82 FR 1645 - Revision of Regulations Under Chapter 3 Regarding Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 82, Issue 4 (January 6, 2017)

In the Rules and Regulations section of this issue of the Federal Register, the Department of the Treasury (Treasury Department) and the IRS are issuing temporary regulations (TD 9808) that revise certain provisions of the final regulations regarding withholding of tax on certain U.S. source income paid to foreign persons and requirements for certain claims for refund or credit of income tax made by foreign persons. The text of the temporary regulations also serves as the text of these proposed regulations.

[Federal Register Volume 82, Number 4 (Friday, January 6, 2017)]
[Proposed Rules]
[Pages 1645-1647]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-31589]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-134247-16]
RIN 1545-BN73


Revision of Regulations Under Chapter 3 Regarding Withholding of 
Tax on Certain U.S. Source Income Paid to Foreign Persons

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the Department of the Treasury (Treasury Department) 
and the IRS are issuing temporary regulations (TD 9808) that revise 
certain provisions of the final

[[Page 1646]]

regulations regarding withholding of tax on certain U.S. source income 
paid to foreign persons and requirements for certain claims for refund 
or credit of income tax made by foreign persons. The text of the 
temporary regulations also serves as the text of these proposed 
regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by April 6, 2017.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-134247-16), 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-
134247-16), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224, or sent electronically, via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-134247-16).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Leni Perkins, (202) 317-6942; concerning submissions of comments and/or 
requests for a public hearing, Regina Johnson, (202) 317-6901 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    The temporary regulations in the Rules and Regulations section of 
this issue of the Federal Register amend the Income Tax Regulations (26 
CFR part 1) relating to section 1441 of the Internal Revenue Code 
(Code). The temporary regulations set forth rules relating to 
withholding and reporting requirements under chapter 3 of the Code, 
including rules relating to claims for a reduced rate of withholding 
under an income tax treaty. The preamble to the temporary regulations 
explains the temporary regulations and these proposed regulations.

Special Analyses

    Certain IRS regulations, including these, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13653. Therefore, a regulatory assessment is not 
required.
    It is hereby certified that the collection of information in this 
notice of proposed rulemaking will not have a significant economic 
impact on a substantial number of small entities within the meaning of 
section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6).
    The domestic small business entities that are subject to the 
collections of information in this notice of proposed rulemaking are 
those domestic business entities that are payors of certain U.S. source 
income to foreign persons. These domestic small business entities are 
subject to comprehensive rules under chapter 3 to identify the proper 
treatment of payees for purposes of that chapter's information 
reporting and tax withholding purposes. The domestic small business 
entities subject to the collections of information in this notice of 
proposed rulemaking are also subject to comprehensive information 
reporting and tax withholding rules under chapters 4 and 61 with 
respect to payments of certain U.S. source income subject to 
information reporting and tax reporting under chapter 3. These payors 
are also subject to information and reporting rules under section 3406.
    Payors of payments that are subject to the information reporting 
and withholding regimes under chapter 3 play an important role in U.S. 
tax compliance by providing information about payments made to, and 
income earned by, U.S. and foreign taxpayers.
    Although the Treasury Department and the IRS anticipate that a 
substantial number of domestic small entities will be affected by the 
collection of information in this notice of proposed rulemaking, the 
Treasury Department and the IRS believe that the economic impact to 
these entities resulting from the information collection requirements 
will not be significant. The reporting obligations under these proposed 
regulations flow from the obligations that domestic small entities may 
have as withholding agents for payments of amounts subject to 
withholding under sections 1441 or 1442. As withholding agents, these 
entities have already been subject to the overall framework of these 
regulations, and the economic burden of complying with any additional 
requirements will be minimal. Therefore, a Regulatory Flexibility 
Analysis under the Regulatory Flexibility Act is not required. Pursuant 
to section 7805(f) of the Code, this regulation has been submitted to 
the Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small businesses.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments that are submitted 
timely to the IRS as prescribed in this preamble under the 
``ADDRESSES'' heading. The Treasury Department and the IRS request 
comments on all aspects of the proposed rules, including comments on 
the clarity of the proposed rules and how compliance therewith could be 
made easier. All comments will be available for public inspection and 
copying. A public hearing will be scheduled if requested in writing by 
any person that timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the public hearing 
will be published in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is Leni C. 
Perkins, Office of Associate Chief Counsel (International). However, 
other personnel from the Treasury Department and the IRS participated 
in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be 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 1.1441-1 is amended by:
0
1. Adding paragraphs (b)(7)(ii)(B) and (c)(2)(ii).
0
2. Revising paragraph (c)(3)(ii).
0
3. Adding paragraphs (c)(38)(ii), (e)(2)(ii)(B), (e)(3)(iv)(C)(3), 
(e)(4)(i)(B), (e)(4)(ii)(A)(2), (e)(4)(iv)(D), and (e)(4)(iv)(E).
    The revisions and additions read as follows:


Sec.  1.1441-1  Requirement for the deduction and withholding of tax on 
payments to foreign persons.

* * * * *
    (b) * * *
    (7) * * *
    (ii) * * *
    (B) [The text of the proposed amendment to Sec.  1.1441-
1(b)(7)(ii)(B) is the same as the text of Sec.  1.1441-1T(b)(7)(ii)(B) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (c) * * *
    (2) * * *
    (ii) [The text of the proposed amendment to Sec.  1.1441-
1(c)(2)(ii) is the same as the text of Sec.  1.1441-1T(c)(2)(ii) 
published elsewhere in this issue of the Federal Register.]

[[Page 1647]]

    (3) * * *
    (ii) [The text of the proposed amendment to Sec.  1.1441-
1(c)(3)(ii) is the same as the text of Sec.  1.1441-1T(c)(3)(ii) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (38) * * *
    (ii) [The text of the proposed amendment to Sec.  1.1441-
1(c)(38)(ii) is the same as the text of Sec.  1.1441-1T(c)(38)(ii) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (e) * * *
    (2) * * *
    (ii) * * *
    (B) [The text of the proposed amendment to Sec.  1.1441-
1(e)(2)(ii)(B) is the same as the text of Sec.  1.1441-1T(e)(2)(ii)(B) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (3) * * *
    (iv) * * *
    (C) * * *
    (3) [The text of the proposed amendment to Sec.  1.1441-
1(e)(3)(iv)(C)(3) is the same as the text of Sec.  1.1441-
1T(e)(3)(iv)(C)(3) published elsewhere in this issue of the Federal 
Register.]
* * * * *
    (4) * * *
    (i) * * *
    (B) [The text of the proposed amendment to Sec.  1.1441-
1(e)(4)(i)(B) is the same as the text of Sec.  1.1441-1T(e)(4)(i)(B) 
published elsewhere in this issue of the Federal Register.]
    (ii) * * *
    (A) * * *
    (2) [The text of the proposed amendment to Sec.  1.1441-
1(e)(4)(ii)(A)(2) is the same as the text of Sec.  1.1441-
1T(e)(4)(ii)(A) published elsewhere in this issue of the Federal 
Register.]
* * * * *
    (iv) * * *
    (D) [The text of the proposed amendment to Sec.  1.1441-
1(e)(4)(iv)(D) is the same as the text of Sec.  1.1441-1T(e)(4)(iv)(D) 
published elsewhere in this issue of the Federal Register.]
    (E) [The text of the proposed amendment to Sec.  1.1441-
1(e)(4)(iv)(E) is the same as the text of Sec.  1.1441-1(e)(4)(iv)(E) 
published elsewhere in this issue of the Federal Register.]
* * * * *
0
Par. 3. Section 1.1441-2 is amended by adding paragraph (a)(8) to read 
as follows:


Sec.  1.1441-2  Amounts subject to withholding.

    (a) * * *
    (8) [The text of the proposed amendment to Sec.  1.1441-2(a)(8) is 
the same as the text of Sec.  1.1441-2T(a)(8) published elsewhere in 
this issue of the Federal Register.]
* * * * *
0
Par. 4. Section 1.1441-6 is amended by:
0
1. Adding paragraphs (b)(1)(i) and (b)(1)(ii).
0
2. Revising paragraphs (c)(1) and (c)(5)(i).
    The additions and revision read as follows:


Sec.  1.1441-6   Claim of reduced withholding under an income tax 
treaty.

* * * * *
    (b) * * *
    (1) * * *
    (i) [The text of the proposed amendment to Sec.  1.1441-6(b)(1)(i) 
is the same as the text of Sec.  1.1441-6T(b)(1)(i) published elsewhere 
in this issue of the Federal Register.]
    (ii) [The text of the proposed amendment to Sec.  1.1441-
6(b)(1)(ii) is the same as the text of Sec.  1.1441-6T(b)(1)(ii) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (c) * * *
    (1) [The text of the proposed amendment to Sec.  1.1441-6(c)(1) is 
the same as the text of Sec.  1.1441-6T(c)(1) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    (5) * * *
    (i) [The text of the proposed amendment to Sec.  1.1441-6(c)(5)(i) 
is the same as the text of Sec.  1.1441-6T(c)(5)(i) published elsewhere 
in this issue of the Federal Register.]
* * * * *
0
Par. 5. Section 1.1441-7 is amended by adding paragraph (b)(10)(iv) to 
read as follows:


Sec.  1.1441-7   General provisions relating to withholding agents.

* * * * *
    (b) * * *
    (10) * * *
    (iv) [The text of the proposed amendment to Sec.  1.1441-
7(b)(10)(iv) is the same as the text of Sec.  1.1441-7T(b)(10)(iv) 
published elsewhere in this issue of the Federal Register.]
* * * * *

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-31589 Filed 12-30-16; 4:15 pm]
 BILLING CODE 4830-01-P