SECTION 3. SCOPE

This revenue procedure provides a simplified method to request relief for certain late filings under sections 1.897–2(g)(1)(ii)(A), 1.897–2(h), 1.1445–2(c)(3)(i), 1.1445–2(d)(2), 1.1445–5(b)(2), and 1.1445–5(b)(4). This procedure is in lieu of the letter ruling

connected with such trade or business under sections 871(b) or 882. A U.S. real property interest includes an interest in real property located in the United States or the Virgin Islands and any interest (other than an interest solely as a creditor) in a domestic corporation unless the taxpayer establishes that the corporation was at no time a U.S. real property holding corporation (USRPHC) during the period described in section 897(c)(1)(A)(ii).

.02 Section 1.897–2 provides requirements to establish that a corporation is not a USRPHC. Unless these requirements are satisfied, it is presumed that a domestic corporation is a USRPHC.

.03 Section 1445(a) generally requires the transferee of a U.S. real property interest to withhold 10 percent of the amount realized by the foreign person on the disposition of the U.S. real property interest. Section 1445(b) and the regulations thereunder provide several exceptions to this general requirement. In addition, section 1445(e) provides special rules for certain dispositions and distributions. Section 1445(e)(1) requires withholding on certain dispositions of U.S. real property interests by a domestic partnership, domestic trust, or domestic estate. Section 1445(e)(2) requires withholding on certain distributions by foreign corporations. Section 1445(e)(3) requires withholding on distributions by certain domestic corporations to foreign shareholders. Section 1445(e)(4) addresses taxable distributions by domestic or foreign partnerships, trusts, or estates, and section 1445(e)(5) provides rules relating to dispositions of interests in such entities. Section 1445(e)(6) addresses certain distributions by a regulated investment company or real estate investment trust.

.04 One exception to section 1445 withholding involves nonrecognition transactions. Pursuant to section 1.1445–2(d)(2), a transferee is not required to withhold if the transferee provides notice that, by reason of the operation of a nonrecognition provision of the Internal Revenue Code or the provisions of any United States treaty, the transferor is not required to recognize any gain or loss with respect to the transfer. Under section 1.1445–2(d)(2)(i)(A), the transferor may provide a notice to the transferee that the transferor is not required to recognize gain or loss. The notice must include the information described

in section 1.1445–2(d)(2)(iii). The transferee must provide a copy of the notice to the IRS within 20 days of the transfer. § 1.1445–2(d)(2)(i)(B). Similarly, in transfers described in section 1445(e), an entity or fiduciary otherwise required to withhold is not required to withhold if, by reason of the operation of a nonrecognition provision of the Internal Revenue Code or the provisions of any United States treaty, no gain or loss is required to be recognized by the foreign person with respect to which withholding would otherwise be required. § 1.1445–5(b)(2)(i)(A). Withholding is not required if, within 20 days of the transfer, the entity or fiduciary delivers a notice to the IRS that includes the information described in section 1.1445–5(b)(2)(ii). § 1.1445–5(b)(2)(i)(B).

.05 Another exception to withholding involves the transfer of an interest in a domestic corporation which is not a USRPHC. Because section 897(a)(1) does not apply to the gain (or loss) from a foreign person’s disposition of stock in a domestic corporation that is not a USRPHC, section 1445 does not require the transferee to withhold upon a foreign person’s disposition of stock in a domestic corporation that is not a USRPHC. To establish that an interest in a domestic corporation was not a U.S. real property interest as of the date of the disposition, the foreign person must either obtain a statement from the corporation or a determination from the IRS. To qualify for the rule permitting a statement from the corporation, a foreign transferor must obtain from the transferred domestic corporation a statement that the domestic corporation is not a USRPHC as of the date of the disposition. This statement must be obtained no later than the date, including any extensions, on which a tax return would otherwise be due with respect to the foreign transferor’s disposition. § 1.897–2(g)(1)(ii)(A). The domestic corporation must mail a notice of the statement to the IRS within 30 days after it is provided to the foreign transferor, unless it meets the requirements of section 1.897–2(h)(4)(i). §§ 1.897–2(h)(2) and 1.897–2(h)(4)(i). If the IRS has been so notified, and the transferee receives a copy of the statement, then the transferee is not required to withhold. §§1.897–2(g)(1)(ii)(B) and 1.1445–2(c)(3)(i). Similarly, in

2008–21 I.R.B. 1015 May 27, 2008

of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–2098. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid OMB control number.

The collection of information in this revenue procedure is in section 4.02. This information is required to be submitted to the applicable service center in order to obtain relief for late filings under sections 1.897–2(g)(1)(ii)(A), 1.897–2(h), 1.1445–2(c)(3)(i), 1.1445–2(d)(2), 1.1445–5(b)(2), or 1.1445–5(b)(4). This information will be used to determine whether the eligibility requirements for obtaining relief have been met. The collection of information is required to obtain a benefit. The likely respondents are businesses or other for-profit institutions.

The estimated annual burden per respondent varies from 3 to 5 hours, depending on individual circumstances, with an estimated average of 4 hours. The estimated number of respondents is 200.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.