81 FR 8398 - PATH Act Changes to Section 1445
DEPARTMENT OF THE TREASURY
Internal Revenue Service Federal Register Volume 81, Issue 33 (February 19, 2016)
Internal Revenue Service
Federal Register Volume 81, Issue 33 (February 19, 2016)
| Page Range | 8398-8402 | |
| FR Document | 2016-03421 |
[Federal Register Volume 81, Number 33 (Friday, February 19, 2016)] [Rules and Regulations] [Pages 8398-8402] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-03421] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9751] RIN 1545-BN22 PATH Act Changes to Section 1445 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. ----------------------------------------------------------------------- SUMMARY: This document contains final and temporary regulations relating to the taxation of, and withholding on, foreign persons upon certain dispositions of, and distributions with respect to, United States real property interests (USRPIs). The regulations reflect changes made by the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). In addition, the regulations update certain mailing addresses listed in regulations under sections 897 and 1445. These regulations affect certain holders of USRPIs and withholding agents that are required to withhold tax on certain dispositions of, and distributions with respect to, USRPIs. This document also requests comments on certain other aspects of the PATH Act that apply to dispositions of, and distributions with respect to, USRPIs. DATES: Effective date: These regulations are effective on February 19, 2016. Applicability date: For dates of applicability, see Sec. Sec. 1.1445-1(h), 1.1445-2(e), and 1.1445-5(h). ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-101329-16), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG- 101329-16), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG- 101329-16). FOR FURTHER INFORMATION CONTACT: Milton M. Cahn or David A. Levine, (202) 317-6937; concerning submissions of comments, Regina Johnson, (202) 317-6901 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collections of information contained in these final regulations were previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under control numbers 1545-0123, 1545-0902, and 1545-1797 in conjunction with Treasury decisions 7999 (49 FR 50689, Dec. 31, 1984), 8113 (51 FR 46620, Dec. 24, 1986), and 9082 (68 FR 46081, Aug. 5, 2003), respectively. There are no proposals for substantive changes to these collections of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents might become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background Section 897(a)(1) provides, in general, that gain or loss of a nonresident alien individual or foreign corporation from the disposition of a United States real property interest (USRPI) shall be taken into account under section 871(b)(1) or 882(a)(1), as applicable, as if the nonresident alien individual or foreign corporation were engaged in a trade or business within the United States during the taxable year and such gain or loss were effectively connected with that trade or business. Section 897(c)(1)(A) defines a USRPI to include any interest (other than solely as a creditor) in any domestic corporation unless the taxpayer establishes that such corporation was at no time a United States real property holding corporation (USRPHC) during the applicable testing period (generally, the five-year period ending on the date of the disposition of the USRPHC). Under section 897(c)(2), a USRPHC means any corporation if the fair market value of its USRPIs equals or exceeds 50 percent of the total fair market value of its USRPIs, its interests in real property located outside the United States, and any other assets that are used or held for use in a trade or business. However, section 897(c)(1)(B) generally provides [[Page 8399]] that an interest in a corporation is not a USRPI if the corporation does not hold USRPIs as of the date its stock is sold and the corporation disposed of all of the USRPIs that it held during the applicable testing period in transactions in which the full amount of gain, if any, was recognized (the cleansing exception). Section 1445(a) generally imposes a withholding tax obligation on the transferee when a foreign person disposes of a USRPI. Section 1445(f)(3) provides that a foreign person is any person other than a United States person. Section 1445(e)(3) generally imposes a withholding obligation on a domestic corporation that is a USRPHC on distributions to foreign persons to which section 302 or sections 331 through 346 apply. Section 1445(e)(3) also provides that similar rules are applicable to distributions to foreign persons under section 301 that are not made out of the earnings and profits of the domestic corporation. Section 1445(e)(4) generally requires a domestic or foreign partnership, the trustee of a domestic or foreign trust, or the executor of a domestic or foreign estate to withhold on the distribution of any USRPI to a partner or beneficiary who is a foreign person. Under section 1445(e)(5), the transferee of a partnership interest or of a beneficial interest in a trust or estate is required to deduct and withhold tax to the extent provided in regulations. Any amounts withheld under section 1445 are credited against the foreign transferor's U.S. tax liability. Sec. 1.1445-1(f)(1). Before the enactment of the Protecting Americans from Tax Hikes Act of 2015, Public Law 114-113 (the PATH Act), the withholding rate under sections 1445(a), 1445(e)(3), 1445(e)(4), and 1445(e)(5) was 10 percent of either the amount realized or the fair market value of the interest, as applicable. Section 324(a) of the PATH Act increased the withholding rate under these sections from 10 percent to 15 percent. This new rate applies to dispositions after February 16, 2016. Section 324(b) of the PATH Act, however, retained the 10-percent withholding rate in the case of a disposition of property that is acquired by the transferee for his or her use as a residence with respect to which the amount realized is greater than $300,000 but does not exceed $1 million. Section 325 of the PATH Act provides that the cleansing exception will not apply to dispositions on or after December 18, 2015, if the corporation or its predecessor was a real estate investment trust or a regulated investment company at any time during the shorter of the period that the shareholder held the interest or the five-year period ending on the date of the disposition of the shareholder's interest in the corporation. Section 323(a) of the PATH Act added section 897(l), which provides that section 897 does not apply (i) to USRPIs held directly (or indirectly through one or more partnerships) by, or (ii) to distributions received from a real estate investment trust by, a qualified foreign pension fund or an entity wholly owned by a qualified foreign pension fund. Section 897(l)(2) defines a qualified foreign pension fund for purposes of section 897(l), and section 897(l)(3) provides that the Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of section 897(l). In addition, section 323(b) of the PATH Act amended the definition of foreign person in section 1445(f)(3) to provide that entities described in section 897(l) are not treated as foreign persons for purposes of section 1445, except as otherwise provided by the Secretary. The amendments in section 323 of the PATH Act are applicable to dispositions and distributions after December 18, 2015. Explanation of Provisions These regulations update Sec. 1.897-2 and Sec. Sec. 1.1445-1 through 1.1445-5, and append an informational footnote to Sec. 1.1445- 11T(d)(2)(iii), to reflect changes made by the PATH Act. Additionally, for certain filings that are described in regulations under sections 897 and 1445, these regulations provide that the mailing address is the address specified in the Instructions for Form 8288 under the heading ``Where To File.'' Applicability Dates Consistent with the PATH Act, the revisions to Sec. 1.1445-2 to incorporate the exemption under section 1445(f)(3) for entities described in section 897(l) apply to dispositions and distributions after December 18, 2015, and the revisions to Sec. 1.897-2 regarding the cleansing exception apply to dispositions on or after December 18, 2015. The new withholding rates described in these regulations apply to dispositions of, and distributions with respect to, USRPIs that occur after February 16, 2016. Beginning after February 19, 2016, taxpayers are required to use the revised mailing address provided in these regulations. However, the IRS will not assert penalties against taxpayers that use the mailing address previously specified in the regulations on or before June 20, 2016. Any prior timely filings made pursuant to the regulations under sections 897 and 1445 that were mailed to the address specified in the Instructions for Form 8288 under the heading ``Where To File,'' instead of the address previously specified in the regulations, have been accepted by the IRS. Request for Comments The Treasury Department and the IRS request comments regarding what regulations, if any, should be issued pursuant to section 897(l)(3). All comments that are submitted as prescribed in this preamble under the ADDRESSES heading will be available at www.regulations.gov or upon request. Special Analyses Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. Because no notice of proposed rulemaking is required, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. The Treasury Department and the IRS have determined that section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. chapter 5) does not apply to these regulations, including because good cause exists under section 553(b)(B) of the APA. Section 553(b)(B) of the APA provides that an agency is not required to publish a notice of proposed rulemaking in the Federal Register when the agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest. These regulations are necessary to ensure that existing regulations for transferees and other parties properly reflect the changes implemented by the PATH Act. Because these regulations merely conform the regulations to certain changes made by the PATH Act, and update certain mailing addresses, prior notice and public comment is unnecessary. Accordingly, good cause exists for dispensing with notice and public comment pursuant to section 553(b) of the APA. For the same reasons that section 553(b) of the APA does not apply, including because good cause exists under section 553(d)(3) of the APA, the requirements in section 553(d) of the APA for a delayed effective date are inapplicable. Drafting Information The principal authors of these regulations are Milton M. Cahn and [[Page 8400]] David A. Levine of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1--INCOME TAXES 0 Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * 0 Par. 2. Section 1.897-2 is amended as follows: 0 1. By removing ``, and'' at the end of paragraph (f)(2)(i) and adding a semicolon in its place. 0 2. By removing the period at the end of paragraph (f)(2)(ii) and adding ``; and'' in its place. 0 1. By adding paragraph (f)(2)(iii) before the existing undesignated paragraph. 0 2. In each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (h)(2)(v), third sentence... the Director, the address Philadelphia specified in the Service Center, Instructions for P.O. Box 21086, Form 8288 under the Drop Point 8731, heading ``Where To FIRPTA Unit, File''. Philadelphia, PA 19114-0586. (h)(4)(ii), first sentence.. the Director, the address Philadelphia specified in the Service Center, Instructions for P.O. Box 21086, Form 8288 under the Drop Point 8731, heading ``Where To FIRPTA Unit, File''. Philadelphia, PA 19114-0586. ------------------------------------------------------------------------ The revision and addition reads as follows: Sec. 1.897-2 United States real property holding corporations. * * * * * (f) * * * (2) * * * (iii) If the disposition occurs on or after December 18, 2015, neither the corporation nor any predecessor of the corporation was a regulated investment company or a real estate investment trust at any time during the shorter of the periods described in section 897(c)(1)(A)(ii). * * * * * Sec. 1.897-3 [Amended] 0 Par. 3. Section 1.897-3 is amended in each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (c) introductory text, first with the Director, at the address sentence. Philadelphia specified in the Service Center, Instructions for P.O. Box 21086, Form 8288 under Drop Point 8731, the heading FIRPTA Unit, ``Where To Philadelphia, PA File''. 19114-0586. (d)(1), fourth sentence......... the Philadelphia the address Service Center. specified in the Instructions for Form 8288 under the heading ``Where To File''. (f)(1), second sentence......... addressed to the delivered to the Director, address specified Philadelphia in the Service Center, Instructions for P.O. Box 21086, Form 8288 under Drop Point 8731, the heading FIRPTA Unit, ``Where To Philadelphia, PA File''. 19114-0586. (f)(1), fifth sentence.......... the Director, the address Philadelphia specified in the Service Center. Instructions for Form 8288 under the heading ``Where To File''. ------------------------------------------------------------------------ 0 Par. 4. Section 1.1445-1 is amended as follows: 0 1. By revising the first sentence and removing the last sentence of paragraph (b)(1). 0 2. By redesignating paragraphs (b)(2) through (4) as paragraphs (b)(3) through (5) respectively. 0 3. By adding a new paragraph (b)(2). 0 4. By revising paragraph (g)(10). 0 5. By revising the heading and adding two sentences after the first sentence in paragraph (h). 0 6. In each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (a), second sentence........ 10 percent.......... 15 percent (10 percent in the case of dispositions described in paragraph (b)(2) of this section). newly designated 10 percent.......... 15 percent. (b)(4)(iii), first sentence. newly designated Sec. 1.1445- paragraph (b)(4)(iii), second 1(b)(3)(iii). (b)(4)(iii). sentence. (c)(2)(i)(A), first sentence 10 percent.......... 15 percent (10 percent in the case of dispositions described in paragraph (b)(2) of this section). (c)(2)(i)(B), third sentence 10 percent.......... 15 percent (10 percent in the case of dispositions described in paragraph (b)(2) of this section). ------------------------------------------------------------------------ [[Page 8401]] The additions and revisions read as follows: Sec. 1.1445-1 Withholding on dispositions of U.S. real property interests by foreign persons: In general. * * * * * (b) Duty to withhold--(1) In general. Except as provided in paragraph (b)(2) and Sec. Sec. 1.1445-2 and 1.1445-3, transferees of U.S. real property interests are required to deduct and withhold a tax equal to 15 percent of the amount realized by the transferor if the transferor is a foreign person.* * * (2) Reduced rate for certain residences. Transferees of U.S. real property interests are required to deduct and withhold a tax equal to 10 percent of the amount realized by the transferor if the transferor is a foreign person and the following requirements are satisfied: (i) The property is acquired by the transferee for use by the transferee as a residence; (ii) the amount realized for the property does not exceed $1,000,000; and (iii) section 1445(b)(5) does not apply to the disposition. See Sec. 1.1445-2(d)(1). * * * * * (g) * * * (10) Address for correspondence. Any written communication to the Internal Revenue Service described in this section is to be mailed to the address specified in the Instructions for Form 8288 under the heading ``Where To File.'' (h) Applicability dates. * * * The withholding rates set forth in paragraphs (a), (b)(1), (b)(2), (b)(4)(iii), (c)(2)(i)(A), and (c)(2)(i)(B) of this section apply to dispositions after February 16, 2016. For dispositions on or before February 16, 2016, see paragraphs (a), (b)(1), (b)(3)(iii), (c)(2)(i)(A), and (c)(2)(i)(B) of this section as contained in 26 CFR part 1 revised as of April 1, 2015. 0 Par. 5. Section 1.1445-2 is amended as follows: 0 1. By revising the first sentence in the undesignated paragraph following paragraph (b)(2)(i)(C). 0 2. In paragraph (b)(4)(iv), by adding a sentence after the last sentence. 0 3. In paragraph (e), by revising the heading and adding two sentences after the first sentence. 0 4. In each of the paragraphs listed in the first colum by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (b)(4)(iv), second sentence. 10 percent.......... 15 percent. (b)(4)(iv), third sentence.. 10 percent.......... 15 percent. (b)(4)(iv), fourth sentence. 10 percent.......... 15 percent. (c)(3)(iii), second sentence 10 percent.......... 15 percent. (c)(3)(iii), third sentence. 10 percent.......... 15 percent. (c)(3)(iii), fourth sentence 10 percent.......... 15 percent. (d)(2)(i)(B), first sentence provides a copy of mails a copy of the the transferor's transferor's notice notice to the to the Internal Director, Revenue Service. Philadelphia Service Center. (d)(3)(i)(A) introductory 10 percent.......... 15 percent (10 text, first sentence. percent in the case of dispositions described in Sec. 1.1445-1(b)(2)). (d)(3)(i)(B) introductory 10 percent.......... 15 percent (10 text, first sentence. percent in the case of dispositions described in Sec. 1.1445-1(b)(2)). ------------------------------------------------------------------------ The additions and revision read as follows: Sec. 1.1445-2 Situations in which withholding is not required under section 1445(a). * * * * * (b) * * * (2) * * * (i) * * * (C) * * * In general, a foreign person is a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, or foreign estate, but not a qualified foreign pension fund (as defined in section 897(l)) or an entity all of the interests of which are held by a qualified foreign pension fund. * * * (4) * * * (iv) * * * For dispositions described in Sec. 1.1445-1(b)(2), this paragraph shall be applied by replacing ``15 percent'' with ``10 percent'' each time it appears. * * * * * (e) Applicability dates. * * * The exclusion of entities described in section 897(l) from the definition of foreign person in paragraph (b)(2)(i) of this section applies to dispositions and distributions after December 18, 2015, and the withholding rates set forth in paragraphs (b)(4)(iv), (c)(3)(iii), and (d)(3)(i) of this section apply to dispositions after February 16, 2016. For dispositions on or before February 16, 2016, see paragraphs (b)(4)(iv), (c)(3)(iii), and (d)(3)(i) of this section as contained in 26 CFR part 1 revised as of April 1, 2015. Sec. 1.1445-3 [Amended] 0 Par. 6. Section 1.1445-3 is amended in each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (b)(1), first sentence...... to the Director, to. Philadelphia Service Center, at. (f)(1), first sentence...... to the Director, to. Philadelphia Service Center, at. (f)(2)(iii), heading........ by the Director, on behalf of the Philadelphia Service. Service Center,. (f)(2)(iii), first sentence. by the Director, on behalf of the Philadelphia Service. Service Center or his delegate. (g) introductory text, third addressed to the delivered to. sentence. Director, Philadelphia Service Center, at. ------------------------------------------------------------------------ [[Page 8402]] Sec. 1.1445-4 [Amended] 0 Par. 7. Section 1.1445-4 is amended in each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (c)(1), tenth sentence...... from a foreign from a foreign person must person after withhold a tax February 16, 2016, equal to 10 percent. must withhold a tax equal to 15 percent (10 percent in the case of dispositions described in Sec. 1.1445-1(b)(2)). (c)(1), thirteenth sentence. 10 percent tax...... 15 percent tax (10 percent tax in the case of dispositions described in Sec. 1.1445-1(b)(2)). (c)(2), second sentence..... to the Director, to. Philadelphia Service Center, at. ------------------------------------------------------------------------ 0 Par. 8. Section 1.1445-5 is amended as follows: 0 1. In each of the paragraphs listed in the first column, by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (b)(2)(ii) introductory to the Director, to. text, first sentence. Philadelphia Service Center, at. (c)(3)(iv) introductory 10 percent.......... 15 percent. text, second sentence. (c)(3)(v), first sentence... with the Director, at. Philadelphia Service Center, at. (c)(3)(v), fifth sentence... with the Director, at. Philadelphia Service Center, at. (e)(1) introductory text, 10 percent.......... 15 percent. first sentence. ------------------------------------------------------------------------ 0 2. In paragraph (h), by revising the heading and adding two sentences after the first sentence. The revision and additions read as follows: Sec. 1.1445-5 Special rules concerning distributions and other transactions by corporations, partnerships, trusts, and estates. * * * * * (h) Applicability dates. * * * The withholding rates set forth in paragraphs (c)(3)(iv) and (e)(1) of this section apply to distributions after February 16, 2016. For distributions on or before February 16, 2016, see paragraphs (c)(3)(iv) and (e)(1) of this section as contained in 26 CFR part 1 revised as of April 1, 2015. Sec. 1.1445-6 [Amended] 0 Par. 9. Section 1.1445-6 is amended in each of the paragraphs listed in the first column by removing the language in the ``Remove'' column and adding in its place the language in the ``Add'' column. ------------------------------------------------------------------------ Paragraph Remove Add ------------------------------------------------------------------------ (f)(1), first sentence...... to the Director, to. Philadelphia Service Center, at. (f)(2)(iii), heading........ by the Director, on behalf of the Philadelphia Service. Service Center. (f)(2)(iii), first sentence. by the Director, on behalf of the Philadelphia Service. Service Center, or his delegate. (g) introductory text, addressed to the delivered to. second sentence. Director, Philadelphia Service Center, at. ------------------------------------------------------------------------ Sec. 1.1445-11T [Amended] 0 Par. 10. Section 1.1445-11T is amended in paragraph (d)(2)(iii) by adding footnote ``1'' after the last sentence to read as follows: Sec. 1.1445-11T Special rules requiring withholding under Sec. 1.1445-5 (temporary). * * * * * (d) * * * (2) * * * (iii) * * * \1\ Section 324(a) of the Protecting Americans from Tax Hikes Act of 2015 (Pub. L. 114-113) increased the withholding rate under section 1445(e)(5) to 15 percent, applicable to dispositions after February 16, 2016. John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: February 12, 2016. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2016-03421 Filed 2-17-16; 4:15 pm] BILLING CODE 4830-01-P
![8398 Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Rules and Regulations
Tompkinsville, KY, Tompkinsville-Monroe Port Angeles, WA, William R Fairchild Intl, (202) 317–6937; concerning submissions
County, RNAV (GPS) RWY 22, Amdt 1B RNAV (GPS) RWY 8, Amdt 1 of comments, Regina Johnson, (202)
Orange, MA, Orange Muni, NDB RWY 1, Port Angeles, WA, William R Fairchild Intl, 317–6901 (not toll-free numbers).
Amdt 1A, CANCELED RNAV (GPS) RWY 26, Amdt 1
Orange, MA, Orange Muni, NDB RWY 32, SUPPLEMENTARY INFORMATION:
[FR Doc. 2016–03368 Filed 2–18–16; 8:45 am]
Amdt 1A, CANCELED Paperwork Reduction Act
BILLING CODE 4910–13–P
Vineyard Haven, MA, Martha’s Vineyard,
VOR RWY 24, Amdt 2A, CANCELED The collections of information
Baltimore, MD, Baltimore/Washington Intl contained in these final regulations
Thurgood Marshall, VOR RWY 10, Amdt DEPARTMENT OF THE TREASURY were previously reviewed and approved
17B, CANCELED by the Office of Management and
Baltimore, MD, Baltimore/Washington Intl Internal Revenue Service Budget in accordance with the
Thurgood Marshall, VOR/DME RWY 33L, Paperwork Reduction Act of 1995 (44
Amdt 3A, CANCELED 26 CFR Part 1 U.S.C. 3507) under control numbers
Eliot, ME, Littlebrook Air Park, NDB–B,
[TD 9751]
1545–0123, 1545–0902, and 1545–1797
Amdt 1, CANCELED
Sanford, ME, Sanford Seacoast Rgnl, VOR in conjunction with Treasury decisions
RIN 1545–BN22 7999 (49 FR 50689, Dec. 31, 1984), 8113
RWY 7, Amdt 4C, CANCELED
Alpena, MI, Alpena County Rgnl, VOR RWY (51 FR 46620, Dec. 24, 1986), and 9082
1, Amdt 14D, CANCELED
PATH Act Changes to Section 1445 (68 FR 46081, Aug. 5, 2003),
Hancock, MI, Houghton County Memorial, AGENCY: Internal Revenue Service (IRS), respectively. There are no proposals for
VOR RWY 13, Amdt 16, CANCELED Treasury. substantive changes to these collections
Fairmont, MN, Fairmont Muni, VOR RWY of information.
13, Amdt 5, CANCELED ACTION: Final and temporary
An agency may not conduct or
Fairmont, MN, Fairmont Muni, VOR RWY regulations.
sponsor, and a person is not required to
31, Amdt 8, CANCELED respond to, a collection of information
Hibbing, MN, Range Rgnl, VOR RWY 13, SUMMARY: This document contains final
Amdt 13A, CANCELED and temporary regulations relating to unless it displays a valid control
Hibbing, MN, Range Rgnl, VOR RWY 31, the taxation of, and withholding on, number assigned by the Office of
Amdt 17, CANCELED foreign persons upon certain Management and Budget.
Willmar, MN, Willmar Muni-John L Rice dispositions of, and distributions with Books or records relating to a
Field, VOR RWY 13, Orig, CANCELED respect to, United States real property collection of information must be
Glasgow, MT, Wokal Field/Glasgow Intl, interests (USRPIs). The regulations retained as long as their contents might
NDB RWY 30, Amdt 2A, CANCELED reflect changes made by the Protecting become material in the administration
Beaufort, NC, Michael J Smith Field, NDB of any internal revenue law. Generally,
RWY 21, Amdt 2, CANCELED
Americans from Tax Hikes Act of 2015
(the PATH Act). In addition, the tax returns and tax return information
Tarboro, NC, Tarboro-Edgecombe, NDB RWY are confidential, as required by 26
27, Orig, CANCELED regulations update certain mailing
addresses listed in regulations under U.S.C. 6103.
Berlin, NH, Berlin Rgnl, VOR–B, AMDT 3A,
CANCELED sections 897 and 1445. These Background
Manchester, NH, Manchester, VOR RWY 35, regulations affect certain holders of Section 897(a)(1) provides, in general,
Amdt 15E, CANCELED USRPIs and withholding agents that are
Portsmouth, NH, Portsmouth Intl at Pease, that gain or loss of a nonresident alien
required to withhold tax on certain individual or foreign corporation from
VOR RWY 16, Amdt 5B, CANCELED dispositions of, and distributions with
Portsmouth, NH, Portsmouth Intl at Pease, the disposition of a United States real
VOR RWY 34, Orig–D, CANCELED
respect to, USRPIs. This document also property interest (USRPI) shall be taken
Newark, NJ, Newark Liberty Intl, VOR/DME requests comments on certain other into account under section 871(b)(1) or
RWY 22L, Orig–D, CANCELED aspects of the PATH Act that apply to 882(a)(1), as applicable, as if the
Newark, NJ, Newark Liberty Intl, VOR/DME dispositions of, and distributions with nonresident alien individual or foreign
RWY 22R, Amdt 4D, CANCELED respect to, USRPIs. corporation were engaged in a trade or
Hudson, NY, Columbia County, Takeoff DATES:
Minimums and Obstacle DP, Amdt 1
business within the United States
Effective date: These regulations are during the taxable year and such gain or
White Plains, NY, Westchester County, VOR/ effective on February 19, 2016.
DME–A, Amdt 4B, CANCELED loss were effectively connected with
Applicability date: For dates of that trade or business.
Knoxville, TN, Mc Ghee Tyson, Takeoff
Minimums and Obstacle DP, Amdt 8 applicability, see §§ 1.1445–1(h), Section 897(c)(1)(A) defines a USRPI
1.1445–2(e), and 1.1445–5(h). to include any interest (other than solely
RESCINDED: On December 7, 2015 (80 FR
75923), the FAA published an Amendment ADDRESSES: Send submissions to: as a creditor) in any domestic
in Docket No. 31049, Amdt No. 3671, to Part CC:PA:LPD:PR (REG–101329–16), Room corporation unless the taxpayer
97 of the Federal Aviation Regulations, under 5203, Internal Revenue Service, P.O. establishes that such corporation was at
section 97.20. The following entry for Port Box 7604, Ben Franklin Station, no time a United States real property
Angeles, WA, effective February 4, 2016, is Washington, DC 20044. Submissions holding corporation (USRPHC) during
hereby rescinded in its entirety: may be hand-delivered Monday through the applicable testing period (generally,
Port Angeles, WA, William R Fairchild Intl, Friday between the hours of 8 a.m. and the five-year period ending on the date
WATTR SIX, Graphic DP 4 p.m. to CC:PA:LPD:PR (REG–101329– of the disposition of the USRPHC).
RESCINDED: On January 26, 2016 (81 FR 16), Courier’s Desk, Internal Revenue Under section 897(c)(2), a USRPHC
asabaliauskas on DSK5VPTVN1PROD with RULES
4174), the FAA published an Amendment in Service, 1111 Constitution Avenue NW., means any corporation if the fair market
Docket No. 31051, Amdt No. 3673, to Part 97 Washington, DC 20224, or sent
of the Federal Aviation Regulations, under value of its USRPIs equals or exceeds 50
sections 97.29 and 97.33. The following
electronically via the Federal percent of the total fair market value of
entries for Port Angeles, WA, effective eRulemaking Portal at http:// its USRPIs, its interests in real property
February 4, 2016, are hereby rescinded in www.regulations.gov (IRS REG–101329– located outside the United States, and
their entirety: 16). any other assets that are used or held for
Port Angeles, WA, William R Fairchild Intl, FOR FURTHER INFORMATION CONTACT: use in a trade or business. However,
ILS OR LOC RWY 8, Amdt 3 Milton M. Cahn or David A. Levine, section 897(c)(1)(B) generally provides
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![8400 Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Rules and Regulations
David A. Levine of the Office of PART 1—INCOME TAXES ■ 2. By removing the period at the end
Associate Chief Counsel (International). of paragraph (f)(2)(ii) and adding ‘‘;
However, other personnel from the IRS ■ Paragraph 1. The authority citation and’’ in its place.
and the Treasury Department for part 1 continues to read in part as ■ 1. By adding paragraph (f)(2)(iii)
participated in their development. follows: before the existing undesignated
List of Subjects in 26 CFR Part 1 Authority: 26 U.S.C. 7805 * * * paragraph.
Income taxes, Reporting and ■ Par. 2. Section 1.897–2 is amended as ■ 2. In each of the paragraphs listed in
recordkeeping requirements. the first column by removing the
follows:
Adoption of Amendments to the language in the ‘‘Remove’’ column and
■ 1. By removing ‘‘, and’’ at the end of
Regulations adding in its place the language in the
paragraph (f)(2)(i) and adding a ‘‘Add’’ column.
Accordingly, 26 CFR part 1 is semicolon in its place.
amended as follows:
Paragraph Remove Add
(h)(2)(v), third sentence ...................................... the Director, Philadelphia Service Center, the address specified in the Instructions for
P.O. Box 21086, Drop Point 8731, FIRPTA Form 8288 under the heading ‘‘Where To
Unit, Philadelphia, PA 19114–0586. File’’.
(h)(4)(ii), first sentence ....................................... the Director, Philadelphia Service Center, the address specified in the Instructions for
P.O. Box 21086, Drop Point 8731, FIRPTA Form 8288 under the heading ‘‘Where To
Unit, Philadelphia, PA 19114–0586. File’’.
The revision and addition reads as the corporation nor any predecessor of § 1.897–3 [Amended]
follows: the corporation was a regulated
■ Par. 3. Section 1.897–3 is amended in
investment company or a real estate
§ 1.897–2 United States real property each of the paragraphs listed in the first
holding corporations. investment trust at any time during the
column by removing the language in the
shorter of the periods described in
* * * * * ‘‘Remove’’ column and adding in its
(f) * * * section 897(c)(1)(A)(ii).
place the language in the ‘‘Add’’
(2) * * * (iii) If the disposition occurs * * * * * column.
on or after December 18, 2015, neither
Paragraph Remove Add
(c) introductory text, first sentence with the Director, Philadelphia Service Center, P.O. at the address specified in the Instructions for Form
Box 21086, Drop Point 8731, FIRPTA Unit, Phila- 8288 under the heading ‘‘Where To File’’.
delphia, PA 19114–0586.
(d)(1), fourth sentence .................... the Philadelphia Service Center ................................ the address specified in the Instructions for Form
8288 under the heading ‘‘Where To File’’.
(f)(1), second sentence ................... addressed to the Director, Philadelphia Service delivered to the address specified in the Instructions
Center, P.O. Box 21086, Drop Point 8731, for Form 8288 under the heading ‘‘Where To
FIRPTA Unit, Philadelphia, PA 19114–0586. File’’.
(f)(1), fifth sentence ......................... the Director, Philadelphia Service Center ................. the address specified in the Instructions for Form
8288 under the heading ‘‘Where To File’’.
■ Par. 4. Section 1.1445–1 is amended ■ 2. By redesignating paragraphs (b)(2) ■ 6. In each of the paragraphs listed in
as follows: through (4) as paragraphs (b)(3) through the first column by removing the
■ 1. By revising the first sentence and
(5) respectively. language in the ‘‘Remove’’ column and
■ 3. By adding a new paragraph (b)(2). adding in its place the language in the
removing the last sentence of paragraph ■ 4. By revising paragraph (g)(10).
(b)(1). ‘‘Add’’ column.
■ 5. By revising the heading and adding
two sentences after the first sentence in
paragraph (h).
Paragraph Remove Add
(a), second sentence .......................................... 10 percent ........................................................ 15 percent (10 percent in the case of disposi-
tions described in paragraph (b)(2) of this
section).
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newly designated (b)(4)(iii), first sentence ......... 10 percent ........................................................ 15 percent.
newly designated (b)(4)(iii), second sentence ... § 1.1445–1(b)(3)(iii) .......................................... paragraph (b)(4)(iii).
(c)(2)(i)(A), first sentence ................................... 10 percent ........................................................ 15 percent (10 percent in the case of disposi-
tions described in paragraph (b)(2) of this
section).
(c)(2)(i)(B), third sentence .................................. 10 percent ........................................................ 15 percent (10 percent in the case of disposi-
tions described in paragraph (b)(2) of this
section).
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![Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Rules and Regulations 8401
The additions and revisions read as (i) The property is acquired by the February 16, 2016. For dispositions on
follows: transferee for use by the transferee as a or before February 16, 2016, see
residence; paragraphs (a), (b)(1), (b)(3)(iii),
§ 1.1445–1 Withholding on dispositions of (ii) the amount realized for the (c)(2)(i)(A), and (c)(2)(i)(B) of this
U.S. real property interests by foreign property does not exceed $1,000,000;
persons: In general.
section as contained in 26 CFR part 1
and revised as of April 1, 2015.
* * * * * (iii) section 1445(b)(5) does not apply
■ Par. 5. Section 1.1445–2 is amended
(b) Duty to withhold—(1) In general. to the disposition. See § 1.1445–2(d)(1).
Except as provided in paragraph (b)(2) as follows:
* * * * *
and §§ 1.1445–2 and 1.1445–3, ■ 1. By revising the first sentence in the
(g) * * *
transferees of U.S. real property (10) Address for correspondence. Any undesignated paragraph following
interests are required to deduct and written communication to the Internal paragraph (b)(2)(i)(C).
withhold a tax equal to 15 percent of the Revenue Service described in this ■ 2. In paragraph (b)(4)(iv), by adding a
amount realized by the transferor if the section is to be mailed to the address sentence after the last sentence.
transferor is a foreign person.* * * specified in the Instructions for Form ■ 3. In paragraph (e), by revising the
(2) Reduced rate for certain 8288 under the heading ‘‘Where To heading and adding two sentences after
residences. Transferees of U.S. real File.’’ the first sentence.
property interests are required to deduct (h) Applicability dates. * * * The ■ 4. In each of the paragraphs listed in
and withhold a tax equal to 10 percent withholding rates set forth in the first colum by removing the
of the amount realized by the transferor paragraphs (a), (b)(1), (b)(2), (b)(4)(iii), language in the ‘‘Remove’’ column and
if the transferor is a foreign person and (c)(2)(i)(A), and (c)(2)(i)(B) of this adding in its place the language in the
the following requirements are satisfied: section apply to dispositions after ‘‘Add’’ column.
Paragraph Remove Add
(b)(4)(iv), second sentence ................................ 10 percent ........................................................ 15 percent.
(b)(4)(iv), third sentence ..................................... 10 percent ........................................................ 15 percent.
(b)(4)(iv), fourth sentence ................................... 10 percent ........................................................ 15 percent.
(c)(3)(iii), second sentence ................................. 10 percent ........................................................ 15 percent.
(c)(3)(iii), third sentence ..................................... 10 percent ........................................................ 15 percent.
(c)(3)(iii), fourth sentence ................................... 10 percent ........................................................ 15 percent.
(d)(2)(i)(B), first sentence ................................... provides a copy of the transferor’s notice to mails a copy of the transferor’s notice to the
the Director, Philadelphia Service Center. Internal Revenue Service.
(d)(3)(i)(A) introductory text, first sentence ........ 10 percent ........................................................ 15 percent (10 percent in the case of disposi-
tions described in § 1.1445–1(b)(2)).
(d)(3)(i)(B) introductory text, first sentence ........ 10 percent ........................................................ 15 percent (10 percent in the case of disposi-
tions described in § 1.1445–1(b)(2)).
The additions and revision read as of the interests of which are held by a (d)(3)(i) of this section apply to
follows: qualified foreign pension fund. * * * dispositions after February 16, 2016. For
(4) * * * dispositions on or before February 16,
§ 1.1445–2 Situations in which withholding (iv) * * * For dispositions described
is not required under section 1445(a). 2016, see paragraphs (b)(4)(iv),
in § 1.1445–1(b)(2), this paragraph shall (c)(3)(iii), and (d)(3)(i) of this section as
* * * * * be applied by replacing ‘‘15 percent’’ contained in 26 CFR part 1 revised as of
(b) * * * with ‘‘10 percent’’ each time it appears. April 1, 2015.
(2) * * * * * * * *
(i) * * * (e) Applicability dates. * * * The § 1.1445–3 [Amended]
(C) * * * exclusion of entities described in
In general, a foreign person is a section 897(l) from the definition of ■ Par. 6. Section 1.1445–3 is amended
nonresident alien individual, foreign foreign person in paragraph (b)(2)(i) of in each of the paragraphs listed in the
corporation, foreign partnership, foreign this section applies to dispositions and first column by removing the language
trust, or foreign estate, but not a distributions after December 18, 2015, in the ‘‘Remove’’ column and adding in
qualified foreign pension fund (as and the withholding rates set forth in its place the language in the ‘‘Add’’
defined in section 897(l)) or an entity all paragraphs (b)(4)(iv), (c)(3)(iii), and column.
Paragraph Remove Add
(b)(1), first sentence ........................................... to the Director, Philadelphia Service Center, to.
at.
(f)(1), first sentence ............................................ to the Director, Philadelphia Service Center, to.
at.
asabaliauskas on DSK5VPTVN1PROD with RULES
(f)(2)(iii), heading ................................................ by the Director, Philadelphia Service Center, on behalf of the Service.
(f)(2)(iii), first sentence ....................................... by the Director, Philadelphia Service Center on behalf of the Service.
or his delegate.
(g) introductory text, third sentence ................... addressed to the Director, Philadelphia Serv- delivered to.
ice Center, at.
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![8402 Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Rules and Regulations
§ 1.1445–4 [Amended] first column by removing the language its place the language in the ‘‘Add’’
■ Par. 7. Section 1.1445–4 is amended in the ‘‘Remove’’ column and adding in column.
in each of the paragraphs listed in the
Paragraph Remove Add
(c)(1), tenth sentence ......................................... from a foreign person must withhold a tax from a foreign person after February 16,
equal to 10 percent. 2016, must withhold a tax equal to 15 per-
cent (10 percent in the case of dispositions
described in § 1.1445–1(b)(2)).
(c)(1), thirteenth sentence .................................. 10 percent tax .................................................. 15 percent tax (10 percent tax in the case of
dispositions described in § 1.1445–1(b)(2)).
(c)(2), second sentence ..................................... to the Director, Philadelphia Service Center, to.
at.
■ Par. 8. Section 1.1445–5 is amended ■ 1. In each of the paragraphs listed in adding in its place the language in the
as follows: the first column, by removing the ‘‘Add’’ column.
language in the ‘‘Remove’’ column and
Paragraph Remove Add
(b)(2)(ii) introductory text, first sentence ............ to the Director, Philadelphia Service Center, to.
at.
(c)(3)(iv) introductory text, second sentence ...... 10 percent ........................................................ 15 percent.
(c)(3)(v), first sentence ....................................... with the Director, Philadelphia Service Center, at.
at.
(c)(3)(v), fifth sentence ....................................... with the Director, Philadelphia Service Center, at.
at.
(e)(1) introductory text, first sentence ................ 10 percent ........................................................ 15 percent.
■ 2. In paragraph (h), by revising the (h) Applicability dates. * * * The § 1.1445–6 [Amended]
heading and adding two sentences after withholding rates set forth in ■ Par. 9. Section 1.1445–6 is amended
the first sentence. paragraphs (c)(3)(iv) and (e)(1) of this
The revision and additions read as in each of the paragraphs listed in the
section apply to distributions after first column by removing the language
follows: February 16, 2016. For distributions on in the ‘‘Remove’’ column and adding in
§ 1.1445–5 Special rules concerning or before February 16, 2016, see its place the language in the ‘‘Add’’
distributions and other transactions by paragraphs (c)(3)(iv) and (e)(1) of this column.
corporations, partnerships, trusts, and section as contained in 26 CFR part 1
estates. revised as of April 1, 2015.
* * * * *
Paragraph Remove Add
(f)(1), first sentence ............................................ to the Director, Philadelphia Service Center, to.
at.
(f)(2)(iii), heading ................................................ by the Director, Philadelphia Service Center .. on behalf of the Service.
(f)(2)(iii), first sentence ....................................... by the Director, Philadelphia Service Center, on behalf of the Service.
or his delegate.
(g) introductory text, second sentence ............... addressed to the Director, Philadelphia Serv- delivered to.
ice Center, at.
§ 1.1445–11T [Amended] applicable to dispositions after February 16, DEPARTMENT OF THE TREASURY
■ Par. 10. Section 1.1445–11T is 2016.
amended in paragraph (d)(2)(iii) by 31 CFR Part 0
John Dalrymple,
adding footnote ‘‘1’’ after the last Deputy Commissioner for Services and
sentence to read as follows: Department of the Treasury Employee
Enforcement. Rules of Conduct
§ 1.1445–11T Special rules requiring Approved: February 12, 2016.
withholding under § 1.1445–5 (temporary). Mark J. Mazur, AGENCY: Department of the Treasury.
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* * * * * Assistant Secretary of the Treasury (Tax ACTION: Interim final rule.
(d) * * * Policy).
(2) * * * [FR Doc. 2016–03421 Filed 2–17–16; 4:15 pm]
(iii) * * * SUMMARY: The Department of the
1 Section 324(a) of the Protecting
BILLING CODE 4830–01–P Treasury (the ‘‘Department’’ or
Americans from Tax Hikes Act of 2015 (Pub.
‘‘Treasury’’) is updating its Employee
L. 114–113) increased the withholding rate Rules of Conduct, which prescribe
under section 1445(e)(5) to 15 percent, uniform rules of conduct and procedure
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Document Created: 2018-02-02 14:32:02
Document Modified: 2018-02-02 14:32:02
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final and temporary regulations. | |
| Dates | Effective date: These regulations are effective on February 19, 2016. | |
| Contact | Milton M. Cahn or David A. Levine, (202) 317-6937; concerning submissions of comments, Regina Johnson, (202) 317-6901 (not toll-free numbers). | |
| FR Citation | 81 FR 8398 | |
| RIN Number | 1545-BN22 | |
| CFR Associated | Income Taxes and Reporting and Recordkeeping Requirements |
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