SEC. 9. BLANKET — Internal Revenue Bulletin 2000-35

CERTIFICATE

.01 In general . The Commissioner may issue a withholding certificate (blanket withholding certificate) that excuses withholding with respect to multiple dispositions of U.S. real property interests by the transferor or the transferor’s legal representative during a period of no more than 12 months. A blanket withholding certificate may be issued if the transferor holding the U.S. real property interests provides a letter of credit as specified in paragraph 1 of this subsection .01 or a guarantee as specified in paragraph 2 of this subsection .01 and enters into an agreement with the Service that meets the requirements of paragraphs 3 and 4 of this subsection .01.

For dispositions not subject to section 1445(e) of the Code, the transferor must provide an irrevocable letter of credit in an amount equal to the greater of (i) $100,000 or (ii) 10 percent of the amount to be realized on the projected dispositions covered by the certificate. For dispositions subject to section 1445(e), the transferor must provide an irrevocable letter of credit in an amount equal to the greater of (i) $100,000 or (ii) the tax that section 1445(e) would require to be withheld. The letter of credit must meet the requirements of paragraph 3 of subsection 6.01 of this revenue procedure

and otherwise must be acceptable to the Commissioner. In addition, the letter of credit by its terms must be valid until at least the last day of the ninth month following the date (including extensions of time) on which a return will be required to be filed with respect to the tax year in which the 12th month covered by the withholding certificate falls. A letter of credit in the form specified in subsection 6.02(5) in most circumstances will be acceptable to the Service when requesting a blanket withholding certificate.

Alternatively, the Service may accept as security for a blanket withholding certificate with respect to a corporate transferor’s tax liability a guarantee of the payment of such liability. The Service will accept such a guarantee only if (a) the corporation providing the guarantee is a corporation, foreign or domestic, any class of the stock of which is regularly traded on an established securities market on the date of the transfer; (b) the corporation providing the guarantee (1) is the transferor or holds, directly or indirectly, more than 80 percent of the voting stock of the transferor and (2) is engaged in a trade or business within the United States; and (c) has gross assets in the United States at least $25 million in excess of the U.S. real property interest being disposed of.

Additionally, the transferor corporation must have filed United States corporate income tax returns for the prior consecutive three years and the guarantee otherwise must be acceptable to the Commissioner. The guarantee by its terms must be valid until at least the last day of the ninth month following the date (including extensions of time) on which a return will be required to be filed with respect to the tax year in which the 12th month covered by the withholding certificate falls. A guarantee in the form specified in subsection 6.02(6) will be acceptable to the Service in most circumstances when requesting a blanket withholding certificate.

The transferor must provide with the letter of credit described in paragraph 1 of this subsection or the guarantee described in paragraph 2 of this subsection an executed tax payment and security agreement securing the payment of tax with respect to the projected dispositions covered by the blanket withholding certificate. The agreement must generally meet the requirements of subsections 5.02

through 5.05 of this revenue procedure as modified to take account of this subsection 9.01 and otherwise must be acceptable to the Commissioner. The agreement must also list all the U.S. real property interests covered by the agreement and give a brief description of each interest. In addition, the agreement must contain the terms as to notification of specific dispositions required by paragraph 4 of this subsection 9.01 and must provide that, in the event of a failure by the transferor to provide such notification or to file a return in a timely manner, deposit estimated tax in a timely manner, or to pay tax in a timely manner, with respect to the gain on one or more of the dispositions covered by the certificate, the Commissioner may draw upon the letter of credit or demand payment under the guarantee to satisfy the transferor’s liability for any tax imposed by 871(b)(1) or 882(a)(1) of the Code, plus interest and penalties, if any, on any one or more dispositions covered by the certificate.

The agreement required by paragraph 3 of this subsection must state that the transferor agrees to notify the Commissioner before or on the date of any disposition of a U.S. real property interest covered by the blanket certificate. The notice shall include the following information:

(a) The name, legal address, and

taxpayer identification number (to the extent required in regulations) of the transferor or the name and legal address of a legal representative of the transferor with the power to bind the transferor with respect to the disposition; (b) The name, legal address, and

taxpayer identification number (to the extent required in regulations) of the transferee or the name and legal address of a legal representative of the transferee with the power to bind the transferee with respect to the disposition: (c) A description of the U.S. real

property interest to be transferred and the anticipated date of the transfer; (d) The amount that would other wise have been required to be withheld on the transfer (10

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(b) The applicant has otherwise

violated the provisions of this section. 2. To be exempt from withholding tax liability, the person that would otherwise be required to withhold must, before or on the day of the closing of a transaction, provide a statement to the Commissioner containing the following information and material:

(a) The name, legal address, and

U.S. real property interest and the anticipated date of the acquisition; (d) The total contract price of the

acquired U.S. real property interest; the amount of liabilities, if any, to be assumed by the transferee; and the amount of liabilities, if any, to which the property is to be acquired is subject; and (e) A copy of the transferor’s

withholding certificate. .03 Copy of security agreement . The Commissioner will, upon request, provide the transferor with a copy of a security agreement submitted pursuant to paragraph 9.01(2) executed by the Commissioner, but such an executed copy is not needed to establish the validity of the blanket withholding certificate for purposes of the subject disposition. Provided that notice is not given by the Commissioner under section 9.02(1), and provided that the transferee timely provides the required information and materials, the withholding certificate remains valid.

.04 Consequences of failure to notify . In the event of any failure by the trans

percent of the amount realized unreduced by the maximum tax calculation or for any other reason); (e) The cumulative total of

amounts that would otherwise have been required to be withheld with respect to dispositions (i) which have already taken place or are scheduled to take place prior to the disposition with respect to which notice is being given and (ii) with respect to which the Commissioner has not sent the notice described in subsection .02(l) below; (f) The amount of the original let ter of credit provided or the amount the guarantor is bound to pay the Service under the guarantee; and (g) A copy of the transferor’s

withholding certificate, or if the application is pending, a copy of the withholding certificate application. An agreement in the form prescribed by subsection 5.06 of this revenue procedure in most cases will be acceptable to the Service for purposes of paragraphs 3 and 4 of this subsection 9.01, with the following modifications: (i) The form should reflect and describe, as the “subject interests,” the projected dispositions to be covered by the blanket withholding certificate to which the agreement will relate, (ii) paragraph 2 of the form should be modified to state that the agreement is entered into in connection with an application for a blanket withholding certificate and will extend to all dispositions covered by the blanket withholding certificate, (iii) the third sentence of paragraph 2 should be revised to read “Security for the payment of such liability is provided by an irrevocable letter of credit in the amount of in accordance with the requirements of subsection 9.01(1) of Rev. Proc. 2000–35 or by a guarantee in accordance with the requirements of subsection 9.01(2) of Rev. Proc. 2000–35,” (iv) a new paragraph should be added to the form (designated as paragraph 3, with the other paragraphs being renumbered accordingly), containing the terms of paragraph 4 of this subsection 9.01, and (v) paragraph 5 of the

form (paragraph 6 as renumbered) should be revised to read:

“6. In the event of any failure by the transferor or the transferor’s legal representative (i) to notify the Commissioner properly, in accordance with paragraph 4, of a disposition of a U.S. real property interest covered by this agreement and the blanket withholding certificate to which it relates, or (ii) to file a return in a timely manner, to deposit estimated tax in a timely manner, or to pay tax in a timely manner, with respect to the gain on one or more dispositions covered by this agreement and such certificate, the Commissioner may draw upon the letter of credit provided or the guarantee as related security under this agreement in full to the extent of the tax imposed by section 871(b)(1) or section 882(a)(1) of the Code on any one or more dispositions covered by this agreement and such certificate, plus interest and additions to tax, if any. This amount shall be in addition to any other civil or criminal penalties that may apply with respect to the applicant’s use of the withholding certificate in violation of the terms thereof.”

.02 Withholding certificates—Provi- sions . A withholding certificate issued by the Commissioner under this section will state that no withholding is required with respect to any disposition of a U.S. real property interest by the applicant provided that (1) before the date of the transfer, the Commissioner does not provide notice to the person who would otherwise be required to withhold (discussed in paragraph 1 below) that such withholding is required, and (2) the person who would otherwise be required to withhold timely provides the information and material described in paragraph 2 below and the disposition as consummated does not materially fail to correspond to the information so provided.

If one of the following conditions occurs, the Commissioner will provide notice to the applicant, and to the person required to withhold, that withholding is required despite the prior issuance of a withholding certificate:

(a) The applicant’s letter of credit

or amount under the guarantee, in light of prior dispositions, is not sufficient to cover the amount otherwise required to be withheld on the transfer, or

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feror or the transferor’s legal representative to notify the Commissioner properly, in accordance with section 9.01(3), of a disposition of a U.S. real property interest, or to file a return in a timely manner, to deposit estimated tax in a timely manner, or to pay tax in a timely manner, with respect to the gain on one or more dispositions covered by the blanket withholding certificate, the letter of credit provided under section 9.01(l) or the guarantee provided under section 9.01(2) may be drawn upon in full to the extent of the tax imposed by section 871(b)(1) or section 882(a)(1) of the Code, plus interest and additions to tax, if any, on any one or more dispositions covered by the blanket withholding certificate. This amount shall be in addition to any other civil or criminal penalties that may apply with respect to the applicant’s use of the withholding certificate in violation of the terms thereof.