SECTION 4. AMENDMENTS TO

THE FFI AGREEMENT

Section 5 of this revenue procedure sets forth the FFI agreement, which has been updated consistent with the temporary chapter 4 regulations, and provides further clarification to certain of the requirements in the prior FFI agreement. For instance, citations to relevant regulations under chapter 3, 4, or 61 have been amended consistent with the citations used in the temporary chapter 4 regulations. Several definitions in section 2 of the FFI agreement are updated. For example, the terms chapter 4 withholding rate

Bulletin No. 2014–29 131 July 14, 2014

pool (including the U.S. payee pool) and chapter 4 reporting pool have been redefined and are further clarified.

Section 3.02 of the FFI agreement is revised to incorporate the allowance for treating an obligation held by an entity that is issued, opened, or executed on or after July 1, 2014, and before January 1, 2015 as a preexisting obligation for purposes of applying the due diligence procedures under chapter 4 and the regulations thereunder, except that an FFI may not apply the documentation exception under § 1.1471–4(c)(3)(iii), as provided in Notice 2014–33, 2014–21 I.R.B. 1033.

Sections 4.01(D), 4.02(B), 6.05(A)(2), 6.07, and 9.02(B) of the FFI agreement are also updated to reflect that a participating FFI may elect under § 1.1471– 4(b)(3)(iii) to backup withhold under section 3406 rather than to withhold under chapter 4 on a withholdable payment that is a reportable payment (as defined in § 1.1471–1(b)(113)) made to certain U.S. non-exempt recipients only if the participating FFI complies with the information reporting rules under chapter 61 with respect to payments made to such account holders.

In addition, section 5.02 of the FFI agreement (regarding tax withheld and set aside in escrow with respect to withholdable payments to certain dormant accounts) is revised to conform to the temporary chapter 4 regulations for when the tax must be deposited.

Section 11.02(B) of the FFI agreement is revised to clarify that the responsibilities of a lead FI are only with respect to members of the FFI group (as defined in section 2.26 of the FFI agreement) that have designated the participating FFI to act as lead FI on their behalf. Additionally, if an FFI group has a consolidated compliance program, the participating FFI that is also the compliance FI (as defined in section 2.15 of the FFI agreement) for the members of the FFI group that are included in such compliance program must act as the lead FI for each such member of the FFI group.

Section 9.01 of the FFI agreement is revised to remove an incorrect reference to § 1.1471–3(d)(4)(iii), and section 9.02(B) is revised to remove an incorrect reference to § 1.6049–4(b)(6). Section 9.02(B) of the FFI agreement also is re

vised to allow a participating FFI that receives a withholdable payment that is allocable to an account holder of the FFI that is a passive NFFE with one or more substantial U.S. owner(s) (or, in the case of a reporting Model 2 FFI, with one or more controlling persons as defined under the applicable IGA) to certify on a withholding statement provided to the withholding agent that the FFI is reporting the account holder as a U.S. account under the terms of the FFI agreement. When finalizing the temporary chapter 4 regulations, the Treasury Department and the IRS intend to amend the regulations to allow a withholding agent to rely on such a certification provided by a participating FFI, reporting Model 2 FFI, or reporting Model 1 FFI, which, absent a reason to know that the certificate is incorrect or unreliable, would relieve the withholding agent of its obligation to obtain and report information about a passive NFFE with substantial U.S. owners under section 1472. This amendment is intended to eliminate duplicative reporting of substantial U.S. owners (or controlling persons) of passive NFFEs required under section 1472 as well as under the U.S. account reporting requirements of a participating FFI, reporting Model 2 FFI, or reporting Model 1 FFI under chapter 4 or an applicable IGA.

Section 9.02(B) is also revised to provide that a participating FFI may allocate a portion of a withholdable payment to a group of documented account holders (other than nonqualified intermediaries or flow-through entities) for whom withholding and reporting is not required under chapter 3, 4, or 61. For example, a participating FFI may allocate a payment of bank deposit interest to a pool of documented foreign account holders rather than providing specific information and a valid withholding certificate or other appropriate documentation for each such payee. The Treasury Department and the IRS intend to amend the regulations to incorporate this change when the temporary chapter 4 regulations are finalized.