Section 7. ADJUSTMENTS FOR

OVER- AND UNDERWITHHOLDING; REFUNDS

Sec. 7.01. Adjustments for Chapter 3 or 4 Overwithholding by WT. WT may make an adjustment for amounts paid to its beneficiaries or owners when WT has overwithheld under chapter 3 or 4 by applying either the reimbursement procedure described in section 7.01(A) of this Agreement or the set-off procedure described in section 7.01(B) of this Agreement within the time period prescribed for those procedures. (A) Reimbursement Procedure . WT may repay its beneficiaries or owners for an amount overwithheld under chapter 3 or 4 and reimburse itself by reducing, by the amount of tax actually repaid to the beneficiaries or owners, the amount of any subsequent deposit of tax required to be made by WT under section 3.05 of this Agreement. For purposes of this section 7.01(A), an amount that is overwithheld shall be applied in order of time (i.e., sequentially) to each of WT’s subsequent deposit periods in the same calendar year to the extent that the withholding taxes required to be deposited for a subsequent deposit period exceed the amount actually deposited. An amount overwithheld in a calendar year may be applied to deposit periods in the calendar year following the calendar year of overwithholding only if— (1) The repayment occurs before the earlier of the due date (without regard to extensions) for filing Form 1042–S for the calendar year of overwithholding or the

date that the Form 1042–S is actually filed by WT with the IRS; (2) WT states on a Form 1042–S (issued, if applicable, to the beneficiary or owner or otherwise to a chapter 3 or 4 reporting pool) filed by March 15 of the calendar year following the calendar year of overwithholding, the amount of tax withheld and the amount of any actual repayments; and (3) WT states on a Form 1042, filed by March 15 of the calendar year following the calendar year of overwithholding, that the filing of the Form 1042 constitutes a claim for credit in accordance with § 1.6414–1. (B) Set-Off Procedure . WT may repay its beneficiaries or owners by applying the amount overwithheld against any amount which otherwise would be required under chapter 3 or 4 to be withheld from a payment made by WT before the earlier of March 15 of the calendar year following the calendar year of overwithholding or the date that the Form 1042–S is actually filed with the IRS. For purposes of making a return on Form 1042 or Form 1042–S for the calendar year of overwithholding, and for purposes of making a deposit of the amount withheld, the reduced amount shall be considered the amount required to be withheld from such income under chapter 3 or 4. Sec. 7.02. Collective Credit or Refund Procedures for Chapter 3 or 4 Over- withholding. If WT has made a PR election and there has been overwithholding (as defined in section 2.52 of this Agreement) on amounts paid to WT’s direct beneficiaries or owners during a calendar year and the amount of overwithholding has not been recovered under the reimbursement or set-off procedures as described in section 7.01 of this Agreement, WT may request a credit or refund of the total amount overwithheld by following the procedures of this section 7.02. WT shall follow the procedures set forth under sections 6402 and 6414, and the regulations thereunder, to claim the credit or refund. No credit or refund will be allowed after the expiration of the statutory period of limitation for refunds under section 6511. If there has been overwithholding and WT does not apply for a collective refund, it must provide a Form 1042–S for the payment that was subject to the over

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withholding if requested by the beneficiary or owner receiving the payment. (A) Payments for which a Collective Re- fund is Permitted. Except as otherwise provided in this section 7.02, WT may use the collective refund procedure of this section 7.02 with respect to all amounts subject to chapter 3 or 4 withholding that WT has withheld under this Agreement. With respect to amounts withheld under chapter 3 or 4, WT shall not include in its collective refund claim any amounts withheld on payments made to an indirect beneficiary or owner or a direct account holder of WT that is a passthrough beneficiary or owner. Further, with respect to amounts withheld under chapter 4, if WT is a participating FFI or registered deemed-compliant FFI, WT shall not include in its collective refund claim any amounts withheld on payments made to any beneficiary or owner that is an account holder described in the FFI agreement or in § 1.1471–4(h)(2). (B) Requirements for a Collective Refund. ( 1 ) WT may use the collective refund procedures under this section 7.02 only if WT has not issued (and will not issue) Forms 1042–S to the beneficiaries or owners that were subject to overwithholding and for which a collective refund claim is being made. (2) WT must submit, together with its amended Form 1042 on which it provides a reconciliation of amounts withheld and a claim for credit or refund, a statement that includes the following information and representations— (i) The reason(s) for the overwithholding; (ii) WT deposited the tax for which a refund is being sought under section 6302 and WT has not applied the reimbursement or set-off procedures of §§ 1.1461–2 and 1.1474–2 to adjust the tax withheld to which the claim relates; (iii) WT has repaid or will repay the amount for which a refund is sought to the appropriate beneficiaries or owners; (iv) WT retains a record showing the total amount of tax withheld, adjustments for underwithholding, and reimbursements for overwithholding as it relates to each beneficiary or owner and also showing the repayment (if applicable) to such beneficiaries or owners for the amount of tax for which a refund is being sought; (v) WT retains valid documentation that

meets the requirements of chapter 3 or 4 (as applicable) to substantiate the amount of overwithholding with respect to each beneficiary or owner for which a refund is being sought; and (vi) WT has not issued (and will not issue) a Form 1042–S (or such other form as the IRS may prescribe) to any beneficiary or owner with respect to the payments for which a refund is being sought. Sec. 7.03. Adjustments for Chapter 3 or 4 Underwithholding. If WT knows that an amount should have been withheld under chapter 3 or 4 from a previous payment made to a beneficiary or owner and the amount was not withheld, WT may either withhold from future payments made pursuant to chapter 3 or chapter 4 to the same beneficiary or owner or satisfy the tax from the beneficiary’s or owner’s proportionate share of assets over which WT has control. The additional withholding or satisfaction of the tax owed described in the previous sentence must be made before the due date (not including extensions) of the Form 1042 for the calendar year in which the underwithholding occurred. Sec. 7.04. Chapter 3 or 4 Underwith- holding after Form 1042 Filed. If, after a Form 1042 has been filed for a calendar year, WT, WT’s reviewer, or the IRS determines that WT has underwithheld tax under chapter 3 or 4 for such year, WT shall file an amended Form 1042 to report and pay the underwithheld tax. WT shall pay the underwithheld tax, the interest due on the underwithheld tax, and any applicable penalties, at the time of filing the amended Form 1042. If WT fails to file an amended return, the IRS shall make such return under section 6020 and assess such tax under the procedures set forth in the Code.