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Instructions for Form 1042-S
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1438

taxmap/instr2/i1042s-010.htm#TXMP13f752a3
Payments by U.S. Withholding Agents(p10)

rule
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1443
taxmap/instr2/i1042s-010.htm#TXMP26a74844
In general.(p10)
rule
U.S. withholding agents making payments described under Amounts Subject to Reporting on Form 1042-S, earlier, must file a separate Form 1042-S for each recipient who receives the income. Furthermore, withholding agents filing paper Forms 1042-S are not permitted to report multiple types of income on a Form 1042-S (or substitute form 1042-S) furnished to a recipient or on Copy A filed with the IRS. These filers must use a separate Form 1042-S (or substitute form) for information reportable on a single type of income.
See Payments Made to Persons Who Are Not Recipients, later, if the payment is made to a foreign person that is not a recipient.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1481

taxmap/instr2/i1042s-010.htm#TXMP6243c522
Payments to Recipients(p10)

rule
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1486
taxmap/instr2/i1042s-010.htm#TXMP7abab6f7
Payments directly to beneficial owners.(p10)
rule
A U.S. withholding agent making a payment directly to a beneficial owner must complete Form 1042-S and treat the beneficial owner as the recipient. Boxes 15a through 15i should be left blank. The Form 1042-S must also include the appropriate chapter 3 and chapter 4 exemption codes, if applicable, in boxes 3a and 4a, as well as the appropriate recipient codes for the chapter 3 and chapter 4 status codes for a payment that is a withholdable payment and an amount subject to chapter 3 withholding. A U.S. withholding agent should complete boxes 16a through 16e only if it is completing Form 1042-S as a paying agent acting pursuant to an agreement to act as an authorized agent for filing and reporting Form 1042 and 1042-S.
In the case of foreign joint owners, you may provide a single Form 1042-S made out to the owner whose status you relied upon to determine the applicable rate of withholding (the owner subject to the highest rate of withholding). If, however, any one of the owners requests its own Form 1042-S, you must furnish a Form 1042-S to the person who requests it. If the request is made after a Form 1042-S was filed reporting the payment and tax withheld to only one of the joint owners, you should amend the originally filed Form 1042-S to allocate the payment and tax withheld among the joint owners accordingly and provide copies of the Amended forms to each recipient. If more than one Form 1042-S is issued for a single payment, the aggregate amount paid and tax withheld that is reported on all Forms 1042-S cannot exceed the total amounts paid to joint owners and the tax withheld on those payments. In any event, each Form 1042-S can only include the recipient information (boxes 13a through 13d) for one of the beneficial owners. Form 1042-S must not be completed with more than one of the joint owners as the recipient.
caution
In the case of joint owners, Form 1042-S can only list one of the owners as the recipient in box 13a. Form 1042-S must not be completed with more than one of the joint owners as the recipient.

taxmap/instr2/i1042s-010.htm#TXMP7ca27057
Example 1.(p10)

WA, a U.S. withholding agent, makes a withholdable payment of U.S. source dividends to A, a foreign individual from whom it has received a Form W-8BEN and who is not eligible for a reduced rate of chapter 3 withholding under a treaty. WA must file a Form 1042-S for A, enter 3 in box 3,06 in box 1 (income code), 00 in box 3a (chapter 3 exemption code), 30.00 in box 3b (chapter 3 tax rate), 15 in box 4a (payee not subject to chapter 4 withholding), 00.00 in box 4b (chapter 4 tax rate), 16 in box 13f (individual), and 23 in box 13g (individual).
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1510
taxmap/instr2/i1042s-010.htm#TXMP6177a703
Payments to a qualified intermediary, withholding foreign partnership, or withholding foreign trust.(p10)
rule
A U.S. withholding agent that makes payments to a QI (whether or not the QI assumes primary withholding responsibility), a withholding foreign partnership (WP), or a withholding foreign trust (WT) should complete Form 1042-S in most cases, treating the QI, WP, or WT as the recipient. SeePayments allocated, or presumed made, to U.S. non-exempt recipients, later, for exceptions. A QI that does not assume primary withholding responsibility is required to provide information regarding the allocations of income subject to a particular withholding rate to the withholding agent on the withholding statement associated with its Form W-8IMY. In such a case, the U.S. withholding agent must complete a separate Form 1042-S for each withholding rate pool associated with the QI. For purposes of chapter 4, a QI may provide a single pool of recalcitrant account holders (rather than separate pools for each class). In such a case, the withholding agent may use chapter 4 pooled reporting code 49 (QI-Recalcitrant Pool-General). A QI that assumes primary withholding responsibility, a WP, or a WT is not required to provide withholding rate pool information to a withholding agent but will report such information directly to the IRS.
A U.S. withholding agent making a withholdable payment to an FFI that is a QI (that assumes primary withholding responsibility), a WP, or a WT must use recipient code 12 (qualified intermediary), 09 (withholding foreign partnership), or 11 (withholding foreign trust) as the chapter 3 status code and must use recipient code 05 (participating FFI- other), 06 (participating FFI- reporting Model 2 FFI), 07 (registered deemed-compliant FFI- reporting Model 1 FFI), 09 (registered deemed-compliant FFI-other) for an FFI treated as deemed-compliant under an IGA, 31 (non reporting IGA FFI) or, for a payment to a QI, 27 (exempt beneficial owner) as the chapter 4 status code. A U.S. withholding agent must use chapter 4 recipient code 48 (U.S. Payees Pool) when reporting a reportable amount allocated to a chapter 4 withholding rate pool of U.S. payees of a QI and report the chapter 3 recipient code 12 (qualified intermediary). A U.S. withholding agent must not use any chapter 3 pooled reporting code (codes 27 through 33). Use of an inappropriate recipient code may cause a notice to be generated.
caution
A QI is required to act in such capacity only for designated accounts. Therefore, such an entity also may provide a Form W-8IMY in which it certifies that it is acting as an NQI for other accounts and, if it is an FFI that is receiving a withholdable payment, that it is a participating FFI, registered deemed-compliant FFI, or FFI treated as deemed-compliant under an IGA. A U.S. withholding agent that receives a Form W-8IMY on which the foreign person providing the form indicates that it is not acting as a QI may not treat the foreign person as a recipient except as otherwise provided in these instructions. A withholding agent must not use the EIN that a QI provides in its capacity as such to report payments that are treated as made to an entity in its capacity as an NQI. In that case, use the GIIN, if any, and EIN that is provided by the entity on its Form W-8IMY in which it claims that it is acting as an NQI or flow-through entity.
taxmap/instr2/i1042s-010.htm#TXMP58d8d3b9
Note.(p11).
A withholding agent is required to use chapter 4 reporting pool codes as the chapter 4 status code in the case of withholdable payments made to:

if the QI, NQI, NWP, or NWT provides chapter 4 withholding rate pool information in the withholding statement associated with its Form W-8IMY. See the presumption rules under Regulations section 1.1471-3(f) if such information is not provided for a withholdable payment made to an entity.

taxmap/instr2/i1042s-010.htm#en_us_publink1000307173
taxmap/instr2/i1042s-010.htm#TXMP578f2396
Example 2.
(p11)
spacer

WA, a U.S. withholding agent, makes a withholdable payment of U.S. source dividends to QI, a qualified intermediary that does not assume primary chapters 3 and 4 withholding responsibility and that is a participating FFI. QI provides WA with a valid Form W-8IMY with which it associates a withholding statement that allocates 95% of the payment to a chapter 3, 15% withholding rate pool with a single chapter 4 exemption code, and 5% of the payment to a chapter 4, 30% withholding rate pool of recalcitrant account holders. WA must complete a Form 1042-S, for the dividends allocated to the chapter 3, 15% withholding rate pool, showing 3 in box 3, 00 in box 3a (chapter 3 exemption code), 15.00 in box 3b (chapter 3 tax rate), chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a, 00.00 in box 4b (chapter 4 tax rate) and QI as the recipient in box 13a along with recipient code 12 (qualified intermediary) as the chapter 3 status code and recipient code 05 (participating FFI-other) as the chapter 4 status code. WA must also complete a Form 1042-S, for the dividends allocated to the chapter 4, 30% withholding rate pool, showing 4 in box 3, chapter 3 exemption code 12 (payee subjected to chapter 4 withholding) in box 3a, 00.00 in box 3b (chapter 3 tax rate), 00 in box 4a (chapter 4 exemption code), and “30.00” in box 4b with QI as the recipient in box 13a and recipient code 12 (qualified intermediary) as the chapter 3 status code and recipient code 49 (QI‐Recalcitrant Pool‐General) as the chapter 4 status code.
taxmap/instr2/i1042s-010.htm#en_us_publink1000307174
taxmap/instr2/i1042s-010.htm#TXMP7f49fe23
Payments allocated, or presumed made, to U.S. non-exempt recipients.
(p11)
spacer

A QI may provide Forms W-9 or other information regarding U.S. non-exempt recipients that the QI (or other entity maintaining the account) is required to report under chapter 61 and for which the QI does not assume primary Form 1099 reporting responsibility. QI may also provide information regarding U.S. non-exempt recipients that QI elects to backup withhold under section 3406 instead of withholding under chapter 4 on payments made to an account holder. If Forms W-9 or other information is provided together with information allocating all or a part of the payment to U.S. non-exempt recipients, you must report income allocable to the U.S. non-exempt recipients on the appropriate Form 1099 and not on Form 1042-S even though you are paying that income to a QI. QI may also provide information regarding U.S. non-exempt recipients in a chapter 4 withholding rate pool that the withholding agent must report on Form 1042-S.
You also may be required under the presumption rules to treat a payment made to a QI as made to a payee that is a U.S. non-exempt recipient from which you must withhold on the payment under the backup withholding provisions of the Code. In this case, you must report the payment on the appropriate Form 1099. See the General Instructions for Certain Information Returns.
taxmap/instr2/i1042s-010.htm#en_us_publink1000307171
taxmap/instr2/i1042s-010.htm#TXMP4e9412d5
Example 3.
(p11)
spacer

WA, a U.S. withholding agent, makes a withholdable payment of U.S. source dividends to QI, a qualified intermediary and registered deemed-compliant FFI that is a local FFI described in Regulations section 1.1471-5(f)(1)(i)(A). QI provides WA with a valid Form W-8IMY certifying that it is transmitting Forms W-9 for U.S. non-exempt recipients and with which it associates a withholding statement that allocates 95% of the payment to a chapter 3, 15% withholding rate pool with a single chapter 4 exemption code, and 5% of the payment to C, a U.S. individual. QI also provides WA with C's Form W-9. C is a direct account holder of QI and a U.S. citizen that is a resident of QI's local jurisdiction that QI is not required to report under chapter 4 (see Regulations section 1.1471-5(f)(1)(i)(A)) and thus cannot be included in a chapter 4 withholding rate pool of U.S. payees. See Regulations section 1.6049-4(c)(4). WA must complete a Form 1042-S, showing QI as the recipient in box 13a, and WA should use recipient code 12 (qualified intermediary) as the chapter 3 status code and recipient code 09 (registered deemed-compliant FFI – other) as the chapter 4 status code for the dividends allocated to the 15% withholding rate pool. WA also must complete a Form 1099-DIV issued to C reporting the part of the dividend allocated to C.
taxmap/instr2/i1042s-010.htm#en_us_publink1000307175
taxmap/instr2/i1042s-010.htm#TXMP01d58414
Example 4.
(p11)
spacer

WA, a withholding agent, makes a withholdable payment of U.S. source dividends to QI, a qualified intermediary that is a reporting Model 1 FFI. QI provides WA with a valid Form W-8IMY with which it associates a withholding statement that allocates 40% of the payment to a chapter 3, 15% withholding rate pool and 40% to a chapter 3, 30% withholding rate pool. QI does not provide any withholding rate pool information regarding the remaining 20% of the payment. WA must apply the presumption rule to the part of the payment (20%) that has not been allocated. Under the presumption rules of Regulations section 1.1471-3(f) for a withholdable payment made to an entity, 20% of the payment is treated as paid to a nonparticipating FFI. WA must complete three Forms 1042-S. First, a Form 1042-S for dividends subject to 15% withholding, showing 3 in box 3, 00 in box 3a (chapter 3 exemption code), 15.00 in box 3b (chapter 3 tax rate), chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a, 00.00 in box 4b (chapter 4 tax rate), QI as the recipient in box 13a, recipient code 12 (qualified intermediary) as the chapter 3 status code, and recipient code 07 (registered deemed-compliant FFI-reporting Model 1 FFI) as the chapter 4 status code (because the payment is a withholdable payment). Second, a Form 1042-S for dividends subject to 30% withholding, showing 3 in box 3, “00” in box 3a (chapter 3 exemption code), 30.00 in box 3b (chapter 3 tax rate), chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a, 00.00 in box 4b (chapter 4 tax rate), QI as the recipient in box 13a, recipient code 12 (qualified intermediary) as the chapter 3 status code, and recipient code 07 (registered deemed-compliant FFI – reporting Model 1 FFI) as the chapter 4 status code. Third, a Form 1042-S for dividends subject to 30% withholding, showing 4 in box 3, chapter 3 exemption code 12 (payee subjected to chapter 4 withholding) in box 3a, 00.00 in box 3b (chapter 3 tax rate),00 in box 4a (chapter 4 exemption code),30.00 in box 4b (chapter 4 tax rate), Unknown Recipient as the recipient name in box 13a, recipient code 21 (unknown recipient) as the chapter 3 status code, and recipient code 29 (unknown recipient) as the chapter 4 status code. Also, QI's name, status codes, country code, address, GIIN, and QI-EIN must be entered in boxes 15a through 15i.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1577
taxmap/instr2/i1042s-010.htm#TXMP2ca72e49
Substitute dividends paid to qualified securities lenders.(p12)
rule
A withholding agent that makes payments of substitute dividends to a qualified securities lender (QSL) should complete Form 1042-S treating the QSL as the recipient. Use income code 34. Use recipient code 13 or 14 (qualified securities lender – qualified intermediary or qualified securities lender – other) as the chapter 3 status code and include the applicable chapter 4 status code of the QSL.
The withholding agent is not required to withhold on a substitute dividend payment if it receives, at least annually, a certificate from the QSL that includes a statement with the following information:
If the withholding agent receives a certificate from the QSL that includes a statement that contains the above information, use chapter 3 exemption code 11.
If the QSL is also a QI with primary withholding responsibility, use chapter 3 exemption code 11 and not exemption code 06 for chapter 3 purposes.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1606
taxmap/instr2/i1042s-010.htm#TXMP36e8d739
Amounts paid to certain U.S. branches.(p12)
rule
A U.S. withholding agent making a payment to a U.S. branch of an FFI or NFFE completes Form 1042-S as follows:
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1665
taxmap/instr2/i1042s-010.htm#TXMP7d40777d
Amounts paid to a foreign estate.(p12)
rule
If a U.S. withholding agent makes a payment to a foreign estate, a Form 1042-S must be completed showing the estate as the recipient. Use recipient code 17 (estate) as the chapter 3 status code and the applicable recipient code for the chapter 4 status code.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1682
taxmap/instr2/i1042s-010.htm#TXMP41028da8
Dual claims.(p12)
rule
A U.S. withholding agent may make a payment to a foreign entity (for example, a hybrid entity) that is simultaneously claiming an exemption from chapter 4 withholding and a reduced rate of tax under chapter 3 on its own behalf for a part of the payment and an exemption from chapter 4 withholding and a reduced rate of tax under chapter 3 on behalf of persons in their capacity as interest holders in that entity on the remaining part. If the claims are consistent and the withholding agent has accepted the multiple claims, a separate Form 1042-S must be filed for the entity for those payments for which the entity is treated as claiming a reduced rate of withholding and separate Forms 1042-S must be filed for each of the interest holders for those payments for which the interest holders are claiming a reduced rate of withholding. The Forms 1042-S must include the chapter 4 status of the payee (including the applicable chapter 4 exemption). If the claims are consistent but the withholding agent has not chosen to accept the multiple claims, or if the claims are inconsistent, a separate Form 1042-S must be filed for the person(s) being treated as the recipient(s).
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1691
taxmap/instr2/i1042s-010.htm#TXMP13f24dd1
Special instructions for U.S. trusts and estates.(p12)
rule
Report the entire amount of income subject to reporting, regardless of estimates of distributable net income.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1700

taxmap/instr2/i1042s-010.htm#TXMP66bf7f03
Payments Made to Persons Who Are Not Recipients(p12)

rule
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1705
taxmap/instr2/i1042s-010.htm#TXMP4e5c88cb
Disregarded entities and hybrid entities.(p12)
rule
If a U.S. withholding agent makes a payment to a disregarded entity (other than a limited branch of an FFI) that is not a hybrid entity making a treaty claim, and receives a valid Form W-8BEN-E or W-8ECI from a foreign person that is the single owner of the disregarded entity, the withholding agent must file a Form 1042-S in the name of the foreign single owner. The taxpayer identifying number (TIN) on the Form 1042-S, if required, must be the foreign single owner's TIN. However, in box 13h include the GIIN of the disregarded entity provided in Part II of Form W-8BEN-E if it is an FFI.

taxmap/instr2/i1042s-010.htm#TXMP18ceb553
Example 5.(p12)

WA, a withholding agent, makes a withholdable payment of interest to LLC, a foreign limited liability company that is not an FFI. LLC is wholly-owned by FC, a foreign corporation that is an excepted non-financial foreign entity. LLC is treated as a disregarded entity. WA has a Form W-8BEN-E from FC on which it states that it is the beneficial owner of the income paid to LLC. WA reports the interest payment on Form 1042-S showing FC as the recipient. The result would be the same if LLC was a domestic entity.
A disregarded entity can, however, claim to be the beneficial owner of a payment if it is a hybrid entity claiming treaty benefits. See Form W-8BEN-E and its instructions for more information. If a disregarded entity claims on a valid Form W-8BEN-E to be the beneficial owner, the U.S. withholding agent must complete a Form 1042-S treating the disregarded entity as a recipient and using recipient code 26 (hybrid entity making a treaty claim) as the chapter 3 status code and the applicable recipient code for the chapter 4 status code of the single owner when the payment is a withholdable payment and chapter 4 withholding does not apply.
A hybrid entity with multiple owners may also claim treaty benefits. See Form W-8BEN-E and its instructions for more information on documentation requirements that apply in such cases. If a hybrid entity treated as a resident of a treaty country claims treaty benefits on a valid Form W-8BEN-E associated with a withholdable payment (and chapter 4 withholding does not apply with respect to any of its owners to such payment or portion of such payment), the U.S. withholding agent should complete a Form 1042-S treating the hybrid entity as a recipient, use code 26 (hybrid entity making a treaty claim) as the chapter 3 recipient status code, and leave blank the chapter 4 recipient status code. To the extent, however, that a portion of a withholdable payment is allocated to an owner of the hybrid entity for which chapter 4 withholding must be applied, the U.S. withholding agent must issue a separate Form 1042-S to such owner using the applicable recipient codes for the owner's chapters 3 and 4 status codes and report the hybrid entity as the intermediary. The withholding agent must do so for each such owner for which chapter 4 withholding applies and must exclude amounts allocable to such owners from the Form 1042-S issued to the hybrid entity.
If an owner of a reverse hybrid entity claims treaty benefits on a valid Form W-8BEN-E or W-8BEN (and chapter 4 withholding does not apply with respect to the payment to the reverse hybrid entity), the U.S. withholding agent should issue a Form 1042-S for the portion of the payment allocable to each such owner treating the owner as the recipient, using the applicable recipient codes for the chapter 3 and 4 status codes, and report the reverse hybrid entity as the intermediary in boxes 15a through 15i. In such a case, the U.S. withholding agent must issue a Form 1042-S to the reverse hybrid entity for the remainder of the payment treating such entity as the recipient and using the applicable chapters 3 and 4 status codes. However, if chapter 4 withholding applies with respect to the payment to the reverse hybrid entity, the U.S. withholding agent must instead issue a Form 1042-S to the reverse hybrid entity for the entire payment and withhold accordingly.

taxmap/instr2/i1042s-010.htm#TXMP33e3e692
Example 6.(p13)

WA, a withholding agent, makes a withholdable payment of interest to FP, a hybrid entity organized in Country X. FP is treated as a partnership under the Code but is treated as a company resident in Country X for Country X purposes. WA has a Form W-8BEN-E from FP on which it claims treaty benefits. WA also has a Form W-8IMY from FP that includes its chapters 3 and 4 statuses and a W-8BEN-E from each of FP's owners, FC1 and FC2, which certify that FC1 is a PFFI and FC2 is a NPFFI. The attached withholding statement allocates 80% of the payment to FC1 and 20% of the payment to FC2. WA must issue a Form 1042-S for 80% of the payment to FP as the recipient using recipient code 26 (hybrid entity making a treaty claim) as the chapter 3 status code and leaving blank the recipient code for the chapter 4 status code. WA must withhold under chapter 4 on the remaining 20% of the payment allocated to FC2 and issue a Form 1042-S to FC2 as the recipient using recipient code 15 (corporation) as the chapter 3 status code and recipient code 15 (nonparticipating FFI) as the chapter 4 status code and must report FP as the intermediary in boxes 15a through 15i.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1729
taxmap/instr2/i1042s-010.htm#TXMP518c02ed
Amounts paid to a nonqualified intermediary or flow-through entity.(p13)
rule
If a U.S. withholding agent makes a payment to an NQI or a flow-through entity (other than a nonparticipating FFI) with respect to a withholdable payment, it must complete a separate Form 1042-S for each recipient on whose behalf the NQI or flow-through entity acts as indicated by its withholding statement and the documentation associated with its Form W-8IMY. If a payment is made through tiers of NQIs or flow-through entities, the withholding agent must nevertheless complete Form 1042-S for the recipients to which the payments are remitted. A withholding agent completing Form 1042-S for a recipient that receives a payment through an NQI or a flow-through entity must include in boxes 15a through 15i of Form 1042-S the name, country code, address, TIN, if any, GIIN, if any, and status codes of the NQI or flow-through entity from whom the recipient directly receives the payment.
If, however, a U.S. withholding agent makes withholdable payments to an NQI or a flow-through entity that is a participating FFI or registered deemed-compliant FFI that is allocable to a chapter 4 withholding rate pool as indicated by the FFI’s withholding statement, the U.S. withholding agent should complete a separate Form 1042-S for each chapter 4 reporting pool (i.e., pool of recalcitrant account holders, pool of nonparticipating FFIs, pool of payees that are U.S. persons) treating the participating FFI or registered deemed-compliant FFI as the recipient and must include the GIIN and chapter 3 status code of the FFI and the applicable chapter 4 reporting pool code as the chapter 4 status code. If a payment is made through tiers of NQIs or flow-through entities that are participating FFIs or registered deemed-compliant FFIs, the withholding agent must nevertheless complete Form 1042-S for each chapter 4 reporting pool to which the payments are allocated and must report, as the recipient, the FFI from whom the recipients included in the chapter 4 reporting pool directly receive the payment.

taxmap/instr2/i1042s-010.htm#TXMP2af8d7d1
Example 7.(p13)

WA, a withholding agent, makes a withholdable payment of interest to FFI 1, a reporting Model 1 FFI. FFI 1 provides WA with a valid Form W-8IMY with which it associates a withholding statement that allocates 80% of the payment to FFI 2, a participating FFI, and 20% of the payment to a pool of nonparticipating FFIs. FFI 1 also provides WA with FFI 2's Form W-8IMY with which it associates a withholding statement that allocates 100% of the payment to recalcitrant pool-no U.S. indicia. WA must complete a Form 1042-S for the interest allocated to a pool of nonparticipating FFIs with FFI 1 as the recipient and must complete another Form 1042-S for the interest allocated to a pool of recalcitrant account holders-no U.S. indicia with FFI 2 as the recipient.
If a U.S. withholding agent makes a withholdable payment to an NQI or flow-through entity that is a participating FFI or deemed-compliant FFI, and cannot reliably associate the payment, or any part of the payment, with a withholding statement, or to the extent required, a valid withholding certificate (Forms W-8 or W-9) or other valid appropriate documentation from a recipient, the withholding agent must follow the appropriate presumption rules for that payment which, if the payment is a withholdable payment, will generally require the withholding agent to withhold 30% under chapter 4 because such payment is presumed made to a nonparticipating FFI. See Regulations section 1.1471-3(f)(5). For this purpose, if the allocation information provided to the withholding agent indicates an allocation of more than 100% of the payment, then no part of the payment should be considered to be associated with a Form W-8, Form W-9, or other appropriate documentation. The Form 1042-S should be completed by entering Unknown Recipient in box 13a and recipient code 21 (unknown recipient) as the chapter 3 status code and recipient code 29 (unknown recipient) as the chapter 4 status code. Also, the name, country code, address, TIN, if any, GIIN, if any, and status codes of the FFI should be entered in boxes 15a through 15i.
If a U.S. withholding agent makes a withholdable payment to an NQI or flow-through entity that is a nonparticipating FFI, the withholding agent must treat the payments as made to an unknown recipient regardless of whether it can reliably associate the payment, or any part of the payment, with a valid withholding certificate (Forms W-8 or W-9) or other valid appropriate documentation from a recipient (see Regulations section 1.1471-3(d)(8)). The withholding agent should complete a Form 1042-S showing “Unknown Recipient” in box 13a and recipient code 21 (unknown recipient) as the chapter 3 status code and recipient code 29 (unknown recipient) as the chapter 4 status code. Also, the name, country code, address, chapter 4 status code, and TIN, if any, of the nonparticipating FFI should be entered on Form 1042-S in boxes 15a through 15i.
If, however, an NQI or flow-through entity that is a nonparticipating FFI provides documentation described in Regulations section 1.1471-3(d)(8)(ii) to establish that the withholdable payment or a portion of the payment is beneficially owned by an exempt beneficial owner, then the withholding agent should complete a Form 1042-S for each exempt beneficial owner showing the chapter 4 exemption code 15 (payee not subject to chapter 4 withholding), the exempt beneficial owner as the recipient in box 13a, and the name, country code, address, chapter 4 status code, and TIN, if any, of the nonparticipating FFI in boxes 15a through 15i. For any remaining portion of the payment, the withholding agent should complete a Form 1042-S to an unknown recipient as described directly above.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1754
taxmap/instr2/i1042s-010.htm#TXMP3f4fcebc
Pro-rata reporting.
(p14)
spacer

If the withholding agent has agreed that an NQI (other than a nonparticipating FFI) may provide information allocating a payment to its account holders under the alternative procedure of Regulations section 1.1441-1(e)(3)(iv)(D) (no later than February 17, 2017) and the NQI fails to allocate more than 10% of the payment in a withholding rate pool to the specific recipients in the pool or an applicable chapter 4 withholding rate pool, the withholding agent must file Forms 1042-S for each recipient in the pool on a pro-rata basis. If, however, the NQI fails to timely allocate 10% or less of the payment in a withholding rate pool to the specific recipients in a pool, the withholding agent must file Forms 1042-S for each recipient for which it has allocation information and report the unallocated part of the payment on a Form 1042-S in accordance with the presumption rules.
taxmap/instr2/i1042s-010.htm#en_us_publink64278ad0e1894
taxmap/instr2/i1042s-010.htm#TXMP1a81c699
Payments allocated, or presumed made, to U.S. non-exempt recipients.
(p14)
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You may be given Forms W-9 or other information regarding U.S. non-exempt recipients from an NQI or flow-through entity together with information allocating all or a part of the payment to U.S. non-exempt recipients. You must report income allocable to a U.S. non-exempt recipient on the appropriate Form 1099 and not on Form 1042-S, even though you are paying that income to an NQI or a flow-through entity. If, however, a participating FFI or registered deemed-compliant FFI provides a withholding statement allocating all or part of the payment to a chapter 4 withholding rate pool of U.S. payees along with the certification provided on Form W-8IMY required for reporting such pool (as described in Regulations section 1.1471-3(c)(3)(iii)(B)), you must report the income allocable to such pool on Form 1042-S.

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Example 8.(p14)

FP is a nonwithholding foreign partnership (flow-through entity) that is a certified deemed-compliant FFI. FP receives from WA, a U.S. withholding agent, a withholdable payment of interest described by income code 01 (interest paid by U.S. obligors – general). FP has three partners, A, B, and C, all of whom are individuals. FP provides WA with a Form W-8IMY certifying that it is transmitting Forms W-9 for U.S. non-exempt recipients and Forms W-8BEN from A and B and a Form W-9 from C, a U.S. non-exempt recipient. In addition, FP provides a complete withholding statement in association with its Form W-8IMY that allocates the interest payments among A, B, and C. WA must file two Forms 1042-S, one each for A and B, treating FP as the intermediary in boxes 15a through 15i. WA should also file a Form 1099-INT for C.

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Example 9.(p14)

The facts are the same as in Example 8, except that FP does not provide any documentation from its partners. Because WA cannot reliably associate the withholdable payment of interest with documentation from a payee, it must apply the presumption rules of Regulations section 1.1471-3(f) to treat the interest as paid to a nonparticipating FFI. A Form 1042-S should be completed by entering 4 in box 3, “Unknown Recipient” in box 13a, recipient code 21 (unknown recipient) as the chapter 3 status code, and recipient code 29 (unknown recipient) as the chapter 4 status code. Also, the name, country code, address, status codes, and TIN, if any, of FP should be entered in boxes 15a through 15i.

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Example 10.(p14)

The facts are the same as Example 9 except that FP is a participating FFI and provides WA with a Form W-8IMY certifying that it is reporting its U.S. accounts under chapter 4 and a withholding statement allocating 33% of the payment to a pool of U.S. payees. With respect to the U.S. pool of payees, WA must file a Form 1042-S showing FP as the recipient in box 13a and include FP's GIIN, recipient code 08 as the chapter 3 status code (partnership other than a withholding foreign partnership), and use recipient code 48 (U.S. payees pool) as the chapter 4 status code. WA should enter 3 in box 3 as the chapter indicator, leave boxes 3a and 3b blank, and enter exemption code 18 (U.S. payees of a participating FFI or registered deemed-compliant FFI) in box 4a and 00.00 in box 4b.
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Specified Federal Procurement Payments Made to Foreign Persons(p14)

rule
For purposes of section 5000C, a payor of a specified Federal procurement payment to a foreign person must complete a Form 1042-S for payments withheld upon in the name of the foreign person. Use income code 44 to report payments subject to withholding under section 5000C. Box 2 should include the amount of the specified Federal procurement payments subject to withholding and box 7 should include the amount of tax withheld under section 5000C.
If you are reporting tax withheld under section 5000C, enter 3 in box 3 as if the tax were a chapter 3 tax, enter 00 in box 3a, and report the tax withheld in box 7. You do not need to complete box 4a, 4b, or any box for a chapter 3 or 4 status code. On boxes 13a through 13d, include the name and the address of the foreign person withheld upon. If known, include the TIN (if any) in box 13e.