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Final regs reduce burden under IRC Chapters 3, 4

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Tax Hot Topics newsletter The IRS released final regulations (T.D. 9890) on Dec. 27, 2019 that provide guidance on certain due diligence and reporting rules under Chapter 3 and 4 of the Internal Revenue Code that are applicable to persons making certain U.S.-source payments to foreign persons and on certain aspects of reporting by foreign financial institutions on U.S. accounts.

The regulations adopt select provisions from temporary and proposed regulations issued in 2017 and 2018. This includes modifications related to the requirement that a withholding certificate or treaty statement provided with documentary evidence by a treaty claimant that is an entity identify the applicable limitation on benefits provision that the entity meets in order to be eligible for treaty benefits. Other modifications relate to the documentation that a withholding agent may rely on to treat an address provided by an account holder that is subject to a hold mail instruction as a permanent residence address for purposes of an account holder’s claim of foreign status or benefits under an income tax treaty.

The regulations also adopt additional guidance contained in Notices 2017-46 and 2018-20 that is related to a U.S. financial institution’s obligation to collect foreign Tax Identification Numbers and dates of birth from foreign account holders.

Contacts:
David Sites
Partner
Washington National Tax Office
T +1 202 861 4104

David Zaiken
Managing Director
Washington National Tax Office
T +1 202 521 1543

Cory Perry
Senior Manager
Washington National Tax Office
T +1 202 521 1509

Mike Del Medico
Manager
Washington National Tax Office
T +1 202 521 1522

Yasmin Dirks
Manager
Washington National Tax Office
T +1 202 521 1506

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