable to each below income code.

a. 27:

b. 57:

c.
58:

3\. Total number of accounts reviewed as part of the periodic review that received a PTP-related payment applicable to each below
income code.

a.
27:

b.
57:

c.
58:

### E. Documentation

Note: Reporting for this Part E should include, in addition to each QI Account, partners in a partnership certifying to a modified
amount realized for purposes of section 1446(f) and grantors and owners of a trust receiving an amount subject to withholding under
section 1446(a) or (f).

1\. Total accounts reviewed with valid documentation with respect to PTP-related payments for purposes of section 1446(a) or (f)
(as applicable).

2\. Total accounts reviewed with respect to PTP-related payments for which an account holder's (or partner's) U.S. status was incor-
rectly determined by QI for purposes of section 1446(a) or (f) (as applicable).

3\. Total accounts reviewed with respect to PTP-related payments for which treaty benefits were claimed where QI did not obtain
sufficient documentation to establish the payee's entitlement to treaty benefits for purposes of section 1446(a) or (f) (as applica-
ble, including, where applicable, the treaty statement and limitation on benefits information required by section 5.03(B) of the QI
agreement).

4\. Total number of accounts reviewed for which QI incorrectly determined the applicability of the "10-percent exception" of
§1.1446(f)-4(b)(3) for one or more PTP-related payments (for a QI assuming primary withholding responsibility only).

5\. Total accounts reviewed with respect to PTP-related payments for which the invalid documentation was otherwise relied on
by QI for purposes of section 1446(a) or (f) (as applicable) (excluding accounts described in sections E.2 through E.4 directly
above).

6\. Total accounts reported in this section E for which the documentation was invalid solely due to the absence of a U.S. TIN.

### F. Withholding

1\. The aggregate amount reported as withheld by another withholding agent on Forms 1042-S issued to QI (as a recipient) for pay-
ments of PTP distributions under income code 27.

2\. The aggregate amount reported by QI as withheld by QI on Forms 1042-S for payments of PTP distributions under income code
27\.

3\. The total withholding reported by QI on Forms 1042-S for payments of PTP distributions under income code 27.

4\.
Amount of variance (if question 1 plus question 2 does not equal question 3) and attach an explanation for any variance.

5\.
The aggregate amount reported as withheld by another withholding agent on Forms 1042-S issued to QI (as a recipient) for pay-
ments of amounts realized from the sale of PTP interests under income code 57.

6\. The aggregate amount reported by QI as amounts it withheld on Forms 1042-S for payments of amounts realized from the sale
of PTP interests under income code 57.

7\. The total withholding reported by QI on Forms 1042-S for payments of amounts realized from the sale of PTP interests under
income code 57.

8\. Amount of variance (if question 5 plus question 6 does not equal question 7) and attach an explanation for any variance.

9\. The aggregate amount reported as withheld by another withholding agent on Forms 1042-S issued to QI (as a recipient) for pay-
ments of PTP distributions under income code 58.

10\. The aggregate amount reported by QI as amounts it withheld on Forms 1042-S for payments of PTP distributions under income
code 58.

11\. The total withholding reported by QI on Forms 1042-S for payments of PTP distributions under income code 58.

12\. Amount of variance (if question 9 plus question 10 does not equal question 11) and attach an explanation for any variance.

13\. Additional withholding required under section 1446(a) based on the results of the periodic review for payments of PTP distribu-
tions reportable on Form 1042-S under income code 27.

a. Total pre-curing:

b. Total post-curing:

14\. Additional withholding required under section 1446(f) based on the results of the periodic review for payments of amounts real-
ized from the sale of PTP interests reportable on Form 1042-S under income code 57.

a. Total pre-curing:

b. Total post-curing:

15\. Additional withholding required under section 1446(a) based on the results of the periodic review for payments of PTP distribu-
tions reportable on Form 1042-S under income code 58.

a. Total pre-curing:

b. Total post-curing:

G. Reconciliation of Reporting on PTP-Related Payments

1\. The aggregate amount reported as paid to QI on all Forms 1042-S issued to QI (as a recipient) with income code 27.

2\. The aggregate amount reported as paid by QI on all Forms 1042-S filed by QI with income code 27.

3\. Amount of variance (if question 1 does not equal question 2) and attach an explanation for any variance.

4\. The aggregate amount reported as paid to QI on all Forms 1042-S issued to the QI (as a recipient) with income code 57.

5\. The aggregate amount reported as paid by QI on all Forms 1042-S filed by QI with income code 57.

6\. Amount of variance (if question 4 does not equal question 5) and attach an explanation for any variance.

7\. The aggregate amount reported as paid to QI on all Forms 1042-S issued to QI (as a recipient) with income code 58.

8\. The aggregate amount reported as paid by QI on all Forms 1042-S filed by QI with income code 58.

9\. Amount of variance (if question 7 does not equal question 8) and attach an explanation for any variance.

10\. The aggregate amount paid to QI for which QI acted as a Disclosing QI (and was therefore reported on Form 1042-S in Boxes
15a through 15i).

11\. The aggregate amount paid by QI to its account holders for which QI acted as a Disclosing QI (as determined from QI's books
and records).

12\. Amount of variance (if question 10 does not equal question 11) and attach an explanation for any variance.

H. Other Reporting. Report the number of account holders for which QI did not properly apply the procedures of section 8.07 of
the QI agreement.

# APPENDIX II

## Section I. Background.

To the extent provided in section 10.05 of the QI agreement and this Appendix II, the reviewer is permitted to use a sampling method-
ology to perform the periodic review. This Appendix II includes safe harbor procedures covering basic sample design parameters and
methodologies, including sample size, strata allocation, and projection. Except as otherwise provided, the terms used in this Appendix
II are as defined in the QI agreement.

Generally, sampling should only be used whenever an examination of all accounts within a particular class of accounts would be
prohibitive due to time or expense. If it is reasonable to examine all accounts in connection with a particular part of the periodic
review, sampling techniques should not be used. Sampling should be used only if there are more than 60 accounts to review. If any
accounts of QI held by PAIS ("PAI Accounts") or accounts of QI held by partnerships or trusts utilizing the agency option ("Agency
Accounts") are also included in QI's review (because the PAI or the partnership or trust did not perform its own periodic review), the
PAI Accounts or Agency Accounts should be included in the sample of accounts for which QI acts as a QI ("QI Accounts") by adding
additional strata through replication of the strata prescribed in section II.A.3 of this Appendix II, as applicable. For purposes of QI's
periodic review, a QI Account is referred to as a "sample unit" (and collectively as the "sample") with respect to each review. The
sampling methodology employed envisions a documentation review (as prescribed in section 10.05(A) of the QI agreement) requir-
ing review of all selected sample units and a review of (1) withholding rate pool classifications (as prescribed in section 10.05(B) of
the QI agreement), (2) withholding responsibilities (as prescribed in section 10.05(C) of the QI agreement), and (3) return filing and
information reporting (as prescribed in section 10.05(D) of the QI agreement) that require review of a subset (a "spot check" under
section II.B.1 of this Appendix II) of the sample units reviewed in the documentation review.

The statistical sampling methodologies used in this Appendix II are not intended to be and cannot be used for any other tax purpose.
QI may use another sampling technique provided it documents its parameters and methodologies for the IRS to review, as described
in section 10.05 of the QI agreement, and adheres to the principles of Rev. Proc. 2011-42, 2011-37 I.R.B. 318. The IRS will determine
if a projection of underwithholding identified utilizing a statistical sampling method is required in accordance with section III.C of
this Appendix II.

A reviewer may request approval to modify the safe harbor methodology or approval of another sampling methodology in order to
select more than one sample or to use multistage, cluster, or other sampling methodologies including additional stratifications. To
obtain IRS approval, contact the Financial Intermediaries Program in accordance with section 12.06 of the QI agreement.

The safe harbor in this Appendix II applies to all periodic reviews starting with calendar year 2023.

## Section II. Safe Harbor Methodology.

### A. DOCUMENTATION REVIEW

1\. Population.

(a) Population of QI Accounts. The population of QI Accounts consists of all accounts described below.

(1) All accounts held by U.S. persons (or account holders presumed to be U.S. persons) that received a reportable payment;

(2) All accounts held by non-U.S. persons (or account holders presumed to be non-U.S. persons) that received a reportable amount;

(3) All accounts that received a PTP distribution; and

(4) All accounts that received an amount realized from the sale of a PTP interest.

Additionally, if a combined periodic review is conducted, the population of QI Accounts will include the above accounts of both the
predecessor QI and successor QI. See section 11.05(B) of the QI agreement (describing the requirements for a combined periodic
review).

2\. Sample Sizes for Documentation Review.

(a) Sample Size Calculations. The sample size for each sample is the lesser of (1) the number of sample units determined using the
sample formula in section II.A.2(b) of this Appendix II, or (2) 25 percent of the total number of sample units in the population. How-
ever, in determining the sample size, the reviewer must adhere to the guidelines for minimum stratum sample size in sections II.A.3
and II.A.4 of this Appendix II. This may result in a sample size greater than the sample size resulting from using the formula in section
II.A.2(b) of this Appendix II. The minimum sample size of any sample shall not be less than 60. A sample size larger than calculated
under this section may be used without contacting the Financial Intermediaries Program.

This sample size calculation is determined without regard to any required certainty stratum (e.g., the strata referenced in section
II.A.3(a) of this Appendix II), or a sample used in a combined periodic review for a predecessor QI. In these instances, the number of
accounts to be included in the certainty strata are in addition to the sample size calculation detailed in this section. A certainty stratum
is a stratum in which all sample units are reviewed.

If PAI Accounts or Agency Accounts have been added to the sample of QI Accounts because the PAI or partnership or trust did not
perform its own periodic review, a separate sample size calculation should also be performed for the PAI Accounts or the Agency
Accounts as if they were part of a separate QI sample. If multiple samples are used, the sample size for each sample (including for
any additional PAI Accounts or Agency Accounts) is calculated independently.

(b) Sample Formula. While the following formula, when used with the variable values stated below, is intended not to result in a
sample size greater than 321, the total sample size for a single sample may exceed 321 in certain instances such as when the sample
includes (1) PAI Accounts, (2) Agency Accounts, (3) accounts for which QI used the joint account option, (4) accounts in a certainty
strata, or (5) accounts of a predecessor QI and successor QI in a combined review. Sample size may also exceed 321 when the
reviewer uses "optional further stratification by dollar amounts" (see section II.A.6 of this Appendix II). Additionally, the reviewer
may, in its discretion, have a sample population larger than that resulting from the safe harbor method.

The number of sample units to be reviewed is determined using the sample formula as follows:

Sample Size =- PQ
1+
t2PQ
N d2
d2

1 (t2PQ 1)

where t = 1.645 (confidence coefficient at 95 percent one-sided)
P = 5 percent (error rate) for the QI account sample
Q= 1-P
d = 2 percent (precision level)
N = total population

### 3. Strata.

Sample of QI Accounts. The reviewer must segregate all QI Accounts into the following strata. While segregating accounts, steps
should be taken to ensure all partnerships and trusts for which QI has utilized the joint account option are placed into the appropriate
direct account stratum (stratum b), while the underlying partners, beneficiaries, or owners of the partnerships or trusts are excluded
from the indirect stratum (stratum d). Such underlying accounts will be selected for review in accordance with section II.A.7 of this
Appendix II.

Further substratification by dollar amounts may be used in accordance with section II.A.6 of this Appendix II.

The strata are as follows:

(a) A stratum of the thirty top dollar value accounts as determined by the total of the PTP distributions and amounts realized from
sales of PTP interests paid to an account. All accounts in this stratum are to be reviewed for purposes of section 10.05(A) of the QI
agreement. After removing these accounts, further accounts are to be selected randomly from the below strata in accordance with the
sample size calculation specified in Section II.A.2 of this Appendix II and the allocation method specified in Section II.A.4 of this
Appendix II;

(b) A stratum of all accounts that are held by direct account holders that are not U.S. non-exempt recipients;

(d) A stratum of all accounts held by indirect account holders.

If a sample is used in a combined periodic review, certainty strata containing accounts from the predecessor QI replicating all strata
described above must be formed. Each stratum must contain the fifteen top dollar value accounts of the predecessor QI as measured
by the total of reportable amounts paid to foreign recipients, reportable payments paid to U.S. recipients, total PTP distributions paid
to an account, and total amounts realized from sales of PTP interests paid to an account. Every sample unit determined under the pre-
ceding sentence must be reviewed. The remainder of the accounts of the predecessor QI, along with all the accounts of the successor
QI, must be placed into strata (a) through (d).

4\. Allocation of Sample Size to Each Stratum.

The reviewer must allocate the number of sample units for each sample (including for any PAI Accounts or Agency Accounts added
to the sample of QI Accounts) independently of the other samples. The reviewer must allocate the number of sample units in the
sample determined under section II.A.2 of this Appendix II to each of the three randomly selected strata (that is, strata b, c, and d)
described in section II.A.3 of this Appendix II. The sample units are allocated by multiplying the number of sample units in the sam-
ple, as determined under section II.A.2 of this Appendix II, by a fraction, the numerator of which is the total number of sample units
in the stratum and the denominator of which is the total number of sample units in the population. The minimum number of sample
units in any stratum must be the lesser of 60 sample units or the number of sample units in the stratum. If the allocation of sample
units to a stratum using the above method results in a sample size of a stratum that is less than 60 and less than the actual number of
sample units in the stratum, the minimum allocation to that stratum is the total number of sample units in the stratum. In this case,
the difference between number of accounts sampled using the above-referenced fraction and the actual number of accounts sampled
can be used to reduce the number of accounts sampled in the other two randomly selected strata on a pro rata basis; however, this
reallocation cannot be used to reduce the sample size of any stratum below 60. Additionally, in instances where there are less than
60 accounts in a stratum population it is not necessary to reallocate the difference between 60 and the actual number of accounts in a
stratum population over the other strata; and, therefore, such an instance should not increase the total sample size.

### 5. Random Number Generator.

The reviewer must select for the documentation review under section 10.05(A) of the QI agreement sample units from each non-cer-
tainty stratum identified in section II.A.3 of this Appendix II by using a random number generator. Random numbers should be drawn
separately for each sample (including for any PAI Accounts or Agency Accounts added to the sample of QI Accounts) including the
use of separate seeds. Information regarding the random number generator used must be included in the records as required in section
III.D of this Appendix II. This information must be sufficient to allow the IRS to replicate the random numbers as well as to allow the
reviewer to continue the sequences of randomly generated numbers if it is determined additional sample units need to be reviewed.
This information must include the name and version of the random number generator, the seed numbers used or generated, specifica-
tion of any options selected, and the computer equipment on which the random number generator was run.

### 6. Optional Further Stratification by Dollar Amounts.

For each sample (including for any PAI Accounts or Agency Accounts added to the sample of QI Accounts), the reviewer may further
stratify by dollar amounts for that sample without submitting a request for approval to the Foreign Intermediaries Program when the
reviewer is otherwise selecting the sample in accordance with this Appendix II. Reportable amounts for foreign recipients, reportable
payments for U.S. recipients, PTP distributions, and amounts realized from sales of PTP interests are to be considered in the substrat-
ification. If the reviewer chooses to substratify under this section, the reviewer must comply with the following rules:

(a) A certainty stratum consisting of sample units that have received payments of the highest dollar amounts during the review year
must be created. This stratum shall consist of 30 accounts;

(b) The remaining strata shall be randomly selected to contain approximately equal amounts in each substratum; and

7\. Determining Rate of Withholding for Partnerships and Trusts for Which the QI has Applied the Joint Account Option.

When reviewing documentation of partners, beneficiaries, or owners of a partnership or trust to which QI has applied the joint account
option to determine the rate of withholding QI should have applied to the partnership or trust, the reviewer may limit the review to
the number of partners, beneficiaries, or owners by referring to the table below. The underlying partners, beneficiaries, or owners in
the partnership or trust must be selected randomly.

Number of partners, beneficiaries, or owners

/ Number to be reviewed

0-10

All

11- 14

15-19

20-24

25 -29

30-34

35-39

40 -49

50-74

75-99

100 - 199

200 - 499

500 - 4,999

&gt; 4,999

8\. Determining Rate of Withholding for Partnerships and Trusts for Section 1446(a) and (f) Withholding.

When the status of a partner in a partnership or a grantor or owner of a trust is relevant to determining the rate of withholding for a
partnership or trust receiving an amount subject to withholding under section 1446(a) or (f), the partners, grantors, or owners to be
reviewed must be determined randomly, with the number of partners, grantors or owners limited by reference to the table provided
in section II.A.7 of this Appendix II.

# B. WITHHOLDING RATE POOL, WITHHOLDING RESPONSIBILITIES, AND RETURN FILING AND INFORMATION REPORTING REVIEWS (SPOT CHECK)

1\. Selection of Accounts for Review.

For purposes of reviewing the sampled accounts for compliance with withholding rate pool requirements, withholding responsibili-
ties, and return filing requirements under sections 10.05(B) through 10.05(D) of the QI agreement, the reviewer must perform a spot
check review (spot check) of accounts from every stratum in the sample that failed the documentation review under section 10.05(A)
of the QI agreement, taking into account the applicable presumption rules of section 5.13 of the QI agreement. With respect to the
accounts described in the preceding sentence, the reviewer may exclude from the spot check any account for which the QI did not
apply a reduced rate of withholding.

To the extent that the number of sample units selected under the preceding paragraph (or selected from the population, if the reviewer
has not used statistical sampling) in any stratum is less than 30, the reviewer must also select for the spot check (in the order selected
by the random number generator under section II.A.5 of this Appendix or, if the reviewer has not used statistical sampling, in the
order used by the QI for its record keeping) an additional number of sample units drawn from that stratum that equal the difference
between 30 and the number of sample units from the sample in that stratum.

If applicable, the reviewer must randomly select for spot check 20 accounts in stratum (a) under section II.A.3 of this Appendix II.
Additionally, every account in the certainty stratum for the predecessor QI in a combined periodic review must be selected for spot
check.

When performing the spot check, if the reviewer determines underwithholding occurred on a payment to an account, all payments to
that account must be considered when calculating total underwithholding for that account.

# Section III. Additional Requirements Regarding the Use of Sampling

## A. DOCUMENTATION OF SAMPLE PLAN

The reviewer should provide in its periodic report the information described in Rev. Proc. 2011-42, Appendix (A), Sampling Plan
Standards, and Appendix (B), Sampling Documentation Standards, as applicable. Additionally, originally recorded payment and
withholding amounts, as well as the amount that should have been withheld and the amount actually withheld as determined by the
compliance review, should be retained for every sample unit, along with additional information required by this Appendix II.

## B. DETERMINATION OF UNDERWITHHOLDING

If the reviewer determines that underwithholding has occurred with respect to the sampled accounts, QI must notify the Financial
Intermediaries Program within 30 days of the completion of the periodic review of any underwithholding identified in the review,
as provided in section 12.06 of the QI agreement, and the amount of any underwithholding that remains after any curing. Curing for
purposes of the preceding sentence is limited to curing performed after the selection of the sample. QI shall report and pay, in accor-
dance with the requirements of the QI agreement, the actual underwithheld tax without regard to projection, as determined at the end
of the 30-day period. The QI may continue to cure up to 60 days after the date on which the IRS proposes a deficiency with respect
to the underwithholding.

## C. PROJECTION

1\. When the IRS reviews QI's periodic certification, it will determine if a projection of underwithholding is required based on QI's
periodic review report, factual information provided, and other relevant information. If a projection is required, the IRS will deter-
mine the total amount of underwithheld tax by projecting the underwithholding over the entire stratum of similar accounts using a
projection method that is consistent with the sampling method used on a post cure basis. For example, if a stratified random sampling
method permitted in this Appendix II has been used, the IRS may determine the total amount of underwithheld tax by first deter-
mining the amount of underwithheld tax within each stratum by projecting actual underwithholding within a stratum over the entire
stratum, and then totaling underwithholding over all strata as follows:

(a) Divide the amount of underwithholding within each stratum by that stratum's sample size;

(b) Multiply the result in (a) by the total number of accounts in that stratum; and

2\. The following is an example of how underwithholding may be projected over the population to determine a deficiency in tax with
respect to QI:

A QI has QI designated accounts as follows:

Stratum B contains 1025 accounts

Stratum C contains 1025 accounts.

Stratum D contains 0 accounts.

Following the safe harbor sampling methodology in this Appendix II, the total sample size is 278 as allocated below:

Stratum B sample size = 139.

Stratum C sample size = 139.

Stratum D sample size = 0.

Stratum B has 10 accounts with documentation insufficient to support the reduced rate of withholding applied by the QI for total
underwithholding of $2,500. The QI subsequently cures the documentation for 4 of the accounts leaving 6 uncured accounts for a
total remaining underwithholding of $1,250.

Stratum C has 6 accounts with documentation insufficient to support the reduced rate of withholding applied by the QI for total
underwithholding of $600. The QI subsequently cures the documentation for 1 of the accounts leaving 5 uncured accounts for a total
remaining underwithholding of $500.

The total underwithholding would be calculated as follows:

Total projected stratum underwitholding = (total actual stratum underwithholding/number of accounts selected for the sample in the
stratum) * total number of accounts in the stratum.

Stratum B: (1,250 / 139) * 1025 = $9,217.63
Stratum C: (500 / 139) * 1025 = $3,687.05
Total Underwithholding = $9,217.63 + $3,687.05 = $12,904.68

3\. The IRS reserves the right to review and adjust any projection of underwithholding. If after reviewing all relevant information, the
IRS determines that further action is necessary with respect to determining the amount of underwithholding for the year of review or
any other year, the IRS may request that QI have the reviewer review additional sample units or conduct a full review of the entire
sample (or determine that a projection of any underwithholding is unwarranted).

4\. If the reviewer has determined that overwithholding has occurred with respect to a sample, projection may not be used for purposes
of a refund. A projection of overwithholding may offset any underwithholding in the sample, however, provided that the IRS deter-
mines projection to be appropriate and QI enters into a closing agreement (Form 906) that QI will not file a claim for refund for any
overwithholding that the reviewer has discovered.

D. Reporting of Sample Results in the Periodic Review Report

The reviewer should describe in the periodic review report the steps taken to construct the sample population and to ensure all
accounts subject to review were included in the population and subject to sampling under the procedures outlined in this Appendix
II. In constructing the population, the reviewer should reconcile total payments made to accounts in the population and total with-
holding of amounts to Part IV, sections E (Reconciliation of Reporting on Payments of Reportable Amounts) and F (Reconciliation
of Withholding on Reportable Amounts) and Part VII (PTP-Related Payments) of Appendix I to the QI agreement, where applicable.

The reviewer should also record the original population and sample statistics separately for each sample (including for any PAI
Account or Agency Account added to the sample of QI Accounts) by stratum as follows:

(1) Total number of sample units in the population;

(2) Total number of sample units in the sample;

(3) Total reportable amounts for foreign recipients in the population;

(4) Total reportable payments for U.S. recipients in the population;

(5) Total reportable amounts for foreign recipients in the sample;

(6) Total reportable payments for U.S. recipients in the sample;

(7) Total PTP-related payments (as described in Part VII of Appendix I) in the population;

(8) Total PTP-related payments (as described in Part VII of Appendix I) in the sample;

(9) Total chapter 3 withholding in the population;

(10) Total chapter 4 withholding in the population;

(11) Total chapter 3 withholding in the sample;

(12) Total chapter 4 withholding in the sample;

(13) Total backup withholding in the population;

(14) Total backup withholding in the sample;

(15) Total PTP-related withholding (as described in Part VII of Appendix I) in the population; and

(16) Total PTP-related withholding (as described in Part VII of Appendix I) in the sample.

### APPENDIX III

General Instructions: Information requested in this Appendix III relates to Forms 1042 and 1042-S. Use an excel spreadsheet format
to replicate all parts and provide responses (amounts only). Attach the spreadsheet when submitting QI's periodic certification.

For waiver requests, provide the information for each year of the certification period. Otherwise, provide the information for each
year of the certification period except the periodic review year. Responses should reflect the last amended return filed, if applicable.
The box/line numbers below are as shown on Forms 1042 and 1042-S for the 2022 year. If a box or line number changes in future
years, the equivalent line or box should be used.

Provide a detailed analysis and explanation of all variances (1-9) and additional variances listed below. Attach additional documents
as needed.

#### PART 1 - INFORMATION ON FORMS 1042-S ISSUED TO AND FILED BY QI.

A. (box 2) Total of gross income as reported on all Forms 1042-S filed by QI: $

B. (box 7a) Total of federal tax withheld by QI on all Forms 1042-S filed by QI: $

C. (box 8) Total of tax withheld by other agents on all Forms 1042-S filed by QI: $

D. (box 10) Total withholding credit as reported on all Forms 1042-S filed by QI: $

E. (box 2) Total of gross income as reported on all Forms 1042-S issued to QI as a recipient: $

F. (box 10) Total withholding credit as reported on all Forms 1042-S issued to QI as a recipient: $

G. (box 9) Total overwithheld tax repaid to recipient pursuant to adjustment procedures on all Forms 1042-S filed by QI: $

H. (box 11) Total tax paid by withholding agent (amounts not withheld) on all Forms 1042-S filed by QI: $

#### PART 2 - INFORMATION ON FORM 1042 FILED BY QI

I. (line 62c) Total gross amounts reported on Form 1042: $

J. (line 63a + 63c(2)) Tax withheld by QI reported on Form 1042: $

K. (line 63b(1) + 63b(2)) Tax withheld by other withholding agents reported on Form 1042: $

L. (line 63c(1)) Adjustments to overwithholding reported on Form 1042: $

M. (line 63e) Total tax reported as withheld or paid on Form 1042: $

N. (line 64e) Total net tax liability reported on Form 1042: $

O. (line 67a + 67b) Credits for amounts withheld by other withholding agents reported on Form 1042: $

#### PART 3 - RECONCILIATION OF FORMS 1042-S ISSUED TO QI TO FORMS 1042-S FILED BY QI.

Variance 1 (gross income): A - E = $

Variance 2 (tax withheld by other withholding agents): C - F = $

# PART 4 - RECONCILIATION OF FORM 1042 FILED BY QI TO FORMS 1042-S FILED BY QI.

Variance 3 (gross income): I -A = $

Variance 4 (tax withheld by QI): J - B = $

Variance 5 (tax withheld by other withholding agents): K - C = $

Variance 6 (adjustments to overwithholding by QI): L - G = $
Variance 7 (total tax reported as withheld or paid): M - (D + H) = $

## PART 5 - RECONCILIATION OF ITEMS ON FORM 1042 FILED BY QI

Variance 8 (amounts withheld by other withholding agents): K - O = $

Variance 9 (tax withheld or paid compared to net tax liability): M - N= $

Explanation of Variances:

Amounts received for which no Form 1042-S reporting was required and reporting was not received.

QDD related:

Non-QDD related:

Amounts paid by QI for which Form 1042-S reporting was required but were not reported.

QDD related:

Non-QDD related:

Note: Certain payments to a QDD are subject to reporting even if no amount is withheld from the payment, and amounts on which
a withholding agent withheld are subject to reporting whether or not the amount is subject to withholding. See §1.1461-1(c)(2)(i)(M)
(covering dividends and substitute dividends). Certain amounts paid to a QDD, however, are not required to be reported on Form
1042-S. See §1.1461-1(c)(2)(ii)(J).

# Part IV

## Announcement 2022-28

### INTRODUCTION

Since 2000, the Internal Revenue Ser-
vice (IRS) has identified over 30 "listed
transactions"-transactions that the IRS
has determined to be abusive tax avoid-
ance transactions within the meaning of
§ 1.6011-4(b)(2) of the Income Tax Reg-
ulations-by publishing a notice or other
subregulatory guidance as provided in
§ 1.6011-4. One of these notices, Notice
2017-10, 2017-4 I.R.B. 544, identified
certain syndicated conservation easements
as listed transactions. On November 9,
2022, the U.S. Tax Court, in a reviewed
decision with two judges dissenting, held
that Notice 2017-10 was invalid because it
was issued without following the notice-
and-comment rulemaking procedure set
forth in section 553 of the Administrative
Procedure Act (APA), 5 U.S.C. 551 - 559.
See Green Valley Investors, LLC v. Com-
missioner, 159 T.C. No. 5 (2022). Earlier
this year, the U.S. Court of Appeals for
the Sixth Circuit reached a similar con-
clusion with respect to Notice 2007-83,
2007-2 C.B. 960, which identified certain
trust arrangements claiming to be welfare
benefit funds and involving cash value life
insurance policies as listed transactions.
See Mann Construction, Inc. v. United
States, 27 F.4th 1138 (6th Cir. 2022).

The Department of the Treasury (Trea-
sury Department) and the IRS disagree
with the Tax Court's decision in Green
Valley and the Sixth Circuit's decision in
Mann Construction, and are continuing
to defend the validity of existing listing
notices in circuits other than the Sixth
Circuit. At the same time, however, to
eliminate any confusion and to ensure that
these decisions do not disrupt the IRS's
ongoing efforts to combat abusive tax
shelters throughout the nation, the Trea-
sury Department and the IRS are today
issuing proposed regulations to identify
certain syndicated conservation easement
transactions as listed transactions. The
Treasury Department and the IRS intend
to finalize these regulations, after due con-
sideration of public comments, in 2023
and intend to issue proposed regulations

identifying additional listed transactions
in the near future.

# BACKGROUND

Section 6011 of the Internal Revenue
Code (Code) requires persons to file such
returns or statements prescribed by the
Secretary of the Treasury or her delegate
(Secretary), as required by regulation. Pur-
suant to that section, the Treasury Depart-
ment and the IRS promulgated § 1.6011-
4, which defines five types of "reportable
transactions" and requires any participant
in a reportable transaction to file a disclo-
sure statement (Form 8886, Reportable
Transaction Disclosure Statement) with
the Office of Tax Shelter Analysis (OTSA)
and with certain tax returns. That regula-
tion defines a "listed transaction," a type
of reportable transaction, as a transaction
that is the same as or substantially similar
to one that the IRS has determined to be a
tax avoidance transaction and has identi-
fied by notice, regulation, or other form of
published guidance.

Following the promulgation of
§1.6011-4, Congress passed the Amer-
ican Jobs Creation Act (AJCA), which
included section 6707A of the Code.
Section 6707A imposes penalties on any
person who fails to disclose participation
in a reportable transaction, including a
listed transaction. Consistent with the
regulation, that statute defines a "report-
able transaction" as "any transaction with
respect to which information is required
to be included with a return or statement
because, as determined under regulations
prescribed under section 6011, such trans-
action is of a type which the Secretary
determines as having a potential for tax
avoidance or evasion;" and a "listed trans-
action" as "a reportable transaction which
is the same as, or substantially similar to,
a transaction specifically identified by the
Secretary as a tax avoidance transaction
for purposes of section 6011."

Section 6111 of the Code and the related
regulations require material advisors with
respect to reportable transactions to dis-
close such transactions on Form 8918,
Material Advisor Disclosure Statement.
Section 6112 of the Code and the related
regulations require material advisors to

maintain lists of persons advised with
respect to reportable transactions. Sec-
tions 6707 and 6708 were also amended
as part of the AJCA and impose penalties
for failure to meet those disclosure and list
maintenance obligations.

# TREASURY AND IRS ACTIONS TO COMBAT ABUSIVE TRANSACTIONS

The Treasury Department and the IRS
continue to take the position that listed
transactions can be identified by notice
or other subregulatory guidance and that
the APA's notice-and-comment procedure
does not apply to identification of such
transactions. The Treasury Department
and the IRS disagree with the Tax Court's
decision in Green Valley and the Sixth
Circuit's decision in Mann Construction
and continue to defend the validity of
existing listing notices in litigation. The
Treasury Department and the IRS recog-
nize, however, that Mann Construction is
controlling law in the Sixth Circuit, and
the IRS has ceased enforcing disclosure
and list maintenance requirements with
respect to Notice 2017-10 in the Sixth
Circuit. Accordingly, to avoid confusion
and to prevent disruption of the IRS's
ongoing efforts to identify and examine
abusive tax shelters throughout the nation,
the Treasury Department and the IRS are
issuing proposed regulations to identify
certain syndicated conservation easement
transactions as listed transactions. The
Treasury Department and the IRS intend
to finalize these regulations, after due con-
sideration of public comments, in 2023
and intend to issue proposed regulations
identifying additional listed transactions
in the near future.

Taxpayers should take note that, if a
transaction becomes a listed transaction
after a taxpayer files a return reflecting
the tax effects of the transaction, § 1.6011-
4(e)(2)(i) requires the participant to file a
disclosure statement with OTSA within 90
days of the transaction becoming a listed
transaction if the assessment limitations
period remains open for any taxable year
in which the taxpayer participated in the
listed transaction. Accordingly, any tax-
payer, including taxpayers who reside in

the Sixth Circuit, who has participated
in a transaction in any year for which
the assessment limitation period remains
open when the regulation identifying the
transaction as a listed transaction is final-
ized will have an obligation to disclose
the transaction. Failure to disclose will
subject the taxpayer to the penalty under
section 6707A. Participants required to
disclose listed transactions who fail to do
so are also subject to an extended period
of limitations under section 6501(c)(10).
That section provides that the time for
assessment of any tax with respect to the
transaction will not expire before the date
that is one year after the earlier of the date
the participant discloses the transaction or
the date a material advisor discloses the
participation pursuant to a written request
under section 6112(b)(1)(A).

Likewise, if a regulation identifying a
transaction as a listed transaction is final-
ized after the occurrence of the events
described in § 301.6111-3(b)(4)(i) of the
Procedure and Administration Regula-
tions, a material advisor will be treated
as becoming a material advisor on the
date the regulation is finalized pursuant
to § 301.6111-3(b)(4)(iii) (if not deemed
a material advisor earlier pursuant to a
valid listing notice). A material advisor is
required to file a Form 8918 by the last
day of the month following the quarter in
which the advisor became a material advi-
sor with respect to the listed transaction.
See § 301.6111-3(d) and (e).

In addition, a material advisor must
maintain a list identifying each person
with respect to whom the advisor acted as
a material advisor with respect to a listed
transaction, if the person advised by the
material advisor entered into the listed
transaction within six years before the
transaction was identified as a listed trans-
action. See § 301.6112-1(b)(2).

# DRAFTING INFORMATION

The principal author of this announce-
ment is Stephanie W. Chernoff of the
Office of the Associate Chief Counsel
(Procedure & Administration). For further
information regarding this announcement,
contact Stephanie W. Chernoff at (202)
317-5670 (not a toll-free call).

## Notice of Proposed Rulemaking

### Syndicated Conservation Easement Transactions as Listed Transactions

#### REG-106134-22

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemak-
ing and notice of public hearing.

SUMMARY: This document contains
proposed regulations that identify certain
syndicated conservation easement transac-
tions and substantially similar transactions
as listed transactions, a type of reportable
transaction. Material advisors and certain
participants in these listed transactions are
required to file disclosures with the IRS
and are subject to penalties for failure to
disclose. The proposed regulations affect
participants in these transactions as well
as material advisors. In addition, while
the proposed regulations exclude qualified
organizations from being treated as partic-
ipants or parties to a prohibited tax shel-
ter transaction subject to excise tax, this
notice of proposed rulemaking requests
comments on whether the final regula-
tions should remove the exclusion from the
application of the excise tax for qualified
organizations that facilitate syndicated con-
servation easement transactions. Finally,
this document provides notice of a public
hearing on the proposed regulations.

DATES: Comment date: Electronic or
written comments must be received by
February 6, 2023.

Public hearing: The public hearing is
scheduled to be held by teleconference on
March 1, 2023, at 10 a.m. ET. Requests to
speak and outlines of topics to be discussed
at the public hearing must be received by
February 6, 2022. If no outlines are received
by February 6, 2023, the public hearing
will be cancelled. Requests to attend the
public hearing must be received by 5 p.m.
ET on February 27, 2023. The telephonic
hearing will be made accessible to people

with disabilities. Requests for special assis-
tance during the telephonic hearing must be
received by February 24, 2023.

ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Por-
tal at www.regulations.gov (indicate IRS
and REG-106134-22). Once submitted
to the Federal eRulemaking Portal, com-
ments cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish any
comments to the public docket. Send paper
submissions to: CC:PA:LPD:PR (REG-
106134-22), room 5203, Internal Revenue
Service, P.O. Box 7604, Ben Franklin Sta-
tion, Washington, D.C. 20044.

For those requesting to speak during
the hearing, send an outline of topic sub-
missions electronically via the Federal
eRulemaking Portal at www.regulations.
gov (indicate IRS and REG-106134-22).

Individuals who want to testify by tele-
phone at the public hearing must send an
email to publichearings@irs.gov to receive
the telephone number and access code for
the hearing. The subject line of the email
must contain the regulation number REG-
106134-22 and the word TESTIFY. For
example, the subject line may say: Request
to TESTIFY at Hearing for REG-106134-
22. The email should include a copy of the
speaker's public comments and outline
of topics. Individuals who want to attend
by telephone the public hearing must also
send an email to publichearings@irs.gov
to receive the telephone number and access
code for the hearing. The subject line of the
email must contain the regulation number
REG-106134-22 and the word ATTEND.
For example, the subject line may say:
Request to ATTEND Hearing for REG-
106134-22. To request special assistance
during the telephonic hearing, contact the
Publications and Regulations Branch of the
Office of Associate Chief Counsel (Pro-
cedure and Administration) by sending
an email to publichearings@irs.gov (pre-
ferred) or by telephone at (202) 317-5177
(not a toll-free number).

FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Theresa Melchiorre of the
Office of Associate Chief Counsel (Income

Tax and Accounting), (202) 317-7011;
concerning submissions of comments and
requests for hearing, Regina L. Johnson
at (202) 317-5177 or publichearings@irs.
gov (not toll-free numbers).

#### SUPPLEMENTARY INFORMATION:

##### Comments and Public Hearing

Before these proposed amendments to
the regulations are adopted as final regu-
lations, consideration will be given to any
comments that are submitted timely to the
IRS as prescribed in the preamble under
the ADDRESSES section. The Treasury
Department and the IRS request com-
ments on all aspects of the proposed reg-
ulations. Any comments submitted will be
made available at www.regulations.gov or
upon request.

A public hearing is being held by
teleconference on March 1, 2023, begin-
ning at 10 a.m. ET unless no outlines are
received by February 6, 2023.

The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish to
comment by telephone at the hearing must
submit written or electronic comments
and an outline of the topics to be discussed
as well as the time to be devoted to each
topic by February 6, 2023, as prescribed
in the preamble under the ADDRESSES
section.

A period of ten minutes will be allo-
cated to each person for making com-
ments. After the deadline for receiving
outlines has passed, the IRS will prepare
an agenda containing the schedule of
speakers. Copies of the agenda will be
made available at www.regulations.gov,
search IRS and REG-106134-22. Copies
of the agenda will also be available by
emailing a request to publichearings@irs.
gov. Please put "REG-106134-22 Agenda
Request" in the subject line of the email.

Announcement 2020-4, 2020-17 I.R.B.
667 (April 20, 2020), provides that until
further notice, public hearings conducted
by the IRS will be held telephonically.
Any telephonic hearing will be made
accessible to people with disabilities.

##### Background

This document contains proposed
additions to 26 CFR part 1 (Income Tax

Regulations) under section 6011 of the
Internal Revenue Code (Code). The addi-
tions identify certain transactions that are
"listed transactions" for purposes of sec-
tion 6011.

## I. Overview of the Reportable Transaction Regime

Section 6011(a) generally provides that,
when required by regulations prescribed
by the Secretary of the Treasury or her
delegate (Secretary), "any person made
liable for any tax imposed by this title, or
with respect to the collection thereof, shall
make a return or statement according to
the forms and regulations prescribed by
the Secretary. Every person required to
make a return or statement shall include
therein the information required by such
forms or regulations."

On February 28, 2000, the Treasury
Department and the IRS issued a series
of temporary regulations (T.D. 8877; T.D.
8876; T.D. 8875) and cross-referencing
notices of proposed rulemaking (REG-
103735-00; REG-110311-98; REG-
103736-00) under sections 6011, 6111,
and 6112. The temporary regulations and
cross-referencing notices of proposed
rulemaking were published in the Federal
Register (65 FR 11205, 65 FR 11269; 65
FR 11215, 65 FR 11272; 65 FR 11211, 65
FR 11271) on March 2, 2000 (2000 Tem-
porary Regulations). The 2000 Temporary
Regulations were modified several times
before March 4, 2003, the date on which
the Treasury Department and the IRS,
after providing notice and opportunity for
public comment and considering the com-
ments received, published final regula-
tions (T.D. 9046) in the Federal Register
(68 FR 10161) under sections 6011, 6111,
and 6112 (2003 Final Regulations). The
2000 Temporary Regulations and 2003
Final Regulations consistently provided
that reportable transactions include listed
transactions and that a listed transaction is
a transaction that is the same as or sub-
stantially similar to one of the types of
transactions that the IRS has determined
to be a tax avoidance transaction and has
identified by notice, regulation, or other
form of published guidance as a listed
transaction.

Following the 2003 promulgation of
§1.6011-4, Congress passed the American

Jobs Creation Act of 2004 (AJCA), Pub-
lic Law 108-357, 118 Stat. 1418 (October
22, 2004), which added sections 6707A,
6662A, and 6501(c)(10) to the Code, and
revised sections 6111, 6112, 6707, and
6708 of the Code. See sections 811-812
and 814-817 of the AJCA. The AJCA's
legislative history explains that Congress
incorporated in the statute the method that
the Treasury Department and the IRS had
been using to identify reportable transac-
tions, and provided incentives, via pen-
alties, to encourage taxpayer compliance
with the new disclosure reporting obli-
gations. As the Committee on Ways and
Means explained in its report accompany-
ing H.R. 4520, which became the AJCA:

The Committee believes that the best
way to combat tax shelters is to be
aware of them. The Treasury Depart-
ment, using the tools available, issued
regulations requiring disclosure of cer-
tain transactions and requiring organiz-
ers and promoters of tax-engineered
transactions to maintain customer
lists and make these lists available to
the IRS. Nevertheless, the Committee
believes that additional legislation is
needed to provide the Treasury Depart-
ment with additional tools to assist its
efforts to curtail abusive transactions.
Moreover, the Committee believes
that a penalty for failing to make the
required disclosures, when the imposi-
tion of such penalty is not dependent
on the tax treatment of the underlying
transaction ultimately being sustained,
will provide an additional incentive
for taxpayers to satisfy their reporting
obligations under the new disclosure
provisions.

House Report 108-548(I), 108th Cong.,
2nd Sess. 2004, at 261 (June 16, 2004)
(House Report).

In Footnote 232 of the House Report,
the Committee on Ways and Means notes
that the statutory definitions of "reportable
transaction" and "listed transaction" were
intended to incorporate the pre-AJCA reg-
ulatory definitions while providing the
Secretary with leeway to make changes to
those definitions:

The provision states that, except as
provided in regulations, a listed trans-
action means a reportable transaction,
which is the same as, or substantially
similar to, a transaction specifically

identified by the Secretary as a tax
avoidance transaction for purposes of
section 6011. For this purpose, it is
expected that the definition of "sub-
stantially similar" will be the definition
used in Treas. Reg. sec. 1.6011-4(c)(4).
However, the Secretary may modify
this definition (as well as the definitions
of "listed transaction" and "reportable
transactions") as appropriate.

Id. at 261 n.232.

Section 6707A(c)(1) defines a "report-
able transaction" as "any transaction with
respect to which information is required
to be included with a return or statement
because, as determined under regulations
prescribed under section 6011, such trans-
action is of a type which the Secretary
determines as having a potential for tax
avoidance or evasion." A "listed trans-
action" is defined by section 6707A(c)
(2) as "a reportable transaction which is
the same as, or substantially similar to, a
transaction specifically identified by the
Secretary as a tax avoidance transaction
for purposes of section 6011."

Section 6111(a), as revised by the
AJCA, provides that each material advi-
sor with respect to any reportable trans-
action must make a return setting forth:
(1) information identifying and describing
the transaction, (2) information describ-
ing any potential tax benefits expected to
result from the transaction, and (3) such
other information as the Secretary may
prescribe. Such return must be filed not
later than the date specified by the Sec-
retary. Section 6111(b)(2) provides that
a reportable transaction has the meaning
given to such term by section 6707A(c).

Section 6112(a), as revised by the
AJCA, provides that each material advi-
sor with respect to any reportable transac-
tion (as defined in section 6707A(c)) must
(whether or not required to file a return
under section 6111 with respect to such
transaction) maintain a list (1) identifying
each person with respect to whom such
advisor acted as a material advisor and (2)
containing such other information as the
Secretary may by regulations require.

On August 3, 2007, the Treasury
Department and the IRS published final
regulations in the Federal Register (72
FR 43146-01, 72 FR 43157-01, 72 FR
43154-01) under sections 6011, 6111,
and 6112 modifying the rules relating to

the disclosure of reportable transactions
by participants in reportable transactions
under section 6011, the disclosure of
reportable transactions by material advi-
sors under section 6111, and the list main-
tenance requirements of material advisors
with respect to reportable transactions
under section 6112 in response to the
changes in the AJCA.

## II. Disclosure of Reportable Transactions by Participants and Penalties for Failure to Disclose

Section 1.6011-4(a) provides that
every taxpayer that has participated in a
reportable transaction within the mean-
ing of §1.6011-4(b) and who is required
to file a tax return must file a disclosure
statement within the time prescribed in
§1.6011-4(e).

Section 1.6011-4(d) and (e) provide
that the disclosure statement - Form
8886, Reportable Transaction Disclosure
Statement (or successor form) - must be
attached to the taxpayer's tax return for
each taxable year for which a taxpayer
participates in a reportable transaction.
A copy of the disclosure statement must
be sent to the IRS's Office of Tax Shel-
ter Analysis (OTSA) at the same time
that any disclosure statement is first filed
by the taxpayer pertaining to a particular
reportable transaction.

Reportable transactions include listed
transactions, confidential transactions,
transactions with contractual protection,
loss transactions, and transactions of inter-
est. See §1.6011-4(b)(2) through (6). Con-
sistent with the definitions previously pro-
vided in the 2000 Temporary Regulations
and later in the 2003 Final Regulations,
as promulgated in 2007, §1.6011-4(b)(2)
continues to define a "listed transaction"
as a transaction that is the same as or sub-
stantially similar to one of the types of
transactions that the IRS has determined to
be a tax avoidance transaction and identi-
fied by notice, regulation, or other form of
published guidance as a listed transaction.

Section 1.6011-4(c)(4) provides that a
transaction is "substantially similar" if it
is expected to obtain the same or similar
types of tax consequences and is either
factually similar or based on the same or
similar tax strategy. Receipt of an opin-
ion regarding the tax consequences of the

transaction is not relevant to the determi-
nation of whether the transaction is the
same as or substantially similar to another
transaction. Further, the term substantially
similar must be broadly construed in favor
of disclosure. For example, a transaction
may be substantially similar to a listed
transaction even though it may involve
different entities or use different Code
provisions.

Section 1.6011-4(c)(3)(i)(A) provides
that a taxpayer has participated in a listed
transaction if the taxpayer's tax return
reflects tax consequences or a tax strat-
egy described in the published guidance
that lists the transaction under §1.6011-
4(b)(2). Published guidance may identify
other types or classes of persons that will
be treated as participants in a listed trans-
action. Published guidance may also iden-
tify types or classes of persons that will
not be treated as participants in a listed
transaction.

Section 1.6011-4(e)(2)(i) provides that
if a transaction becomes a listed trans-
action after the filing of a taxpayer's tax
return reflecting the taxpayer's participa-
tion in the listed transaction and before the
end of the period of limitations for assess-
ment for any taxable year in which the
taxpayer participated in the listed transac-
tion, then a disclosure statement must be
filed with OTSA within 90 calendar days
after the date on which the transaction
becomes a listed transaction. This require-
ment extends to an amended return and
exists regardless of whether the taxpayer
participated in the transaction in the year
the transaction became a listed transaction.
The Commissioner of Internal Revenue
(Commissioner) may also determine the
time for disclosure of listed transactions
in the published guidance identifying the
transaction.

Participants required to disclose these
transactions under §1.6011-4 who fail to
do so are subject to penalties under sec-
tion 6707A. Section 6707A(b) provides
that the amount of the penalty is 75 per-
cent of the decrease in tax shown on the
return as a result of the reportable transac-
tion (or which would have resulted from
such transaction if such transaction were
respected for Federal tax purposes), sub-
ject to minimum and maximum penalty
amounts. The minimum penalty amount
is $5,000 in the case of a natural person

and $10,000 in any other case. For a listed
transaction, the maximum penalty amount
is $100,000 in the case of a natural person
and $200,000 in any other case.

Additional penalties may also apply.
In general, section 6662A imposes a 20
percent accuracy-related penalty on any
understatement (as defined in section
6662A(b)(1)) attributable to an ade-
quately disclosed reportable transaction.
If the taxpayer had a requirement to
disclose participation in the reportable
transaction but did not adequately dis-
close the transaction in accordance with
the regulations under section 6011, the
taxpayer is subject to an increased pen-
alty rate equal to 30 percent of the under-
statement. See section 6662A(c). Section
6662A(b)(2) provides that section 6662A
applies to any item which is attributable
to any listed transaction and any report-
able transaction (other than a listed trans-
action) if a significant purpose of such
transaction is the avoidance or evasion of
Federal income tax.

Participants required to disclose listed
transactions who fail to do so are also sub-
ject to an extended period of limitations
under section 6501(c)(10). That section
provides that the time for assessment of
any tax with respect to the transaction
shall not expire before the date that is one
year after the earlier of the date the partic-
ipant discloses the transaction or the date a
material advisor discloses the participation
pursuant to a written request under section
6112(b)(1)(A).

## III. Disclosure of Reportable Transactions by Material Advisors and Penalties for Failure to Disclose

Section 301.6111-3(a) of the Procedure
and Administration Regulations provides
that each material advisor with respect
to any reportable transaction, as defined
in §1.6011-4(b), must file a return as
described in §301.6111-3(d) by the date
described in §301.6111-3(e).

Section 301.6111-3(b)(1) provides that
a person is a material advisor with respect
to a transaction if the person provides any
material aid, assistance, or advice with
respect to organizing, managing, promot-
ing, selling, implementing, insuring, or
carrying out any reportable transaction,
and directly or indirectly derives gross

income in excess of the threshold amount
as defined in §301.6111-3(b)(3) for the
material aid, assistance, or advice. Under
§301.6111-3(b)(2)(i) and (ii), a person
provides material aid, assistance, or advice
if the person provides a tax statement,
which is any statement (including another
person's statement), oral or written, that
relates to a tax aspect of a transaction that
causes the transaction to be a reportable
transaction as defined in §1.6011-4(b)(2)
through (7).

Material advisors must disclose trans-
actions on Form 8918, Material Advisor
Disclosure Statement (or successor form),
as provided in §301.6111-3(d) and (e).
Section 301.6111-3(e) provides that the
material advisor's disclosure statement for
a reportable transaction must be filed with
the OTSA by the last day of the month
that follows the end of the calendar quar-
ter in which the advisor becomes a mate-
rial advisor with respect to a reportable
transaction or in which the circumstances
necessitating an amended disclosure state-
ment occur. The disclosure statement must
be sent to the OTSA at the address pro-
vided in the instructions for Form 8918 (or
successor form).

Section 301.6111-3(d)(2) provides
that the IRS will issue to a material advi-
sor a reportable transaction number with
respect to the disclosed reportable trans-
action. Receipt of a reportable transaction
number does not indicate that the dis-
closure statement is complete, nor does
it indicate that the transaction has been
reviewed, examined, or approved by the
IRS. Material advisors must provide the
reportable transaction number to all tax-
payers and material advisors for whom the
material advisor acts as a material advisor
as defined in §301.6111-3(b). The report-
able transaction number must be provided
at the time the transaction is entered into,
or, if the transaction is entered into prior to
the material advisor receiving the report-
able transaction number, within 60 cal-
endar days from the date the reportable
transaction number is mailed to the mate-
rial advisor.

Additionally, material advisors must
prepare and maintain lists identifying each
person with respect to whom the advisor
acted as a material advisor with respect
to the reportable transaction in accor-
dance with §301.6112-1(b) and furnish

such lists to the IRS in accordance with
§301.6112-1(e).

Section 6707(a) provides that a mate-
rial advisor who fails to file a timely dis-
closure, or files an incomplete or false dis-
closure statement, is subject to a penalty.
Pursuant to section 6707(b)(2), for listed
transactions, the penalty is the greater of
(A) $200,000, or (B) 50 percent of the
gross income derived by such person with
respect to aid, assistance, or advice which
is provided with respect to the listed trans-
action before the date the return is filed
under section 6111.

A material advisor may also be sub-
ject to a penalty under section 6708 for
failing to maintain a list under section
6112(a) and failing to make the list avail-
able upon written request to the Secretary
in accordance with section 6112(b) within
20 business days after the date of such
request. Section 6708(a) provides that the
penalty is $10,000 per day for each day
of the failure after the 20th day. However,
no penalty will be imposed with respect to
the failure on any day if such failure is due
to reasonable cause.

## IV. Tax-Exempt Entities as Parties to Prohibited Tax Shelter Transactions

Section 4965 of the Code, which was
enacted in 2006, is intended to deter cer-
tain "tax-exempt entities" (as defined in
section 4965(c)) from facilitating prohib-
ited tax shelter transactions, which include
listed transactions. Section 4965(a)(1)
provides, in part, that if a transaction is
a prohibited tax shelter transaction at the
time a tax-exempt entity becomes a party
to the transaction, the entity must pay a
tax for the taxable year and any subse-
quent taxable year as provided in section
4965(b)(1). Tax-exempt entities subject to
the tax are listed in section 4965(c)(1)-(3)
and include, among others, entities and
governmental units described in sections
501(c) and 170(c) (other than the United
States). A tax-exempt entity that is a party
to a prohibited tax shelter transaction gen-
erally is also subject to various reporting
and disclosure obligations. Additionally,
an entity manager is subject to excise
taxes under section 4965(a)(2) if the man-
ager approves the entity as a party (or
otherwise causes the entity to be a party)
to a prohibited tax shelter transaction

and knows or has reason to know that
the transaction is a prohibited tax shelter
transaction.

### A. The excise taxes

The amount of the section 4965 tax
owed by a tax-exempt entity depends on
whether the tax-exempt entity knows, or
has reason to know, that a transaction is
a prohibited tax shelter transaction at the
time the entity becomes a party to the
transaction. A tax-exempt entity is treated
as knowing or having reason to know that
a transaction is a prohibited tax shelter
transaction if one or more of its entity
managers knew or had reason to know
that the transaction was a prohibited tax
shelter transaction at the time the entity
manager(s) approved the entity as (or oth-
erwise caused the entity to be) a party to
the transaction.1 The tax-exempt entity is
also attributed the knowledge or reason to
know of certain entity managers-those
persons with authority or responsibil-
ity similar to that exercised by an offi-
cer, director, or trustee of an organiza-
tion-even if the entity manager does not
approve the entity as (or otherwise cause
the entity to be) a party to the transaction.

Section 53.4965-4(a)(1) provides that a
tax-exempt entity is a "party" to a prohib-
ited tax shelter transaction if it facilitates
a prohibited tax shelter transaction by
reason of its tax-exempt, tax-indifferent,
or tax-favored status. In addition, under
§53.4965-4(a)(2) and (b), the Secretary
may issue published guidance to identify
tax-exempt entities by type, class, or role
that will or will not be treated as parties to
a prohibited tax shelter transaction.

If the tax-exempt entity unknowingly
becomes a party to a prohibited tax shelter
transaction, the section 4965 tax gener-
ally equals the greater of (1) the product
of the highest rate of tax under section 11
(currently 21 percent) and the entity's net
income attributable to the prohibited tax
shelter transaction, or (2) the product of
the highest rate of tax under section 11 and
75 percent of the proceeds received by the
entity that are attributable to the prohib-
ited tax shelter transaction. If the tax-ex-
empt entity knew or had reason to know

that the transaction was a prohibited tax
shelter transaction at the time the tax-ex-
empt entity became a party to the transac-
tion, the section 4965 tax increases to the
greater of (1) 100 percent of the entity's
net income attributable to the prohibited
tax shelter transaction, or (2) 75 percent
of the entity's proceeds attributable to the
prohibited tax shelter transaction.

The terms "net income" and "proceeds"
are defined in §53.4965-8. In general, a
tax-exempt entity's net income attribut-
able to a prohibited tax shelter transac-
tion is its gross income derived from the
transaction, reduced by those deductions
that are attributable to the transaction and
that would be allowed by chapter 1 of the
Code if the tax-exempt entity were treated
as a taxable entity for this purpose, and
further reduced by the taxes imposed by
subtitle D of the Code (other than the tax
imposed by section 4965) with respect to
the transaction. In the case of a tax-exempt
entity that is a party to the transaction by
reason of facilitating a prohibited tax shel-
ter transaction by reason of its tax-exempt,
tax-indifferent, or tax-favored status, the
term "proceeds," solely for purposes of
section 4965, means the gross amount of
the tax-exempt entity's consideration for
facilitating the transaction, not reduced
for any costs or expenses attributable to
the transaction. Published guidance with
respect to a particular prohibited tax shel-
ter transaction may designate additional
amounts as proceeds from the transaction
for purposes of section 4965. In addition,
for all tax-exempt entities that are parties
to a prohibited tax shelter transaction, any
amount that is a gift or a contribution to a
tax-exempt entity and that is attributable
to a prohibited tax shelter transaction is
treated as proceeds for purposes of sec-
tion 4965, unreduced by any associated
expenses.

The amount of the section 4965 tax
on an "entity manager" equals $20,000
for each time the manager approves the
tax-exempt entity as (or otherwise causes
such entity to be) a party to a prohibited
tax shelter transaction and knows or has
reason to know that the transaction is a
prohibited tax shelter transaction. This lia-
bility is not joint and several.

### B. Disclosures

Section 53.6011-1 requires that a
tax-exempt entity subject to the section
4965 excise tax must file Form 4720,
Return of Excise Taxes Under Chapters
41 and 42 of the Internal Revenue Code,
to report the liability and pay the tax due
under section 4965(a)(1). Under §1.6033-
5, a tax-exempt entity that is a party to a
prohibited tax shelter transaction must file
Form 8886-T, Disclosure by Tax-Exempt
Entity Regarding Prohibited Tax Shelter
Transaction, to disclose that it is a party
to a prohibited tax shelter transaction, the
identity of any other party (whether tax-
able or tax-exempt) to such transaction
that is known to the tax-exempt entity, and
certain other information. Under §1.6033-
2, if the tax-exempt entity is required to
file Form 990, Return of Organization
Exempt From Income Tax, it must dis-
close on that form that it is a party to a
prohibited tax shelter transaction, whether
any taxable party notified the tax-exempt
entity that it was or is a party to a prohib-
ited tax shelter transaction, and whether
the tax-exempt entity filed Form 8886-T.

Section 6011(g) and §301.6011(g)-1
provide that any taxable party to a prohib-
ited tax shelter transaction must disclose
to each tax-exempt entity that the taxable
party knows or has reason to know is a
party to such transaction that the transac-
tion is a prohibited tax shelter transaction.

## V. Conservation Easements

Section 170(f)(3)(A) provides that, in
the case of a contribution (not made by a
transfer in trust) of an interest in property
that consists of less than the taxpayer's
entire interest in such property, a deduc-
tion will be allowed only to the extent that
the value of the interest contributed would
be allowable as a deduction under section
170 if such interest had been transferred
in trust.

Section 170(f)(3)(B)(iii) provides that
section 170(f)(3)(A) does not apply to a
qualified conservation contribution.

Section 170(h)(1) provides that, for
purposes of section 170(f)(3)(B)(iii), the
term "qualified conservation contribution"

1 Section 53.4965-6 of the Foundation and Similar Excise Tax Regulations provides factors to be considered in determining whether an entity manager knows or has reason to know that
a transaction is a prohibited tax shelter transaction.

means a contribution (1) of a qualified real
property interest, (2) to a qualified orga-
nization, (3) exclusively for conservation
purposes.

Under section 170(h)(2), the term
"qualified real property interest" means
any of the following interests in real prop-
erty: (A) the entire interest of the donor
other than a qualified mineral interest as
defined in section 170(h)(6); (B) a remain-
der interest; and (C) a restriction (granted
in perpetuity) on the use that may be made
of the real property.

Section 170(h)(3) provides that the
term "qualified organization" generally
includes governmental units, certain pub-
lic charities, and Type I supporting organi-
zations thereto.

Section 170(h)(4)(A) generally pro-
vides that the term "conservation purpose"
includes (1) the preservation of land areas
for outdoor recreation by, or the education
of, the general public; (2) the protection
of a relatively natural habitat of fish, wild-
life, or plants, or similar ecosystem; (3)
the preservation of open space (includ-
ing farmland and forest land) where such
preservation is either for the scenic enjoy-
ment of the general public, or pursuant to
a clearly delineated Federal, State, or local
governmental conservation policy, and
that will yield a significant public benefit,
or (4) the preservation of an historically
important land area or a certified historic
structure (as defined in section 170(h)(4)
(C)).

Section 170(h)(4)(B) provides a special
rule with respect to buildings in registered
historic districts. Among other require-
ments, any contribution of a qualified
real property interest that is a restriction
with respect to the exterior of a building
described in section 170(h)(4)(C)(ii) is
not considered to be exclusively for con-
servation purposes unless such interest
includes a restriction which preserves the
entire exterior of the building (including
the front, sides, rear, and height of the
building), and prohibits any change in the
exterior of the building which is inconsis-
tent with the historical character of such
exterior.

Section 170(h)(4)(C) provides that, for
purposes of section 170(h)(4)(A)(iv), the
term "certified historic structure" means
any building, structure, or land area which
is listed in the National Register, or any

building which is located in a registered
historic district (as defined in section
47(c)(3)(B) of the Code) and is certified
by the Secretary of the Interior to the Sec-
retary as being of historic significance to
the district. A building, structure, or land
area satisfies section 170(h)(4)(C) if it
satisfies that definition either at the time
of the transfer or on the due date (includ-
ing extensions) for filing the transferor's
return under chapter 1 of the Code for the
taxable year in which the transfer is made.

Section 170(h)(5)(A) provides that, for
purposes of section 170(h), a contribution
is not treated as exclusively for conser-
vation purposes unless the conservation
purpose is protected in perpetuity. Section
170(h)(2)(C) and section 1.170A-14(b)(2)
provide in part that a perpetual conserva-
tion restriction is a restriction granted in
perpetuity on the use that may be made
of real property including an easement or
other interest in property that under state
law has attributes similar to an easement.

### VI. Syndicated Conservation Easement Transactions and Notice 2017-10

Some promoters have been syndicating
conservation easement transactions that
purport to give investors in a partnership
or other pass-through entity (pass-through
entity) the opportunity to claim a charita-
ble contribution deduction in amounts that
significantly exceed the amounts invested.
In one type of an abusive syndicated con-
servation easement transaction, the pro-
moter obtains an appraisal that purports
to be a qualified appraisal as defined in
section 170(f)(11)(E)(i). The appraisal
greatly inflates the value of the conserva-
tion easement based on unreasonable and
unrealistic conclusions about the highest
and best use of the real property and does
not take into account all of the factors
necessary to support the valuation, such as
the time and costs to achieve that highest
and best use. In addition, investors who
held their direct or indirect interests in the
pass-through entity for one year or less
take into account under section 1223 of
the Code the pass-through entity's holding
period in the conservation easement for
purposes of section 1222 of the Code (tak-
ing into account any modification required
by section 1061 of the Code) for purposes
of potential treatment of the donated

conservation easement as long-term cap-
ital gain property under section 170(e)(1).

On December 23, 2016, the IRS
released Notice 2017-10, 2017-4 I.R.B.
544, which was subsequently modified
by Notice 2017-29, 2017-20 I.R.B. 1243,
and Notice 2017-58, 2017-42 I.R.B. 326,
alerting taxpayers and their representa-
tives that syndicated conservation ease-
ment transactions described in Notice
2017-10, and substantially similar trans-
actions, are tax avoidance transactions and
identifying them as listed transactions for
purposes of §1.6011-4(b)(2) and sections
6111 and 6112. Notice 2017-10 also alerts
persons involved with the transactions
that certain responsibilities may arise
from their involvement. Notice 2017-10,
as modified by Notice 2017-29, specifi-
cally excludes a donee described in sec-
tion 170(c) from being treated as a party
to the transaction under section 4965 of
the Code ("section 4965 carve-out"), a
participant under §1.6011-4, or a material
advisor under section 6111(b)(1). Notice
2017-10 applies to easements placed on
any real property, including historically
important land areas and certified historic
structures.

Notice 2017-10 describes the follow-
ing transaction as a listed transaction.
An investor receives promotional materi-
als that offer investors in a pass-through
entity the possibility of a charitable con-
tribution deduction that equals or exceeds
an amount that is two and one-half times
(that is, 250 percent of) the amount of the
investor's investment. The promotional
materials may be oral or written. For pur-
poses of Notice 2017-10, promotional
materials include, but are not limited to,
documents described in §301.6112-1(b)
(3)(iii)(B). The investor purchases an
interest, directly or indirectly (through
one or more tiers of pass-through enti-
ties), in the pass-through entity that holds
real property. The pass-through entity that
holds the real property contributes a con-
servation easement encumbering the prop-
erty to a tax-exempt entity and allocates,
directly or through one or more tiers of
pass-through entities, a charitable contri-
bution deduction to the investor. Follow-
ing that contribution, the investor reports
on his or her federal income tax return a
charitable contribution deduction with
respect to the conservation easement.

Notice 2017-10 creates a rule only for
purposes of reporting and penalties under
the reportable transaction rules. No infer-
ence should be drawn from Notice 2017-
10 (or these regulations) regarding the
appropriateness of any deduction in any
specific case, including cases in which
the deduction is less than two and one-
half times the amount of an investor's
investment.

The foregoing efforts to combat
abuse notwithstanding, the Treasury
Department and IRS fully support oth-
erwise proper deductions attributable
to the voluntary contribution of a prop-
erly valued restriction on real property
requiring the real property to be granted
and protected for conservation purposes
in perpetuity.

### VII. Purpose of Proposed Regulations

On March 3, 2022, the Sixth Circuit
issued an order in Mann Construction v.
United States, 27 F.4th 1138, 1147 (6th
Cir. 2022), holding that Notice 2007-83,
2007-2 C.B. 960, which identified certain
trust arrangements claiming to be welfare
benefit funds and involving cash value life
insurance policies as listed transactions,
violated the Administrative Procedure
Act (APA), 5 U.S.C. 551-559, because the
notice was issued without following the
notice-and-comment procedures required
by section 553 of the APA. The Sixth
Circuit concluded that Congress did not
clearly express an intent to override the
notice-and-comment procedures required
by section 553 of the APA when it enacted
the AJCA. Id. at 1148. The Sixth Circuit
reversed the decision of the district court,
which held that Congress had authorized
the IRS to identify listed transactions
without notice and comment. See Mann
Construction, Inc. v. United States, 539
F.Supp.3d 745, 763 (E.D. Mich. 2021).
See also GBX Associates, LLC, v. United
States, 1:22cv401 (N.D. Ohio, Nov. 14,
2022).

Relying on an analysis similar to the
Sixth Circuit's analysis in Mann Con-
struction, the Tax Court, in a reviewed
decision with two judges dissenting,
recently held that Notice 2017-10 was
improperly issued because it was issued
without following the APA's notice and
comment procedures. See Green Valley

Investors, LLC, et al. v. Commissioner,
159 T.C. No. 5 (Nov. 9, 2022). Accord-
ingly, the court granted the petitioner's
cross-motion for partial summary judg-
ment on the application of section 6662A
penalties. A final decision has not been
entered in the case.

The Treasury Department and the IRS
disagree with the Sixth Circuit's deci-
sion in Mann Construction and the Tax
Court's decision in Green Valley and
are continuing to defend the validity of
Notice 2017-10 and other notices identi-
fying transactions as listed transactions
in circuits other than the Sixth Circuit.
At the same time, however, to eliminate
any confusion and ensure consistent
enforcement of the tax laws throughout
the nation, the Treasury Department and
the IRS are issuing these proposed regu-
lations to identify certain syndicated con-
servation easement transactions as listed
transactions for purposes of all relevant
provisions of the Code and Treasury
Regulations.

These proposed regulations inform
taxpayers that participate in syndicated
conservation easement transactions, and
substantially similar transactions, and
persons who act as material advisors
with respect to these transactions, and
substantially similar transactions, that,
once these proposed regulations are pub-
lished in final form, those taxpayers and
material advisors must disclose the trans-
actions in accordance with the final regu-
lations and the regulations issued under
section 6011 and 6111. Material advi-
sors must also maintain lists as required
by section 6112. Prior to the date these
regulations are published as final regu-
lations, it is the position of the Treasury
Department and the IRS that disclosure
and list maintenance requirements for
syndicated conservation easement trans-
actions identified as listed transactions in
Notice 2017-10 continue to be in effect,
other than in the Sixth Circuit. In addi-
tion, taxpayers, including taxpayers in
the Sixth Circuit, who have filed a tax
return reflecting their participation in a
syndicated conservation easement trans-
action before the final regulations are
published and who have not disclosed
the transaction pursuant to Notice 2017-
10 will be required to file a disclosure
statement within 90 calendar days after

the date on which the final regulations
are published if the period of limita-
tions for assessment for any taxable year
in which the taxpayer participated in
the transaction remains open. Material
advisors also have disclosure and list
maintenance obligations with respect
to such transactions. See Part VI. of the
Explanation of Provisions section of this
preamble.

The IRS intends to challenge the pur-
ported tax benefits from these syndicated
conservation easement transactions based
on the overvaluation of the conservation
easement. The IRS may also challenge the
purported tax benefits from these transac-
tions based on failure to comply with the
requirements of section 170 (including,
for example, lack of donative intent or
the failure to comply with requirements
of section 170(h)), lack of economic sub-
stance, lack of business purpose, violation
of the partnership anti-abuse rule, or appli-
cation of other rules or doctrines based on
the facts of a particular case.

## Explanation of Provisions

### I. Definition of Syndicated Conservation Easement Transactions

Proposed §1.6011-9(a) provides that
a transaction that is the same as, or sub-
stantially similar to, a syndicated conser-
vation easement transaction described in
proposed §1.6011-9(b) is a listed trans-
action for purposes of §1.6011-4(b)(2)
and sections 6111 and 6112. “Substan-
tially similar to" is defined in §1.6011-
4(c)(4) to include any transaction that is
expected to obtain the same or similar
types of tax consequences and that is
either factually similar or based on the
same or a similar tax strategy. In the con-
text of a syndicated conservation ease-
ment transaction, that would include, for
example, transactions in which the con-
tributed property is described in section
170(h)(2)(A) or (B) or a fee interest in
real property.

Proposed §1.6011-9(b) defines a syn-
dicated conservation easement transaction
as a transaction in which the four elements
described in proposed §1.6011-9(b)(1)
through (4) occur (regardless of the order
in which they occur). These four elements
are as follows:

A. Promotional materials satisfy the 2.5
times rule.

A taxpayer receives promotional mate-
rials that offer investors in a pass-through
entity the possibility of a charitable con-
tribution deduction that equals or exceeds
an amount that is two and one-half times
the amount of the taxpayer's investment
in the pass-through entity. The proposed
regulations refer to this element as the
"2.5 times rule." Proposed §1.6011-9(c)
(4) states that, for this purpose, the term
"promotional materials" includes materi-
als described in §301.6112-1(b)(3)(iii)(B)
and any other written or oral communi-
cation regarding the transaction provided
to investors, such as marketing materials,
appraisals (including preliminary apprais-
als, draft appraisals, and the appraisal
that is attached to the taxpayer's return),
websites, transactional documents such
as the deed of conveyance, private place-
ment memoranda, tax opinions, operat-
ing agreements, subscription agreements,
statements of the anticipated value of the
conservation easement, and statements of
the anticipated amount of the charitable
contribution deduction. These proposed
regulations provide additional guidance
on how to determine whether the 2.5 times
rule is met, as discussed in Part II of the
Explanation of Provisions section of this
preamble.

#### B. Taxpayer invests in the pass-through entity.

The taxpayer acquires an interest,
directly or indirectly through one or more
tiers of pass-through entities, in the pass-
through entity that owns real property
(that is, the taxpayer becomes an investor
in the entity that owns the real property).

C. Pass-through entity contributes the
conservation easement to a qualified
organization and allocates a charitable
contribution deduction to its partners.

The pass-through entity that owns the
real property contributes an easement on
such real property to a qualified organiza-
tion and treats the easement as a conserva-
tion easement. A conservation easement is
defined in these proposed regulations (in
proposed §1.6011-9(c)(2)) as a restriction,

exclusively for conservation purposes,
granted in perpetuity (per the relevant sub-
sections of section 170), on the use that
may be made of specified real property.

The pass-through entity allocates,
directly or through one or more tiers of
pass-through entities, a charitable contri-
bution deduction to the taxpayer.

D. Taxpayer reports charitable
contribution deduction on taxpayer's
Federal income tax return.

The taxpayer reports on the taxpayer's
Federal income tax return a charitable
contribution deduction with respect to the
conservation easement.

### II. 2.5 Times Rule

These proposed regulations include
three rules to address potential avoidance
of the 2.5 times rule. First, to prevent
promoters from circumventing the 2.5
times rule by having promotional materi-
als contain language that is ambiguous as
to the amount of the potential charitable
deduction, the proposed regulations pro-
vide that the highest deduction amount
stated or implied in the promotional
materials, taken as a whole, applies.
Thus, if the promotional materials sug-
gest a range of possible charitable con-
tribution deduction amounts, the highest
suggested deduction amount determines
whether the 2.5 times rule is met. Simi-
larly, if one piece of promotional mate-
rials (for example, an appraisal or oral
statement) suggests a higher charitable
contribution deduction amount than do
other promotional materials, then the
highest suggested charitable contribu-
tion deduction amount will determine
whether the 2.5 times rule is met.

Second, the proposed regulations
include a rebuttable presumption deeming
the 2.5 times rule to be met if (i) the pass-
through entity donates a conservation
easement within three years following
taxpayer's investment in the pass-through
entity, (ii) the pass-through entity allo-
cates a charitable contribution deduction
to the taxpayer that equals or exceeds two
and one-half times the amount of the tax-
payer's investment, and (iii) the taxpayer
claims a deduction that equals or exceeds
two and one-half times the amount of the

taxpayer's investment. This presumption
is intended to address taxpayers and pro-
moters who may not be forthcoming about
the content or receipt of the promotional
materials (as broadly defined under the
proposed regulations). By the fact that the
taxpayer claimed a charitable contribu-
tion deduction that equals or exceeds an
amount that is two and one-half times the
amount of their investment in the pass-
through entity, the Treasury Department
and the IRS will presume that the tax-
payer received promotional materials that
offered investors the possibility of being
allocated a charitable contribution deduc-
tion that equals or exceeds an amount that
is two and one-half times the amount of the
taxpayer's investment in the pass-through
entity. The presumption may be rebutted if
the taxpayer establishes to the satisfaction
of the Commissioner that none of the pro-
motional materials contained a suggestion
or implication that investors might receive
a charitable contribution deduction that
equals or exceeds an amount that is two
and one-half times the amount of their
investment in the pass-through entity. The
Treasury Department and the IRS request
comments on this rule.

Finally, to prevent taxpayers from
investing excess amounts in the pass-
through entity to avoid meeting the 2.5
times rule, the proposed regulations con-
tain an "anti-stuffing" rule. The anti-stuff-
ing rule provides that the amount of a
taxpayer's investment in the pass-through
entity for purposes of determining appli-
cation of the 2.5 times rule is limited to
the portion of the taxpayer's investment
that is attributable to the portion of the real
property on which a conservation ease-
ment is placed and that produces the char-
itable contribution deduction described
in paragraph (b)(3) of this section. For
example, if a portion of the taxpayer's
investment in the pass-through entity is
attributable to property held directly or
indirectly by the pass-through entity other
than the real property on which a conser-
vation easement is placed (including any
other real property, cash, cash equivalents,
digital assets, marketable securities, or
other assets), that portion of the taxpay-
er's investment is not attributable to the
portion of the real property on which a
conservation easement is placed for pur-
poses of the 2.5 times rule. The proposed

regulations include an example illustrat-
ing the application of this rule.

## III. Participant

Whether a taxpayer has participated
in the listed transaction described in
proposed §1.6011-9(b) is determined
under §1.6011-4(c)(3)(i)(A). Participants
include, but are not limited to, an owner
of a pass-through entity, the pass-through
entity (any tier, if multiple tiers are
involved in the transaction), or any other
taxpayer whose tax return reflects tax
consequences or a tax strategy described
in these proposed regulations. The pro-
posed regulations provide, consistent with
Notice 2017-10, that a qualified organiza-
tion to which a syndicated conservation
easement described in proposed §1.6011-
9(b) is donated is not treated as a partic-
ipant under §1.6011-4(c)(3)(i)(A) to the
listed transaction described in these pro-
posed regulations.

## IV. Material Advisors

Material advisors, including promot-
ers, appraisers and return preparers who
make a tax statement with respect to trans-
actions described in proposed §1.6011-
9(b), have disclosure and list maintenance
obligations under sections 6111 and 6112.
See §§301.6111-3 and 301.6112-1. Notice
2017-10, as modified by Notice 2017-29,
provided that a qualified organization is
not treated as a material advisor under
section 6111. These proposed regulations
differ from Notice 2017-10, as modified,
in that they do not contain this rule. One
of the requirements to be a material advi-
sor under section 6111(b)(1) is that the
person must directly or indirectly derive
gross income in excess of the threshold
amount provided in section 6111(b)(1)
(B) for providing material aid, assistance,
or advice with respect to the listed trans-
action. The regulations under section
6111 provide that gross income includes
all fees for a tax strategy, for services for
advice (whether or not tax advice), and for

the implementation of a reportable trans-
action. However, a fee does not include
amounts paid to a person, including an
advisor, in that person's capacity as a party
to the transaction. See §301.6111-3(b)(3)
(ii). The Treasury Department and the IRS
request comments on whether qualified
organizations are receiving fees for pro-
viding material aid, assistance, or advice
with respect to transactions described in
these proposed regulations, the nature of
the services being provided, and why a
carve-out from the definition of material
advisor is needed.

## V. Party to a Prohibited Tax Shelter Transaction

The proposed regulations provide,
consistent with Notice 2017-10, that a
qualified organization2 is not treated as
a party to the transaction under section
4965. However, the Treasury Department
and the IRS are considering whether a
qualified organization that facilitates an
abusive syndicated conservation easement
transaction described in these proposed
regulations should be subject to section
4965. Since the issuance of Notice 2017-
10, the IRS has received tens of thousands
of listed transaction disclosures under sec-
tions 6011 and 6111. These disclosures
indicate that a small number of qualified
organizations facilitate abusive syndi-
cated conservation easement transactions,
sometimes for several hundreds of inves-
tors per year. Eliminating or limiting the
scope of the section 4965 carve-out could
deter qualified organizations from facil-
itating these abusive transactions. Any
elimination or limitation of the section
4965 carve-out would apply only to trans-
actions occurring after the date the Trea-
sury decision adopting these regulations
as final regulations is published in the
Federal Register.

While some land trusts facilitate syndi-
cated conservation easement transactions
that the land trusts know, or have reason
to know, are abusive, other land trusts take
affirmative steps to avoid participating in

abusive transactions. For example, some
land trusts, when engaging in transactions
with pass-through entities of unrelated
parties, require a donor's appraisal and
will decline to participate in any transac-
tion in which, among other things: (i) the
appraisal indicates an increase in value
of more than two and one-half times the
basis in the property; (ii) the easement or
property is donated within 36 months of
the pass-through entity's acquisition of the
property; and (iii) the value of the dona-
tion (not the deduction) is $1 million or
greater.

The Treasury Department and the IRS
request comments on specific ways that
qualified organizations can engage in
due diligence to avoid entering into abu-
sive syndicated conservation easement
transactions described in these proposed
regulations. For example: what questions
should qualified organizations ask donors
to avoid entering into a syndicated con-
servation easement transaction described
in these proposed regulations; when is
the qualified organization best positioned
to make the inquiries; and what written
information or materials could the donor
provide to the qualified organization to
ensure the qualified organization will
not be participating in an inappropriate
transaction?

### A. Eliminating the section 4965 carve-out

Tax-exempt entities that facilitate
abusive syndicated conservation ease-
ment transactions described in these pro-
posed regulations do so by reason of their
tax-exempt, tax-indifferent, or tax-favored
status. Thus, if the final regulations were
to eliminate the section 4965 carve-out, a
qualified organization that accepts a syn-
dicated conservation easement described
in these proposed regulations would be
subject to the section 4965 excise tax.
However, if the qualified organization did
not know, or have reason to know, that
the contribution of the easement was part
of a syndicated conservation easement

2 As noted in Part V of the Background section of this preamble, a donation of a qualified conservation contribution must be made to a "qualified organization," generally defined in section
170(h)(3) to include governmental units, certain public charities, and Type I supporting organizations thereto. Under section 4965(c), the term "tax-exempt entity" includes, among others,
entities and governmental units described in sections 501(c) and 170(c) (other than the United States). Thus, absent the section 4965 carve-out, tax-exempt entities that would be affected
are donees that are qualified organizations described in section 170(h)(3), other than the United States, that accept a conservation easement as part of the syndicated conservation easement
transaction described in these proposed regulations.

transaction described in these proposed
regulations, then the qualified organization
would be subject only to the lesser section
4965 entity-level tax provided in section
4965(b)(1)(A). See discussion in Part
IV.A. of the Background section of this
preamble. Further, if at the time an entity
manager approves or otherwise causes the
qualified organization to accept the con-
tribution the manager does not know, or
have reason to know, that the contribution
is part of a syndicated conservation ease-
ment transaction described in these pro-
posed regulations, the manager would not
be subject to the tax imposed by section
4965(a)(2).

Conversely, if the qualified organiza-
tion knows or has reason to know (under
the rules discussed in Part IV.A. of the
Background section of this preamble) that
a contribution of an easement is part of a
syndicated conservation easement trans-
action described in these proposed regula-
tions, the qualified organization would be
subject to the increased section 4965 enti-
ty-level tax provided in section 4965(b)(1)
(B). In addition, any entity manager who
approves or otherwise causes the qualified
organization to accept the contribution
of an easement that the entity manager
knows or has reason to know is part of a
syndicated conservation easement trans-
action described in these proposed regula-
tions would be subject to the $20,000 tax
imposed by section 4965(a)(2).

The Treasury Department and the IRS
request comments on eliminating the sec-
tion 4965 carve-out in final regulations,
including whether there are specific sit-
uations in which a qualified organization
should or should not be considered to
know or have reason to know that a con-
servation easement contribution is part
of a syndicated conservation easement
transaction described in these proposed
regulations.

### B. Limiting the section 4965 carve-out

As described in Part IV.A. of the
Background section of this preamble,
§53.4965-4(b) provides that the Secretary
can identify tax-exempt entities that will

not be treated as parties to a prohibited tax
shelter transaction in published guidance
by type, class, or role. As an alternative
to eliminating the section 4965 carve-out
in final regulations, the Treasury Depart-
ment and the IRS are considering whether
to include a more limited carve-out in the
final regulations. Such a limited carve-out
could provide, for example, that a tax-ex-
empt entity that conducted an adequate
amount of due diligence before entering
into a transaction is not treated as a party
to a syndicated conservation easement
transaction.

The Treasury Department and the IRS
request comments on what would con-
stitute adequate due diligence to warrant
relieving a tax-exempt entity from poten-
tial liability for the section 4965 excise
tax and what additional safeguards might
be needed. For example, the Treasury
Department and the IRS request com-
ments on whether, if final regulations
include a more limited carve-out, the
carve-out should provide relief only for
organizations that have not previously
been involved3 in a syndicated conserva-
tion easement transaction.

### C. Net income and proceeds

As noted in Part IV.A. of the Back-
ground section of this preamble, the
section 4965 excise tax is based on an
entity's net income attributable to the pro-
hibited tax shelter transaction or proceeds
received by the entity that are attributable
to a prohibited tax shelter transaction. The
Treasury Department and the IRS request
comments on determining the amount
of net income and proceeds attributable
to the prohibited tax shelter transaction
in the context of a syndicated conser-
vation easement transaction, including
what gross income (if any) typically is
derived from (and what deductions are
attributable to) the transaction; the value
of the gift or contribution that would be
treated as proceeds for purposes of section
4965; and whether the IRS should desig-
nate additional amounts as proceeds for
section 4965 purposes, as permitted by
§53.4965-8.

### D. General request for comments

In addition to the specific comment
requests above, the Treasury Department
and the IRS request comments regarding
all aspects of the potential elimination
or limitation of the section 4965 carve-
out in final regulations, including any
alternative ways to deter tax-exempt
entities from acting as parties to syndi-
cated conservation easement transactions
and whether any additional guidance is
needed on the application of section 4965
in the syndicated conservation easement
context.

## VI. Effect of Transaction Becoming a Listed Transaction Under These Regulations

Participants required to disclose these
transactions under §1.6011-4 who fail to
do so are subject to penalties under sec-
tion 6707A. Participants required to dis-
close these transactions under §1.6011-4
who fail to do so are also subject to an
extended period of limitations under
section 6501(c)(10). Material advisors
required to disclose these transactions
under section 6111 who fail to do so are
subject to penalties under section 6707.
Material advisors required to maintain
lists of investors under section 6112 who
fail to do so (or who fail to provide such
lists when requested by the IRS) are sub-
ject to penalties under section 6708(a).
In addition, the IRS may impose other
penalties on persons involved in these
transactions or substantially similar
transactions, including accuracy-related
penalties under section 6662 or section
6662A, the section 6694 penalty for
understatements of a taxpayer's liabil-
ity by a tax return preparer, the section
6695A penalty for certain valuation
misstatements attributable to incorrect
appraisals, the section 6700 penalty for
promoting abusive tax shelters, and the
section 6701 penalty for aiding and abet-
ting understatement of tax liability.

Taxpayers who have filed a tax
return (including an amended return
(or Administrative Adjustment Request

3 A tax-exempt entity might be considered "involved" for these purposes, for example, if it previously accepted a syndicated conservation easement or if any person who established the
tax-exempt entity, or related persons to any such person, were participants, material advisors, or involved in any other capacity with a previous syndicated conservation easement transaction.

(AAR) for certain partnerships)) reflect-
ing their participation in these trans-
actions prior to [DATE OF PUBLI-
CATION OF FINAL RULE IN THE
FEDERAL REGISTER] and who have
not previously disclosed their partici-
pation in the transactions pursuant to
Notice 2017-10 must disclose the trans-
actions as provided in §1.6011-4(d) and
(e) provided that the period of limita-
tions for assessment of tax, including
any applicable extensions, for any tax-
able year in which the taxpayer partici-
pated in the transaction has not ended on
or before [DATE OF PUBLICATION
OF FINAL RULE IN THE FEDERAL
REGISTER]. Taxpayers that disclosed
their participation in a transaction pur-
suant to Notice 2017-10 before final reg-
ulations are published will be treated as
having made the disclosure pursuant to
the final regulations for the years cov-
ered by that disclosure.

In addition, material advisors have dis-
closure requirements with regard to trans-
actions occurring in prior years. However,
notwithstanding
§301.6111-3(b)(4)(i)
and (iii), material advisors are required
to disclose only if they have made a tax
statement on or after [DATE 6 YEARS
BEFORE DATE OF PUBLICATION
OF FINAL RULE].

## VII. Applicability Date

Proposed §1.6011-9(a) would iden-
tify syndicated conservation easement
transactions described in proposed
§1.6011-9(b) as listed transactions
effective as of the date of publication in
the Federal Register of a Treasury deci-
sion adopting these regulations as final
regulations.

## VIII. Effect on Other Documents

These proposed regulations do not
revoke or modify Notice 2017-10.

## Special Analyses

### I. Paperwork Reduction Act

The collection of information con-
tained in these proposed regulations is
reflected in the collection of information
for Forms 8886 and 8918 that have been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507(c)) under control numbers
1545-1800 and 1545-0865.

To the extent there is a change in bur-
den as a result of these regulations, the
change in burden will be reflected in the

updated burden estimates for the Forms
8886 and 8918. The requirement to main-
tain records to substantiate information
on Forms 8886 and 8918 is already con-
tained in the burden associated with the
control number for the forms and remains
unchanged.

An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.

### II. Regulatory Flexibility Act

The Secretary of the Treasury hereby
certifies that the proposed regulations will
not have a significant economic impact
on a substantial number of small entities
pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6). As previously
explained, the basis for these proposed
regulations is Notice 2017-10, 2017-4
I.R.B. 544 (modified by Notice 2017-29,
2017-20 I.R.B. 1243, and Notice 2017-58,
2017-42 I.R.B. 326). The following chart
sets forth the gross receipts of respondents
to Notice 2017-10 that report federal
tax information using Form 1065 (U.S.
Return of Partnership Income) and Form
1120-S (U.S. Income Tax Return for an S
Corporation):

Notice 2017-10 All Filings 2017 to 2021 Respondents by Size

Receipts

Respondents

Filings

Under 5M

93.3%

88.3%

5M to 10M

3.1%

5.2%

10M to 15M

1.2%

2.9%

15M to 20M

0.6%

0.4%

20M to 25M

0.6%

0.7%

Over 25M

1.2%

2.5%

This chart shows that the majority of
respondents to Notice 2017-10 reported
gross receipts under $5 million. Even
assuming that these respondents constitute
a substantial number of small entities, the
proposed regulations will not have a sig-
nificant economic impact on these entities
because the proposed regulations imple-
ment sections 6111 and 6112 and §1.6011-4

by specifying the manner in which and
time at which an identified transaction
must be reported. Accordingly, because the
proposed regulations are limited in scope to
time and manner of information reporting
and definitional information, the economic
impact of the proposal is expected to be
minimal. Further, the Treasury Department
and the IRS expect that the reporting burden

is low; the information sought is necessary
for regular annual return preparation and
ordinary recordkeeping. The estimated bur-
den for any taxpayer required to file Form
8886 is approximately 10 hours, 16 min-
utes for recordkeeping, 4 hours, 50 minutes
for learning about the law or the form, and
6 hours, 25 minutes for preparing, copying,
assembling, and sending the form to the

IRS. The IRS's Research, Applied Analyt-
ics, and Statistics division estimates that the
appropriate wage rate for this set of taxpay-
ers is $98.87 (2021 dollars) per hour. Thus,
it is estimated that a respondent will incur
costs of approximately $2,127.00 per filing.
Disclosures received to date by the Trea-
sury Department and the IRS in response to
the reporting requirements of Notice 2017-
10 indicate that this small amount will not
pose any significant economic impact for
those taxpayers now required to disclose
under the proposed regulations.

For the reasons stated, a regulatory
flexibility analysis under the Regula-
tory Flexibility Act is not required. The
Treasury Department and the IRS invite
comments on the impact of the proposed
regulations on small entities. Pursuant to
section 7805(f) of the Code, this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel for the Office of
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.

### III. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a state,
local, or tribal government, in the aggre-
gate, or by the private sector, of $100 mil-
lion (updated annually for inflation). This
proposed rule does not include any Fed-
eral mandate that may result in expendi-
tures by state, local, or tribal governments,
or by the private sector in excess of that
threshold.

### IV. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on state and local gov-
ernments, and is not required by statute,
or preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the Execu-
tive Order. This proposed rule does not
have federalism implications and does

not impose substantial direct compliance
costs on State and local governments or
preempt state law within the meaning of
the Executive Order.

### V. Regulatory Planning and Review

The Administrator of the Office of
Information and Regulatory Affairs
(OIRA), Office of Management and Bud-
get, has determined that this proposed
rule is not a significant regulatory action,
as that term is defined in section 3(f) of
Executive Order 12866. Therefore, OIRA
has not reviewed this proposed rule pur-
suant to section 6(a)(3)(A) of Executive
Order 12866 and the April 11, 2018,
Memorandum of Agreement between the
Treasury Department and the Office of
Management and Budget (OMB).

### Statement of Availability of IRS Documents

Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin
and is available from the Superintendent
of Documents, U.S. Government Publish-
ing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.

### Drafting Information

The principal author of these proposed
regulations is Theresa Melchiorre, Office
of Associate Chief Counsel (Income Tax
& Accounting). However, other person-
nel from the Treasury Department and the
IRS participated in their development.

### List of Subjects in 26 CFR Part 1

Income Taxes, Reporting and record-
keeping requirements.

### 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 * * *

Section 1.6011-9 also issued under 26
U.S.C. 6001 and 26 U.S.C. 6011. * * *

Par. 2. Section 1.6011-9 is added to
read as follows:

## §1.6011-9 Syndicated conservation easement listed transactions.

(a) Identification as listed transac-
tion. Transactions that are the same as,
or substantially similar to, a transaction
described in paragraph (b) of this section
are identified as listed transactions for
purposes of §1.6011-4(b)(2).

(b) Syndicated conservation easement
transaction. The term syndicated con-
servation easement transaction means a
transaction in which the following steps
occur (regardless of the order in which
they occur)

(1) A taxpayer receives promotional
materials that offer investors in a pass-
through entity the possibility of being allo-
cated a charitable contribution deduction
that equals or exceeds an amount that is
two and one-half times the amount of the
taxpayer's investment in the pass-through
entity as determined under paragraph (d)
of this section (2.5 times rule);

(2) The taxpayer acquires an interest
directly, or indirectly through one or more
tiers of pass-through entities, in the pass-
through entity that owns real property
(that is, becomes an investor in the entity);

(3) The pass-through entity that owns
the real property contributes an ease-
ment on such real property, which it
treats as a conservation easement within
the meaning of paragraph (c)(2) of this
section, to a qualified organization and
allocates, directly or through one or
more tiers of pass-through entities, a
charitable contribution deduction to the
taxpayer; and

(4) The taxpayer claims a charitable
contribution deduction with respect to the
conservation easement on the taxpayer's
Federal income tax return.

(1) Charitable contribution deduction.
The term charitable contribution deduc-
tion means a deduction under section 170
of the Internal Revenue Code (Code),
which includes a deduction arising from
a qualified conservation contribution as
defined in section 170(h)(1).

(2) Conservation easement. The term
conservation easement means a restric-
tion, within the meaning of section 170(h)
(2)(C), exclusively for conservation
purposes, within the meaning of sec-
tion 170(h)(1)(C) and section 170(h)(4),
granted in perpetuity, on the use that may
be made of specified real property.

(3) Pass-through entity. The term pass-
through entity means a partnership, S cor-
poration, or trust (other than a grantor
trust within the meaning of subchapter J
of chapter 1 of the Code).

(4) Promotional materials. The term
promotional materials includes materi-
als described in §301.6112-1(b)(3)(iii)
(B) of this chapter and any other writ-
ten or oral communication regarding
the transaction provided to investors,
such as marketing materials, apprais-
als (including preliminary appraisals,
draft appraisals, and the appraisal that is
attached to the taxpayer's return), web-
sites, transactional documents such as
the deed of conveyance, private place-
ment memoranda, tax opinions, oper-
ating agreements, subscription agree-
ments, statements of the anticipated
value of the conservation easement, and
statements of the anticipated amount of
the charitable contribution deduction.

(5) Qualified organization. The term
qualified organization means an organiza-
tion described in section 170(h)(3).

(6) Real property. The term real prop-
erty includes all land, structures, and
buildings, including a certified historic
structure defined in section 170(h)(4)(C).

(d) Application of 2.5 times rule-(1)
Multiple suggested deduction amounts.
If the promotional materials, as defined
in paragraph (c)(4) of this section and
described in paragraph (b)(1) of this sec-
tion, suggest or imply a range of possible
charitable contribution deduction amounts
that may be allocated to the taxpayer, the
highest suggested or implied deduction
amount will determine whether the 2.5
times rule is met. In addition, if one piece
of promotional materials (for example,
an appraisal or oral statement) suggests
or implies a higher charitable contribu-
tion deduction amount than suggested or
implied by other promotional materials,
then the highest suggested charitable con-
tribution deduction amount determines
whether the 2.5 times rule is met.

(2) Rebuttable presumption. The 2.5
times rule is deemed to be met if the pass-
through entity donates a conservation
easement within three years following
taxpayer's investment in the pass-through
entity, the pass-through entity allocates a
charitable contribution deduction to the
taxpayer that equals or exceeds two and
one-half times the amount of the taxpay-
er's investment, and the taxpayer claims
a charitable contribution deduction that
equals or exceeds two and one-half times
the amount of the taxpayer's investment.
This presumption may be rebutted if the
taxpayer establishes to the satisfaction of
the Commissioner that none of the promo-
tional materials contained a suggestion or
implication that investors might be allo-
cated a charitable contribution deduction
that equals or exceeds an amount that is
two and one-half times the amount of their
investment in the pass-through entity.

(3) Anti-stuffing rule. For purposes
of paragraph (b)(1) of this section, the
amount of a taxpayer's investment in the
pass-through entity is limited to the por-
tion of the taxpayer's investment described
in paragraph (b)(2) of this section that is
attributable to the portion of the real prop-
erty on which a conservation easement is
placed and that produces the charitable
contribution deduction described in para-
graph (b)(3) of this section. For example,
if a portion of the taxpayer's investment
in the pass-through entity is attributable
to property held directly or indirectly by
the pass-through entity other than the real
property on which a conservation ease-
ment is placed as described in paragraph
(b)(3) of this section (including any other
real property, cash, cash equivalents, dig-
ital assets, marketable securities, or other
assets), that portion of the taxpayer's
investment is not attributable to the por-
tion of the real property on which a con-
servation easement is placed for purposes
of paragraph (b)(1) of this section.

(4) Example illustrating anti-stuffing
rule .- (i) Facts. An individual (A) pur-
chased an interest in a partnership (P)
that owns real property with a fair market
value of $500,000 and marketable securi-
ties with a fair market value of $500,000.
A is one of four equal investors in P, each
of whom purchased its interest in P for
$250,000 of cash. With respect to an inves-
tor's $250,000 payment for its interest in

P, the promotional materials stated that P
expected to allocate a $500,000 charita-
ble contribution deduction to the investor
(that is, a charitable deduction that is two
times the amount an investor paid for its
interest in P). After all four investors have
purchased their interests in P, P donates a
conservation easement to a qualified orga-
nization as defined in section 170(h)(3) of
the Code and reports a $2,000,000 chari-
table contribution deduction on its Form
1065 based on P obtaining an appraisal
indicating that the value of the conserva-
tion easement is $2,000,000. The Sched-
ule K-1 (Form 1065) that P furnishes to
A indicates that P allocated a $500,000
charitable contribution deduction to A for
the taxable year.

(ii) Analysis. Under paragraph (d)(2)
of this section, for purposes of paragraph
(b)(1) of this section, the amount of A's
investment in P that is attributable to the
real property on which a conservation
easement is placed described in paragraph
(b)(3) of this section is $125,000 (that is,
only the portion of the investment that is
attributable to the real property on which
a conservation easement is placed and
that produces the charitable contribution
deduction described in paragraph (b)(3) of
this section). Because A's investment for
purposes of the 2.5 times rule is $125,000
and A's expected charitable contribu-
tion deduction, based on the promotional
materials, is $500,000 (that is, an expected
deduction that is four times the investor's
investment), the requirements of the 2.5
times rule of paragraph (b)(1) of this sec-
tion are satisfied.

(e) Participation in a syndicated con-
servation easement transaction-(1) In
general. Whether a taxpayer has partici-
pated in a syndicated conservation ease-
ment transaction described in paragraph
(b) of this section is determined under
§1.6011-4(c)(3)(i)(A).

(2) Class of participants. For purposes
of §1.6011-4(c)(3)(i)(A), participants in a
syndicated conservation easement trans-
action described in paragraph (b) of this
section include-

(i) An owner of a pass-through entity;

(ii) A pass-through entity;

(iii) Any other taxpayer whose Fed-
eral income tax return reflects tax con-
sequences or a tax strategy arising from
the syndicated conservation easement

transaction described in paragraph (b) of
this section.

(3) Exclusion. A qualified organiza-
tion to which the conservation easement
is donated is not treated as a participant
under §1.6011-4(c)(3)(i)(A) in a syndi-
cated conservation easement transaction
described in paragraph (b) of this section.

(f) Application of section 4965. A qual-
ified organization is not treated under
section 4965 of the Code as a party to the
transaction described in paragraph (b) of
this section.

(g) Applicability date. This section's
identification of transactions that are the
same as, or substantially similar to, the
transactions described in paragraph (b) of
this section as listed transactions for pur-
poses of §1.6011-4(b)(2) and sections 6111
and 6112 of the Code is effective [DATE
OF PUBLICATION OF FINAL RULE
IN THE FEDERAL REGISTER].

Melanie R. Krause,
Acting Deputy Commissioner for Ser-
vices and Enforcement.

(Filed by the Office of the Federal Register Decem-
ber 06, 2022, 11:15a.m., and published in the issue
of the Federal Register for December 08, 2022, 87
FR 75185)

## Notice of Proposed Rulemaking

## Single-Entity Treatment of Consolidated Groups for Specific Purposes

REG-113839-22

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains
proposed regulations that treat mem-
bers of a consolidated group as a sin-
gle United States shareholder in certain
cases for purposes of section 951(a)(2)
(B) of the Internal Revenue Code (the
"Code"). The proposed regulations affect

consolidated groups that own stock of for-
eign corporations.

DATES: Written or electronic comments
and requests for a public hearing must be
received by January 18, 2023. Requests
for a public hearing must be submitted
as prescribed in the "Comments and
Requests for a Public Hearing" section.

ADDRESSES: Commenters are strongly
encouraged to submit public comments elec-
tronically. Submit electronic submissions via
the Federal eRulemaking Portal at www.reg-
ulations.gov (indicate IRS and REG-113839-
22) by following the online instructions for
submitting comments. Once submitted to the
Federal eRulemaking Portal, comments can-
not be edited or withdrawn. The Department
of the Treasury ("Treasury Department") and
the IRS will publish for public availability
any comment submitted electronically or on
paper to its public docket. Send paper sub-
missions to: CC:PA:LPD:PR (REG-113839-
22), room 5203, Internal Revenue Service,
PO Box 7604, Ben Franklin Station, Wash-
ington, D.C. 20044.

FOR FURTHER INFORMATION
CONTACT: Austin Diamond-Jones,
(202) 317-5085 (Corporate) and Julie
T. Wang, (202) 317-6975 (Corporate)
regarding section 1502 and the proposed
amendments to §1.1502-80, and Joshua
P. Roffenbender, (202) 317-6934 (Inter-
national) regarding sections 951, 951A,
and 959; concerning submissions of com-
ments and requests for a public hearing,
Vivian Hayes at (202) 317-6901 (not toll-
free numbers) or by email to publichear-
ings@irs.gov (preferred).

### SUPPLEMENTARY INFORMATION:

#### Background

##### I. Overview

This document contains proposed
amendments to 26 CFR part 1 under sec-
tions 1502 and 7805(a) of the Code (the
"proposed regulations").

II. Sections 1501 and 1502

Pursuant to section 1501, an affiliated
group of corporations may elect to file

a U.S. Federal income tax ("U.S. tax")
return on a consolidated basis (such return,
a "consolidated return"). Groups electing
to file consolidated returns include all
members' income items on a single return,
in lieu of filing separate returns for each
member.

Section 1502 authorizes the Secretary
of the Treasury or their delegate ("Secre-
tary") to prescribe regulations for an affil-
iated group of corporations that join in fil-
ing (or that are required to join in filing) a
consolidated return (such a group, a "con-
solidated group," as defined in §1.1502-
1(h)) to clearly reflect the U.S. tax liability
of the consolidated group and to prevent
avoidance of such tax liability. For pur-
poses of carrying out those objectives,
section 1502 also permits the Secretary to
prescribe rules that may be different from
the provisions of chapter 1 of subtitle A
of the Code that would apply if the corpo-
rations composing the consolidated group
filed separate returns. Terms used in the
consolidated return regulations generally
are defined in §1.1502-1.

III. Sections 951(a)(1)(A), 951A(a), and
959

Sections 951(a)(1)(A) and 951A(a)
subject each United States shareholder
(within the meaning of section 951(b) or
section 953(c)(1)(A), if applicable) (each
shareholder, a "U.S. shareholder") of a
controlled foreign corporation (within the
meaning of section 957 or section 953(c)
(1)(B), if applicable) (a "CFC") to U.S. tax
on certain income of the CFC, regardless
of whether the CFC distributes the earn-
ings and profits ("E&P") attributable to
such income. To avoid double taxation, a
corresponding amount of the CFC's E&P
is designated as previously taxed earnings
and profits ("PTEP") under section 959
and generally is not subject to U.S. tax at
the U.S. shareholder level when distrib-
uted, whether to a U.S. shareholder or to
an upper-tier CFC (such a distribution to
a U.S. shareholder or an upper-tier CFC, a
"section 959(a) distribution" or a "section
959(b) distribution," respectively). See
section 959. Generally, PTEP is treated as
distributed before E&P that is not PTEP
("non-PTEP"), and a section 959(a) dis-
tribution is treated as not a dividend. See
section 959(c) and (d).

Under section 951(a)(1)(A), a U.S.
shareholder of a CFC must include in gross
income its pro rata share of the CFC's sub-
part F income (as defined in section 952)
if the U.S. shareholder owns (within the
meaning of section 958(a)) stock of the
CFC on the last day of the CFC's taxable
year on which it is a CFC (the "last rele-
vant day"). Ownership of stock within the
meaning of section 958(a) means stock
owned directly and stock owned indi-
rectly through foreign corporations and
other foreign entities (including certain
domestic entities to the extent treated as
foreign entities under §1.958-1(d)(1)). For
purposes of the remainder of this pream-
ble, a reference to stock ownership means
stock owned within the meaning of sec-
tion 958(a).

A U.S. shareholder's pro rata share
of a CFC's subpart F income for a tax-
able year of the CFC is calculated by
first determining the amount described
in section 951(a)(2)(A). This amount,
which is determined based on the U.S.
shareholder's proportionate share of a
hypothetical distribution by the CFC,
represents subpart F income (unreduced
by distributions during the taxable year)
allocable to stock of the CFC that the
U.S. shareholder owns on the last rel-
evant day. See section 951(a)(2)(A);
§1.951-1(b) and (e). That amount is
then reduced by the amount described
in section 951(a)(2)(B) to arrive at the
U.S. shareholder's pro rata share of the
CFC's subpart F income. For a discus-
sion of section 951(a)(2)(B), see part IV
of this Background section.

Section 951A(a) requires a U.S.
shareholder of a CFC to include in gross
income its GILTI inclusion amount.
See §1.951A-1(b). A U.S. shareholder's
GILTI inclusion amount is determined
by taking into account the U.S. share-
holder's pro rata share of tested items
(as defined in §1.951A-1(f)(5)) of certain
CFCs in which the U.S. shareholder owns
stock, such as tested income, tested loss,
and qualified business asset investment.
A U.S. shareholder's pro rata share of a
CFC's tested items is determined in the
same manner as a U.S. shareholder's pro
rata share of a CFC's subpart F income
under section 951(a)(2), subject to certain
modifications. See section 951A(e)(1) and
§1.951A-1(d).

In many cases, a significant portion
of a CFC's income has been (or will be)
subject to U.S. tax under section 951(a)(1)
(A) or 951A(a), including by reason of the
transition tax imposed under section 965,
which taxed non-PTEP of certain foreign
corporations under section 951(a)(1)(A).
As a result, there is (and will continue to
be) a substantial amount of PTEP in the
U.S. tax system.

IV. Section 951(a)(2)(B)

Section 951(a)(2)(B) addresses cases
in which stock of a CFC owned by a U.S.
shareholder on the last relevant day was
acquired by the U.S. shareholder during
the CFC's taxable year. In these cases,
section 951(a)(2)(B) generally reduces the
U.S. shareholder's pro rata share of the
CFC's subpart F income or tested income
by the amount of distributions received by
any other person during the taxable year
as a dividend with respect to the acquired
stock. However, the reduction is limited
to the amount of the dividend that would
have been received with respect to the
acquired stock if the CFC had distributed
an amount equal to its subpart F income
for the taxable year multiplied by a frac-
tion, the numerator of which is the num-
ber of days during the taxable year on
which the U.S. shareholder did not own
the acquired stock, and the denominator
of which is the number of days during the
taxable year (such fraction, the "section
951(a)(2)(B) fraction").

The reduction, as so limited, represents
an amount of distributed income of the
CFC on which the U.S. shareholder oth-
erwise would be subject to U.S. tax under
section 951(a)(1)(A) or 951A(a) by reason
of owning the acquired stock on the last
relevant day, but that is not allocable to the
period during which the U.S. shareholder
owned the acquired stock. The reduction
is intended to prevent double taxation of
subpart F income or tested income of the
CFC that is distributed during the taxable
year. In turn, the limitation on the reduc-
tion is intended to ensure that income allo-
cable to the U.S. shareholder's ownership
period with respect to the acquired stock is
included in the U.S. shareholder's pro rata
share. See generally Technical Explana-
tion of the Revenue Act of 1962, S. Rep.
No. 87-1881, at 239 (1962).

V. Application of Sections 951(a)(1)(A)

and 951A(a) to Consolidated Groups

A consolidated group member's inclu-
sion under section 951(a)(1)(A) is deter-
mined at the member level in the same
manner as the inclusion is determined for
any domestic corporation that is a U.S.
shareholder of a foreign corporation.

A member's GILTI inclusion amount
is determined by taking into account
the aggregate of its pro rata share of
the tested income of each tested income
CFC (as defined in §1.951A-2(b)(1)) and
its allocable share of the group's aggre-
gate amount of other tested items. See
§1.1502-51. As explained in the pream-
ble to the final regulations in §1.1502-51,
determining a member's GILTI inclu-
sion amount entirely on a separate-entity
basis would undermine the clear reflec-
tion of the U.S. tax liability of the con-
solidated group as a whole. In contrast,
the adopted approach creates "consistent
results regardless of which member of a
consolidated group owns the stock of the
CFCs[,] ... removes incentives for inap-
propriate planning, and also eliminates
traps for the unwary." See TD 9866, 84
Fed. Reg. 29288, 29318.

#### Explanation of Provisions

##### I. In General

The Treasury Department and the IRS
are aware that some consolidated groups
are taking the position that the group's
aggregate inclusions under sections 951(a)
(1)(A) and 951A(a) are reduced by chang-
ing the location of ownership of stock
of a CFC within the group. Specifically,
taxpayers are taking the position that a
group's aggregate pro rata share of a low-
er-tier CFC's subpart F income or tested
income is reduced under section 951(a)(2)
(B) by reason of a section 959(b) distribu-
tion made by the lower-tier CFC, together
with a direct or indirect acquisition of
stock of the lower-tier CFC by a member
from another member. Given the substan-
tial amount of PTEP in the U.S. tax system
following the enactment of sections 951A
and 965, the Treasury Department and the
IRS understand that taxpayers are taking
this position with increasing frequency
in an attempt to significantly reduce their

income inclusions under sections 951(a)
(1)(A) and 951A(a).

For example, assume that M1 and M2
are members of a consolidated group (the
"P group"). M1 directly owns all the stock
of an upper-tier CFC ("CFC1"), which
directly owns all the stock of a lower-tier
CFC ("CFC2"). M2 directly owns all the
stock of another CFC ("CFC3"). During a
taxable year of CFC2, CFC2 makes a sec-
tion 959(b) distribution to CFC1. On a day
other than the last day of the same taxable
year, CFC1 transfers all the stock of CFC2
to CFC3 in a transaction that qualifies as a
reorganization described in section 368(a)
(1)(B). As a result, M2 indirectly acquires
stock of CFC2, which M2 continues to
own throughout the rest of the taxable
year.

The Treasury Department and the
IRS understand that some consolidated
groups are taking the position that section
951(a)(2)(B) reduces M2's pro rata share
of CFC2's subpart F income or tested
income. This position is based in part
on the assertion that, for purposes of the
section 951(a)(2)(B) fraction, M2 is not
treated as owning stock of CFC2 on days
on which the stock is owned by M1 (or
another member of the group).

This position does not clearly reflect
a consolidated group's U.S. tax liability.
The group's aggregate pro rata shares of
subpart F income and tested income of
a CFC - and thus the group's aggregate
inclusions under sections 951(a)(1)(A)
and 951A(a), respectively - should not be
affected when ownership of stock of the
CFC moves within the group.

In addition, this position is inconsistent
with section 951(a)(2)(B) and the purposes
of that provision. The amount described
in section 951(a)(2)(B) represents certain
distributed income of a CFC on which a
U.S. shareholder otherwise would be sub-
ject to U.S. tax under section 951(a)(1)(A)
or 951A(a) by reason of owning stock of
the CFC on the last relevant day. E&P that
already has been subject to U.S. tax, such
as E&P comprising a section 959(b) dis-
tribution, cannot represent such income.
A position treating such E&P as giving
rise to a section 951(a)(2)(B) reduction
inappropriately reduces U.S. taxation
of a CFC's subpart F income or tested
income. Furthermore, the reduction to
U.S. tax could be permanent to the extent

that a deduction under section 245A(a) is
allowed when E&P corresponding to the
untaxed income ultimately is distributed
to a U.S. shareholder.

To address the inappropriate outcomes
claimed under this position and to clearly
reflect a consolidated group's U.S. tax lia-
bility, the proposed regulations treat mem-
bers of a consolidated group as a single
U.S. shareholder for certain purposes, as
described in part II of this Explanation of
Provisions section. As described in part
IV of this Explanation of Provisions, the
Treasury Department and the IRS are fur-
ther considering the interaction of sections
951(a)(2)(B) and 959(b).

II. Consolidated Groups Treated as a
Single U.S. Shareholder for Purposes
of Applying Section 951(a)(2)(B) with
Respect to Section 959(b) Distributions

The proposed regulations treat mem-
bers of a consolidated group as a single
U.S. shareholder for purposes of apply-
ing section 951(a)(2)(B) in the context
of section 959(b) distributions. See pro-
posed §1.1502-80(j)(1). When members
are treated as a single U.S. shareholder,
direct or indirect acquisitions of stock of a
CFC by one member from another mem-
ber do not give rise to a section 951(a)(2)
(B) reduction, because the numerator of
the section 951(a)(2)(B) fraction reflects
the period that both members owned stock
of the CFC. As a result, the group's aggre-
gate inclusions under sections 951(a)(1)
(A) and 951A(a) with respect to a CFC
are not reduced under section 951(a)(2)
(B) by reason of a section 959(b) distribu-
tion made by the CFC and changes in the
location of ownership of stock of the CFC
within the group. See proposed §1.1502-
80(j)(2), Example 1 and Example 2. The
Treasury Department and the IRS have
determined that this outcome facilitates
the clear reflection of the U.S. tax liability
of a consolidated group.

The proposed regulations do not apply
in the context of dividends composed of
non-PTEP. When such a dividend gives
rise to a reduction under section 951(a)
(2)(B), other rules may result in the
dividend being (directly or indirectly)
included in the gross income of a U.S.
shareholder. See, e.g., §1.245A-5 (limit-
ing the deduction under section 245A(a)

and the look-through exception to subpart
F income under section 954(c)(6)).

In addition to the proposed regulations,
other authorities or common law doctrines
may apply to recast a transaction or other-
wise affect the tax treatment of a transac-
tion. See, e.g., sections 482 and 7701(o)
and §§1.701-2 and 1.1502-13(h).

#### III. Applicability Date

The proposed regulations are proposed
to apply to taxable years for which the
original consolidated return is due (with-
out extensions) after the date of publica-
tion in the Federal Register of a Treasury
Decision adopting these rules as final reg-
ulations. See section 1503(a).

#### IV. No Inference

No inference is intended with regard
to the treatment of transactions involving
a consolidated group before the applica-
bility date of the proposed regulations,
including under §1.1502-13. Addition-
ally, no inference is intended with regard
to the treatment of similar transactions
not involving a consolidated group, or
with regard to whether section 959(b)
distributions are taken into account
under section 951(a)(2)(B). The Trea-
sury Department and the IRS are further
considering the interaction of sections
951(a)(2)(B) and 959(b), and any addi-
tional guidance issued relating to those
sections, including guidance to prevent
abuse, may be retroactive.

#### Special Analyses

##### I. Regulatory Planning and Review- Economic Analysis

The Administrator of the Office of
Information and Regulatory Affairs
("OIRA"), Office of Management and
Budget, has determined that this pro-
posed rule is not a significant regulatory
action, as that term is defined in section
3(f) of Executive Order 12866. Therefore,
OIRA has not reviewed this proposed rule
pursuant to section 6(a)(3)(A) of Execu-
tive Order 12866 and the April 11, 2018,
Memorandum of Agreement between the
Treasury Department and the Office of
Management and Budget ("OMB").

##### II. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these proposed regulations will
not have a significant economic impact
on a substantial number of small entities.
This certification is based on the fact that
these proposed regulations apply only to
corporations that file consolidated Fed-
eral income tax returns, and that such
corporations almost exclusively consist
of larger businesses. Specifically, based
on data available to the IRS, corporations
that file consolidated Federal income tax
returns represent only approximately two
percent of all filers of Forms 1120 (U.S.
Corporation Income Tax Return). How-
ever, these consolidated Federal income
tax returns account for approximately
95 percent of the aggregate amount of
receipts provided on all Forms 1120.
Therefore, these proposed regulations
would not create additional obligations
for, or impose an economic impact on,
small entities. Accordingly, the Secretary
certifies that the proposed regulations
will not have a significant economic
impact on a substantial number of small
entities.

##### III. Section 7805(f)

Pursuant to section 7805(f), this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business.

##### IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agen-
cies assess anticipated costs and benefits
and take certain other actions before issu-
ing a final rule that includes any Federal
mandate that may result in expenditures
in any one year by a state, local, or tribal
government, in the aggregate, or by the
private sector, of $100 million in 1995
dollars, updated annually for inflation.
In 2022, that threshold is approximately
$165 million. These proposed regulations
do not include any Federal mandate that
may result in expenditures by state, local,
or tribal governments, or by the private
sector in excess of that threshold.

##### V. Executive Order 13132: Federalism

Executive Order 13132 (entitled
"Federalism") prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
state and local governments, and is not
required by statute, or preempts state law,
unless the agency meets the consultation
and funding requirements of section 6 of
the Executive Order. These proposed reg-
ulations do not have federalism implica-
tions and do not impose substantial direct
compliance costs on State and local gov-
ernments or preempt State law within the
meaning of the Executive Order.

#### Comments and Requests for a Public Hearing

Before the proposed regulations are
adopted as final regulations, consideration
will be given to comments that are sub-
mitted timely to the IRS as prescribed in
the preamble under the "ADDRESSES"
section. The Treasury Department and
the IRS request comments on all aspects
of the proposed regulations. In addition,
the Treasury Department and the IRS
continue to study different applications of
section 951(a)(2)(B) when CFC interests
have been transferred in intercompany
transactions and request comments on the
interaction of section 951(a)(2)(B) and
§1.1502-13. Any comments submitted
will be made available at www.regula-
tions.gov or upon request.

A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
encouraged to be made electronically. If
a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Register.
Announcement 2020-4, 2020-17 IRB 1, pro-
vides that until further notice, public hear-
ings conducted by the IRS will be held tele-
phonically. Any telephonic hearing will be
made accessible to people with disabilities.

#### Statement of Availability of IRS Documents

Any IRS Revenue Procedures, Reve-
nue Rulings, Notices, or other guidance

cited in this document are published in
the Internal Revenue Bulletin (or Cumu-
lative Bulletin) and are available from the
Superintendent of Documents, U.S. Gov-
ernment Publishing Office, Washington,
DC 20402, or by visiting the IRS website
at www.irs.gov.

#### Drafting Information

The principal authors of these regula-
tions are Joshua P. Roffenbender, Office of
Associate Chief Counsel (International),
and Jeremy Aron-Dine and Gregory J.
Galvin, Office of Associate Chief Coun-
sel (Corporate). However, other personnel
from the IRS and the Treasury Department
participated in their development.

#### List of Subjects in 26 CFR Part 1

Income Taxes, Reporting and record-
keeping requirements.

#### Proposed Amendments to the Regulations

Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 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. In §1.1502-80, paragraphs (i)
and (j) are added to read as follows:

§1.1502-80 Applicability of other
provisions of law.

** * * *

(i) [Reserved]

(j) Special rules for application of sec-
tion 951(a)(2)(B) to distributions to which
section 959(b) applies-(1) Single United
States shareholder treatment. In determin-
ing the amount described in section 951(a)
(2)(B) that is attributable to distributions
to which section 959(b) applies, members
of a group are treated as a single United
States shareholder (within the meaning
of section 951(b) (or section 953(c)(1)
(A), if applicable)) for purposes of deter-
mining the part of the year during which
such shareholder did not own (within

the meaning of section 958(a)) the stock
described in section 951(a)(2)(A). The
purpose of this paragraph (j) is to facilitate
the clear reflection of income of a consol-
idated group by ensuring that the location
of ownership of stock of a foreign corpo-
ration within the group does not affect the
amount of the group's income by reason
of sections 951(a)(1)(A) and 951A(a).

(2) Examples. The following examples
illustrate the application of paragraph (j)
(1) of this section. For purposes of the
examples in this paragraph (j)(2): M1
and M2 are members of a consolidated
group of which P is the common parent (P
group); each of CFC1, CFC2, and CFC3
is a controlled foreign corporation (within
the meaning of section 957(a)) with the
U.S. dollar as its functional currency
(within the meaning of section 985); the
taxable year of all entities is the calendar
year for Federal income tax purposes; and
a reference to stock owned means stock
owned within the meaning of section
958(a). These examples do not address
common law doctrines or other authorities
that might apply to recast a transaction or
to otherwise affect the tax treatment of a
transaction.

(i) Example 1. Intercompany transfer of stock
of a controlled foreign corporation-(A) Facts.
Throughout Year 1, M1 directly owns all the stock
of CFC1, which directly owns all the stock of CFC2.

In Year 1, CFC2 has $100x of subpart F income
(as defined in section 952). MI's pro rata share
of CFC2's subpart F income for Year 1 is $100x,
which M1 includes in its gross income under section
951(a)(1)(A). In Year 2, CFC2 has $80x of subpart
F income and distributes $80x to CFC1 (the CFC2
Distribution). Section 959(b) applies to the entire
CFC2 Distribution. On December 29, Year 2, M1
transfers all of its CFC1 stock to M2 in an exchange
described in section 351(a). As a result, on December
31, Year 2 (the last day of Year 2 on which CFC2 is
a controlled foreign corporation), M2 owns 100% of
the stock of CFC1, which owns 100% of the stock
of CFC2.

(B) Analysis. Under paragraph (j)(1) of this sec-
tion, in determining the amount described in section
951(a)(2)(B) that is attributable to the CFC2 Distri-
bution, all members of the P group are treated as a
single United States shareholder for purposes of
determining the part of Year 2 during which such
shareholder did not own the stock of CFC2. Thus,
the ratio of the number of days in Year 2 that such
United States shareholder did not own the stock of
CFC2 to the total number of days in Year 2 is 0/365.
The amount described in section 951(a)(2)(B) is $0,
M2's pro rata share of CFC2's subpart F income for
Year 2 is $80x ($80x - $0), and M2 must include
$80x in its gross income under section 951(a)(1)(A).

(ii) Example 2. Transfer of stock of a controlled
foreign corporation between controlled foreign cor-
porations-(A) Facts. The facts are the same as the
facts of Example 1, except that M1 does not transfer
its CFC1 stock to M2. Additionally, throughout Year
1 and from January 1, Year 2, to December 29, Year
2, M2 directly owns all 90 shares of the only class
of stock of CFC3. Further, on December 29, Year
2, CFC3 acquires all the CFC2 stock from CFC1
in exchange for 10 newly issued shares of the same
class of CFC3 stock in a transaction described in

section 368(a)(1)(B). As a result, on December 31,
Year 2, M1 owns 10% of the stock of CFC2, and M2
owns 90% of the stock of CFC2.

(B) Analysis. Under paragraph (j)(1) of this sec-
tion, in determining the amount described in section
951(a)(2)(B) that is attributable to the portion of the
CFC2 Distribution with respect to each of the CFC2
stock that M1 owns on December 31, Year 2, and the
CFC2 stock that M2 owns on that day, all members
of the P group are treated as a single United States
shareholder for purposes of determining the part of
Year 2 during which such shareholder did not own
such stock. In each case, the ratio of the number of
days in Year 2 that such United States shareholder
did not own such stock to the total number of days in
Year 2 is 0/365, and the amount described in section
951(a)(2)(B) is $0. Ml's and M2's pro rata shares
of CFC2's subpart F income for Year 2 are $8x ($8x
\- $0) and $72x ($72x - $0), respectively, and M1
and M2 must include $8x and $72x in gross income
under section 951(a)(1)(A), respectively.

(3) Applicability date. This paragraph
(j) applies to taxable years for which the
original consolidated Federal income tax
return is due (without extensions) after the
date a Treasury decision adopting these
rules as final regulations is published in
the Federal Register.

Melanie R. Krause,
Acting Deputy Commissioner for Ser-
vices and Enforcement.

(Filed by the Office of the Federal Register Decem-
ber 9, 2022, 11:15a.m., and published in the issue
of the Federal Register for December 14, 2022, 87
FR 76430)

### 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
applied 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 transactions.
This term is most commonly used in a ruling
that lists previously published rulings 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
period 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 rul-
ings 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
material published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

BK-Bank.

B.T.A .- Board of Tax Appeals.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

COOP-Cooperative.

Ct.D .- Court Decision.

CY-County.

D-Decedent.

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.

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.

I.R.B .- Internal Revenue Bulletin.

LE-Lessee.

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.

X-Corporation.

Y-Corporation.

Z-Corporation.

Numerical Finding List1

Proposed Regulations:

Bulletin 2022-52

REG-130975-08, 2022-28 I.R.B. 71 REG 130675-17, 2022-30 I.R.B. 104

Announcements:

REG-125693-19, 2022-39 I.R.B. 241 REG-110368-22, 2022-44 I.R.B. 405

2022-14, 2022-31 I.R.B. 136

REG-100719-21, 2022-45 I.R.B. 457

2022-15, 2022-31 I.R.B. 136

REG-121509-00, 2022-45 I.R.B. 463

2022-16, 2022-33 I.R.B. 144

REG-112096-22, 2022-49 I.R.B. 511

2022-17, 2022-35 I.R.B. 179

REG-106134-22, 2022-52 I.R.B. 660

2022-18, 2022-36 I.R.B. 190

REG-113839-22, 2022-52 I.R.B. 673

2022-19, 2022-36 I.R.B. 191

2022-20, 2022-38 I.R.B. 238

Revenue Procedures:

2022-21, 2022-46 I.R.B. 464

2022-22, 2022-47 I.R.B. 497

2022-25, 2022-27 I.R.B. 3

2022-23, 2022-48 I.R.B. 499

2022-28, 2022-27 I.R.B. 65

2022-24, 2022-51 I.R.B. 556

2022-26, 2022-29 I.R.B. 90

2022-25, 2022-51 I.R.B. 557

2022-32, 2022-30 I.R.B. 101

2022-26, 2022-51 I.R.B. 558

2022-30, 2022-31 I.R.B. 112

2022-27, 2022-51 I.R.B. 559

2022-29, 2022-33 I.R.B. 141

2022-28, 2022-52 I.R.B. 659

2022-34, 2022-33 I.R.B. 143

2022-35, 2022-40 I.R.B. 270

Notices:

2022-36, 2022-40 I.R.B. 274

2022-19, 2022-41 I.R.B. 282

2022-29, 2022-28 I.R.B. 66

2022-31, 2022-43 I.R.B. 339

2022-30, 2022-28 I.R.B. 70

2022-37, 2022-43 I.R.B. 377

2022-31, 2022-29 I.R.B. 85

2022-38, 2022-45 I.R.B. 445

2022-32, 2022-32 I.R.B. 137

2022-40, 2022-47 I.R.B. 487

2022-33, 2022-34 I.R.B. 147

2022-39, 2022-49 I.R.B. 507

2022-34, 2022-34 I.R.B. 150

2022-41, 2022-50 I.R.B. 527

2022-35, 2022-36 I.R.B. 184

2022-42, 2022-52 I.R.B. 565

2022-36, 2022-36 I.R.B. 188

2022-43, 2022-52 I.R.B. 570

2022-37, 2022-37 I.R.B. 234

2022-38, 2022-39 I.R.B. 239

Revenue Rulings:

2022-39, 2022-40 I.R.B. 264

2022-40, 2022-40 I.R.B. 266

2022-12, 2022-27 I.R.B. 1

2022-42, 2022-41 I.R.B. 276

2022-13, 2022-30 I.R.B. 99

2022-44, 2022-41 I.R.B. 277

2022-14, 2022-31 I.R.B. 110

2022-43, 2022-42 I.R.B. 303

2022-15, 2022-35 I.R.B. 152

2022-45, 2022-42 I.R.B. 307

2022-17, 2022-36 I.R.B. 182

2022-41, 2022-43 I.R.B. 304

2022-18, 2022-40 I.R.B. 262

2022-46, 2022-43 I.R.B. 306

2022-19, 2022-44 I.R.B. 379

2022-47, 2022-43 I.R.B. 312

2022-20, 2022-45 I.R.B. 407

2022-48, 2022-43 I.R.B. 316

2022-21, 2022-47 I.R.B. 468

2022-49, 2022-43 I.R.B. 321

2022-22, 2022-49 I.R.B. 500

2022-50, 2022-43 I.R.B. 325

2022-23, 2022-51 I.R.B. 532

2022-51, 2022-43 I.R.B. 331

2022-24, 2022-51 I.R.B. 551

2022-52, 2022-43 I.R.B. 337

2022-53, 2022-45 I.R.B. 437

Treasury Decisions:

2022-54, 2022-45 I.R.B. 439

9963, 2022-34 I.R.B. 145

2022-55, 2022-45 I.R.B. 443

9964, 2022-35 I.R.B. 172

2022-56, 2022-47 I.R.B. 480

9965, 2022-37 I.R.B. 192

2022-57, 2022-47 I.R.B. 482

9966, 2022-44 I.R.B. 380

2022-58, 2022-47 I.R.B. 483

9967, 2022-44 I.R.B. 385

2022-59, 2022-48 I.R.B. 498

9968, 2022-45 I.R.B. 409

2022-60, 2022-49 I.R.B. 502

2022-62, 2022-49 I.R.B. 506

2022-61, 2022-52 I.R.B. 560

# Finding List of Current Actions on Previously Published Items1

Bulletin 2022-52

# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,
we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.

Internal Revenue Bulletin 2022-52 (PDF rendition): IRS Notices

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