Foreign Intermediaries and Foreign

Payments made to a foreign intermediary or foreign flow-through entity that is not a QI that assumes primary chapters 3 and 4 withholding responsibility, a WP, a WT, or a branch treated as a U.S. person (see U.S. branches of foreign banks and foreign insurance companies , earlier) are treated as made to the payees on whose behalf the in- termediary or entity acts except when the intermediary or flow-through entity is subject to chapter 4 withholding. See Flow-Through Entities and Foreign intermediaries , earlier. The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes.

Form W-8IMY. This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U.S. branches for chapter 3 or 4 purposes, or when applicable, for section 1446(a) or (f) purposes, to:

Represent that a foreign person is a QI or an NQI;
Establish the entity’s chapter 4 status when required for chapter 4 purposes;
When applicable, certify that the entity is a participating FFI, a registered deemed-compliant FFI, or a QI that may provide a withholding statement allocating a payment to a chapter 4 withholding rate pool of U.S. payees;
Represent, if applicable, that the QI is assuming primary chapters 3 and 4 withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility;

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Represent that a foreign partnership or a foreign simple or grantor trust is a WP or a WT;
Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust;
Represent that the provider is a U.S. branch of a foreign bank or insurance company and either is agreeing to be treated as a U.S. person or is transmitting documentation of the persons on whose behalf it is acting for the payments;
Represent its status as a qualified securities lender with respect to payments of U.S. source substitute dividends;
Represent its status as a QI acting as a QDD for certain payments; and
Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. For information on qualifying as an upper-tier foreign partnership, see Regulations section 1.1446-5.

For purposes of chapter 4, an intermediary or flow-through entity that is a participating FFI or registered deemed-compliant FFI receiving a withholdable payment may, instead of providing documentation for each payee, provide pooled allocation information, as described under FFI withholding statement next.

FFI withholding statement. An FFI withholding statement must be provided by a participating FFI or registered deemed-compliant FFI (including a U.S. branch of a participating FFI that is not treated as a U.S. person) that is an NQI, nonwithholding foreign partnership, nonwithholding foreign trust, or a QI that makes an election to be withheld on for chapter 4 purposes (that is, a QI that does not assume chapter 3 or 4 withholding responsibility), as described under qualified intermediary (QI), later.

An FFI withholding statement may include either payee-specific information or pooled information. If the withholding statement includes pooled information, the withholding statement must indicate the portion of the payment allocable to:

A chapter 4 withholding rate pool of U.S. payees,
Each class of recalcitrant account holders under Regulations section 1.1471-4(d)(6) or a single pool for a QI, or
A class of nonparticipating FFIs.

If the withholding statement includes payee-specific information, it must indicate both the portion of the payment allocated to each payee and each payee’s chapter 4 status.

Any withholding statement provided by an FFI other than an FFI acting as a WP, WT, or QI with respect to the account must also identify each intermediary or flow-through entity that receives the payment and such entity’s chapter 4 status and GIIN, when applicable.

For additional information on the requirements for FFI withholding statements, see Regulations section 1.1471-3(c)(3)(iii)(B)(2).

Chapter 4 withholding statement. A chapter 4 withholding statement must be provided by the following.

A territory financial institution that does not agree to be treated as a U.S. person.
A U.S. branch that is not a U.S. branch of a participating FFI.
An NFFE or certified deemed-compliant FFI that is an NQI, nonwithholding foreign partnership, or nonwithholding foreign trust and is not the payee.

A chapter 4 withholding statement must contain the following.

The name, address, TIN (if any), entity type, and chapter 4 status of each payee.
The amount allocated to each payee.
A valid withholding certificate or other appropriate documentation sufficient to establish the chapter 4 status of each payee, and each intermediary or flow-through entity that receives the payment on behalf of the payee.
Any other information the withholding agent reasonably requests in order to fulfill its obligations under chapter 4.

A chapter 4 withholding statement is permitted to provide pooled allocation information with respect to payees that are treated as nonparticipating FFIs.

Caution: A Form W-8 must include a U.S. TIN for a partner to be valid for purposes of a claim of exemption or reduced withholding under section 1446(a) or (f). See the instructions for the applicable Form W-8.

Qualified Intermediary (QI)

In most cases, a QI is any foreign intermediary that has entered into a QI agreement (discussed earlier) with the IRS with respect to the withholding and reporting required under chapters 3 and 4 and for purposes of Form 1099 reporting and backup withholding under section 3406. Additionally, starting January 1, 2023, a QI may also assume certain withholding responsibilities with respect to PTP distributions (including withholding under section 1446(a)) and certain transfers of PTP interests for section 1446(f) purposes when acting as an intermediary. For discussion of those provisions, see Publicly Traded Partnership Distri- butions and Section 1446(f): PTP Interests , later. A foreign entity that is a QI acting as a QDD or that is acting with re- spect to payments of substitute interest (as permitted by the QI agreement) can act as a QI even though it is not receiving payments as an intermediary. A foreign entity that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI. The QI can claim that it is a QI until the IRS revokes its QI-EIN.

A QI can be either an FFI or an NFFE. An FFI that is a QI must be a participating FFI (including a reporting Model

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2 FFI), a registered deemed-compliant FFI (including a re- porting Model 1 FFI and a nonreporting Model 2 FFI trea- ted as a registered deemed-compliant FFI), or an FFI trea- ted as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI (including the requirement to register with the IRS) (defined in the QI agreement as a “registered deemed-compliant Model 1 IGA FFI”). Thus, you must identify the chapter 4 status of an FFI, certifying its status as a QI as one of the chapter 4 statuses referenced in the preceding sentence on a Form W-8IMY when a chapter 4 status is required for chapter 4 purposes.

Responsibilities and documentation for chapters 3 and 4. Payments made to a QI that does not assume primary chapters 3 and 4 withholding responsibilities are treated as paid to its account holders. However, a QI is not required to provide you with documentation it obtains from its foreign account holders or from U.S. exempt recipients (U.S. persons exempt from Form 1099 reporting). Instead, it provides you with a withholding statement that contains either chapter 3 or chapter 4 withholding rate pool information. A chapter 4 withholding rate pool is a payment of a single type of income that is a withholdable payment that is allocated to payees that are nonparticipating FFIs or recalcitrant account holders (in a single pool). A chapter 4 withholding rate pool also means a payment of a single type of income that is allocated to U.S. payees when the QI provides the certification required on Form W-8IMY for allocating payments to this pool and a withholding statement. A QI may include in its chapter 4 withholding rate pools its direct account holders as well as account holders of another QI or a participating FFI or registered deemed-compliant FFI. With respect to a payment to a foreign person for which no chapter 4 withholding is required, a chapter 3 withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding and that is reported on Form 1042-S under a single chapter 4 exemption code. Payments made to U.S. exempt recipients may also be included in a chapter 3 withholding rate pool to which withholding does not apply.

A QI is required to provide you with information regarding U.S. nonexempt recipients (U.S. persons subject to Form 1099 information reporting) and to provide you withholding rate pool information separately for each such U.S. person unless it has assumed primary Form 1099 reporting and backup withholding responsibility and meets the requirements to include these recipients in a U.S. payee pool. For the alternative procedure for providing withholding rate pool information for U.S. nonexempt persons not included in a chapter 4 withholding rate pool of U.S. payees, see the Instructions for Form W-8IMY .

The withholding statement must:

Designate those accounts for which it acts as a QI;
Designate those accounts for which it assumes primary chapters 3 and 4 withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility;
If applicable, designate the accounts for which it acts as a qualified securities lender with respect to any U.S. source substitute dividend payments;
If applicable, designate those accounts for which it acts as a QDD (see the QDD withholding statement section of the Instructions for Form W-8IMY for additional requirements);
Provide sufficient information for you to allocate the payment, as applicable, to chapter 3 withholding rate pools and, for payments that are withholdable payments, chapter 4 withholding rate pools of nonparticipating FFIs and recalcitrant account holders when the QI has not assumed primary chapter 3 or 4 withholding responsibility; and
Provide sufficient information for you to allocate payments to each U.S. nonexempt recipient or to a pool of U.S. payees to the extent described earlier under this heading.

The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI.

If a QI that is permitted to do so by the QI agreement obtains documentary evidence under the “KYC” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. A QI may rely on a Form W-8 until its validity expires under Regulations section 1.1441-1(e) (4)(ii) and may rely on documentary evidence not obtained pursuant to “KYC” rules until its validity expires under Regulations section 1.6049-5(c).

Primary chapters 3 and 4 withholding responsibili- ties not assumed. If a QI does not assume primary chapters 3 and 4 withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign and U.S. payees. Unless the alternative procedure applies and the QI is permitted to include U.S. nonexempt recipients in a chapter 4 withholding rate pool of U.S. payees, the QI must provide you with a separate withholding rate pool for each U.S. nonexempt recipient that must be reported on Form 1099. If you and the QI agree, the QI may apply the alternative procedures for U.S. nonexempt recipients by establishing a single withholding rate pool (not subject to backup withholding) for all U.S. nonexempt recipient account holders for whom the QI is required to report on Form 1099 and has provided you with Forms W-9 prior to you making the reportable payment, or, if applicable, designated broker proceeds to which backup withholding does not apply. The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for each U.S. nonexempt recipient.

Primary chapters 3 and 4 withholding responsibili- ties assumed. If you make a payment to a QI that

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assumes primary chapters 3 and 4 withholding responsibilities (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the chapter 4 withholding rate pools and chapter 3 withholding rate pools, as applicable, and the part of the payment attributable to withholding rate pools for each U.S. nonexempt recipient, unless the alternative procedure applies for Form 1099 reporting and/or backup withholding purposes. The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person.

Primary chapters 3 and 4 withholding responsibili- ties and Form 1099 reporting and backup withhold- ing responsibilities assumed. If you make a payment to a QI that assumes primary chapters 3 and 4 withholding responsibilities and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate the payment with valid documentation provided that you receive a valid Form W-8IMY. It is not necessary to associate the payment with any chapter 3 or chapter 4 withholding rate pools.

If you make a payment to a QI that also acts as a QDD, the QI must provide a withholding statement designating the accounts for which it acts as a QDD even if it assumes primary withholding responsibility for all payments. In addition, the QI must provide all information required for the QDD accounts.

Example. You make a payment of U.S. source dividends to a QI. It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U.S. individual who provides it with a Form W-9. Each customer is entitled to 20% of the dividend payment. The QI does not assume any primary withholding responsibility. The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U.S. individual. You should report on Forms 1042-S, 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. The part of the payment allocable to the U.S. individual (20%) is reportable on Form 1099-DIV.

Joint account treatment for chapters 3 and 4. A QI may apply joint account treatment to a partnership or trust if the partnership or trust meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI), an owner-documented FFI with respect to the QI, an exempt beneficial owner, an NFFE, or is covered as an account that is excluded from the definition of financial account under Annex II of an applicable IGA or under

Regulations section 1.1471-5(a) and has provided the QI with a certification that it has maintained such chapter 4 status during each certification period.

It is a direct account holder of the QI.
None of its partners, beneficiaries, or owners is a flow-through entity or is acting as an intermediary for a payment made by the QI to the partnership or trust, and none of its partners, beneficiaries, or owners is a U.S. person.
None of its foreign partners, beneficiaries, or owners is subject to withholding or reporting under chapter 4.
It agrees to make available upon request to the QI (or QI’s reviewer) records that establish it has provided the QI with documentation for purposes of chapters 3 and 4 for all of its partners, beneficiaries, or owners.

For information on these rules, see section 4.05 of the QI agreement in Revenue Procedure 2022-43 .

Agency option. A QI may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the QI and to apply the provisions of the QI agreement to its partners, beneficiaries, or owners, except for any account holder for which it acts as a QDD. A QI and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is either a direct account holder of the QI or an indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI also applies the agency option.
It is an FFI that is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI), an owner-documented FFI with respect to the QI, an NFFE, an exempt beneficial owner, or is covered as an account that is excluded from the definition of financial account under Annex II of an applicable IGA or under Regulations section 1.1471-5(a) and has provided the QI with a certification that it has maintained such chapter 4 status during each certification period.
None of its partners, beneficiaries, or owners is a WT, WP, participating FFI, registered deemed-compliant FFI, registered deemed-compliant Model 1 IGA FFI, or another QI acting as an intermediary for a payment made by the QI to the partnership or trust.
It agrees to permit the QI to treat its direct and indirect partners, beneficiaries, or owners as direct and indirect account holders, respectively, of the QI under the QI agreement.
It agrees to comply with the compliance procedures of the QI agreement.

For information on these rules, see section 4.06 of the QI agreement in Revenue Procedure 2022-43 .

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Form 1042-S reporting. A QI is generally permitted to report payments made to its foreign account holders on a pooled basis rather than reporting payments to each account holder specifically. Pooled basis reporting is not available for payments to certain account holders, such as NQIs, QDDs, flow-through entities (discussed earlier) and certain of their account holders and owners, private arrangement intermediaries, and, in certain circumstances, QIs, WPs, and WTs. Notwithstanding these requirements, separate Forms 1042-S are not issued to account holders that the QI is permitted to include in a chapter 4 withholding rate pool.

Collective refund procedures. A QI may seek a refund of tax withheld under chapters 3 and 4 on behalf of its account holders when the QI has not issued a Form 1042-S to the account holders that received the payment that was subject to overwithholding. The account holders, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the QI. A QI may obtain a refund of tax withheld under chapter 4, however, to the extent permitted under the QI agreement.

Nonqualified Intermediary (NQI)

If you are making a payment to an NQI or U.S. branch that is using Form W-8IMY to transmit information about the branch’s account holders or customers for chapter 3 or 4 purposes, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, before making the payment:

You can allocate the payment to a valid Form W-8IMY;
You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow-through entity, or U.S. branch with a chapter 4 withholding rate pool) (see Pooled withholding infor- mation, later); and
You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required.

Withholding statement. The NQI or U.S. branch must give you certain information on a withholding statement that is associated with the Form W-8IMY for chapter 3 or 4 purposes. A withholding statement must be updated to keep the information accurate prior to each payment. See, however, Regulations section 1.1441-1(e)(3)(iv)(C)(3) for when a withholding agent may instead accept an alternative withholding statement.

For chapter 4 purposes. An NQI receiving a withholdable payment must provide a withholding statement that satisfies the requirements of an FFI withholding statement or, if the NQI is not a participating FFI or registered deemed-compliant FFI, a chapter 4 withholding statement.

An FFI withholding statement may allocate the payment to chapter 4 reporting rate pools (as appropriate), including a chapter 4 withholding rate pool for nonparticipating FFIs, recalcitrant account holders (in each class of account holders, as described in the chapter 4 regulations),

and, for an NQI that is a participating FFI (including a reporting Model 2 FFI) or a registered deemed-compliant FFI (including a reporting Model 1 FFI), U.S. payees. However, an NQI may allocate a payment of a reportable amount (regardless of whether the payment is a withholdable payment) to a chapter 4 withholding rate pool of U.S. payees when the NQI satisfies the requirements for providing such a pool, including the requirement to certify to its status as a participating FFI, including a reporting Model 2 FFI, or registered deemed-compliant FFI, including a reporting Model 1 FFI.

If the FFI withholding statement instead includes payee-specific information for purposes of chapter 4, it must indicate both the portion of the payment allocated to each payee and each payee’s chapter 4 status. The withholding statement must also identify each intermediary or flow-through entity that is receiving a payment (excluding any intermediary or flow-through entity that is an account holder or interest holder in another QI, WP, or WT), each such entity’s chapter 4 status and GIIN (if applicable) when required for chapter 4 purposes, and the chapter 4 withholding rate pools associated with each such entity.

A chapter 4 withholding statement must contain the name, address, TIN (if any), entity type, chapter 4 status of each payee, the amount allocated to each payee, and a valid withholding certificate or other documentation sufficient to establish each payee’s chapter 4 status for payees that are not included in a chapter 4 withholding rate pool of nonparticipating FFIs. The withholding statement must also identify each intermediary or flow-through entity that is receiving a payment (excluding any intermediary or flow-through entity that is an account holder or interest holder in another QI, WP, or WT), each such entity’s chapter 4 status and GIIN (if applicable), and the chapter 4 withholding rate pools associated with each such entity. An allocation of a payment to an NQI, nonwithholding foreign partnership, or nonwithholding foreign trust of an amount subject to chapter 3 withholding to a chapter 4 withholding rate pool of U.S. payees must identify the payees consistent with the description in Regulations section 1.1471-3(c)(3)(iii)(B)(2)(iii).

For chapter 3 purposes. The withholding statement should allocate for chapter 3 purposes only the portion of the payment that was not allocated to a chapter 4 withholding rate pool or to a payee identified on a withholding statement to whom withholding was applied under chapter 4. For chapter 3 purposes, a withholding statement must include the information described below for a reportable amount.

The name, address, and TIN (if any, or if required) of each person for whom documentation is provided.
The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided, and, for a withholdable payment, that the documentation establishes the payee’s chapter 4 status to the extent required for chapter 4 purposes.
The status of the person for whom the documentation has been provided, such as whether the person is a

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U.S. exempt recipient, U.S. nonexempt recipient, or a foreign person. For a foreign person, the statement must indicate whether the person is the beneficial owner or a foreign intermediary, flow-through entity, or a U.S. branch that is not included in a chapter 4 withholding rate pool or in a pool of payees under the alternative procedures (see Alternative procedure, later).

The type of recipient the person is, based on the recipient codes used on Form 1042-S.
Information allocating each payment, by income type, to each payee (including U.S. exempt and nonexempt recipients) for whom documentation has been provided that is not included in a chapter 4 withholding rate pool or in a pool of payees under the alternative procedures (see Alternative procedure, later).
The rate of withholding that applies to each foreign person to whom a payment is allocated.
A foreign payee’s country of residence.
If a reduced rate of withholding is claimed under chapter 3, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc.).
In the case of treaty benefits claimed by entities, whether the applicable LOB statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made.
The name, address, and TIN (if any) and, for a withholdable payment, the chapter 4 status (if required) and GIIN (if applicable) of any other NQI, flow-through entity, or U.S. branch from which the payee will directly receive a payment.
Any other information a withholding agent requests to fulfill its reporting and withholding obligations.

Alternative procedure. Under this alternative procedure, the NQI can give you the information that allocates each payment to each foreign and U.S. exempt recipient or chapter 4 withholding rate pool by January 31 following the calendar year of payment, rather than before the payment is made, as otherwise required. To take advantage of this procedure, the NQI must (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. You must receive the withholding statement with all the required information (other than item 5) before the NQI makes the payment.

Caution: The alternative procedure cannot, however, be used for payments to U.S. nonexempt recipients other than those recipients included in a chapter 4 withholding rate pool of U.S. payees. See Chapter 4, later. Therefore, an NQI must provide you with allocation information for any U.S. nonexempt recipients not included in a chapter 4 withholding rate pool of U.S. payees before the NQI makes a payment.

Pooled withholding information for chapters 3 and 4. If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as

opposed to individual allocation information, before the payment of a reportable amount. The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment, except as otherwise permitted for chapter 4 purposes, when using this procedure.

Chapter 4. In the case of a reportable amount that is also a withholdable payment, an NQI may include amounts allocable to a chapter 4 withholding rate pool (other than a chapter 4 withholding rate pool of U.S. payees) and payees subject to chapter 4 withholding for whom the NQI will provide payee-specific information in a 30% rate pool together with payees subject to chapter 3 withholding at the 30% rate. For the amount of the payment allocable to a chapter 4 withholding rate pool of U.S. payees, an NQI may include amounts allocable to the pool with other amounts exempt from withholding (and an NQI may allocate payments to this pool regardless of whether the payment is a withholdable payment) and may not otherwise apply these provisions for payments made to U.S. nonexempt recipients. The NQI must identify prior to the payment each chapter 4 withholding rate pool to be allocated a portion of the payment, in addition to each payee to be allocated the payments that is not included in such a pool. The NQI must then also allocate, by January 31 following the calendar year of the payment, the portion of the payment to each such pool in addition to allocating the payment to each payee that is not included in the pool.

Failure to provide allocation information. If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool or chapter 4 withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI’s withholding rate pools from that date forward. You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . An NQI is deemed to have failed to provide specific allocation information if it does not give you such information for more than 10% of any one withholding rate pool.

However, if you receive such information by February 14, you may make the appropriate adjustments to repay any excess withholding incurred between February 1 and on or before February 14.

If the NQI fails to allocate more than 10% of the payment to a withholding rate pool by February 14 following the calendar year of payment, you must file a Form 1042-S for each account holder in the pool on a pro-rata basis (treating a chapter 4 withholding rate pool as an account holder for this purpose and excluding U.S. exempt recipients). For example, if there are four account holders in a withholding rate pool that receive a $100 payment and the NQI fails to allocate more than $10 of the payment, you must file four Forms 1042-S, one for each account holder in the pool, showing $25 of income to each. You must also check box 15 (the pro-rata basis reporting) on each Form 1042-S. However, if the NQI provides allocation information for 90% or more of the payment to a

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withholding rate pool, the pro-rata reporting method is not required. Instead, you must file a Form 1042-S for each account holder for whom you have allocation information and report the unallocated part of the payment on a Form 1042-S issued to “unknown recipient.”

Withholding Foreign Partnerships (WPs)

If you are making payments to a WP for chapter 3 or 4 purposes, you do not have to withhold if the WP is acting in that capacity. The WP must assume primary chapters 3 and 4 withholding responsibility for amounts that are distributed to, or included in the distributive share of, any direct partner and may assume chapters 3 and 4 withholding responsibilities for certain of its indirect partners. The WP must withhold the amount required to be withheld. A WP must provide you with a Form W-8IMY that certifies that the WP is acting in that capacity and provides all other information and certifications required by the form. The Form W-8IMY must contain the WP-EIN and GIIN (if applicable).

A WP can be either an FFI or an NFFE. An FFI (other than a retirement fund) that is a WP must be a participating FFI, a registered deemed-compliant FFI, or an FFI treated as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI under Regulations section 1.1471-5(f)(1) (including the requirement to register with the IRS) (defined in the WP agreement as a “registered deemed-compliant Model 1 IGA FFI”). Thus, an FFI certifying its status as a WP must provide you a Form W-8IMY that certifies to one of the chapter 4 statuses referenced in the preceding sentence when a chapter 4 status is required.

Responsibilities of the WP. The WP must withhold under chapter 3 or 4 on the date it makes a distribution of a withholdable payment or an amount subject to chapter 3 withholding to a direct foreign partner based on the Form W-8 or W-9 it receives from its partners. If the partner’s distributive share has not been distributed, the WP must withhold on the partner’s distributive share on the earlier of the date that the partnership must mail or otherwise provide to the partner a Schedule K-1 (Form 1065) or the due date for furnishing the statement (whether or not the WP is required to furnish the statement).

The WP may determine the amount of withholding based on a reasonable estimate of the partner’s distributive share of income subject to withholding for the year. The WP must correct the estimated withholding to reflect the actual distributive share on the earlier of the dates mentioned in the preceding paragraph. If that date is after the earlier of the due date (including extensions) for filing the WP’s Form 1042-S or the date the WP actually issues Form 1042-S for the calendar year, the WP may withhold and report any adjustments required by correcting the information for the following calendar year.

Form 1042 filing. The WP must file Form 1042 even if no amount was withheld. In addition to the information that

is required for the Form 1042, the WP must attach a statement showing the amounts of any overwithholding or underwithholding adjustments and an explanation of those adjustments.

Form 1042-S reporting. The WP can elect to report payments made to its foreign direct partners on a pooled basis for chapter 3 purposes rather than reporting payments to each direct partner in addition to reporting payments in a chapter 4 withholding rate pool to the extent the WP is permitted to do so based on its chapter 4 status. A WP can treat as its direct partners those indirect partners of the WP for which it applies joint account treatment or the agency option (described later). A WP must otherwise issue a Form 1042-S to each partner to the extent it is required to do so under the WP agreement. You may issue a single Form 1042-S for all payments you make to a WP other than payments for which the entity does not act as a WP. You may, however, have Form 1099 requirements for certain indirect partners of a WP that are U.S. nonexempt recipients.

Collective refund procedures. A WP may seek a refund of tax withheld under chapters 3 and 4 on behalf of its partners when the WP has not issued a Form 1042-S to the partners that received the payment that was subject to overwithholding. The partners, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the WP. A WP may obtain a refund of tax withheld under chapter 4 to the extent permitted under the WP agreement.

Reporting of U.S. partners. A WP must report its U.S. partners on Schedule K-1 to the extent required under the WP agreement. If the WP is an FFI, it is also required to report each of its U.S. accounts (or U.S. reportable accounts if a reporting Model 1 FFI) on Form 8966 consistent with its chapter 4 requirements or the requirements of an IGA. If the WP is an NFFE, the WP must file Form 8966 to report any partner that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) if the NFFE is the beneficial owner of a withholdable payment received by the WP. The WP must also file a Form 8966 to report withholdable payments made to a pass-through partner for which the WP acts under the WP agreement that provides information on an account holder (or interest holder) that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) and that is the beneficial owner of the withholdable payment received by the WP, unless the pass-through partner certifies to the WP that it is reporting on the account holder (or interest holder) pursuant to its U.S. account reporting requirements. The preceding sentence applies with respect to a pass-through partner to which the WP applies the agency option or which has partners, beneficiaries, or owners that are indirect partners of the WP.

Joint account treatment. Under special procedures provided in the WP agreement, a WP may apply joint account treatment to a partnership or trust that is a direct

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partner of the WP. A WP that applies the joint account option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WP distributes to, or includes in the distributive share of, a foreign direct partner. These rules only apply to a partnership or trust that meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI, as defined in the WP agreement), an owner-documented FFI, an exempt beneficial owner, or an NFFE (other than a WP or WT).
It is a direct partner of the WP.
None of its partners, beneficiaries, or owners is a flow-through entity or intermediary.
None of the partnership’s or trust’s partners, beneficiaries, or owners is a U.S. person or is subject to withholding or reporting under chapter 4.
It agrees to make available upon request to the WP (or the WP’s auditor) records that establish it has provided the WP with documentation for purposes of chapters 3 and 4 for all of its partners, beneficiaries, or owners.

For more information on applying these rules, see section 9.01 of the WP agreement in section 6 of Revenue Procedure 2017-21 .

Agency option. A WP may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the WP and to apply the provisions of the WP agreement to its partners, beneficiaries, or owners. A WP that applies the agency option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WP distributes to, or includes in the distributive share of, a foreign direct partner. A WP and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is either a direct partner of the WP or an indirect partner of the WP that is a direct partner, beneficiary, or owner of a partnership or trust to which the WP also applies the agency option.
It is an FFI that is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI, as defined in the WP agreement), an owner-documented FFI, an NFFE, or an exempt beneficial owner.
None of its partners, beneficiaries, or owners is a WT, WP, participating FFI, registered deemed-compliant FFI, registered deemed-compliant Model 1 IGA FFI (as defined in the WP agreement), or QI acting as an intermediary for a payment made by the WP to the partnership or trust.
The WP may not act as a withholding foreign partnership with respect to any direct or indirect partner of the partnership or trust that is a U.S. nonexempt recipient, unless the U.S. nonexempt recipient is a partner of an owner-documented FFI or passive NFFE to which the WP applies the agency option and is included in the WP’s U.S. payee pool.
It agrees to comply with the compliance procedures described in section 8.05 of the WP agreement by providing the WP with the certification described in section 8.03 of the WP agreement and providing the WP with documentation or other information for review.
It agrees to comply with the documentation requirements of a WP in the WP agreement.

For more information on applying these rules, see section 9.02 of the WP agreement in section 6 of Revenue Procedure 2017-21 .

WP acting for indirect partners. A WP may act as a WP with respect to an indirect partner of the WP that is not a U.S. nonexempt recipient. However, a WP may act as a WP for an indirect partner that is a U.S. nonexempt recipient if the indirect partner is included in a pass-through partner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. A WP acting as a WP for an indirect partner is not required to forward to its withholding agent the documentation and the withholding statement of the pass-through partner and indirect partner that the WP would have otherwise been required to provide under the requirements of a nonwithholding foreign partnership. See Not acting as a WP , later. However, a WP must provide the withholding agent with documentation and any other information from any pass-through partner whose direct or indirect partner, beneficiary, or owner is a U.S. nonexempt recipient unless the recipient is included in the pass-through partner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees.

If a WP is making a payment that is a withholdable payment, the pass-through partner’s withholding statement must meet the requirements of Regulations section 1.1471-3(c)(3)(iii)(B). The pass-through partner’s withholding statement must include the account holders or interest holders of the pass-through partner in chapter 4 withholding rate pools (to the extent permitted), and, for an amount subject to chapter 3 withholding that is not a withholdable payment or is a withholdable payment for which chapter 4 withholding is not required, valid documentation provided by the account holders or interest holders of the pass-through partner that are not themselves QIs or flow-through entities.

For more information on applying these rules, see section 9.03 of the WP agreement in section 6 of Revenue Procedure 2017-21 .

24 Publication 515 (2026)

Not acting as a WP. A foreign partnership that is not acting as a WP is a nonwithholding foreign partnership. This occurs if a WP is not acting in that capacity for some or all of the amounts it receives from you.

You must treat payments made to a nonwithholding foreign partnership as made to the partners of the partnership. The partnership must provide you with a Form W-8IMY (with Part VIII completed), a withholding statement identifying the amounts, the withholding certificates or documentary evidence of the partners, and the information shown earlier under Withholding statement under Nonqualified Intermediary (NQI).

Withholding Foreign Trusts (WTs)

If you are making payments to a WT for chapter 3 or 4 purposes, you do not have to withhold if the WT is acting in that capacity. The WT must assume primary chapters 3 and 4 withholding responsibility for amounts that are distributed to, or included in the distributive share of, any direct beneficiary or owner and may assume primary chapters 3 and 4 withholding responsibility for certain of its indirect beneficiaries or owners. The WT must withhold the amount required to be withheld. A WT must provide you with a Form W-8IMY that certifies that the WT is acting in that capacity and provides all other information and certifications required by the form. The Form W-8IMY must contain the WT-EIN and GIIN (if applicable).

A WT can be either an FFI or an NFFE. An FFI (other than a retirement fund) that is a WT must be a participating FFI, a registered deemed-compliant FFI, or an FFI treated as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI under Regulations section 1.1471-5(f)(1) (including the requirement to register with the IRS) (defined in the WT agreement as a “registered deemed-compliant Model 1 IGA FFI”). Thus, you must identify the chapter 4 status of an FFI certifying its status as a WT as one of the chapter 4 statuses referenced in the preceding sentence on a Form W-8IMY when a chapter 4 status is required for chapter 4 purposes.

Responsibilities of a WT. The WT must withhold on the date it makes a distribution of a withholdable payment or an amount subject to chapter 3 withholding to a direct foreign beneficiary or owner. If the beneficiary’s or owner’s distributive share has not been distributed, the WT must withhold on the beneficiary’s or owner’s distributive share on the earlier of the date that the trust must mail or otherwise provide to the beneficiary or owner the statement required under section 6048(b) or the due date for furnishing the statement (whether or not the WT is required to furnish the statement).

The WT may determine the amount of withholding based on a reasonable estimate of the beneficiary’s or owner’s distributive share of income subject to withholding for the year. The WT must correct the estimated withholding to reflect the actual distributive share on the earlier of the dates mentioned in the preceding paragraph. If that

date is after the earlier of the due date (including extensions) for filing the WT’s Form 1042-S or the date the WT actually issues Form 1042-S for the calendar year, the WT may withhold and report any adjustments required by correcting the information for the following calendar year.

Form 1042 filing. The WT must file Form 1042 even if no amount was withheld. In addition to the information that is required for the Form 1042, the WT must attach a statement showing the amounts of any overwithholding or underwithholding adjustments and an explanation of those adjustments.

Form 1042-S reporting. The WT can elect to report payments made to its foreign direct beneficiaries or owners on a pooled basis for chapter 3 purposes rather than reporting payments made to each foreign direct beneficiary or owner in addition to reporting payments in a chapter 4 withholding rate pool to the extent the WT is permitted to do so based on its chapter 4 status. A WT can treat as its direct beneficiaries or owners those indirect beneficiaries or owners of the WT for which it applies joint account treatment or the agency option (described later). A WT must otherwise issue a Form 1042-S to each beneficiary or owner to the extent it is required to do so under the WT agreement. You may issue a single Form 1042-S for all payments you make to a WT other than payments for which the entity does not act as a WT. You may, however, have Form 1099 requirements for certain indirect beneficiaries or owners of a WT that are U.S. nonexempt recipients.

Collective refund procedures. A WT may seek a refund of tax withheld under chapters 3 and 4 on behalf of its beneficiaries or owners when the WT has not issued a Form 1042-S to the beneficiaries or owners that received the payment that was subject to overwithholding. The beneficiaries or owners, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the WT. A WT may obtain a refund of tax withheld under chapter 4 to the extent permitted under the WT agreement.

Reporting of U.S. beneficiaries or owners. If the WT is a grantor trust with U.S. owners, the WT is required to file Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner, and to provide statements to a U.S. owner, as well as each U.S. beneficiary who is not an owner and receives a distribution. If the WT is an FFI, it is required to report each of its U.S. accounts (or U.S. reportable accounts if a reporting Model 1 FFI) on Form 8966 consistent with its FATCA requirements or the requirements of an IGA. If the WT is an NFFE, the WT must file Form 8966 to report any beneficiary or owner that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) if the NFFE is the beneficial owner of a withholdable payment received by the WT.

The WT must also file a Form 8966 to report withholdable payments made to a pass-through beneficiary or owner for which the WT acts under the WT agreement that provides information on an account holder (or interest

Publication 515 (2026) 25

holder) that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) and that is the beneficial owner of the withholdable payment received by the WT, unless the pass-through beneficiary or owner certifies to the WT that it is reporting on the account holder (or interest holder) pursuant to its U.S. account reporting requirements. The preceding sentence applies with respect to a pass-through beneficiary or owner to which the WT applies the agency option or which has partners, beneficiaries, or owners that are indirect beneficiaries or owners of the WT. In addition, if the WT is not a participating FFI, a registered deemed-compliant FFI, or a registered deemed-compliant Model 1 IGA FFI and is not required to report with respect to a U.S. beneficiary of the WT on Form 3520-A, then the WT must report with respect to such beneficiary on Form 8966, as required in the WT agreement. A beneficiary for this purpose means a beneficiary that receives a distribution from the WT during the year or that is required to include an amount in gross income with respect to the WT under sections 652(a) or 662(a).

Joint account treatment. Under special procedures provided in the WT agreement, a WT may apply joint account treatment to a partnership or trust that is a direct beneficiary or owner of the WT. A WT that applies the joint account option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WT distributes to, or includes in the distributive share of, a foreign direct beneficiary or owner. These rules only apply to a partnership or trust that meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI, as defined in the WT agreement), an owner-documented FFI, an exempt beneficial owner, or an NFFE (other than a WP or WT).
It is a direct beneficiary or owner of the WT.
None of its partners, beneficiaries, or owners is a flow-through entity or intermediary.
None of the partnership’s or trust’s partners, beneficiaries, or owners is a U.S. person or is subject to withholding or reporting under chapter 4.
It agrees to make available upon request to the WT (or the WT’s auditor) records that establish it has provided the WT with documentation for purposes of chapters 3 and 4 for all of its partners, beneficiaries, or owners.

For more information on applying these rules, see section 9.01 of the WT agreement found in section 7 of Revenue Procedure 2017-21 .

Agency option. A WT may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the WT and to apply the provisions of the WT agreement to its partners, beneficiaries, or owners. A WT that applies the agency option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WT distributes to, or includes in the distributive share of, a foreign direct beneficiary or owner. A WT and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions.

It is a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor trust.
It is either a direct beneficiary or owner of the WT or an indirect beneficiary or owner of the WT that is a direct partner, beneficiary, or owner of a partnership or trust to which the WT also applies the agency option.
It is an FFI that is a certified deemed-compliant FFI (other than a registered deemed-compliant Model 1 IGA FFI, as defined in the WT agreement), an owner-documented FFI, an NFFE, or an exempt beneficial owner.
None of its partners, beneficiaries, or owners is a WT, WP, participating FFI, registered deemed-compliant FFI, registered deemed-compliant Model 1 IGA FFI (as defined in the WT agreement), or a QI acting as an intermediary for a payment made by the WT to the partnership or trust.
The WT may not act as a withholding foreign trust with respect to any direct or indirect beneficiary or owner of the partnership or trust that is a U.S. nonexempt recipient, unless the U.S. nonexempt recipient is a beneficiary or owner of an owner-documented FFI or passive NFFE to which the WT applies the agency option and is included in the WT’s U.S. payee pool.
It agrees to comply with the compliance procedures described in section 8.05 of the WT agreement by providing the WT with the certification described in section 8.03 of the WT agreement and providing the WT with documentation or other information for review.
It agrees to comply with the documentation requirements of a WT in the WT agreement.

For more information on applying these rules, see section 9.02 of the WT agreement in section 7 of Revenue Procedure 2017-21 .

WT acting for indirect beneficiaries or owners. A WT may act as a WT with respect to an indirect beneficiary or owner of the WT that is not a U.S. nonexempt recipient. However, a WT may act as a WT for an indirect beneficiary or owner that is a U.S. nonexempt recipient if the indirect beneficiary or owner is included in a pass-through beneficiary’s or owner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. A WT acting

26 Publication 515 (2026)

as a WT for an indirect beneficiary or owner is not required to forward to its withholding agent the documentation and the withholding statement of the pass-through beneficiary or owner and indirect beneficiary or owner that the WT would have otherwise been required to provide under the requirements of a nonwithholding foreign trust. See Not acting as a WT, later. However, a WT must provide the withholding agent with documentation and any other infor- mation from any pass-through beneficiary or owner whose direct or indirect partner, beneficiary, or owner is a U.S. nonexempt recipient unless the recipient is included in the pass-through beneficiary’s or owner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. If a WT is making a payment that is a withholdable payment, the pass-through beneficiary’s or owner’s withholding statement must meet the requirements of Regulations section 1.1471-3(c)(3)(iii)(B). The pass-through beneficiary’s or owner’s withholding statement must include the account holders or interest holders of the pass-through beneficiary or owner in chapter 4 withholding rate pools (to the extent permitted), and, for an amount subject to chapter 3 withholding that is not a withholdable payment or is a withholdable payment for which chapter 4 withholding is not required, valid documentation provided by the account holders or interest holders of the pass-through beneficiary or owner that are not themselves QIs or flow-through entities.

For more information on applying these rules, see section 9.03 of the WT agreement in section 7 of Revenue Procedure 2017-21 .

Not acting as a WT. A foreign trust that is not acting as a WT is a nonwithholding foreign trust. This occurs if a WT is not acting in that capacity for some or all of the amounts it receives from you.

In most cases, you must treat payments made to a nonwithholding foreign trust as made to the beneficiaries of a simple trust or the owners of a grantor trust. The trust must provide you with a Form W-8IMY (with Part VIII completed), a withholding statement identifying the amounts, the withholding certificates or documentary evidence of the beneficiaries or owners, and the information shown earlier under Withholding statement under Nonqualified Interme- diary (NQI) .