General Instructions for Section — 0126 Inst 8288 (PDF)

Section 1446(f)(1) generally imposes a 10% withholding obligation on the buyer or other transferee (withholding agent) when an interest in a partnership is acquired from a foreign person (transferor) if:

The transferor realized a gain on the sale, and
Any portion of the gain would be treated under section 864(c)(8) as effectively connected with the conduct of a trade or business within the United States (effectively connected gain).

A transfer can occur when a partnership distribution results in gain under section 731. Under section 1446(f) (4), if the transferee fails to withhold any required amount, the partnership must deduct and withhold from distributions to the transferee the amount that the transferee failed to withhold (plus interest). See General Instructions for Section 1446(f)(4) Withholding, later.

Who Must File Unless any of exceptions 1 through 6 of the Exceptions to Section 1446(f)(1) Withholding on Transfers of Non-PTP Interests , later, applies, a buyer or other transferee of a partnership interest must complete and file Part III of Form 8288 to report and transmit the amount withheld. However, if exception 6 applies, the transferee has a separate filing obligation.

Amount To Withhold Generally, you must withhold 10% of the transferor’s amount realized on the transfer, defined later.

Instructions for Form 8288 (Rev. 1-2026) 7

When To File A transferee must file Form 8288 and transmit the tax withheld to the IRS by the 20th day after the date of transfer.

Where To File Send Form 8288 with the amount withheld, and copies A and B of Form(s) 8288-A to:

Ogden Service Center P.O. Box 409101 Ogden, UT 84409

Forms 8288-A Must Be Attached Anyone who completes Form 8288 must also complete a Form 8288-A for each person subject to withholding. Copies A and B of Form 8288-A must be attached to Form 8288. Copy C is for your records. Multiple Forms 8288-A related to a single transaction can be filed with one Form 8288. You are not required to furnish a copy of Form 8288 or 8288-A directly to the transferor.

The IRS will stamp Copy B of each Form 8288-A and will forward the stamped copy to the foreign person subject to withholding at the address shown on Form 8288-A. To receive credit for the withheld amount, the transferor must generally attach the stamped Copy B of Form 8288-A to a U.S. income tax return (for example, Form 1040-NR or 1120-F).

Transferor’s taxpayer identification number (TIN) missing. If you do not have the transferor’s TIN, you must still file Forms 8288 and 8288-A. A stamped copy of Form 8288-A will not be provided to the transferor if the transferor’s TIN is not included on that form. The IRS will send a letter to the transferor requesting the TIN and provide instructions for how to get a TIN. When the transferor provides the IRS with a TIN, the IRS will provide the transferor with a stamped Copy B of Form 8288-A.

Penalties Under section 6651, penalties apply for failure to file Form 8288 when due and for failure to pay the withholding when due. In addition, if you are required to but do not withhold tax under section 1446(f)(1), the tax, including interest, may be collected from you. Under section 7202, you may be subject to a penalty of up to $10,000 for willful failure to collect and pay over the tax. Corporate officers or other responsible persons may be subject to a penalty under section 6672 equal to the amount that should have been withheld and paid over to the IRS. See Regulations section 1.1461-3 for other penalties that may apply.

Definitions for Section 1446(f)(1) Withholding

Amount realized. See Determining the Amount To Withhold , later.

Controlling partner. A partner that, together with any person that bears a relationship described in section 267(b) or 707(b)(1) to the partner, owns directly or indirectly a 50% or greater interest in the capital, profits, deductions, or losses of the partnership at any time within the 12 months before the determination date.

For exception 3, a distributing partnership may only rely on its books and records.
For exception 4, a distributing partnership may only rely on its books and records but must also obtain a representation from the distributee partner stating that the distributee partner satisfies the reporting and tax payment requirements with respect to the partnership’s ECI for the look-back period.

Foreign person. A person that is not a U.S. person, including a qualified intermediary (QI) branch of a U.S. financial institution (as defined in Regulations section 1.1471-1(b)(109)).

TIN. The TIN assigned to a person under section 6109.

Transfer. A sale, exchange, or other disposition, which includes a distribution from a partnership to a partner, as well as a transfer treated as a sale or exchange under section 707(a)(2)(B).

Transferee. Any person, foreign or domestic, that acquires a partnership interest through a transfer, and includes a partnership that makes a distribution.

Transferor. Generally means any person, foreign or domestic, that transfers a partnership 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 (such trust, a grantor trust), the term “transferor” means the grantor or such other person.

Transferor’s agent or transferee’s agent. Any person who represents the transferor or transferee (respectively) in any negotiation with another person relating to the transaction or in settling the transaction. A person will not be treated as a transferor’s agent or a transferee’s agent solely because it performs one or more of the activities described in Regulations section 1.1445-4(f)(3) (relating to activities of settlement officers and clerical personnel).

U.S. person. A person described in section 7701(a)(30).

Exceptions to Section 1446(f)(1) Withholding on Transfers of Non-PTP Interests A transferee, including a partnership when the partner is a distributee, is not required to withhold on the transfer of a non-PTP interest if it properly relies on one of the six certifications, described in Regulations section 1.1446(f)-2(b), Pub. 515, and under Exceptions next. A transferee may not rely on a certification if it has actual knowledge that the certification is incorrect or unreliable.

A certification must include the name and address of the person providing it, be signed under penalties of perjury, and generally include the TIN of the transferor. See Regulations sections 1.1446(f)-1(c)(2)(i) and 1.1446(f)-2(b)(1). Only the certification for exception 6 (related to claims for treaty benefits) must be submitted to the IRS.

A partnership that is a transferee because it makes a distribution may generally rely on a certification from a transferor in the same manner, with the following modifications.

For exception 2, a distributing partnership may rely on its books and records or on a certification from the distributee partner.

8 Instructions for Form 8288 (Rev. 1-2026)

A partnership may not rely on its books and records if it knows, or has reason to know, that the information in its own books and records is incorrect or unreliable.

Exceptions

The relevant information for many of the exceptions is based on a determination date. See Regulations section 1.1446(f)-1(c)(4) and Pub. 515 for more information regarding the determination date.

1. Certification of nonforeign status. The transferor provides a certification of nonforeign status signed under penalties of perjury that states that the transferor is not a foreign person, and provides the transferor’s name, TIN, and address. A certification of nonforeign status includes a valid Form W-9 (including a valid form that the transferee already has in its possession).

2. Certification of no realized gain. The transferor provides a certification that, on the transfer of the partnership interest, there was no realized gain (including no ordinary income arising from the application of section 751 and Regulations section 1.751-1) as of the determination date.

5. Certification of nonrecognition. The transferor provides a certification that it is not required to recognize any gain or loss with respect to the transfer by reason of the operation of a nonrecognition provision of the Internal Revenue Code. The certification must briefly describe the transfer and provide the relevant law and facts relating to the certification.

This exception does not apply if only a portion of the gain is not recognized. In that case, the transferor may be able to provide a Certification of maximum tax liability, later, if the requirements under Regulations section 1.1446(f)-2(c)(4)(v) are met.

during the look-back period, was less than 10% of its total distributive share of partnership gross income; and

For each year during the look-back period, the transferor’s distributive share of partnership ECI or gain (or losses properly allocated and apportioned to that income) has been timely reported on a federal income tax return of the transferor (or if the transferor was a partnership, its direct or indirect nonresident alien and foreign corporate partners) and any tax due with respect to such amounts has been timely paid, provided the return was required to be filed when the transferor furnishes the certification.

3. Certification of less than 10% effectively connec- ted gain. The transferor provides a certification from the partnership stating that:

On the deemed sale of the partnership assets in the manner described in Regulations section 1.864(c)(8)-1(c) as of the determination date either:

a. The partnership would have no effectively connected gain (or the net amount of its effectively connected gain would be less than the 10% of the total net gain), or

b. The transferor’s distributive share of net effectively connected gain resulting from the deemed sale would be less than 10% of the transferor’s distributive share of the total net gain; or

The partnership was not engaged in a trade or business within the United States at any time during the tax year of the partnership until the date of transfer.

4. Certification of less than 10% effectively connec- ted income (ECI). The transferor provides a certification that:

The transferor was a partner in the partnership for the transferor’s immediately prior tax year (for which it has already received a Schedule K-1 (Form 1065)) and the 2 preceding tax years (the look-back period) and had a distributive share of gross income from the partnership in each of these years;
The transferor’s distributive share of gross ECI from the partnership, and from certain persons related to the transferor, as reported on a Schedule K-1 (Form 1065) or other statement required by the partnership, was less than $1 million for each of the tax years during the look-back period;
The transferor’s distributive share of partnership gross ECI, as reported on a Schedule K-1 (Form 1065) or other statement required by the partnership, for each year

6. Certification that an income tax treaty applies. The transferor provides a certification using Form W-8BEN or W-8BEN-E, as applicable, or applicable substitute form that meets the requirements under Regulations section 1.1446-1(c)(5) that the transferor is not subject to tax on any gain from the transfer pursuant to an income tax treaty. The form should contain the information necessary to support the claim for treaty benefits. Within 30 days after the date of the transfer, the transferee must mail a copy of the certificate, together with a cover letter providing the name, TIN, and address of the transferee and the partnership in which the interest was transferred to the IRS, at the address in Where To File , earlier. See Regulations section 1.1446(f)-2(b)(7).

The transferor may not provide this certification if any portion of the gain is subject to tax. In that case, the transferor may be able to provide a Certification of maximum tax liability , later, if the requirements under Regulations section 1.1446(f)-2(c)(4)(vi) are met.

The rules for determining the amount to withhold are contained in Regulations section 1.1446(f)-2(c). See also Pub. 515 . If certain requirements are met, the transferee may rely on a certification of the amount of the transferor’s share of partnership liabilities reported on the most recent Schedule K-1 (Form 1065) issued by the partnership or a

Determining the Amount To Withhold In general, the transferee must withhold 10% of the amount realized. The amount realized includes the following.

The cash paid (or to be paid).
The fair market value of property transferred (or to be transferred).
The amount of any liabilities assumed by the transferee or to which the partnership is subject.
The reduction in the transferor’s share of partnership liabilities.

Instructions for Form 8288 (Rev. 1-2026) 9

certification from a partnership that provides the amount of the transferor’s share of partnership liabilities as of the determination date.

Modified amount realized. If a foreign partnership is the transferor, separate rules may apply to determine a modified amount realized. The modified amount realized is determined by multiplying the amount realized by the aggregate percentage computed as of the determination date. The aggregate percentage is the percentage of the gain (if any) arising from the transfer that would be allocated to any presumed foreign taxable persons. For this purpose, a presumed foreign taxable person is any person that has not provided a certification of nonforeign status, as previously described in the exception 1 to withholding, or a certification that, pursuant to a tax treaty, no portion of the foreign taxable person’s gain is subject to tax. The foreign partnership claims the modified amount realized by providing a certification on Form W-8IMY as provided under Regulations section 1.1446(f)-2(c)(2)(iv). The transferee should not submit the certification to the IRS for approval.

Lack of money or property or lack of knowledge re- garding liabilities. Under certain circumstances, the amount that the transferee must withhold equals 100% of the amount realized without regard to any decrease in the transferor’s share of the partnership liabilities. These circumstances are if:

The amount otherwise required to be withheld would exceed the amount realized determined without regard to the decrease in the transferor’s share of partnership liabilities, or
The transferee is unable to determine the amount realized because it does not have actual knowledge of the transferor’s share of partnership liabilities (and has not received or cannot rely on a certification of the transferor’s share of partnership liabilities received from the transferor (including the most recent Schedule K-1 (Form 1065)) or a certification of the transferor’s share of liabilities received from the partnership).

Certification of maximum tax liability. A transferor that meets certain requirements can certify its maximum tax liability to the transferee. The maximum tax liability is the amount of the transferor’s effectively connected gain multiplied by the applicable percentage described in Regulations section 1.1446-3(a)(2). The applicable percentage for foreign corporations is the highest rate of tax under section 11(b) and for non-corporations is the highest rate of tax under section 1. This certification may be used if a nonrecognition provision or an income tax treaty excludes only a portion of the effectively connected gain. While the certification should not be submitted to the IRS for approval, if a portion of the gain on the transfer is not subject to tax pursuant to an income tax treaty, the certification requirements described in exception 6 must be met.

Transfers of Partnership Interests Subject to Withholding Under Sections 1445(e)(5) and 1446(f)(1) The transfer of a partnership interest may be subject to withholding under section 1445(e)(5) or Regulations

section 1.1445-11T(d)(1) if 50% or more of the value of the partnership’s gross assets consists of USRPIs, and 90% or more of the value of its gross assets consists of USRPIs plus any cash or cash equivalents. The transfer of a partnership interest may also be subject to withholding under section 1446(f)(1) and Regulations section 1.1446(f)-2, if the partnership also holds other property used in the conduct of a trade or business within the United States. If both sections 1445(e)(5) and 1446(f)(1) could apply to the same transfer, the transfer is subject to the payment and reporting requirements of section 1445 only and not section 1446(f)(1). However, if the transferor has applied for a withholding certificate under the last sentence of Regulations section 1.1445-11T(d)(1), the transferee must withhold the greater of the amounts required under section 1445(e)(5) or 1446(f)(1). A transferee that has complied with the withholding requirements under either section 1445(e)(5) or 1446(f) (1), as described in this paragraph, will be deemed to satisfy its withholding requirement.

Liability of Agents A transferee’s or transferor’s agent must provide notice to a transferee (or other person required to withhold) if that agent is furnished with a certification described in Regulations 1.1446(f)-1 or 1.1446(f)-2 that the agent knows is false. A person required to withhold may not rely on a certification if it receives the notice described in Regulations section 1.1446(f)-5(c)(1). An agent’s liability is limited to the amount of compensation that the agent derives from the transaction. In addition, an agent that assists in the preparation of, or fails to disclose knowledge of, a false certification may be liable for civil and criminal penalties. For more information, see Regulations section 1.1446(f)-5.