Who Is a Withholding Agent?

Any person, U.S. or foreign, in whatever capacity acting, that has control, receipt, custody, disposal, or payment of an amount subject to withholding for chapter 3 purposes or a withholdable payment for chapter 4 purposes is a withholding agent. See Regulations section 1.1441-2(e) for what constitutes a payment, which in limited circumstances may include when there is no actual transfer of cash or property (for example, dividend equivalents). The withholding agent may be an individual, corporation, partnership, trust, association, or any other entity, including (but not limited to) any foreign intermediary, foreign partnership, or U.S. branch of certain foreign banks and insurance companies. If several persons qualify as withholding agents for a single payment, the tax required to be withheld must only be withheld once. Generally, the person who pays (or causes to be paid) an amount subject to withholding under chapter 3 or a withholdable payment to the foreign person (or to its agent) must withhold. See the Instructions for Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, and Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, for return filing and information reporting obligations with respect to payments made to foreign persons.

For effectively connected taxable income (ECTI) allocable to a foreign partner, the partnership (other than a PTP) is generally the withholding agent and must file Form 8804, Annual Return for Partnership Withholding Tax (section 1446); Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax; and Form 8813, Partnership Withholding Tax Payment Voucher (section 1446). For ECTI allocable to a foreign partner in a PTP, a nominee is generally the withholding agent and must file Form 1042 and 1042-S.

On the transfer of a partnership interest (other than an interest in a PTP) to which withholding under section 1446(f) applies, the transferee is the withholding agent and must withhold 10% of the amount realized. The transferee of a non-PTP interest must file Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests. A broker for a transfer of an interest in a PTP to which withholding applies under section 1446(f) is a withholding agent for the amount realized on the transfer and must withhold 10% of the amount realized and file Forms 1042 and 1042-S.