SECTION 3. DEFINITIONS

For purposes of this revenue procedure, the terms listed below are defined as follows.

.01 A “QI” is an eligible person as described in §1.1441–1(e)(5)(ii)(A) or (B) (and paragraph .10 of this section) that enters into a withholding agreement (described in section 5 of this revenue procedure) with the IRS. A person acting in its capacity as a QI 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.

.02 A “QI-Form W–8” means a withholding certificate described in §1.1441– 1(e)(3)(ii). .03 An “account holder” means any person that has an account with a QI. It includes a person that is the beneficial owner of the account or a person that holds the account as an intermediary (e.g., custodian, nominee or agent).

.04 An “exempt recipient” means, for interest, dividends, and royalties, a person described in §1.6049–4(c)(1)(ii). For broker proceeds, it is a person described in §5f.6045–1(c)(3)(i)(B) or in §1.6045– 2(b)(2)(i). .05 A “non-exempt recipient” or “nonexempt payee” means a person that is not an exempt recipient under the definition in paragraph .04 of this section.

.06 Any reference to “chapter 3 of the Code” means sections 1441, 1442, and 1443 of the Code, and shall not include references to sections 1445 and 1446 of

the Code, unless specifically indicated otherwise.

.07 Any reference to “chapter 61 of the Code” means sections 6041, 6041A, 6042, 6044, 6045, 6049, and 6050N of the Code.

.08 A “reportable amount” means an amount subject to withholding under chapter 3 of the Code (within the meaning of §1.1441–2(a)), U.S. source deposit interest (including original issue discount) described in section 871(i)(2)(A) of the Code, and U.S. source interest or original issue discount on short-term obligations described in section 871(g)(1)(B) of the Code. The term does not include payments on deposits with banks and other financial institutions that remain on deposit for two weeks or less. It also does not include amounts of original issue discount arising from a sale and repurchase transaction completed within a period of two weeks or less, or amounts described in §1.6049–5(b)(7), (10), or (11) (relating to certain obligations issued in bearer form). See §1.1441–1(e)(3)(vi).

.09 A “withholding agent” has the same meaning as set forth in §1.1441–7(a) and includes a payor, as defined in §1.6049–4(a)(2). As used in this revenue procedure, the term generally refers to the person making a payment to a QI.

.10 An “eligible person” means, as described in §1.1441–1(e)(5)(ii)(A) or (B), any foreign financial institution, foreign clearing organization, or foreign branch of a U.S. financial institution or U.S. clearing organization.

.11 A “branch” includes an office. .12 A “financial institution” means a person described in §1.165–12(c)(1)(iv) (not including a person providing pension or other similar benefits or a regulated investment company or other mutual fund, unless otherwise indicated).

.13 A “clearing organization” means a person described in §1.163–5(c)(2)(i)(D)(8).

.14 “Class of assets” and “withholding pool,” have the meanings given to the terms in section 5.02(4)(c) of this revenue procedure.

.15 Any reference to “payments to a QI or an account holder” includes crediting an amount to the account of the QI or account holder.

.16 An “acceptance agent” is a person, as described in §301.6109–1(d)(3)(iv)(B),

April 13, 1998 16 1998–15 I.R.B.

or Form W–9 from each of its account holders to such withholding agents.

(2) Designation of primary withholding responsibility. A QI is a withholding agent under chapter 3 of the Code and a payor under chapter 61 and section 3406 of the Code for reportable amounts that it pays to its account holders. Generally, a withholding agent that makes a payment to the QI, however, will be responsible for actually withholding under chapter 3 and section 3406 of the Code. Thus, if the withholding agent has withheld and reported on the reportable amounts paid to the QI, the QI is not required to withhold except to the extent required to correct any underwithholding. See §1.1441–1(b)(6). The QI may, however, agree in its withholding agreement to assume primary withholding responsibility for payments to foreign account holders. See §1.1441–1(e)(5)(iv). Generally, the IRS will not allow a QI to assume primary withholding or reporting responsibility for payments to U.S. persons unless the QI is a foreign branch of a U.S. financial institution, or the QI has a branch in the United States and establishes that its U.S. branch can adequately comply with the provisions under chapter 61 and section 3406 of the Code.

(3) Disclosure of identity of beneficial owner or payee by QI. Except as otherwise provided in this subparagraph (3), a QI is not required to disclose the identity of its account holders covered by a QIForm W–8 to a withholding agent. Further, the documentation given by an account holder to a QI supporting the account holder’s claim of foreign status and, if applicable, entitlement to a reduced rate of withholding does not need to be attached to the QI-Form W–8. The QI must, however, furnish a Form W–9 (or an acceptable substitute form) for each of its account holders (or those of another intermediary or of a foreign partnership) that is a U.S. payee that is not an exempt recipient. The identity of U.S. payees who are exempt recipients is not required to be disclosed to the withholding agent. If the QI does not hold a Form W–9 for a non-exempt U.S. payee, it must furnish to the withholding agent any information the QI has regarding the payee’s name, address, and taxpayer identifying number. The requirement to disclose the identity of non-exempt U.S. payees will apply despite local bank secrecy laws.

that is authorized to assist persons in obtaining individual taxpayer identification numbers or employer identification numbers from the IRS. See Rev. Proc. 96–52, 1996–2 C.B. 372.