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Amended Tax Returns

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Amended Tax Returns

Amended tax returns 12. Amended tax returns   Filing Form 720 Table of Contents Attachments to Form 720. Amended tax returns Conditions to allowance. Amended tax returns Use Form 720 to report and pay the excise taxes previously discussed in this publication. Amended tax returns File Form 720 for each calendar quarter until you file a final Form 720. Amended tax returns For information on filing Form 720 electronically, visit the IRS e-file website at www. Amended tax returns irs. Amended tax returns gov/efile. Amended tax returns You may be required to file your returns on a monthly or semimonthly basis instead of quarterly if you do not make deposits as required (see Payment of Taxes, later) or are liable for the excise tax on taxable fuels and meet certain conditions. Amended tax returns Form 720 has three parts and three schedules. Amended tax returns Part I consists of excise taxes generally required to be deposited (see Payment of Taxes, later). Amended tax returns Part II consists of excise taxes that are not required to be deposited. Amended tax returns Part III is used to figure your tax liability for the quarter and the amount of any balance due or overpayment. Amended tax returns Schedule A, Excise Tax Liability, is used to record your net tax liability for each semimonthly period in a quarter. Amended tax returns Complete it if you have an entry in Part I. Amended tax returns Schedule C, Claims, is used to make claims. Amended tax returns However, Schedule C can only be used if you are reporting a liability in Part I or Part II. Amended tax returns Schedule T, Two-Party Exchange Information Reporting, is used to report certain exchanges of taxable fuel before or in connection with the removal at the terminal rack. Amended tax returns Attachments to Form 720. Amended tax returns   You may have to attach the following forms. Amended tax returns Form 6197 for the gas guzzler tax. Amended tax returns Form 6627 for environmental taxes. Amended tax returns Form 720X. Amended tax returns   This form is used to make adjustments to Forms 720 filed in prior quarters. Amended tax returns You can file Form 720X by itself or, if it shows a decrease in tax, you can attach it to Form 720. Amended tax returns See Form 720X for more information. Amended tax returns Conditions to allowance. Amended tax returns   For tax decreases, the claimant must check the appropriate box on Form 720X stating that: For adjustments of communications or air transportation taxes, the claimant has: Repaid the tax to the person from whom it was collected, or Obtained the consent of that person to the allowance of the adjustment. Amended tax returns For other adjustments, the claimant has: Not included the tax in the price of the article and not collected the tax from the purchaser, Repaid the tax to the ultimate purchaser, or Attached the written consent of the ultimate purchaser to the allowance of the adjustment. Amended tax returns However, the conditions listed under (2) do not apply to environmental taxes, the ship passenger tax, obligations not in registered form, foreign insurance taxes, fuels used on inland waterways, cellulosic or second generation biofuel sold as but not used as fuel, biodiesel sold as fuel but not used as fuel, and certain fuel taxes if the tax was based on use (for example, dyed diesel fuel used in trains, LPG, and CNG). Amended tax returns Final return. Amended tax returns   File a final return if: You go out of business, or You will not owe excise taxes that are reportable on Form 720 in future quarters. Amended tax returns Due dates. Amended tax returns   Form 720 must be filed by the following due dates. Amended tax returns Quarter Covered Due Dates January, February, March April 30 April, May, June July 31 July, August, September October 31 October, November, December January 31   If any due date falls on a Saturday, Sunday, or legal holiday, you can file the return on the next business day. Amended tax returns One-time filing. Amended tax returns   If you import a gas guzzling automobile, you may be eligible to make a one-time filing using your SSN if you: Do not import gas guzzling automobiles in the course of your trade or business, and Are not required to file Form 720 reporting other excise taxes for the calendar quarter, except for a one-time filing. Amended tax returns   If you meet both requirements above, see Gas guzzler tax (IRS No. Amended tax returns 40) in the Instructions for Form 720 for how to file and pay the tax. Amended tax returns Payment voucher. Amended tax returns   Form 720-V, Payment Voucher, must be included with Form 720 if you have a balance due on line 10 of Form 720 and you are making your payment by check or money order. Amended tax returns Prev  Up  Next   Home   More Online Publications
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The Amended Tax Returns

Amended tax returns Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. Amended tax returns S. Amended tax returns Taxpayer Identification NumbersUnexpected payment. Amended tax returns Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Amended tax returns Electronic reporting. Amended tax returns Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Amended tax returns S. Amended tax returns Real Property InterestForeign corporations. Amended tax returns Domestic corporations. Amended tax returns U. Amended tax returns S. Amended tax returns real property holding corporations. Amended tax returns Partnerships. Amended tax returns Trusts and estates. Amended tax returns Domestically controlled QIE. Amended tax returns Late filing of certifications or notices. Amended tax returns Certifications. Amended tax returns Liability of agent or qualified substitute. Amended tax returns Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Amended tax returns Withholding of Tax In most cases, a foreign person is subject to U. Amended tax returns S. Amended tax returns tax on its U. Amended tax returns S. Amended tax returns source income. Amended tax returns Most types of U. Amended tax returns S. Amended tax returns source income received by a foreign person are subject to U. Amended tax returns S. Amended tax returns tax of 30%. Amended tax returns A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. Amended tax returns The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Amended tax returns The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. Amended tax returns In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Amended tax returns S. Amended tax returns source income. Amended tax returns Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Amended tax returns NRA withholding does not include withholding under section 1445 of the Code (see U. Amended tax returns S. Amended tax returns Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Amended tax returns A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Amended tax returns However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Amended tax returns S. Amended tax returns person is not required to withhold. Amended tax returns In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. Amended tax returns Withholding Agent You are a withholding agent if you are a U. Amended tax returns S. Amended tax returns or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. Amended tax returns A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. Amended tax returns S. Amended tax returns branch of certain foreign banks and insurance companies. Amended tax returns You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. Amended tax returns Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Amended tax returns In most cases, the U. Amended tax returns S. Amended tax returns person who pays an amount subject to NRA withholding is the person responsible for withholding. Amended tax returns However, other persons may be required to withhold. Amended tax returns For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. Amended tax returns In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. Amended tax returns Liability for tax. Amended tax returns   As a withholding agent, you are personally liable for any tax required to be withheld. Amended tax returns This liability is independent of the tax liability of the foreign person to whom the payment is made. Amended tax returns If you fail to withhold and the foreign payee fails to satisfy its U. Amended tax returns S. Amended tax returns tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Amended tax returns   The applicable tax will be collected only once. Amended tax returns If the foreign person satisfies its U. Amended tax returns S. Amended tax returns tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Amended tax returns Determination of amount to withhold. Amended tax returns   You must withhold on the gross amount subject to NRA withholding. Amended tax returns You cannot reduce the gross amount by any deductions. Amended tax returns However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Amended tax returns   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. Amended tax returns In no case, however, should you withhold more than 30% of the total amount paid. Amended tax returns Or, you may make a reasonable estimate of the amount from U. Amended tax returns S. Amended tax returns sources and put a corresponding part of the amount due in escrow until the amount from U. Amended tax returns S. Amended tax returns sources can be determined, at which time withholding becomes due. Amended tax returns When to withhold. Amended tax returns   Withholding is required at the time you make a payment of an amount subject to withholding. Amended tax returns A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. Amended tax returns A payment is considered made to a person if it is paid for that person's benefit. Amended tax returns For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. Amended tax returns A payment also is considered made to a person if it is made to that person's agent. Amended tax returns   A U. Amended tax returns S. Amended tax returns partnership should withhold when any distributions that include amounts subject to withholding are made. Amended tax returns However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Amended tax returns S. Amended tax returns partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. Amended tax returns If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Amended tax returns A U. Amended tax returns S. Amended tax returns trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. Amended tax returns To the extent a U. Amended tax returns S. Amended tax returns trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. Amended tax returns Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. Amended tax returns (See Returns Required , later. Amended tax returns ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. Amended tax returns Form 1099 reporting and backup withholding. Amended tax returns    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Amended tax returns S. Amended tax returns person. Amended tax returns You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Amended tax returns S. Amended tax returns person that is subject to Form 1099 reporting if any of the following apply. Amended tax returns The U. Amended tax returns S. Amended tax returns person has not provided its taxpayer identification number (TIN) in the manner required. Amended tax returns The IRS notifies you that the TIN furnished by the payee is incorrect. Amended tax returns There has been a notified payee underreporting. Amended tax returns There has been a payee certification failure. Amended tax returns In most cases, a TIN must be provided by a U. Amended tax returns S. Amended tax returns non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Amended tax returns A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Amended tax returns You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. Amended tax returns S. Amended tax returns person. Amended tax returns For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Amended tax returns S. Amended tax returns person subject to Form 1099 reporting. Amended tax returns See Identifying the Payee , later, for more information. Amended tax returns Also see Section S. Amended tax returns Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. Amended tax returns Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. Amended tax returns Wages paid to employees. Amended tax returns   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Amended tax returns See Pay for Personal Services Performed , later. Amended tax returns Effectively connected income by partnerships. Amended tax returns   A withholding agent that is a partnership (whether U. Amended tax returns S. Amended tax returns or foreign) is also responsible for withholding on its income effectively connected with a U. Amended tax returns S. Amended tax returns trade or business that is allocable to foreign partners. Amended tax returns See Partnership Withholding on Effectively Connected Income , later, for more information. Amended tax returns U. Amended tax returns S. Amended tax returns real property interest. Amended tax returns   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Amended tax returns S. Amended tax returns real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Amended tax returns S. Amended tax returns real property interest to a shareholder, partner, or beneficiary that is a foreign person. Amended tax returns See U. Amended tax returns S. Amended tax returns Real Property Interest , later. Amended tax returns Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Amended tax returns It does not apply to payments made to U. Amended tax returns S. Amended tax returns persons. Amended tax returns Usually, you determine the payee's status as a U. Amended tax returns S. Amended tax returns or foreign person based on the documentation that person provides. Amended tax returns See Documentation , later. Amended tax returns However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. Amended tax returns Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. Amended tax returns However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Amended tax returns U. Amended tax returns S. Amended tax returns agent of foreign person. Amended tax returns   If you make a payment to a U. Amended tax returns S. Amended tax returns person and you have actual knowledge that the U. Amended tax returns S. Amended tax returns person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Amended tax returns However, if the U. Amended tax returns S. Amended tax returns person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. Amended tax returns   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. Amended tax returns S. Amended tax returns person and not as a payment to a foreign person. Amended tax returns You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Amended tax returns Disregarded entities. Amended tax returns   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. Amended tax returns The payee of a payment made to a disregarded entity is the owner of the entity. Amended tax returns   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. Amended tax returns   If the owner is a U. Amended tax returns S. Amended tax returns person, you do not apply NRA withholding. Amended tax returns However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Amended tax returns You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. Amended tax returns Flow-Through Entities The payees of payments (other than income effectively connected with a U. Amended tax returns S. Amended tax returns trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Amended tax returns This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Amended tax returns Income that is, or is deemed to be, effectively connected with the conduct of a U. Amended tax returns S. Amended tax returns trade or business of a flow-through entity is treated as paid to the entity. Amended tax returns All of the following are flow-through entities. Amended tax returns A foreign partnership (other than a withholding foreign partnership). Amended tax returns A foreign simple or foreign grantor trust (other than a withholding foreign trust). Amended tax returns A fiscally transparent entity receiving income for which treaty benefits are claimed. Amended tax returns See Fiscally transparent entity , later. Amended tax returns In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. Amended tax returns You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Amended tax returns You must determine whether the owners or beneficiaries of a flow-through entity are U. Amended tax returns S. Amended tax returns or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. Amended tax returns You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. Amended tax returns If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. Amended tax returns See Documentation and Presumption Rules , later. Amended tax returns Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Amended tax returns Foreign partnerships. Amended tax returns    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. Amended tax returns If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. Amended tax returns However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Amended tax returns If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. Amended tax returns Example 1. Amended tax returns A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Amended tax returns S. Amended tax returns citizen. Amended tax returns You make a payment of U. Amended tax returns S. Amended tax returns source interest to the partnership. Amended tax returns It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. Amended tax returns S. Amended tax returns citizen. Amended tax returns The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Amended tax returns You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Amended tax returns Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Amended tax returns Report the payment to the U. Amended tax returns S. Amended tax returns citizen on Form 1099-INT. Amended tax returns Example 2. Amended tax returns A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Amended tax returns The second partnership has two partners, both nonresident alien individuals. Amended tax returns You make a payment of U. Amended tax returns S. Amended tax returns source interest to the first partnership. Amended tax returns It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. Amended tax returns In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Amended tax returns The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Amended tax returns Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. Amended tax returns Example 3. Amended tax returns You make a payment of U. Amended tax returns S. Amended tax returns source dividends to a withholding foreign partnership. Amended tax returns The partnership has two partners, both foreign corporations. Amended tax returns You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. Amended tax returns You must treat the partnership as the payee of the dividends. Amended tax returns Foreign simple and grantor trust. Amended tax returns   A trust is foreign unless it meets both of the following tests. Amended tax returns A court within the United States is able to exercise primary supervision over the administration of the trust. Amended tax returns One or more U. Amended tax returns S. Amended tax returns persons have the authority to control all substantial decisions of the trust. Amended tax returns   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Amended tax returns A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Amended tax returns   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Amended tax returns The payees of a payment made to a foreign grantor trust are the owners of the trust. Amended tax returns However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Amended tax returns If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. Amended tax returns Example. Amended tax returns A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Amended tax returns S. Amended tax returns citizen. Amended tax returns You make a payment of interest to the foreign trust. Amended tax returns It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. Amended tax returns S. Amended tax returns citizen. Amended tax returns The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. Amended tax returns You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Amended tax returns Report the payment to the nonresident aliens on Forms 1042-S. Amended tax returns Report the payment to the U. Amended tax returns S. Amended tax returns citizen on Form 1099-INT. Amended tax returns Fiscally transparent entity. Amended tax returns   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. Amended tax returns The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. Amended tax returns ). Amended tax returns The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. Amended tax returns An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. Amended tax returns Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. Amended tax returns   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Amended tax returns Example. Amended tax returns Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. Amended tax returns A has two interest holders, B and C. Amended tax returns B is a corporation organized under the laws of country Y. Amended tax returns C is a corporation organized under the laws of country Z. Amended tax returns Both countries Y and Z have an income tax treaty in force with the United States. Amended tax returns A receives royalty income from U. Amended tax returns S. Amended tax returns sources that is not effectively connected with the conduct of a trade or business in the United States. Amended tax returns For U. Amended tax returns S. Amended tax returns income tax purposes, A is treated as a partnership. Amended tax returns Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. Amended tax returns The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. Amended tax returns Accordingly, A is fiscally transparent in its jurisdiction, country X. Amended tax returns B and C are not fiscally transparent under the laws of their respective countries of incorporation. Amended tax returns Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. Amended tax returns Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. Amended tax returns S. Amended tax returns source royalty income for purposes of the U. Amended tax returns S. Amended tax returns -Y income tax treaty. Amended tax returns Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. Amended tax returns Therefore, A is not treated as fiscally transparent under the laws of country Z. Amended tax returns Accordingly, C is not treated as deriving its share of the U. Amended tax returns S. Amended tax returns source royalty income for purposes of the U. Amended tax returns S. Amended tax returns -Z income tax treaty. Amended tax returns Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. Amended tax returns This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Amended tax returns You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. Amended tax returns An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Amended tax returns A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Amended tax returns In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. Amended tax returns You must determine whether the customers or account holders of a foreign intermediary are U. Amended tax returns S. Amended tax returns or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Amended tax returns You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Amended tax returns If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. Amended tax returns See Documentation and Presumption Rules , later. Amended tax returns Nonqualified intermediary. Amended tax returns   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Amended tax returns The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Amended tax returns Example. Amended tax returns You make a payment of interest to a foreign bank that is a nonqualified intermediary. Amended tax returns The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. Amended tax returns S. Amended tax returns person for whom the bank is collecting the payments. Amended tax returns The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. Amended tax returns The account holders are the payees of the interest payment. Amended tax returns You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. Amended tax returns S. Amended tax returns person on Form 1099-INT. Amended tax returns Qualified intermediary. Amended tax returns   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Amended tax returns S. Amended tax returns intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Amended tax returns You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. Amended tax returns In this situation, the QI is required to withhold the tax. Amended tax returns You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Amended tax returns   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. Amended tax returns If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. Amended tax returns S. Amended tax returns person. Amended tax returns Branches of financial institutions. Amended tax returns   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. Amended tax returns The countries with approved KYC rules are listed on IRS. Amended tax returns gov. Amended tax returns QI withholding agreement. Amended tax returns   Foreign financial institutions and foreign branches of U. Amended tax returns S. Amended tax returns financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Amended tax returns   A QI is entitled to certain simplified withholding and reporting rules. Amended tax returns In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Amended tax returns   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Amended tax returns These forms, and the procedures required to obtain a QI withholding agreement are available at www. Amended tax returns irs. Amended tax returns gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Amended tax returns Documentation. Amended tax returns   A QI is not required to forward documentation obtained from foreign account holders to the U. Amended tax returns S. Amended tax returns withholding agent from whom the QI receives a payment of U. Amended tax returns S. Amended tax returns source income. Amended tax returns The QI maintains such documentation at its location and provides the U. Amended tax returns S. Amended tax returns withholding agent with withholding rate pools. Amended tax returns A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Amended tax returns   A QI is required to provide the U. Amended tax returns S. Amended tax returns withholding agent with information regarding U. Amended tax returns S. Amended tax returns persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Amended tax returns   If a QI obtains documentary evidence under the “know-your-customer” 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. Amended tax returns This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. Amended tax returns Form 1042-S reporting. Amended tax returns   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. Amended tax returns Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Amended tax returns Collective refund procedures. Amended tax returns   A QI may seek a refund on behalf of its direct account holders. Amended tax returns The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. Amended tax returns U. Amended tax returns S. Amended tax returns branches of foreign banks and foreign insurance companies. Amended tax returns   Special rules apply to a U. Amended tax returns S. Amended tax returns branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Amended tax returns If you agree to treat the branch as a U. Amended tax returns S. Amended tax returns person, you may treat the branch as a U. Amended tax returns S. Amended tax returns payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Amended tax returns S. Amended tax returns branch on which the agreement is evidenced. Amended tax returns If you treat the branch as a U. Amended tax returns S. Amended tax returns payee, you are not required to withhold. Amended tax returns Even though you agree to treat the branch as a U. Amended tax returns S. Amended tax returns person, you must report the payment on Form 1042-S. Amended tax returns   A financial institution organized in a U. Amended tax returns S. Amended tax returns possession is treated as a U. Amended tax returns S. Amended tax returns branch. Amended tax returns The special rules discussed in this section apply to a possessions financial institution. Amended tax returns   If you are paying a U. Amended tax returns S. Amended tax returns branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. Amended tax returns S. Amended tax returns person for amounts subject to NRA withholding. Amended tax returns Consequently, amounts not subject to NRA withholding that are paid to a U. Amended tax returns S. Amended tax returns branch are not subject to Form 1099 reporting or backup withholding. Amended tax returns   Alternatively, a U. Amended tax returns S. Amended tax returns branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Amended tax returns In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. Amended tax returns See Nonqualified Intermediaries under  Documentation, later. Amended tax returns   If the U. Amended tax returns S. Amended tax returns branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. Amended tax returns Withholding foreign partnership and foreign trust. Amended tax returns   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. Amended tax returns A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. Amended tax returns   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. Amended tax returns A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Amended tax returns You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. Amended tax returns WP and WT withholding agreements. Amended tax returns   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Amended tax returns Also see the following items. Amended tax returns Revenue Procedure 2004-21. Amended tax returns Revenue Procedure 2005-77. Amended tax returns Employer identification number (EIN). Amended tax returns   A completed Form SS-4 must be submitted with the application for being a WP or WT. Amended tax returns The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Amended tax returns Documentation. Amended tax returns   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. Amended tax returns The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. Amended tax returns The Form W-8IMY must contain the WP-EIN or WT-EIN. Amended tax returns Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Amended tax returns A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. Amended tax returns S. Amended tax returns person. Amended tax returns It also includes a foreign branch of a U. Amended tax returns S. Amended tax returns financial institution if the foreign branch is a qualified intermediary. Amended tax returns In most cases, the U. Amended tax returns S. Amended tax returns branch of a foreign corporation or partnership is treated as a foreign person. Amended tax returns Nonresident alien. Amended tax returns   A nonresident alien is an individual who is not a U. Amended tax returns S. Amended tax returns citizen or a resident alien. Amended tax returns A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Amended tax returns Married to U. Amended tax returns S. Amended tax returns citizen or resident alien. Amended tax returns   Nonresident alien individuals married to U. Amended tax returns S. Amended tax returns citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Amended tax returns However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Amended tax returns Wages paid to these individuals are subject to graduated withholding. Amended tax returns See Wages Paid to Employees—Graduated Withholding . Amended tax returns Resident alien. Amended tax returns   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Amended tax returns Green card test. Amended tax returns An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. Amended tax returns This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Amended tax returns Substantial presence test. Amended tax returns An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Amended tax returns Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Amended tax returns   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. Amended tax returns This exception is for a limited period of time. Amended tax returns   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Amended tax returns Note. Amended tax returns   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. Amended tax returns For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Amended tax returns Resident of a U. Amended tax returns S. Amended tax returns possession. Amended tax returns   A bona fide resident of Puerto Rico, the U. Amended tax returns S. Amended tax returns Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Amended tax returns S. Amended tax returns citizen or a U. Amended tax returns S. Amended tax returns national is treated as a nonresident alien for the withholding rules explained here. Amended tax returns A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. Amended tax returns   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Amended tax returns S. Amended tax returns Possessions. Amended tax returns Foreign corporations. Amended tax returns   A foreign corporation is one that does not fit the definition of a domestic corporation. Amended tax returns A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. Amended tax returns Guam or Northern Mariana Islands corporations. Amended tax returns   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). Amended tax returns Note. Amended tax returns   The provisions discussed below under U. Amended tax returns S. Amended tax returns Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. Amended tax returns U. Amended tax returns S. Amended tax returns Virgin Islands and American Samoa corporations. Amended tax returns   A corporation created or organized in, or under the laws of, the U. Amended tax returns S. Amended tax returns Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. Amended tax returns S. Amended tax returns Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. Amended tax returns S. Amended tax returns Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Amended tax returns Foreign private foundations. Amended tax returns   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Amended tax returns Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate. Amended tax returns Other foreign organizations, associations, and charitable institutions. Amended tax returns   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. Amended tax returns In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. Amended tax returns   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Amended tax returns   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. Amended tax returns U. Amended tax returns S. Amended tax returns branches of foreign persons. Amended tax returns   In most cases, a payment to a U. Amended tax returns S. Amended tax returns branch of a foreign person is a payment made to the foreign person. Amended tax returns However, you may treat payments to U. Amended tax returns S. Amended tax returns branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Amended tax returns S. Amended tax returns regulatory supervision as payments made to a U. Amended tax returns S. Amended tax returns person, if you and the U. Amended tax returns S. Amended tax returns branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Amended tax returns For this purpose, a financial institution organized under the laws of a U. Amended tax returns S. Amended tax returns possession is treated as a U. Amended tax returns S. Amended tax returns branch. Amended tax returns Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. Amended tax returns The payee is a U. Amended tax returns S. Amended tax returns person. Amended tax returns The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Amended tax returns In most cases, you must get the documentation before you make the payment. Amended tax returns The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Amended tax returns See Standards of Knowledge , later. Amended tax returns If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Amended tax returns For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. Amended tax returns The specific types of documentation are discussed in this section. Amended tax returns However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Amended tax returns As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. Amended tax returns Section 1446 withholding. Amended tax returns   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Amended tax returns In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. Amended tax returns This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. Amended tax returns Joint owners. Amended tax returns    If you make a payment to joint owners, you need to get documentation from each owner. Amended tax returns Form W-9. Amended tax returns   In most cases, you can treat the payee as a U. Amended tax returns S. Amended tax returns person if the payee gives you a Form W-9. Amended tax returns The Form W-9 can be used only by a U. Amended tax returns S. Amended tax returns person and must contain the payee's taxpayer identification number (TIN). Amended tax returns If there is more than one owner, you may treat the total amount as paid to a U. Amended tax returns S. Amended tax returns person if any one of the owners gives you a Form W-9. Amended tax returns See U. Amended tax returns S. Amended tax returns Taxpayer Identification Numbers , later. Amended tax returns U. Amended tax returns S. Amended tax returns persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Amended tax returns Form W-8. Amended tax returns   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Amended tax returns Until further notice, you can rely upon Forms W-8 that contain a P. Amended tax returns O. Amended tax returns box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. Amended tax returns S. Amended tax returns person and that a street address is available. Amended tax returns You may rely on Forms W-8 for which there is a U. Amended tax returns S. Amended tax returns mailing address provided you received the form prior to December 31, 2001. Amended tax returns   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Amended tax returns You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Amended tax returns S. Amended tax returns possession. Amended tax returns Other documentation. Amended tax returns   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Amended tax returns The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Amended tax returns These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Amended tax returns Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. Amended tax returns Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Amended tax returns   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. Amended tax returns   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. Amended tax returns For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. Amended tax returns Claiming treaty benefits. Amended tax returns   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. Amended tax returns S. Amended tax returns TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. Amended tax returns   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. Amended tax returns   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Amended tax returns See Fiscally transparent entity discussed earlier under Flow-Through Entities. Amended tax returns   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Amended tax returns For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. Amended tax returns   The exemptions from, or reduced rates of, U. Amended tax returns S. Amended tax returns tax vary under each treaty. Amended tax returns You must check the provisions of the tax treaty that apply. Amended tax returns Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. Amended tax returns   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. Amended tax returns You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. Amended tax returns Exceptions to TIN requirement. Amended tax returns   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. Amended tax returns Income from marketable securities (discussed next). Amended tax returns Unexpected payments to an individual (discussed under U. Amended tax returns S. Amended tax returns Taxpayer Identification Numbers ). Amended tax returns Marketable securities. Amended tax returns   A Form W-8BEN provided to claim treaty benefits does not need a U. Amended tax returns S. Amended tax returns TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Amended tax returns For this purpose, income from a marketable security consists of the following items. Amended tax returns Dividends and interest from stocks and debt obligations that are actively traded. Amended tax returns Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Amended tax returns Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. Amended tax returns Income related to loans of any of the above securities. Amended tax returns Offshore accounts. Amended tax returns   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. Amended tax returns   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. Amended tax returns However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. Amended tax returns An offshore account is an account maintained at an office or branch of a U. Amended tax returns S. Amended tax returns or foreign bank or other financial institution at any location outside the United States. Amended tax returns   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Amended tax returns This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Amended tax returns In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. Amended tax returns Documentary evidence. Amended tax returns   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. Amended tax returns To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. Amended tax returns Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. Amended tax returns Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. Amended tax returns In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. Amended tax returns Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. Amended tax returns   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. Amended tax returns (See Effectively Connected Income , later. Amended tax returns )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Amended tax returns   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Amended tax returns S. Amended tax returns trade or business is subject to withholding under section 1446. Amended tax returns If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. Amended tax returns    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. Amended tax returns Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Amended tax returns   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. Amended tax returns S. Amended tax returns possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. Amended tax returns   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. Amended tax returns   See Foreign Governments and Certain Other Foreign Organizations , later. Amended tax returns Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. Amended tax returns 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. Amended tax returns The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Amended tax returns Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Amended tax returns S. Amended tax returns Branches for United States Tax Withholding. Amended tax returns   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Amended tax returns S. Amended tax returns branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. Amended tax returns S. Amended tax returns branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Amended tax returns S. Amended tax returns person or is transmitting documentation of the persons on whose behalf it is acting, or 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. Amended tax returns For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Amended tax returns 1446-5. Amended tax returns Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Amended tax returns A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. Amended tax returns The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Amended tax returns The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. Amended tax returns Responsibilities. Amended tax returns   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Amended tax returns However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Amended tax returns Instead, it provides you with a withholding statement that contains withholding rate pool information. Amended tax returns A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding. Amended tax returns A qualified intermediary is required to provide you with information regarding U. Amended tax returns S. Amended tax returns persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Amended tax returns S. Amended tax returns person unless it has assumed Form 1099 reporting and backup withholding responsibility. Amended tax returns For the alternative procedure for providing rate pool information for U. Amended tax returns S. Amended tax returns non-exempt persons, see the Form W-8IMY instructions. Amended tax returns   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. Amended tax returns   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Amended tax returns Primary responsibility not assumed. Amended tax returns   If a QI does not assume primary NRA 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 payees. Amended tax returns Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Amended tax returns S. Amended tax returns person subject to Form 1099 reporting and/or backup withholding. Amended tax returns 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. Amended tax returns Primary NRA withholding responsibility assumed. Amended tax returns   If you make a payment to a QI that assumes primary NRA withholding responsibility (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 withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. Amended tax returns S. Amended tax returns person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Amended tax returns 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. Amended tax returns Primary NRA and Form 1099 responsibility assumed. Amended tax returns   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. Amended tax returns It is not necessary to associate the payment with withholding rate pools. Amended tax returns Example. Amended tax returns You make a payment of dividends to a QI. Amended tax returns 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. Amended tax returns S. Amended tax returns individual who provides it with a Form W-9. Amended tax returns Each customer is entitled to 20% of the dividend payment. Amended tax returns The QI does not assume any primary withholding responsibility. Amended tax returns 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. Amended tax returns S. Amended tax returns individual. Amended tax returns 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. Amended tax returns The part of the payment allocable to the U. Amended tax returns S. Amended tax returns individual (20%) is reportable on Form 1099-DIV. Amended tax returns Smaller partnerships and trusts. Amended tax returns   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. Amended tax returns It is a foreign partnership or foreign simple or grantor trust. Amended tax returns It is a direct account holder of the QI. Amended tax returns It does not have any partner, beneficiary, or owner that is a U. Amended tax returns S. Amended tax returns person or a pass- through partner, beneficiary, or owner. Amended tax returns   For information on these rules, see section 4A. Amended tax returns 01 of the QI agreement. Amended tax returns This is found in Appendix 3 of Revenue Procedure 2003-64. Amended tax returns Also see Revenue Procedure 2004-21. Amended tax returns Related partnerships and trusts. Amended tax returns    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Amended tax returns It is a foreign partnership or foreign simple or grantor trust. Amended tax returns 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 has applied this rule. Amended tax returns For information on these rules, see section 4A. Amended tax returns 02 of the QI agreement. Amended tax returns This is found in Appendix 3 of Revenue Procedure 2003-64. Amended tax returns Also see Revenue Procedure 2005-77. Amended tax returns Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Amended tax returns S. Amended tax returns branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to 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. Amended tax returns S. Amended tax returns branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Amended tax returns The NQI, flow-through entity, or U. Amended tax returns S. Amended tax returns branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Amended tax returns A withholding statement must be updated to keep the information accurate prior to each payment. Amended tax returns Withholding statement. Amended tax returns   In most cases, a withholding statement must contain the following information. Amended tax returns The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Amended tax returns The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Amended tax returns The status of the person for whom the documentation has been provided, such as whether the person is a U. Amended tax returns S. Amended tax returns exempt recipient (U. Amended tax returns S. Amended tax returns person exempt from Form 1099 reporting), U. Amended tax returns S. Amended tax returns non-exempt recipient (U. Amended tax returns S. Amended tax returns person subject to Form 1099 reporting), or a foreign person. Amended tax returns For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. Amended tax returns S. Amended tax returns branch. Amended tax returns The type of recipient the person is, based on the recipient codes used on Form 1042-S. Amended tax returns Information allocating each payment, by income type, to each payee (including U. Amended tax returns S. Amended tax returns exempt and U. Amended tax returns S. Amended tax returns non-exempt recipients) for whom documentation has been provided. Amended tax returns The rate of withholding that applies to each foreign person to whom a payment is allocated. Amended tax returns A foreign payee's country of residence. Amended tax returns If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Amended tax returns ). Amended tax returns In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. Amended tax returns The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Amended tax returns S. Amended tax returns branch from which the payee will directly receive a payment. Amended tax returns Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Amended tax returns Alternative procedure. Amended tax returns   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Amended tax returns S. Amended tax returns exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Amended tax returns 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. Amended tax returns You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Amended tax returns    This alternative procedure cannot be used for payments to U. Amended tax returns S. Amended tax returns non-exempt recipients. Amended tax returns Therefore, an NQI must always provide you with allocation information for all U. Amended tax returns S. Amended tax returns non-exempt recipients prior to a payment being made. Amended tax returns Pooled withholding information. Amended tax returns   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. Amended tax returns A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. Amended tax returns For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). Amended tax returns 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. Amended tax returns Failure to provide allocation information. Amended tax returns   If an NQI fails to provide you with the payee specific allocation information for a 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. Amended tax returns You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Amended tax returns An NQI is deemed to have f