Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Proposed Rules 1105 

(8) Exception for small debt issues. 

Notwithstanding any other provision in 

this section, a debt instrument will not 

be treated as traded on an established 

market if the original stated principal 

amount of the issue that includes the 

debt instrument does not exceed US$50 

million (or, for debt denominated in a 

currency other than the U.S. dollar, the 

equivalent amount in the currency in 

which the debt is denominated). 

(9) Anti-abuse rules—(i) Effect of 

certain temporary restrictions on 

trading. If there is any temporary 

restriction on trading, a purpose of 

which is to avoid the characterization of 

the property as one that is traded on an 

established market for Federal income 

tax purposes, then the property is 

treated as traded on an established 

market. For purposes of the preceding 

sentence, a temporary restriction on 

trading need not be imposed by the 

issuer. 

(ii) Artificial pricing information. If a 

principal purpose for the existence of 

any sale or price quotation is to 

materially misrepresent the value of 

property, that sale or price quotation 

may be disregarded. 

(10) Convertible debt instruments. A 

debt instrument is not treated as traded 

on an established market solely because 

the debt instrument is convertible into 

property that is so traded. 

(11) Effective/applicability date. 

Paragraph (f) of this section applies to 

a debt instrument issued on or after the 

date of publication of the Treasury 

decision adopting these rules as final 

regulations in the Federal Register. 

* * * * * 

Par. 4. Section 1.1274–3 is amended 

by adding a new paragraph (b)(4) to read 

as follows: 

§ 1.1274–3 Potentially abusive situations 

defined. 

* * * * * 

(b) * * * 

(4) Debt-for-debt exchange—(i) Rule. 

A debt instrument issued in a debt-fordebt exchange, including a deemed 

exchange under § 1.1001–3, will not be 

treated as the subject of a recent sales 

transaction for purposes of section 

1274(b)(3)(B)(ii)(I) even if the debt 

instrument exchanged for the newly 

issued debt instrument was recently 

acquired prior to the exchange. 

Therefore, the issue price of the debt 

instrument will not be determined 

under section 1274(b)(3). However, if 

the debt instrument or the property for 

which the debt instrument is issued is 

publicly traded within the meaning of 

§ 1.1273–2(f), the rules of § 1.1273–2 

will apply to determine the issue price 

of the debt instrument. 

(ii) Effective/applicability date. 

Paragraph (b)(4)(i) of this section applies 

to a debt instrument issued on or after 

the date of publication of the Treasury 

decision adopting these rules as final 

regulations in the Federal Register. 

* * * * * 

Par. 5. Section 1.1275–2 is amended 

by revising paragraphs (k)(3)(ii)(A), 

(k)(3)(iii)(A) and (k)(5) and adding a 

new paragraph (k)(3)(v) to read as 

follows: 

§ 1.1275–2 Special rules relating to debt 

instruments. 

* * * * * 

(k) * * * 

(3) * * * 

(ii) * * * 

(A) The original debt instruments are 

publicly traded (within the meaning of 

§ 1.1273–2(f)) as of the reopening date of 

the additional debt instruments; 

* * * * * 

(iii) * * * 

(A) The original debt instruments are 

publicly traded (within the meaning of 

§ 1.1273–2(f)) as of the reopening date of 

the additional debt instruments; 

* * * * * 

(v) Non-publicly traded debt issued 

for cash. Notwithstanding paragraphs 

(k)(3)(ii)(A) and (k)(3)(iii)(A) of this 

section, a qualified reopening includes 

a reopening of original debt instruments 

if the additional debt instruments are 

issued for cash to persons unrelated to 

the issuer (as determined under section 

267(b) or 707(b)) for an arm’s length 

price and the other requirements in 

paragraph (k)(3)(ii) or (k)(3)(iii) of this 

section are satisfied, whichever is 

applicable. For purposes of paragraph 

(k)(3)(ii)(C) of this section, the yield test 

is satisfied if, on the reopening date of 

the additional debt instruments, the 

yield of the additional debt instruments 

(based on their cash purchase price) is 

not more than 110 percent of the yield 

of the original debt instruments on their 

issue date (or, if the original debt 

instruments were issued with no more 

than a de minimis amount of OID, the 

coupon rate). 

* * * * * 

(5) Effective/applicability dates—(i) 

Except as provided in paragraph 

(k)(5)(ii) of this section, this paragraph 

(k) applies to debt instruments that are 

part of a reopening where the reopening 

date is on or after March 13, 2001. 

(ii) Paragraph (k)(3)(v) of this section 

applies to debt instruments that are part 

of a reopening if the reopening date is 

on or after the date of publication of the 

Treasury decision adopting these rules 

as final regulations in the Federal 

Register. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2011–83 Filed 1–6–11; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 31 

[REG–146097–09] 

RIN 1545–BJ01 

Guidance on Reporting Interest Paid to 

Nonresident Aliens 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking; 

notice of public hearing; and 

withdrawal of previously proposed 

rulemaking. 

SUMMARY: This document contains 

proposed regulations that provide 

guidance on the reporting requirements 

for interest on deposits maintained at 

U.S. offices of certain financial 

institutions and paid to nonresident 

alien individuals. These proposed 

regulations affect persons making 

payments of interest with respect to 

such deposits. This document also 

provides a notice of public hearing on 

these proposed regulations and 

withdraws the notice of proposed 

rulemaking published on August 2, 

2002 (67 FR 50386). 

DATES: Written or electronic comments 

must be received by April 7, 2011. 

Outlines of topics to be discussed at the 

public hearing scheduled for April 28, 

2011, at 10 a.m. must be received by 

April 8, 2011. The proposed rule 

published on August 2, 2002 is 

withdrawn as of January 7, 2011. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–146097–09), room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to: CC:PA:LPD:PR (REG–146097–09), 

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–146097– 

09). The public hearing will be held in 

auditorium of the Internal Revenue 

Building, 1111 Constitution Avenue, 

NW., Washington, DC. 


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1106 Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Proposed Rules 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Kathryn Holman, (202) 622–3840; 

concerning submissions of comments, 

the hearing, and/or to be placed on the 

building access list to attend the 

hearing, 

Richard.A.Hurst@irscounsel.treas.gov, 

(202) 622–7180 (not toll free numbers). 

Paperwork Reduction Act 

The collections of information 

contained in this notice of proposed 

rulemaking have been submitted to the 

Office of Management and Budget for 

review in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)). Comments on the 

collections of information should be 

sent to the Office of Management and 

Budget, Attn: Desk Office for the 

Department of the Treasury, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503, with copies to 

the Internal Revenue Service, Attn: IRS 

Reports Clearance Officer, 

SE:W:CAR:MP:T:T:SP, Washington, DC 

20224. Comments on the collection of 

information should be received by 

March 8, 2011. Comments are 

specifically requested concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Internal Revenue Service, including 

whether the information will have 

practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information; 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collections of information 

may be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology; and 

Estimates of capital or start-up costs 

and costs of operation, maintenance and 

purchase of service to provide 

information. 

The collection of information in these 

proposed regulations is in § 1.6049– 

4(b)(5)(i) and § 1.6049–6(e)(4)(i) and (ii). 

This information is required to 

determine if taxpayers have properly 

reported amounts received as income. 

The collection of information is 

mandatory. The likely respondents are 

businesses and other for-profit 

institutions. 

Estimated total annual reporting 

burden: 500 hours. 

The estimated annual burden per 

respondent: 15 minutes. 

Estimated number of respondents: 

2,000. 

Estimated annual frequency of 

responses: Annually. 

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 may 

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. 

SUPPLEMENTARY INFORMATION: 

Background and Explanation of 

Provisions 

On January 17, 2001, the IRS and 

Treasury Department published a notice 

of proposed rulemaking (REG 126100– 

00) in the Federal Register (66 FR 3925, 

corrected by 66 FR 15820 and 66 FR 

16019) under Section 6049 (the 2001 

proposed regulations), which would 

provide that U.S. bank deposit interest 

paid to any nonresident alien individual 

must be reported annually to the IRS. 

On August 2, 2002, the Treasury 

Department and the IRS published a 

notice of proposed rulemaking (REG– 

133254–02) in the Federal Register (67 

FR 50386) which withdrew these 

regulations and proposed narrower 

regulations (the 2002 regulations) that 

would require reporting only on interest 

payments to nonresident alien 

individuals that are residents of certain 

designated countries or, at the option of 

the payor, on interest payments to all 

nonresident alien recipients of bank 

deposit interest. Under the 2002 

regulations currently in effect, reporting 

of U.S. bank deposit interest is required 

only if the interest is paid to a U.S. 

person or a nonresident alien individual 

who is a resident of Canada. These 

proposed regulations withdraw the 2002 

regulations and provide new proposed 

regulations that extend the information 

reporting requirement to include bank 

deposit interest paid to nonresident 

alien individuals who are residents of 

any foreign country. 

This extension is appropriate for 

several reasons. First, since the 2002 

proposed regulations were released, 

there is a growing global consensus 

regarding the importance of cooperative 

information exchange for tax purposes 

that has developed. Significant 

agreements have been reached on 

international standards for the exchange 

of information, including, for example, 

the understanding that information 

exchange will not be limited by bank 

secrecy or the absence of a domestic tax 

interest. Second, requiring routine 

reporting to the IRS of all U.S. bank 

deposit interest paid to any nonresident 

alien individual will further strengthen 

the United States exchange of 

information program, consistent with 

adequate provisions for reciprocity, 

usability, and confidentiality in respect 

of this information. Finally, this 

extension will help to improve 

voluntary compliance by U.S. taxpayers 

by making it more difficult to avoid the 

U.S. information reporting system (such 

as through false claims of foreign 

status). 

In addition to requiring reporting of 

U.S. bank deposit interest paid to any 

nonresident alien individual, the 

proposed regulations also make the 

following minor changes and 

clarifications. Section 1.6049–6 

provides that a copy of Form 1042–S, 

‘‘Foreign Person’s U.S. Source Income 

Subject to Withholding’’, must be 

furnished to the recipient for interest 

paid on deposits maintained at a bank’s 

office within the United States. Section 

1.6049–6(e)(4) has been revised to 

clarify that the payor or middleman can 

satisfy this requirement by furnishing a 

copy of Form 1042–S either in person or 

to the last known address of the 

recipient. 

Proposed Effective Date 

These regulations are proposed to 

apply to payments made after December 

31 of the year in which they are 

published as final regulations in the 

Federal Register. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore a 

regulatory assessment is not required. It 

has also been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to this regulation. 

These regulations impose a collection 

of information on small entities, and the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) applies. This rule regulates 

commercial banks, savings institutions, 

credit unions, and securities brokerages. 

The Small Business Administration 

(SBA) has established size standards for 

types of economic activities which are 

classified based on the North American 

Industry Classification Codes (NAICS). 

The regulations specifying size 

standards are set forth in Title 13, Code 

of Federal Regulations, part 121 (13 CFR 

part 121), Small Business Size 

Regulations. The NAICS Code for small 

commercial banks, savings institutions, 

credit unions, and securities brokerages 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Proposed Rules 1107 

is specified at 13 CFR 121.201. Pursuant 

to subsectors 522110, 522120, and 

522130 of NAICS 2007, a small 

commercial bank, savings institution, or 

credit union is one with $175 million or 

less in assets. Pursuant to subsector 

523120 of NAICS 2007, a small 

securities brokerage is one with receipts 

of less than $7 million. Because this rule 

will affect all institutions that maintain 

accounts for nonresident alien 

individuals, this rule may affect a 

substantial number of small entities. 

The U.S. Census Bureau American 

FactFinder provides data based on the 

2007 Economic Census released 

November 24, 2009 including the 

number of establishments and the 

annual revenue of the establishments 

within each NAICS Code. According to 

this data, for Sector 52: ECO752I1: 

Finance and Insurance Industry Series, 

there were 94,192 commercial banking 

establishments with revenue of 

approximately $609,748,098,000, 16,098 

savings institutions with revenue of 

approximately $91,626,050,000, 17,984 

credit unions with revenue of 

approximately $55,521,199,000, and 

30,989 NAICS Code securities 

brokerages with revenue of 

approximately $167,337,807,000. It is 

estimated that approximately 25,000 

commercial banks, 4,000 savings banks, 

and 4,000 credit unions with less than 

$175,000,000 in assets, and 15,000 

securities brokerages with receipts of 

less than $7,000,000 that would be 

classified as small businesses. 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act, 5 U.S.C. 

Section 605, the Chief Counsel certifies 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. This 

conclusion is based on all of the 

following. The depository accounts, the 

interest on which is subject to reporting 

under these regulations, tend to be with 

larger financial institutions operating in 

the United States, and therefore the 

number of small entities that will be 

required to undertake this collection of 

information is expected to be limited. 

Banks are already required to gather the 

underlying information from 

nonresident aliens on Form W–8, so 

there will be no change in the collection 

of information. Currently under the 

2002 regulations, banks, including small 

financial institutions, are required to 

report this information to the IRS with 

respect to Canadian account holders. 

This rule would simply extend the 

reporting requirement to all nonresident 

aliens. The reporting required by this 

rule would be done on Form 1042 and 

Form 1042–S. This rule also requires 

that institutions prepare and deliver a 

statement to nonresident alien 

individuals to the effect that the 

information on the 1042 form is being 

furnished to the IRS and may be 

furnished to the government of the 

foreign country where the recipient 

resides. The amount of time required to 

complete the Form 1042 and Form 

1042–S is brief, and the statement that 

is required to be collected is brief. 

The IRS requests information 

regarding the economic impact of this 

rule on small commercial banks, savings 

institutions, credit unions, and small 

securities brokerages engaged in 

business involving payment of bank 

deposit interest to a nonresident alien. 

The IRS invites specific comments on 

the economic impact of compliance 

from members of the public who believe 

there will be a significant economic 

impact on small businesses that are 

regulated by this rule. Pursuant to 

section 7805(f) of the Internal Revenue 

Code, this regulation has been 

submitted to the Chief Counsel of 

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 (a signed original and 

eight (8) copies) or electronic comments 

that are submitted timely to the IRS. The 

IRS and Treasury Department request 

comments on the clarity of the proposed 

rules and how they can be made easier 

to understand. All comments will be 

available for public inspection and 

copying. 

A public hearing has been scheduled 

for April 28, 2011, beginning at 10 a.m. 

in the auditorium of the Internal 

Revenue Building, 1111 Constitution 

Avenue, NW., Washington, DC. Due to 

building security procedures, visitors 

must enter at the Constitution Avenue 

entrance. In addition, all visitors must 

present photo identification to enter the 

building. Because of access restrictions, 

visitors will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. For 

information about having your name 

placed on the building access list to 

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT section of this 

preamble. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit electronic or written 

comments and an outline of the topics 

to be discussed and the time to be 

devoted to each topic (signed original 

and eight (8) copies) by April 8, 2011. 

A period of 10 minutes will be allotted 

to each person for making comments. 

An agenda showing the scheduling of 

the speakers will be prepared after the 

deadline for receiving outlines has 

passed. Copies of the agenda will be 

available free of charge at the hearing. 

Drafting Information 

The principal author of the 

regulations is Kathryn Holman, Office of 

Associate Chief Counsel (International). 

However, other personnel from the IRS 

and Treasury Department participated 

in their development. 

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 31 

Employment taxes, Income taxes, 

Penalties, Pensions, Railroad retirement, 

Reporting and recordkeeping 

requirements, Social Security, 

Unemployment compensation. 

Withdrawal of Proposed Amendments 

Accordingly, under the authority of 

26 U.S.C. 7805, the proposed 

amendment to 26 CFR parts 1 and 31 

that was published in the Federal 

Register on Friday, August 2, 2002 (67 

FR 50386) is withdrawn. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR parts 1 and 31 

are proposed to be amended as follows: 

PART 1—INCOME TAXES 

Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 2. In § 1.6049–4, paragraph (b)(5) 

is revised to read as follows: 

§ 1.6049–4 Return of information as to 

interest paid and original issue discount 

includible in gross income after December 

31, 1982. 

* * * * * 

(b) * * * 

(5) Interest payments to nonresident 

alien individuals—(i) General rule. In 

the case of interest aggregating $10 or 

more paid to a nonresident alien 

individual (as defined in section 

7701(b)(1)(B)) that is reportable under 

§ 1.6049–8(a), the payor shall make an 

information return on Form 1042–S, 

‘‘Foreign Person’s U.S. Source Income 

Subject to Withholding’’, for the 

calendar year in which the interest is 

paid. The payor or middleman shall 

prepare and file Form 1042–S at the 


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1108 Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Proposed Rules 

time and in the manner prescribed by 

section 1461 and the regulations under 

that section and by the form and its 

accompanying instructions. See 

§§ 1.1461–1(b) (rules regarding the 

preparation of a Form 1042) and 

1.6049–6(e)(4) (rules for furnishing a 

copy of the Form 1042–S to the payee). 

To determine whether an information 

return is required for original issue 

discount, see §§ 1.6049–5(f) and 1.6049– 

8(a). The Commissioner may by ruling 

or other administrative pronouncement 

prescribe rules pursuant to a treaty or 

executive agreement for uniform 

formatting, standards for sharing 

information, and for usability, 

reciprocity, and confidentiality of 

taxpayer information. 

(ii) Effective/applicability date. 

Paragraph (b)(5)(i) of this section shall 

be effective for payments made after 

December 31 of the year in which the 

final regulations are published in the 

Federal Register. (For interest paid to a 

Canadian nonresident alien individual 

on or before December 31 of the year in 

which final regulations are published in 

the Federal Register, see paragraph 

(b)(5) of this section as in effect and 

contained in 26 CFR part 1 revised April 

1, 2000.) 

* * * * * 

Par. 3. Section 1.6049–5 is amended 

as follows: 

1. In paragraph (b)(12) the last 

sentence is revised. 

2. In paragraph (f) the last sentence is 

revised. 

The revisions read as follows: 

§ 1.6049–5 Interest and original issue 

discount subject to reporting after 

December 31, 1982. 

* * * * * 

(b) * * * 

(12) * * * This paragraph (b)(12) 

does not apply to interest paid after 

December 31 of the year in which the 

final regulations are published in the 

Federal Register to a nonresident alien 

individual as provided in § 1.6049–8. 

* * * * * 

(f) * * * Original issue discount on 

an obligation (including an obligation 

with a maturity of not more than 6 

months from the date of original issue) 

held by a nonresident alien individual 

or foreign corporation is interest 

described in paragraph (b)(1)(vi)(A) or 

(B) of this section and, therefore is not 

interest subject to reporting under 

section 6049 unless it is described in 

§ 1.6049–8(a) (relating to bank deposit 

interest paid after December 31 of the 

year in which the final regulations are 

published in the Federal Register to a 

nonresident alien individual). 

* * * * * 

Par. 4. Section 1.6049–6 is amended 

as follows: 

1. Paragraph (e)(4) is revised. 

2. In paragraph (e)(5), the first 

sentence is revised and a new sentence 

is added at the end of the paragraph. 

The additions and revisions read as 

follows: 

§ 1.6049–6 Statements to recipients of 

interest payments and holders of 

obligations for attributed original issue 

discount. 

* * * * * 

(e) * * * 

(4) Special rule for amounts described 

in § 1.6049–8(a). In the case of amounts 

described in § 1.6049–8(a) (relating to 

payments of deposit interest to 

nonresident alien individuals) paid after 

December 31 of the year in which the 

final regulations are published in the 

Federal Register, any person who makes 

a Form 1042–S, ‘‘Foreign Person’s U.S. 

Source Income Subject to Withholding’’, 

under section 6049(a) and § 1.6049– 

4(b)(5) shall furnish a statement to the 

recipient either in person or by first 

class mail to the recipient’s last known 

address. The statement shall include a 

copy of the Form 1042–S required to be 

prepared pursuant to § 1.6049–4(b)(5) 

and a statement to the effect that the 

information on the form is being 

furnished to the United States Internal 

Revenue Service and may be furnished 

to the government of the foreign country 

where the recipient resides. 

(5) Effective/applicability date. 

Paragraph (e)(4) of this section applies 

to payee statements reporting payments 

of deposit interest to nonresident alien 

individuals paid after December 31 of 

the year in which the final regulations 

are published in the Federal Register. 

* * * (For interest paid to a Canadian 

nonresident alien individual on or 

before December 31 of the year in which 

final regulations are published in the 

Federal Register, see paragraph (e)(4) of 

this section as in effect and contained in 

26 CFR part 1 revised April 1, 2000.) 

Par. 5. In § 1.6049–8 the section 

heading and paragraph (a) are revised to 

read as follows: 

§ 1.6049–8 Interest and original issue 

discount paid to nonresidents. 

(a) Interest subject to reporting 

requirement. For purposes of §§ 1.6049– 

4, 1.6049–6, and this section and except 

as provided in paragraph (b) of this 

section, the term interest means interest 

paid to a nonresident alien individual 

after December 31 of the year in which 

the final regulations are published in 

the Federal Register, where the interest 

is described in section 871(i)(2)(A) with 

respect to a deposit maintained at an 

office within the United States. For 

purposes of the regulations under 

section 6049, a nonresident alien 

individual is a person described in 

section 7701(b)(1)(B). The payor or 

middleman may rely upon a valid Form 

W–8BEN, ‘‘Beneficial Owners Certificate 

of Foreign Status for U.S. Tax 

Withholding’’ to determine whether the 

payment is made to a nonresident alien 

individual. Generally, amounts 

described in this paragraph (a) are not 

subject to backup withholding under 

section 3406. See § 31.3406(g)–1(d) of 

this chapter. However, if the payor or 

middleman does not have either a valid 

Form W–8BEN or valid Form W–9, 

‘‘Request for Taxpayer Identification 

Number and Certification’’, the payor or 

middleman must report the payment as 

made to a U.S. non-exempt recipient if 

it must so treat the payee under the 

presumption rules of § 1.6049–5(d)(2) 

and § 1.1441–1(b)(3)(iii) and must also 

backup withhold under section 3406. 

(For interest paid to a Canadian 

nonresident alien individual on or 

before December 31 of the year in which 

final regulations are published in the 

Federal Register, see paragraph (a) of 

this section as in effect and contained in 

26 CFR part 1 revised April 1, 2000.) 

* * * * * 

PART 31—EMPLOYMENT TAXES AND 

COLLECTION OF INCOME TAX AT THE 

SOURCE 

Par. 6. The authority citation for part 

31 continues to read in part as follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 7. In § 31.3406(g)–1, paragraph 

(d) is revised to read as follows: 

§ 31.3406(g)–1 Exceptions for payments to 

certain payees and certain other payments. 

* * * * * 

(d) Reportable payments made to 

nonresident alien individuals. A 

payment of interest that is reported on 

Form 1042–S, ‘‘Foreign Person’s U.S. 

Source Income Subject to Withholding,’’ 

as paid to a nonresident alien individual 

under § 1.6049–8(a) of this chapter is 

not subject to withholding under section 

3406. (For interest paid to a Canadian 

nonresident alien individual on or 

before December 31 of the year in which 

final regulations are published in the 

Federal Register, see paragraph (d) of 

this section as in effect and contained in 

26 CFR part 1 revised April 1, 2000.) 

* * * * * 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2011–82 Filed 1–6–11; 8:45 am] 

BILLING CODE 4830–01–P 


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