SECTION 10. INFORMATION REPORTING OBLIGATIONS

Sec. 10.01. Form 1042-S Reporting. Except as otherwise provided in section 10.02 of this Agreement, QI is not required to file Forms 1042-S for amounts paid to each beneficial owner account holder or payee for whom such reporting would otherwise be re

1999–5 I.R.B. 43 February 1, 1999

quired. In place of such Forms 1042-S, QI shall file a Form 1042-S reporting the income from classes of assets as determined in sections 10.03 and 10.04 of this Agreement. QI must file its Forms 1042-S in the same manner as required by the instructions to the form. Any Form 1042-S required by this section 10 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, Request for Extension of Time to File Information Returns, by the due date of Forms 1042-S in the manner required by Form 8809.

Sec. 10.02. Beneficial Owner Reporting. QI is required to file Forms 1042-S for amounts paid to each beneficial owner account holder or other payee as described in this section 10.02.

(A) QI must file Forms 1042-S, by income type, exemption code, and withholding rate, for each qualified intermediary or withholding foreign partnership from whom it receives a Form W-8IMY;

(B) QI must file a Form 1042-S for each of the account holders of a nonqualified intermediary (other than the account holders of a PAI) or foreign partnership (other than a withholding foreign partnership) for which the nonqualified intermediary or foreign partnership has provided documentation and allocation information sufficient to determine the amount of income paid to such account holder of the nonqualified intermediary or foreign partnership;

(C) QI must file a Form 1042-S made out to an unknown person for income paid to account holders of a nonqualified intermediary or foreign partnership (other than a withholding foreign partnership) that are undocumented and presumed to be foreign persons;

(D) QI must file a Form 1042-S made out to an unknown person for income paid to documented foreign account holders of the nonqualified intermediary or foreign partnership (other than a withholding foreign partnership) for which QI does not have allocation information sufficient to determine the amount of income paid to such account holders; and

(E) Upon request by the IRS, QI must provide, in the manner requested, the names, addresses, taxpayer identification number, if any, and the amounts paid to those account holders who receive annually $100,000 or more of income for which the account holder claimed a reduced rate of withholding under an income tax treaty and who certify in accordance with section 5.04 of this Agreement that they meet the Limitation on Benefits provision of an income tax treaty and that they derive the income within the meaning of Treas. Reg. §1.894-1T(d). The $100,000 threshold is determined by aggregating all the accounts of an account holder. The threshold shall be determined separately for QI and for each of the affiliated entities of QI described in Appendix A; however, accounts of an account holder at all the branches of any one entity must be aggregated. Notwithstanding the preceding sentence, accounts of an account holder with QI and affiliates of QI must be aggregated if QI, or any of its affiliates, knows, or has reason to know, that the account holder is attempting to avoid disclosure by opening separate accounts. Further, QI, and any of its affiliated entities, must aggregate the accounts of an account holder, and any persons having the relationship described in section 267(b) of the Code with the account holder if QI, or any of its affiliates, actually know that the account holder is attempting to avoid disclosure by having such persons open accounts in their names.

Sec. 10.03. Categories of Assets For Form 1042-S Reporting. For purposes of determining amounts to be reported on Form 1042-S, QI shall determine classes of assets by first dividing all of the assets for which it acts as a qualified intermediary into the three overall categories described in this section 10.03 and then dividing each of those categories into classes of assets as described in section 10.04 of this Agreement. Income from each class of assets shall be reported on a separate Form 1042-S. QI must separate its assets into the following 3 overall categories:

(A) Assets associated with documented foreign account holders;

(B) Assets associated with documented U.S. account holders; and

(C) Assets associated with undocumented account holders.

Sec. 10.04. Classes of Assets for Form 1042-S Reporting. A class of assets is a group of assets within a category of assets that produces the same type of income, is subject to the same rate of withholding, and is associated with the same type of account holders located in the same country. A type of income is determined by reference to the income and exemption codes on Form 1042-S. A type of account holder is determined by reference to the recipient codes to be used solely by a qualified intermediary on Form 1042-S. Thus, QI shall report on a separate Form 1042-S income from each of the following classes of assets:

(A) Assets that are associated with documented foreign beneficial owners that are the same type of account holder, are located in the same foreign country, receive the same type of income, and are subject to the same rate of withholding;

(B) Assets associated with all documented U.S. exempt recipients who receive the same type of income;

(C) Assets that are associated with all undocumented account holders that generate reportable amounts (other than U.S. source bank deposit interest or U.S. source interest and OID on short-term obligations); and

(D) Assets associated with a PAI whose account holders are of the same type, located in the same foreign country, receive the same type of income, and are subject to the same rate of withholding.

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Sec. 10.05. Form 1099 Reporting Responsibility. QI shall file Forms 1099 and, unless filing magnetically, Form 1096, for reportable payments paid to the persons specified in this section 10.05. Forms 1099 shall be filed on or before the date prescribed for the particular Form 1099 under chapter 61 of the Code. Extensions on the time to file Forms 1099 may be requested by submitting Form 8809, Request for Extension of Time to File Information Returns, in the manner required by the form.

(A) QI must file a Form 1099 for each U.S. non-exempt recipient receiving payments for which QI has assumed Form 1099 reporting responsibility;

(B) If QI assumes Form 1099 reporting and backup withholding responsibility, QI must file a Form 1099 made out to an unknown person for income that is paid to a nonqualified intermediary or foreign partnership that QI must presume is made to a nonexempt recipient (e.g., short-term OID or bank deposit interest for which QI does not hold Forms W-8, W-9 or documentary evidence or reportable payments (other than reportable amounts) for which a nonqualified intermediary or foreign partnership has failed to provide allocation information;

(C) QI must file a Form 1099 for each U.S. non-exempt recipient for whom QI has failed to provide a Form W-9 in its possession to a withholding agent or failed to provide sufficient information to the withholding agent for the withholding agent to report the amount on Form 1099;

(C) QI must file a Form 1099 for each person QI actually knows to be a U.S. non-exempt recipient who has not provided QI with a Form W-9 if QI has not given that person’s name, address, taxpayer identification number, if any, and asset allocation information to another payor; and

(D) QI must file a Form 1099 for each person to whom QI has made a payment on which QI withheld an amount under section 3406 of the Code.