Final regs reduce burden under IRC Chapters 3, 4

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.

David Sites
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
Washington National Tax Office
T +1 202 521 1522

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

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.