SECTION 3. SCOPE

.01 Entities Eligible to Execute a WP or WT Agreement . The WP agreement may be entered into by a foreign partnership described in § 1.1441–5(c)(2)(ii), and the WT agreement may be entered into by a foreign trust described in § 1.1441– 5(e)(5)(v). With respect to an FFI, the WP or WT agreement may only be entered into by an FFI that agrees to satisfy the requirements and obligations of a participating FFI, registered deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI. An FFI that is a retirement fund (as defined in section 2.69 of the WP or section 2.67 of the WT agreement) or a NFFE may also apply to enter into a WP or WT agreement. A partnership or trust that is a territory financial institution (as defined in § 1.1471–1(b) (130)) may not enter into a WP or WT agreement. An FFI that is a foreign reverse hybrid entity (as defined in section 2.31 of the WP agreement) may apply to enter into a WP agreement, provided that the FFI is a participating FFI, a registered deemed-compliant FFI, or a registered deemed-compliant Model 1 IGA FFI. See section 4.03 of this revenue procedure for a summary of the requirements in the WP agreement applicable to a foreign reverse hybrid entity.

.02 Chapter 4 Requirements with Re- spect to Financial Accounts . Certain FFIs have withholding and reporting obligations under chapter 4 with respect to the FFI’s financial accounts. Under § 1.1471– 5(b)(1), a financial account is defined broadly, and includes, for example, nonpublicly traded equity interests in an FFI that is an investment entity (as defined in § 1.1471–4(e)(4)(i)). Therefore, if a WP or WT is an FFI, WP’s or WT’s direct partners, beneficiaries, or owners are considered account holders for purposes of chapter 4, and the WP or WT will be required to comply with the withholding and reporting requirements with respect to such partners, beneficiaries, or owners under WP’s or WT’s FATCA requirements.

.03 Assumption of Primary Chapters 3 and 4 Withholding Responsibilities . The WP and WT agreements require a foreign

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partnership or foreign trust to assume primary withholding responsibilities under chapters 3 and 4 with respect to the WP’s or WT’s direct partners, beneficiaries, or owners, and permit the WP or WT to assume primary withholding responsibilities under chapters 3 and 4 for certain indirect partners, beneficiaries, or owners. Section 2.09 of the WP and WT agreements defines chapter 3 to mean sections 1441, 1442, 1443, 1461, 1463, and 1464. The WP and WT agreements do not permit a WP or WT to assume primary withholding responsibility under section 1445 or 1446.

.04 Indirect Partners, Beneficiaries, or Owners That Are U.S. Non-Exempt Recip- ients . A WP or WT must act in its capacity as a WP or WT for reportable amounts that are distributed to, or included in the distributive share of, the WP’s or WT’s direct partners, beneficiaries, or owners. A WP or WT may also act as a WP or WT for reportable amounts that are distributed to, or included in the distributive share of, certain indirect partners, beneficiaries, or owners. Although § 1.1441–5(c)(2)(ii) and (e)(5)(v) authorize the IRS to enter into an agreement with a WP or WT to permit it to act as a withholding agent or payor under chapters 3, 4, and 61, and section 3406, the WP and WT agreements do not cover chapter 61 or section 3406. Accordingly, a WP or WT may only act as a WP or WT for an indirect partner, beneficiary, or owner that is a U.S. nonexempt recipient if the indirect partner, beneficiary, or owner is included in a chapter 4 withholding rate pool of the passthrough partner, beneficiary, or owner (as defined in section 2.56 of the WP agreement and 2.54 of the WT agreement). If the indirect partner, beneficiary, or owner that is a U.S. non-exempt recipient is not included in the passthrough partner’s, beneficiary’s, or owner’s chapter 4 withholding rate pool, the WP or WT cannot act as a WP or WT for such indirect partner, beneficiary, or owner, and must provide specific documentation on such indirect partner, beneficiary, or owner to the withholding agent paying the reportable amount. See section 9.03 of the WP or WT agreement on the treatment of indirect partners, beneficiaries, or owners under each of these agreements.