What's New

Guidance under section 1446(f). The Tax Cuts and Jobs Act (TCJA), added section 1446(f), which generally requires that if the gain on any disposition of an interest in a partnership would be treated under section 864(c)(8) as effectively connected gain, the transferee purchasing an interest in such a partnership from a non-U.S. transferor must withhold a tax equal to 10% of the amount realized on the disposition unless an exception to withholding applies. T.D. 9926, published on November 30, 2020 (84 FR 76910), contains final regulations (“the section 1446(f) regulations”) relating to the withholding and reporting required under section 1446(f), including for transfers of interests in publicly traded partnerships (“PTPs”). Withholding on transfers of interests in PTPs and the revisions included in the section 1446(f) regulations relating to withholding on PTP distributions under section 1446(a) apply to transfers and distributions that occur on or after January 1, 2023. See Notice 2021-51 , 2021-36 I.R.B. 361, for more information. The provisions in the section 1446(f) regulations relating to withholding and reporting on transfers of interests in partnerships that are not PTPs generally apply to transfers occurring after January 29, 2021. These instructions have been updated to incorporate the use of this form by certain entities that are transferors of an interest in a partnership subject to withholding on the amount realized from the transfer. See Pub. 515 for an additional discussion of section 1446(f) withholding, including the effective dates of each provision.

Line 4. Line 4, “Type of entity,” has been updated. The general classification for foreign government has been removed and replaced with the two possible classifications for a foreign government: (i) an integral part of a foreign government; or (ii) an entity that is controlled by a foreign government. See Temporary Regulations section 1.892-2T. See the instructions for Line 4, later.

New Line 9c. New line 9c, “FTIN not legally required,” has been added for account holders otherwise required to provide a foreign tax identification number (FTIN) on line 9b, to indicate that they are not legally required to

obtain an FTIN from their jurisdiction of residence. See the instructions for Line 9c .

Section 6050Y reporting. These instructions have been updated to reference the use of this form by an entity (other than a partnership, simple trust, or grantor trust) that is a foreign seller of a life insurance contract or that is a foreign person and a recipient of a reportable death benefit for purposes of reporting under section 6050Y.

Line 14, claim of tax treaty benefits. The instructions for this line have been updated to include a representation required by entities that are resident in a foreign country that has entered into an income tax treaty with the United States that does not contain a limitation on benefits (LOB) article.

Line 15, special rates and conditions. The instructions for this line have been updated to include representations required by entities claiming treaty benefits on business profits or gains not attributable to a permanent establishment, including for a foreign partner that derives gain subject to tax under section 864(c)(8) upon the transfer of an interest in a partnership and that would be subjected to withholding under section 1446(f) on the transfer.

Electronic signature. These instructions have been updated to include additional guidance included in the final regulations issued under chapter 3 (T.D. 9890) concerning the use of electronic signatures on withholding certificates. See Certification in Part XXX, later, and Regulations section 1.1441-1(e)(4)(i)(B).