Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23391 

Directorate, Regulations and Policy Group, 

2601 Meacham Blvd., Fort Worth, Texas 

76137, telephone (817) 222 5110, email 

sharon.y.miles@faa.gov. 

(2) For operations conducted under a Part 

119 operating certificate or under Part 91, 

Subpart K, we suggest that you notify your 

principal inspector, or lacking a principal 

inspector, the manager of the local flight 

standards district office or certificate holding 

district office, before operating any aircraft 

complying with this AD through an AMOC. 

(h) Additional Information 

(1) Bell Helicopter Alert Service Bulletin 

(ASB) No. 206L–09–159 Revision A, dated 

November 13, 2009, which is not 

incorporated by reference, contains 

additional information about the subject of 

this AD. For this service information, contact 

Bell Helicopter Textron Canada Limited, 

12,800 Rue de l’Avenir, Mirabel, Quebec 

J7J1R4, telephone (450) 437–2862 or (800) 

363–8023, fax (450) 433–0272, or at http:// 

www.bellcustomer.com/files/. You may 

review a copy of this service information at 

the FAA, Office of the Regional Counsel, 

Southwest Region, 2601 Meacham Blvd., 

Room 663, Fort Worth, Texas 76137. 

(2) The subject of this AD is addressed in 

Transport Canada Civil Aviation AD No. CF– 

2011–44R1, dated February 1, 2012. 

(i) Subject 

Joint Aircraft Service Component (JASC) 

Code: 6210, Main rotor blades. 

Issued in Fort Worth, Texas, on April 3, 

2012. 

Kim Smith, 

Manager, Rotorcraft Directorate, Aircraft 

Certification Service. 

[FR Doc. 2012–9314 Filed 4–18–12; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 31 

[TD 9584] 

RIN 1545–BJ01 

Guidance on Reporting Interest Paid to 

Nonresident Aliens 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations regarding the reporting 

requirements for interest that relates to 

deposits maintained at U.S. offices of 

certain financial institutions and is paid 

to certain nonresident alien individuals. 

These regulations will affect commercial 

banks, savings institutions, credit 

unions, securities brokerages, and 

insurance companies that pay interest 

on deposits. 

DATES: Effective Date: These regulations 

are effective April 19, 2012. 

Applicability Date: These regulations 

apply to payments of interest made on 

or after January 1, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Kathryn Holman, (202) 622–3840 (not a 

toll free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these final regulations has 

been reviewed and approved by the 

Office of Management and Budget for 

review in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)) under control number 

1545–1725. 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). The 

collection of information is mandatory 

and the respondents are commercial 

banks, savings institutions, credit 

unions, securities brokerages, and 

insurance companies that maintain 

deposit accounts for nonresident alien 

individuals. 

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. Information 

collected under these regulations will be 

return information as defined in 26 

U.S.C. 6103. Tax returns and return 

information are confidential as required 

by 26 U.S.C. 6103. 

Background 

On January 7, 2011, the Treasury 

Department and the IRS published a 

notice of proposed rulemaking (REG 

146097–09) (the 2011 proposed 

regulations) in the Federal Register (76 

FR 1105, corrected by 76 FR 2852, 76 FR 

20595, and 76 FR 22064) under section 

6049 of the Internal Revenue Code 

(Code). The 2011 proposed regulations 

withdrew proposed regulations that had 

been issued on August 2, 2002 (67 FR 

50386) (the 2002 proposed regulations). 

The 2002 proposed regulations would 

have required reporting of interest 

payments to nonresident alien 

individuals that are residents of certain 

specified countries. The 2011 proposed 

regulations provide that payments of 

interest aggregating $10 or more on a 

deposit maintained at a U.S. office of a 

financial institution and paid to any 

nonresident alien individual are subject 

to information reporting. 

Written comments were received by 

the Treasury Department and the IRS in 

response to the 2011 proposed 

regulations. A public hearing on the 

2011 proposed regulations was held on 

May 18, 2011, at which further 

comments were received. All comments 

were considered and are available for 

public inspection at http:// 

www.regulations.gov or upon request. 

After consideration of the written 

comments and the comments provided 

at the public hearing, the 2011 proposed 

regulations are adopted as revised by 

this Treasury decision. 

Explanation and Summary of 

Comments 

Objectives of This Regulatory Action 

The reporting required by these 

regulations is essential to the U.S. 

Government’s efforts to combat offshore 

tax evasion for several reasons. First, it 

ensures that the IRS can, in appropriate 

circumstances, exchange information 

relating to tax enforcement with other 

jurisdictions. In order to ensure that 

U.S. taxpayers cannot evade U.S. tax by 

hiding income and assets offshore, the 

United States must be able to obtain 

information from other countries 

regarding income earned and assets held 

in those countries by U.S. taxpayers. 

Under present law, the measures 

available to assist the United States in 

obtaining this information include both 

treaty relationships and statutory 

provisions. The effectiveness of these 

measures depends significantly, 

however, on the United States’ ability to 

reciprocate. 

The United States has constructed an 

expansive network of international 

agreements, including income tax or 

other conventions and bilateral 

agreements relating to the exchange of 

tax information (collectively referred to 

as information exchange agreements), 

which provide for the exchange of 

information related to tax enforcement 

under appropriate circumstances. These 

information exchange relationships are 

based on cooperation and reciprocity. A 

jurisdiction’s willingness to share 

information with the IRS to combat 

offshore tax evasion by U.S. taxpayers 

depends, in large part, on the ability of 

the IRS to exchange information that 

will assist that jurisdiction in combating 

offshore tax evasion by its own 

residents. These regulations, by 

requiring reporting of deposit interest to 

the IRS, will ensure that the IRS is in 

a position to exchange such information 

reciprocally with a treaty partner when 

it is appropriate to do so. 


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Second, in 2010, Congress 

supplemented the established network 

of information exchange agreements by 

enacting, as part of the Hiring Incentives 

to Restore Employment Act of 2010 

(Pub. L. 111–147), provisions commonly 

known as the Foreign Account Tax 

Compliance Act (FATCA) that require 

overseas financial institutions to 

identify U.S. accounts and report 

information (including interest 

payments) about those accounts to the 

IRS. In many cases, however, the 

implementation of FATCA will require 

the cooperation of foreign governments 

in order to overcome legal impediments 

to reporting by their resident financial 

institutions. Like the United States, 

those foreign governments are keenly 

interested in addressing offshore tax 

evasion by their own residents and need 

tax information from other jurisdictions, 

including the United States, to support 

their efforts. These regulations will 

facilitate intergovernmental cooperation 

on FATCA implementation by better 

enabling the IRS, in appropriate 

circumstances, to reciprocate by 

exchanging information with foreign 

governments for tax administration 

purposes. 

Finally, the reporting of information 

required by these regulations will also 

directly enhance U.S. tax compliance by 

making it more difficult for U.S. 

taxpayers with U.S. deposits to falsely 

claim to be nonresidents in order to 

avoid U.S. taxation on their deposit 

interest income. 

International Standard for 

Transparency and Information 

Exchange 

Under the international standard for 

transparency and exchange of 

information, which is reflected in the 

Organisation for Economic Cooperation 

and Development (OECD) Model 

Agreement on Exchange of Information 

on Tax Matters, the OECD Model Tax 

Convention, and the United Nations 

Model Double Tax Convention between 

Developed and Developing Countries, 

exchange of tax information cannot be 

limited by domestic bank secrecy laws 

or the absence of a specific domestic tax 

interest in the information to be 

exchanged. Accordingly, under this 

global standard a country cannot refuse 

to share tax information based on 

domestic laws that do not require banks 

to share the information. In addition, 

under the global standard, a country 

cannot opt out of information exchange 

based on the fact that the country does 

not itself need the information to 

enforce its own tax rules. Thus, even 

countries that do not impose income 

taxes, and therefore do not have tax 

enforcement concerns, have entered into 

information exchange agreements to 

provide information about the accounts 

of nonresidents. 

Comments Regarding Confidentiality 

and Improper Use of Information 

Some comments on the 2011 

proposed regulations expressed 

concerns that the information required 

to be reported under those regulations 

might be misused. For example, 

comments expressed concern that 

deposit interest information may be 

shared with a country that does not 

have laws in place to protect the 

confidentiality of the information 

exchanged or that would use the 

information for purposes other than the 

enforcement of its tax laws. These 

comments further suggested that these 

concerns could affect nonresident alien 

investors’ decisions about the location 

of their deposits. 

The Treasury Department and the IRS 

believe that the concerns raised by the 

comments are addressed by existing 

legal limitations and administrative 

safeguards governing tax information 

exchange. As discussed herein, 

information reported pursuant to these 

regulations will be exchanged only with 

foreign governments with which the 

United States has an agreement 

providing for the exchange and when 

certain additional requirements are 

satisfied. Even when such an agreement 

exists, the IRS is not compelled to 

exchange information, including 

information collected pursuant to these 

regulations, if there is concern regarding 

the use of the information or other 

factors exist that would make exchange 

inappropriate. 

First, information reported pursuant 

to these regulations is return 

information under section 6103. Section 

6103 imposes strict confidentiality rules 

with respect to all return information. 

Moreover, section 6103(k)(4) allows the 

IRS to exchange return information with 

a foreign government only to the extent 

provided in, and subject to the terms 

and conditions of an information 

exchange agreement. Thus, the IRS can 

share the information reported under 

these regulations only with foreign 

governments with which the United 

States has an information exchange 

agreement. Absent such an agreement, 

the IRS is statutorily barred from 

sharing return information with another 

country, and these regulations cannot 

and do not change that rule. 

Second, consistent with established 

international standards, all of the 

information exchange agreements to 

which the United States is a party 

require that the information exchanged 

under the agreement be treated and 

protected as secret by the foreign 

government. In addition, information 

exchange agreements generally prohibit 

foreign governments from using any 

information exchanged under such an 

agreement for any purpose other than 

the purpose of administering, collecting, 

and enforcing the taxes covered by the 

agreement. Accordingly, under these 

agreements, neither country is permitted 

to release the information shared under 

the agreement or use it for any other law 

enforcement purposes. 

Third, consistent with the 

international standard for information 

exchange and United States law, the 

United States will not enter into an 

information exchange agreement unless 

the Treasury Department and the IRS 

are satisfied that the foreign government 

has strict confidentiality protections. 

Specifically, prior to entering into an 

information exchange agreement with 

another jurisdiction, the Treasury 

Department and the IRS closely review 

the foreign jurisdiction’s legal 

framework for maintaining the 

confidentiality of taxpayer information. 

In order to conclude an information 

exchange agreement with another 

country, the Treasury Department and 

the IRS must be satisfied that the foreign 

jurisdiction has the necessary legal 

safeguards in place to protect exchanged 

information and that adequate penalties 

apply to any breach of that 

confidentiality. 

Finally, even if an information 

exchange agreement is in effect, the IRS 

will not exchange information on 

deposit interest or otherwise with a 

country if the IRS determines that the 

country is not complying with its 

obligations under the agreement to 

protect the confidentiality of 

information and to use the information 

solely for collecting and enforcing taxes 

covered by the agreement. The IRS also 

will not exchange any return 

information with a country that does not 

impose tax on the income being 

reported because the information could 

not be used for the enforcement of tax 

laws within that country. 

In addition, the IRS has options 

regarding the appropriate form of 

exchange. For example, the IRS might 

exchange information with another 

jurisdiction only upon specific request. 

In the case of specific exchange 

requests, the IRS evaluates the 

requesting country’s current practices 

with respect to information 

confidentiality. The IRS also requires 

the requesting country to explain the 

intended permitted use of the 

information and justify the relevance of 

that information to the permitted use. 


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Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23393 

Alternatively, in appropriate 

circumstances, the IRS might exchange 

certain information on an automatic 

basis. The IRS currently exchanges 

deposit interest information on an 

automatic basis with only one 

jurisdiction (Canada). The IRS will not 

enter into a new automatic exchange 

relationship with a jurisdiction unless it 

has reviewed the country’s policies and 

practices and has determined that such 

an exchange relationship is appropriate. 

Further, the IRS generally will not enter 

into an automatic exchange relationship 

with respect to the information 

collected under these regulations unless 

the other jurisdiction is willing and able 

to reciprocate effectively. 

The Treasury Department and the IRS 

believe that the legal and administrative 

safeguards described in the preceding 

paragraphs regarding the use of 

information collected under these 

regulations should adequately address 

the concerns identified by the 

comments and, therefore, these 

regulations should not significantly 

impact the investment and savings 

decisions of the vast majority of 

nonresidents who are aware of and 

understand these safeguards and 

existing law and practice. Nevertheless, 

to enhance awareness and further 

address concerns, these final regulations 

revise the 2011 proposed regulations to 

require reporting only in the case of 

interest paid to a nonresident alien 

individual resident in a country with 

which the United States has in effect an 

information exchange agreement 

pursuant to which the United States 

agrees to provide, as well as receive, 

information and under which the 

competent authority is the Secretary of 

the Treasury or his delegate. 

For this purpose, the Treasury 

Department and the IRS will publish a 

Revenue Procedure contemporaneously 

with these final regulations specifically 

identifying the countries with which the 

United States has in force such an 

information exchange agreement. The 

Revenue Procedure will be updated as 

appropriate. With respect to any 

calendar year, payors will only be 

required to report interest on deposits 

maintained at an office within the 

United States and paid to a nonresident 

alien individual who is a resident of a 

country identified in the Revenue 

Procedure as of December 31 of the 

prior calendar year as being a country 

with which the United States has in 

effect such an information exchange 

agreement. To address any potential 

burden associated with reporting on this 

basis, the final regulations provide that 

for any year for which the information 

return under § 1.6049–4(b)(5) is 

required, a payor may elect to report 

interest payments to all nonresident 

alien individuals. 

As previously discussed, the 

identification of a country as having an 

information exchange agreement with 

the United States does not necessarily 

mean that the information collected 

under these regulations will be reported 

to such foreign jurisdiction. As an 

additional measure to further increase 

awareness among concerned 

nonresidents regarding the IRS’ use of 

information collected under these 

regulations, the Revenue Procedure also 

will include a second list identifying the 

countries with which the Treasury 

Department and the IRS have 

determined that it is appropriate to have 

an automatic exchange relationship 

with respect to the information 

collected under these regulations. This 

determination will be made only after 

further assessment of a country’s 

confidentiality laws and practices and 

the extent to which the country is 

willing and able to reciprocate. 

In addition, in response to comments, 

and given the information exchange 

practices described in the preceding 

paragraphs and the information that will 

be available in the Revenue Procedure, 

these final regulations eliminate the 

requirement in the 2011 proposed 

regulations for financial institutions to 

include in the information statement 

provided to nonresident alien 

individuals a statement informing the 

individual that the information may be 

furnished to the government of the 

country where the recipient resides. In 

addition, these final regulations clarify 

that a payor or middleman may rely on 

the permanent residence address 

provided on a valid Form W–8BEN, 

‘‘Beneficial Owners Certificate of 

Foreign Status for U.S. Tax 

Withholding’’, for purposes of 

determining the country of residence of 

a nonresident alien to whom reportable 

interest is paid unless the payor or 

middleman knows or has reason to 

know that such documentation of the 

country of residence is unreliable or 

incorrect. The final regulations also 

modify § 31.3406(g)–1 of the proposed 

regulations to clarify that, consistent 

with the backup withholding rules 

generally, a payment of interest 

described in § 1.6049–8(a) is not subject 

to withholding under section 3406 if the 

payor may treat the payee as a foreign 

person, without regard to whether the 

payor reported such interest (although a 

payor may be subject to penalties if it 

fails to report as required). As under the 

prior regulations requiring the reporting 

of interest paid to Canadian nonresident alien individuals, the final 

regulations define interest subject to 

reporting to mean interest paid on 

deposits as defined under section 

871(i)(2)(A) (including deposits with 

persons carrying on a banking business, 

deposits with certain savings 

institutions, and certain amounts held 

by insurance companies under 

agreements to pay interest thereon). 

Comments Regarding Authority and 

Congressional Intent 

Some comments expressed the view 

that the Treasury Department and the 

IRS lack the authority to require the 

reporting required under the 2011 

proposed regulations, or that the 2011 

proposed regulations are contrary to 

Congressional intent. The relevant 

statutory provisions expressly 

contemplate that the Treasury 

Department and the IRS have authority 

to require reporting on deposit interest 

paid to nonresidents. Section 6049(a) 

provides generally for reporting with 

respect to interest payments. Section 

6049(b)(2)(B) and (5) provides that, 

except to the extent otherwise provided 

in regulations, reportable interest does 

not include interest paid to nonresident 

alien individuals on deposits described 

in section 871(i)(2)(A). Section 

6049(b)(2)(B) and (5) thus provides 

express authority for the Treasury 

Department and the IRS to issue 

regulations requiring reporting of such 

interest. 

Special Analyses 

It has been determined that these 

regulations are not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It also has 

been determined that section 553(b) of 

the Administrative Procedure Act (5 

U.S.C. chapter 5) does not apply to these 

regulations. 

When an agency promulgates a final 

rule, the Regulatory Flexibility Act, 5 

U.S.C. chapter 6 (RFA), requires the 

agency to prepare a final regulatory 

flexibility analysis describing the 

impact of the final rule on small 

entities. 5 U.S.C. 604. Section 605 of the 

RFA allows an agency to certify a rule, 

in lieu of preparing a regulatory 

flexibility analysis, if the final rule is 

not expected to have a significant 

economic impact on a substantial 

number of small entities. 

These regulations impose a collection 

of information, and thus, the Regulatory 

Flexibility Act (5 U.S.C. chapter 6) 

applies. It is hereby certified that the 

collection of information contained in 

these regulations will not have a 


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23394 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 

significant economic impact on a 

substantial number of small entities. 

The preamble to the 2011 proposed 

regulations sets forth an analysis of the 

number of small entities that may be 

required to report under these 

regulations. Although this rule may 

affect a substantial number of small 

entities, the IRS has determined that the 

impact on entities affected by these final 

regulations will not be significant. 

Some comments expressed concern 

that the regulations would impose a 

new administrative burden on U.S. 

financial institutions. In addition, some 

comments objected that collecting and 

reporting this information imposes 

burdens on certain types of financial 

institutions, including community 

banks and banks in certain states that 

have a larger percentage of customers 

who are nonresident alien individuals. 

The Treasury Department and the IRS 

disagree. Under existing law, all U.S. 

financial institutions have 

responsibilities to withhold on and 

report with respect to depositors who 

are U.S. citizens, U.S. resident 

individuals, and Canadian resident 

individuals, and have developed the 

systems to perform such withholding 

and reporting. 

All nonresident alien individual 

account holders who maintain accounts 

in the United States are already required 

to complete a Form W–8BEN, declaring 

their non-U.S. status and the country in 

which they reside. U.S. financial 

institutions can use their existing W–8 

information to produce Form 1042–S 

disclosures for the relevant nonresident 

alien individual account holders. Nearly 

all U.S. banks and other financial 

institutions have automated systems to 

produce Form 1099–INT, ‘‘Interest 

Income’’, for U.S. accountholders and 

Form 1042–S, ‘‘Foreign Person’s U.S. 

Source Income Subject to Withholding’’, 

for Canadian accountholders. As a 

result, the information collection 

requirements in these regulations build 

on reporting and information collection 

systems familiar to and currently used 

by U.S. financial institutions, including 

small business entities. The amount of 

time required to complete the Form 

1042 and Form 1042–S is minimal, and 

the statement that is required to be 

collected is brief. Accordingly, it should 

not be a significant burden to adapt 

those systems to report with respect to 

depositors who are resident in other 

countries with which the United States 

has an information exchange agreement. 

Therefore, a regulatory flexibility 

analysis is not required. 

Pursuant to section 7805(f) of the 

Code, the notice of proposed rulemaking 

preceding these final regulations was 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small businesses. The Chief 

Counsel for Advocacy of the Small 

Business Administration did not 

comment on the notice of proposed 

rulemaking. 

Drafting Information 

The principal author of the 

regulations is Kathryn Holman, Office of 

Associate Chief Counsel (International). 

However, other personnel from the 

Treasury Department and the IRS 

participated in their development. 

List of Subjects 

26 CRF 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. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR parts 1 and 31 

are 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 certain 

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 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 recipient). To determine whether an 

information return is required for 

original issue discount, see §§ 1.6049– 

5(f) and 1.6049–8(a). 

(ii) Effective/applicability date. 

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

be applicable for payments made on or 

after January 1, 2013. (For interest paid 

to a Canadian nonresident alien 

individual on or before December 31, 

2012, 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 on or 

after January 1, 2013, to a nonresident 

alien individual to the extent provided 

in § 1.6049–8. 

* * * * * 

(f) * * * Original issue discount on 

an obligation (including an obligation 

with a maturity of not more than six 

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 deposit 

interest paid on or after January 1, 2013, 

to certain nonresident alien 

individuals). 

* * * * * 

■ Par. 4. Section 1.6049–6 is amended 

as follows: 

■ 1. The paragraph heading and text of 

paragraph (e)(4) is revised. 

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

heading and first sentence are 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 


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Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23395 

payments of deposit interest to certain 

nonresident alien individuals) paid on 

or after January 1, 2013, 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. 

(5) Effective/applicability date. 

Paragraph (e)(4) of this section applies 

to payee statements reporting payments 

of deposit interest to nonresident alien 

individuals paid on or after January 1, 

2013. * * * (For interest paid to a 

Canadian nonresident alien individual 

on or before December 31, 2012, 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 certain nonresident aliens. 

(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 

described in section 871(i)(2)(A) that 

relates to a deposit maintained at an 

office within the United States, and that 

is paid to a nonresident alien individual 

who is a resident of a country that is 

identified, in an applicable revenue 

procedure (see § 601.601(d)(2) of this 

chapter) as of December 31 prior to the 

calendar year in which the interest is 

paid, as a country with which the 

United States has in effect an income 

tax or other convention or bilateral 

agreement relating to the exchange of 

tax information within the meaning of 

section 6103(k)(4), under which the 

competent authority is the Secretary of 

the Treasury or his delegate and the 

United States agrees to provide, as well 

as receive, information. 

Notwithstanding the foregoing, for 

purposes of §§ 1.6049–4, 1.6049–6, and 

this section, for any year for which the 

information return under § 1.6049– 

4(b)(5) is required, a payor may elect to 

treat interest as including all interest 

described in section 871(i)(2)(A) that 

relates to a deposit maintained at an 

office within the United States and that 

is paid to any nonresident alien 

individual. A payor shall make this 

election by reporting all such interest. 

For purposes of the regulations under 

section 6049 (§§ 1.6049–1 through 

1.6049–8), a nonresident alien 

individual is a person described in 

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

middleman may rely upon the 

permanent residence address provided 

on a valid Form W–8BEN, ‘‘Beneficial 

Owners Certificate of Foreign Status for 

U.S. Tax Withholding’’, to determine 

the country in which a nonresident 

alien individual is resident unless such 

payor or middleman knows or has 

reason to know that such 

documentation of the country of 

residence is unreliable or incorrect. 

Amounts described in this paragraph (a) 

are not subject to backup withholding 

under section 3406 if the payor may 

treat the payee as a foreign beneficial 

owner or foreign payee under the rules 

of § 1.6049–5(b)(12). 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 the payor must also 

backup withhold under section 3406. 

(For interest paid to a Canadian 

nonresident alien individual on or 

before December 31, 2012, 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 Exception for payments to 

certain payees and certain other payments. 

* * * * * 

(d) Reportable payments made to 

nonresident alien individuals. A 

payment of interest to a nonresident 

alien individual that is described in 

§ 1.6049–(8)(a) of this chapter is not 

subject to withholding under section 

3406 if the payor may treat the payee as 

a foreign beneficial owner or foreign 

payee under the rules of § 1.6049– 

5(b)(12). (For interest paid to a Canadian 

nonresident alien individual on or 

before December 31, 2012, 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. 

Approved: April 12, 2012. 

Emily S. McMahon, 

(Acting) Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2012–9520 Filed 4–17–12; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2012–0257] 

Safety Zones; Recurring Events in 

Captain of the Port New York Zone 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of enforcement of 

regulation. 

SUMMARY: The Coast Guard will enforce 

various safety zones in the Captain of 

the Port New York Zone on specified 

dates and times. This action is necessary 

to ensure the safety of vessels and 

spectators from hazards associated with 

fireworks displays. During the 

enforcement period, no person or vessel 

may enter the safety zone without 

permission of the Captain of the Port 

(COTP). 

DATES: The regulations for the safety 

zones described in 33 CFR 165.160 will 

be enforced on the dates and times 

listed in the table below. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this notice, call 

or email Ensign Kimberly Farnsworth, 

Coast Guard; telephone 718–354–4163, 

email Kimberly.A.Farnsworth@uscg.mil. 

SUPPLEMENTARY INFORMATION: The Coast 

Guard will enforce the safety zones 

listed in 33 CFR 165.160 on the 

specified dates and times as indicated in 

Table 1 below. If the event is delayed by 

inclement weather, the regulation will 

be enforced on the rain date indicated 

in Table 1 below. These regulations 

were published in the Federal Register 

on November 9, 2011 (76 FR 69614). 


srobinson on DSK4SPTVN1PROD with RULES