Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Rules and Regulations 84079 

affected airplanes. The unsafe condition, if 

not addressed, could result in accumulation 

of water and ice in the pipe and, in case of 

an engine fire, prevent extinguishing that 

engine fire, possibly resulting in reduced 

control of the airplane. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Requirements 

Except as specified in paragraphs (h) and 

(i) of this AD: Comply with all required 

actions and compliance times specified in, 

and in accordance with, EASA AD 2023– 

0169. 

(h) Exceptions to EASA AD 2023–0169 

(1) Where EASA AD 2023–0169 refers to its 

effective date, this AD requires using the 

effective date of this AD. 

(2) This AD does not adopt the ‘‘Remarks’’ 

section of EASA AD 2023–0169. 

(i) No Reporting Requirement 

Although the material referenced in EASA 

AD 2023–0169 specifies to submit certain 

information to the manufacturer, this AD 

does not include that requirement. 

(j) Additional AD Provisions 

The following provisions also apply to this 

AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, International 

Validation Branch, FAA, has the authority to 

approve AMOCs for this AD, if requested 

using the procedures found in 14 CFR 39.19. 

In accordance with 14 CFR 39.19, send your 

request to your principal inspector or 

responsible Flight Standards Office, as 

appropriate. If sending information directly 

to the manager of the International Validation 

Branch, mail it to the address identified in 

paragraph (k) of this AD. Information may be 

emailed to: 9-AVS-AIR-730-AMOC@faa.gov. 

Before using any approved AMOC, notify 

your appropriate principal inspector, or 

lacking a principal inspector, the manager of 

the responsible Flight Standards Office. 

(2) Contacting the Manufacturer: For any 

requirement in this AD to obtain instructions 

from a manufacturer, the instructions must 

be accomplished using a method approved 

by the Manager, International Validation 

Branch, FAA; or EASA; or Airbus SAS’s 

EASA Design Organization Approval (DOA). 

If approved by the DOA, the approval must 

include the DOA-authorized signature. 

(3) Required for Compliance (RC): Except 

as required by paragraph (j)(2) of this AD, if 

any material contains procedures or tests that 

are identified as RC, those procedures and 

tests must be done to comply with this AD; 

any procedures or tests that are not identified 

as RC are recommended. Those procedures 

and tests that are not identified as RC may 

be deviated from using accepted methods in 

accordance with the operator’s maintenance 

or inspection program without obtaining 

approval of an AMOC, provided the 

procedures and tests identified as RC can be 

done and the airplane can be put back in an 

airworthy condition. Any substitutions or 

changes to procedures or tests identified as 

RC require approval of an AMOC. 

(k) Additional Information 

For more information about this AD, 

contact Vladimir Ulyanov, Aviation Safety 

Engineer, FAA, 1600 Stewart Avenue, Suite 

410, Westbury, NY 11590; phone 206–231– 

3229; email Vladimir.Ulyanov@faa.gov. 

(l) Material Incorporated by Reference 

(1) The Director of the Federal Register 

approved the incorporation by reference of 

the material listed in this paragraph under 5 

U.S.C. 552(a) and 1 CFR part 51. 

(2) You must use this material as 

applicable to do the actions required by this 

AD, unless this AD specifies otherwise. 

(i) European Union Aviation Safety Agency 

(EASA) AD 2023–0169, dated September 4, 

2023. 

(ii) [Reserved] 

(3) For EASA AD 2023–0169, contact 

EASA, Konrad-Adenauer-Ufer 3, 50668 

Cologne, Germany; telephone +49 221 8999 

000; email ADs@easa.europa.eu; website 

easa.europa.eu. You may find this EASA AD 

on the EASA website at ad.easa.europa.eu. 

(4) You may view this material at the FAA, 

Airworthiness Products Section, Operational 

Safety Branch, 2200 South 216th St., Des 

Moines, WA. For information on the 

availability of this material at the FAA, call 

206–231–3195. 

(5) You may view this material at the 

National Archives and Records 

Administration (NARA). For information on 

the availability of this material at NARA, 

visit www.archives.gov/federal-register/cfr/ 

ibr-locations, or email fr.inspection@

nara.gov. 

Issued on October 3, 2024. 

Peter A. White, 

Deputy Director, Integrated Certificate 

Management Division, Aircraft Certification 

Service. 

[FR Doc. 2024–23538 Filed 10–18–24; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 31 

[TD 10008] 

RIN 1545–BN52 

Withholding on Certain Distributions 

Under Section 3405(a) and (b) 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulation. 

SUMMARY: This document contains a 

final regulation regarding income tax 

withholding on certain periodic 

payments and nonperiodic distributions 

from employer deferred compensation 

plans, individual retirement plans, and 

commercial annuities that are not 

eligible rollover distributions. The 

regulation addresses a payor’s obligation 

to withhold income taxes in the 

circumstances in which those payments 

or distributions are made to payees 

outside of the United States and affects 

payors and payees of those periodic 

payments and nonperiodic 

distributions. 

DATES: 

Effective date. This regulation is 

effective October 21, 2024. 

Applicability date. This regulation 

applies with respect to payments and 

distributions made on or after January 1, 

2026. However, taxpayers may apply it 

to earlier payments and distributions. 

FOR FURTHER INFORMATION CONTACT: 

Jeremy Lamb at (202) 317–4575 or Isaac 

Stein at (202) 317–6320 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Authority 

Section 7805(a) authorizes the 

Secretary to prescribe all needful rules 

and regulations for the enforcement of 

the Code. 

Background 

Section 3405(a)(1) of the Internal 

Revenue Code of 1986 (Code) requires 

the payor of any periodic payment to 

withhold income tax from the payment. 

Under section 3405(a)(2), an individual 

generally may elect not to have section 

3405(a)(1) apply with respect to 

periodic payments made to the 

individual. Section 3405(b)(1) requires 

the payor of any nonperiodic 

distribution to withhold income tax 

from the distribution. Under section 

3405(b)(2), an individual generally may 

elect not to have section 3405(b)(1) 

apply with respect to any nonperiodic 

distribution. 

Section 3405(e)(2) defines a periodic 

payment as a designated distribution 

that is an annuity or similar periodic 

payment. Section 3405(e)(3) defines a 

nonperiodic distribution as any 

designated distribution that is not a 

periodic payment. A designated 

distribution is defined in section 

3405(e)(1) as generally any distribution 

or payment from or under an employer 

deferred compensation plan, an 

individual retirement plan (as defined 

in section 7701(a)(37) of the Code), or a 

commercial annuity. For this purpose, 

an employer deferred compensation 

plan is defined in section 3405(e)(5) as 

any pension, annuity, profit sharing, or 

stock bonus plan or other plan deferring 

the receipt of compensation, and a 

commercial annuity is defined in 

section 3405(e)(6) as an annuity, 

endowment, or life insurance contract 


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1For purposes of this preamble, references to the 

‘‘United States’’ include any possession of the 

United States. 

2APO is associated with Army or Air Force 

installations. FPO is associated with Navy 

installations and ships. APO/FPO addresses are 

utilized by Department of Defense personnel, their 

family members, and other authorized users. DPO 

provides global mail service to authorized 

personnel assigned to designated posts abroad. 

3Effective July 7, 2004, the GAO’s legal name was 

changed from the General Accounting Office to the 

Government Accountability Office. 

issued by an insurance company 

licensed to do business under the laws 

of any State. 

Section 3405(e)(1)(B) identifies 

certain amounts or payments that are 

not a ‘‘designated distribution’’ for 

purposes of section 3405 withholding. 

Under section 3405(e)(1)(B)(iii), any 

amount that is subject to withholding 

under subchapter A of chapter 3 of the 

Code (relating to withholding of tax on 

nonresident aliens and foreign 

corporations) by the person paying such 

amount or which would be so subject 

but for a tax treaty is not a designated 

distribution. 

Section 3405(e)(13)(A) provides 

generally that, in the case of any 

periodic payment or nonperiodic 

distribution that is ‘‘to be delivered 

outside of the United States and any 

possession of the United States,’’ no 

election may be made under section 

3405(a)(2) or (b)(2) with respect to such 

payment, with the result that 

withholding may not be waived. Section 

3405(e)(13)(B) provides that section 

3405(e)(13)(A) does not apply if the 

recipient certifies to the payor, in such 

manner as the Secretary of the Treasury 

may prescribe, that the recipient is not 

(i) a United States citizen or a resident 

alien of the United States, or (ii) an 

individual to whom section 877 of the 

Code applies. Section 877(h) provides 

that section 877 applies to certain 

nonresident alien individuals whose 

expatriation date, as defined in section 

877A(g)(3), is before June 17, 2008. 

Notice 87–7, 1987–1 CB 420, provides 

guidance under section 3405(e)(13)(A) 

to payors of designated distributions 

with respect to their duty to withhold 

income tax from such distributions. The 

notice applies to designated 

distributions for the following categories 

of payees: (1) payees who have provided 

the payors with a residence address 

outside of the United States; 1 (2) payees 

who have provided the payors with a 

residence address within the United 

States; and (3) payees who have not 

provided the payors with a residence 

address. 

Notice 87–7 specifies that, if a payee 

has provided the payor with a residence 

address outside of the United States, the 

payor is required to withhold income 

tax from designated distributions to the 

payee. If a payee has provided the payor 

with a residence address within the 

United States, the payor is required to 

withhold income tax from these 

distributions to the payee unless the 

payee has elected no withholding in 

accordance with the applicable 

provisions of section 3405. If a payee 

has not provided the payor with a 

residence address, the payor is required 

to withhold income tax from designated 

distributions; included within this 

category is a payee who has provided 

the payor with an address for the 

payee’s nominee, trustee, or agent 

without also providing the payee’s 

residence address. 

On May 31, 2019, the Department of 

the Treasury (Treasury Department) and 

the IRS published a notice of proposed 

rulemaking regarding withholding on 

certain periodic payments and 

nonperiodic distributions under section 

3405 (other than eligible rollover 

distributions) in the Federal Register 

(84 FR 25209). No comments responsive 

to the notice of proposed rulemaking 

were received, and no public hearing 

was requested or held. Thus, this final 

regulation adopts the provisions of the 

proposed regulation with no 

modifications except for the change in 

the applicability date to January 1, 2026, 

and other minor changes in wording 

that are nonsubstantive. 

Explanation of Provisions 

This document contains a final 

regulation under section 3405(e) that 

provides withholding guidance for 

payors of periodic payments and 

nonperiodic distributions under section 

3405(a) and (b), respectively. The 

regulation generally addresses a payor’s 

obligation to withhold under section 

3405(a) and (b) in the following 

situations: (1) payments to payees with 

a military or diplomatic Post Office 

address; (2) payments to payees with a 

residence address located within the 

United States; (3) payments to payees 

with a residence address located outside 

of the United States or who have not 

provided a residence address; and (4) 

payments subject to withholding under 

subchapter A of chapter 3 (sections 1441 

through 1446 of the Code). 

1. Payees With a Military or Diplomatic 

Post Office Address 

For purposes of section 

3405(e)(13)(A), the regulation treats an 

Army Post Office (APO), a Fleet Post 

Office (FPO), or a Diplomatic Post Office 

(DPO) 2 address as an address located 

within the United States. In 1986, when 

this provision was added to the Code by 

the Tax Reform Act of 1986, Public Law 

99–514 (TRA ’86), it was one of several 

provisions intended to increase 

compliance with the internal revenue 

laws by United States persons resident 

abroad and green card holders. The 

Senate Finance Committee Report for 

TRA ’86 indicates a concern, based on 

data gathered by the General 

Accounting Office (GAO),3 that the 

percentage of taxpayers who fail to file 

returns is substantially higher among 

Americans living abroad than it is 

among those resident in the United 

States, and that it is often difficult for 

the IRS to enforce compliance by these 

taxpayers. S. Rep. No. 99–313, at 390 

(1986). 

The GAO data referred to in the 

legislative history does not include 

United States military personnel and 

their families as taxpayers who are 

living abroad. Johnny C. Finch, United 

States Citizens Living in Foreign 

Countries and Not Filing Federal 

Income Tax Returns, United States 

General Accounting Office, May 8, 1985. 

In addition, enforcement of compliance 

by individuals receiving mail at an 

APO, an FPO, or a DPO address 

generally does not involve the same 

challenges as enforcing compliance by 

other taxpayers living abroad. Because 

APO, FPO, and DPO delivery 

destinations are generally United States 

military or diplomatic facilities, 

taxpayers with an APO, an FPO, or a 

DPO address commonly maintain a 

current or former employment or 

contractor relationship with the United 

States government. Moreover, these 

addresses generally are treated as 

‘‘domestic’’ by the United States Postal 

Service. United States Domestic Mail 

Manual, 608.2.2. 

For these reasons, the Treasury 

Department and the IRS have 

determined that treating a United States 

military or diplomatic post office 

address as located within the United 

States for purposes of section 

3405(e)(13)(A) is consistent with the tax 

avoidance concerns underlying the 

enactment of that provision. 

Accordingly, the regulation provides 

that designated distributions to United 

States military and diplomatic 

personnel or their families are not 

treated as delivered outside of the 

United States solely because those 

payments or distributions are to be 

delivered to an APO, an FPO, or a DPO 

address. 


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4The Senate Finance Committee Report states 

that ‘‘it will be appropriate to require withholding 

with respect to pension payments to persons with 

foreign addresses absent a showing that 

withholding is not required.’’ S. Rep. No. 99–313, 

at 391 (1986). 

2. Payees With a Residence Address 

Located Within the United States 

The regulation imposes withholding 

requirements on payors regarding 

certain payees who have provided the 

payor with a residence address located 

within the United States. Under Notice 

87–7, payors are not required to 

withhold if a payee provides a residence 

address located within the United States 

and the payee elects no withholding. 

Notice 87–7 does not specifically 

address whether payors are required to 

withhold when a payee provides a 

residence address located within the 

United States, but also provides 

payment instructions indicating that the 

funds are to be delivered outside of the 

United States. As explained in the 

Background section of this preamble, 

the mandatory withholding for amounts 

to be delivered outside of the United 

States was enacted because Congress 

was concerned about noncompliance. 

Section 3405(e)(13)(A) refers to ‘‘any 

periodic payment or nonperiodic 

distribution which is to be delivered 

outside of the United States.’’ Consistent 

with the text of section 3405(e)(13)(A) 

and its purpose, the regulation requires 

payors to withhold in certain 

circumstances when a payee provides a 

residence address located within the 

United States but also provides payment 

instructions indicating that the funds 

are to be delivered outside of the United 

States. 

3. Payees With a Residence Address 

Located Outside of the United States or 

Who Have Not Provided a Residence 

Address 

Unless section 3405(e)(13)(B) (which 

provides an exception for certain 

nonresident aliens) applies, if the 

payee’s residence address that is 

provided to the payor is located outside 

of the United States, the payor is 

required to withhold income tax under 

section 3405 from any designated 

distribution, without regard to the 

delivery instructions and without regard 

to any attempt to elect no withholding. 

Thus, for example, withholding under 

section 3405 would be required even if 

a payee with a foreign residence address 

has requested that the distribution be 

deposited with a financial institution 

located within the United States. Given 

the ease with which the funds deposited 

with a financial institution in the 

United States can be withdrawn by a 

person located outside the United 

States, the Treasury Department and the 

IRS have concluded that the payee’s 

residence address is more likely to be 

indicative of the place the distribution 

is ultimately to be delivered than the 

location of the financial institution. The 

same requirement to withhold income 

tax under section 3405 applies if a 

payee has not provided a residence 

address to the payor. Furthermore, a 

payee who has provided the payor with 

an address for the payee’s nominee, 

trustee, or agent without also providing 

the payee’s residence address has not 

provided a residence address for 

purposes of this regulation. 

These rules are consistent with the 

approach in Notice 87–7, which uses 

the residence address of the payee in 

order to determine whether a taxpayer 

is permitted to make an election not to 

have withholding apply under section 

3405(a)(2) or (b)(2). The Treasury 

Department and the IRS have 

determined that this interpretation 

articulated in Notice 87–7 provides an 

administrable standard that has been 

relied upon for many years, is consistent 

with the TRA ’86 legislative history, and 

appropriately addresses tax avoidance 

concerns underlying section 

3405(e)(13)(A).4

4. Payments Subject to Withholding 

Under Subchapter A of Chapter 3 

In accordance with section 

3405(e)(1)(B)(iii), the regulation clarifies 

that a designated distribution does not 

include a distribution that is subject to 

withholding under subchapter A of 

chapter 3 (or that would be subject but 

for a tax treaty). Therefore, the 

withholding rules under section 3405(a) 

and (b) do not apply to such a 

distribution. For example, section 

3405(a) or (b) withholding would not 

apply to a United States-source 

distribution to a nonresident alien 

individual from a trust described in 

section 401(a) of the Code. In such a 

case, the withholding rules of section 

1441 (within subchapter A of chapter 3) 

that apply to nonresident aliens would 

apply to such a distribution. See 

§ 1.1441–1(b)(1). 

Applicability Date 

This regulation applies with respect 

to payments and distributions made on 

or after January 1, 2026. However, 

taxpayers may apply the regulation to 

earlier payments and distributions. 

Notice 87–7 is obsoleted with respect to 

payments and distributions made after 

December 31, 2025. 

Statement of Availability of IRS 

Documents 

The IRS notice cited in this preamble 

is published in the Cumulative Bulletin 

and is available from the 

Superintendent of Documents, U.S. 

Government Publishing Office, 

Washington, DC 20402. 

Special Analyses 

I. Regulatory Planning and Review 

Pursuant to the Memorandum of 

Agreement, Review of Treasury 

Regulations under Executive Order 

12866 (June 9, 2023), tax regulatory 

actions issued by the IRS are not subject 

to the requirements of section 6 of 

Executive Order 12866, as amended. 

Therefore, a regulatory impact 

assessment is not required. 

II. Paperwork Reduction Act 

The collection of information related 

to the withholding requirements is 

captured within the forms and 

instructions for Forms W–4P and W–4R. 

Both of these forms are approved under 

OMB Number 1545–0074. This 

regulation does not alter any previously 

approved information collection 

requirements contained within the 

forms and instructions for Forms W–4P 

and W–4R, and this regulation does not 

create new collection requirements not 

already approved by the Office of 

Management and Budget. 

III. Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act (5 U.S.C. chapter 6) it is hereby 

certified that the collection of 

information in this regulation will not 

have a significant economic impact on 

a substantial number of small entities. 

The number of small entities potentially 

affected by this regulation is unknown 

but could be substantial because based 

on data and information available to the 

Treasury Department and the IRS, most 

defined benefit and defined 

contribution retirement plans are 

sponsored by small employers (defined 

as employers with fewer than 100 

employees), while annuities and IRAs 

are typically set up by large financial 

institutions. Although a substantial 

number of small entities is potentially 

affected by this regulation, the Treasury 

Department and the IRS have concluded 

that this regulation will not have a 

significant economic impact on a 

substantial number of small entities. 

This is because the main purpose and 

effect of this regulation is to treat 

military and diplomatic post office 

addresses the same as residence 

addresses located within the United 

States for purposes of income tax 


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84082 Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Rules and Regulations 

withholding, and payors of distributions 

from retirement plans and annuities are 

already processing distributions to 

payees with residence addresses located 

within the United States. Accordingly, 

this regulation will not have a 

significant economic impact on a 

substantial number of small entities. 

Therefore, a regulatory flexibility 

analysis under the Regulatory 

Flexibility Act is not required. 

Pursuant to section 7805(f) of the 

Code, the notice of proposed rulemaking 

preceding this regulation was submitted 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on its impact on small 

business. 

IV. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies assess anticipated costs 

and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a state, local, or tribal government, in 

the aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. This regulation 

does not include any Federal mandate 

that may result in expenditures by state, 

local, or tribal governments, or by the 

private sector in excess of that 

threshold. 

V. Executive Order 13132: Federalism 

Executive Order 13132 (Federalism) 

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either imposes substantial, 

direct compliance costs on state and 

local governments, and is not required 

by statute, or preempts state law, unless 

the agency meets the consultation and 

funding requirements of section 6 of the 

Executive Order. This rule does not 

have federalism implications and does 

not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

Order. 

VI. Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this rule as not a major rule, 

as defined by 5 U.S.C. 804(2). 

Drafting Information 

The principal author of this regulation 

is Jeremy Lamb, of the IRS Office of 

Associate Chief Counsel (Employee 

Benefits, Exempt Organizations, and 

Employment Taxes (EEE)). However, 

other personnel from the Treasury 

Department and the IRS participated in 

the development of the regulation. 

List of Subjects in 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 part 31 is 

amended as follows: 

PART 31—EMPLOYMENT TAXES AND 

COLLECTION OF INCOME AT THE 

SOURCE 

■ Paragraph 1. The authority citation 

for part 31 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805. 

* * * * * 

■ Par. 2. Section 31.3405(e)–1 is added 

to read as follows: 

§ 31.3405(e)–1 Questions and answers 

relating to withholding on pensions, 

annuities, and certain other deferred 

income. 

(a) The following questions and 

answers apply for purposes of 

determining whether a payor of periodic 

payments or nonperiodic distributions 

from pensions, annuities, and certain 

other deferred income (other than 

eligible rollover distributions) must 

withhold federal income tax under 

section 3405(a) or (b) of the Code. For 

purposes of this section, references to 

the United States include possessions of 

the United States. 

(b)(1) Q–1. Is an Army Post Office 

(APO), a Fleet Post Office (FPO), or a 

Diplomatic Post Office (DPO) address an 

address located within the United States 

for purposes of section 3405(e)(13)(A)? 

(2) A–1. For purposes of section 

3405(e)(13)(A), an APO, an FPO, or a 

DPO address is an address located 

within the United States. 

(c)(1) Q–2. Is the payor of a designated 

distribution described in section 3405(a) 

or (b) required to withhold income tax 

from the distribution if the payee’s 

residence address that is provided to the 

payor is located within the United 

States? 

(2) A–2. If the payee’s residence 

address that is provided to the payor of 

a designated distribution described in 

section 3405(a) or (b) is located within 

the United States, then the payor is 

required to withhold income tax from 

the distribution unless the payee has 

made a valid election of no withholding 

in accordance with section 3405(a)(2) or 

(b)(2). Any election of no withholding 

with respect to such a distribution 

under section 3405(a)(2) or (b)(2) is not 

valid if the payee instructs the payor to 

do one or more of the following in 

connection with the distribution: 

(i) Send the distribution to a financial 

institution or other person located 

outside of the United States; 

(ii) Send the distribution to a financial 

institution or other person located 

within the United States with further 

instructions (such as for further credit to 

instructions) directing that the funds be 

forwarded to a financial institution or 

other person located outside of the 

United States; or 

(iii) Send the distribution to a 

financial institution or other person 

pursuant to payment instructions 

(including addenda information) that 

reference an International Automated 

Clearing House Transaction (IAT), 

International Bank Account Number 

(IBAN), Society for Worldwide 

Interbank Financial Telecommunication 

(SWIFT) Business Identifier Code (BIC), 

or similar identifier linked to a financial 

institution or other person located 

outside of the United States. 

(d)(1) Q–3. Is the payor of a 

designated distribution described in 

section 3405(a) or (b) required to 

withhold income tax from the 

distribution if the payee’s residence 

address that is provided to the payor is 

located outside of the United States? 

(2) A–3. Unless section 3405(e)(13)(B) 

(which provides an exception for certain 

nonresident aliens) applies, if the 

payee’s residence address that is 

provided to the payor is located outside 

of the United States, the payor of a 

designated distribution described in 

section 3405(a) or (b) is required to 

withhold income tax from the 

distribution without regard to the 

delivery instructions and without regard 

to any request by the payee to elect no 

withholding. Withholding would be 

required, in this case, even if the payee 

has requested that the distribution be 

delivered to a financial institution or 

other person located within the United 

States. 

(e)(1) Q–4. Is the payor of a designated 

distribution described in section 3405(a) 

or (b) required to withhold income tax 

from the distribution if the payee has 

not provided the payor with the payee’s 

residence address? 

(2) A–4. If a payee has not provided 

the payor of a designated distribution 

described in section 3405(a) or (b) with 

the payee’s residence address, the payor 

is required to withhold income tax from 

the distribution. Such a payee may not 

elect no withholding under section 

3405(a)(2) or (b)(2), and any purported 

election of no withholding by such a 


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Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Rules and Regulations 84083 

payee is not valid. For purposes of this 

section, a payee who has provided the 

payor with an address for the payee’s 

nominee, trustee, or agent without also 

providing the payee’s residence address 

has not provided a residence address. 

(f)(1) Q–5. Do the withholding rules 

under section 3405(a) and (b) apply to 

a payee who is to receive a payment or 

distribution that is subject to the 

withholding rules that apply to 

nonresident aliens (or that would be so 

subject but for a tax treaty)? 

(2) A–5. In accordance with section 

3405(e)(1)(B)(iii), a designated 

distribution does not include a 

distribution of a United States-source 

payment that is subject to withholding 

under the rules of sections 1441 through 

1446 of the Code (or that would be so 

subject but for a tax treaty). Therefore, 

the withholding rules under section 

3405(a) and (b) do not apply to such a 

distribution. For example, section 

3405(a) or (b) withholding would not 

apply to a pension or other deferred 

compensation plan distribution to be 

made to a payee who is a nonresident 

alien (or other individual payee who is 

presumed to be a foreign person under 

the presumption rules of § 1.1441– 

1(b)(3)). In such a case, withholding 

under the rules of section 1441, rather 

than under the rules of section 3405(a) 

or (b), would apply to such a 

distribution. 

(g)(1) Q–6. What is the applicability 

date of this section? 

(2) A–6. This section applies with 

respect to payments and distributions 

made on or after January 1, 2026. 

However, taxpayers may apply it to 

earlier payments and distributions. 

Douglas W. O’Donnell, 

Deputy Commissioner. 

Approved: September 21, 2024. 

Aviva R. Aron-Dine, 

Deputy Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2024–24224 Filed 10–18–24; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2023–0568; FRL–11558– 

02–R9] 

Air Plan Approval; California; South 

Coast Air Quality Management District 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is taking final action to 

approve revisions to the South Coast Air 

Quality Management District 

(SCAQMD) portion of the California 

State Implementation Plan (SIP). These 

revisions concern emissions of volatile 

organic compounds (VOCs) and oxides 

of nitrogen (NOX) from refinery flares. 

We are approving a local rule that 

regulates these emission sources under 

the Clean Air Act (CAA or the Act). 

DATES: This rule is effective November 

20, 2024. 

ADDRESSES: The EPA has established a 

docket for this action under Docket ID 

No. EPA–R09–OAR–2023–0568. All 

documents in the docket are listed on 

the https://www.regulations.gov 

website. Although listed in the index, 

some information is not publicly 

available, e.g., Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, is not placed on 

the internet and will be publicly 

available only in hard copy form. 

Publicly available docket materials are 

available through https://

www.regulations.gov, or please contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section for 

additional availability information. If 

you need assistance in a language other 

than English or if you are a person with 

a disability who needs a reasonable 

accommodation at no cost to you, please 

contact the person identified in the FOR

FURTHER INFORMATION CONTACT section. 

FOR FURTHER INFORMATION CONTACT: 

Donnique Sherman, EPA Region IX, 75 

Hawthorne St., San Francisco, CA 

94105. By phone: (415) 947–4129 or by 

email at sherman.donnique@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document, ‘‘we,’’ ‘‘us’’ 

and ‘‘our’’ refer to the EPA. 

Table of Contents 

I. Proposed Action 

II. Public Comments and EPA Responses 

III. EPA Action 

IV. Incorporation by Reference 

V. Statutory and Executive Order Reviews 

I. Proposed Action 

On March 8, 2024 (89 FR 16712), the 

EPA proposed to approve the following 

rule into the California SIP. 

Local agency Rule No. Rule title Amended Submitted 

SCAQMD ............................. 1118 Control of Emissions from Refinery Flares ........................................... 01/06/23 05/11/23 

We proposed to approve this rule 

because we determined that it complies 

with the relevant CAA requirements. 

Our proposed action contains more 

information on the rule and our 

evaluation. 

II. Public Comments and EPA 

Responses 

The EPA’s proposed action provided 

a 30-day public comment period. During 

this period, we received two comments. 

The comments discussed California’s 

legalization of recreational marijuana 

and its impact on air quality. Upon 

review, the EPA determined that the 

comments fail to raise issues germane to 

the proposed revisions to SCAQMD 

Rule 1118, which exclusively regulates 

emissions of VOCs and NOX from 

refinery flares. The rule revisions being 

approved with this action increase rule 

enforceability by correcting the 

previously identified director’s 

discretion deficiency in our September 

22, 2022 action. Therefore, we have 

determined that these comments do not 

necessitate a response, and the EPA will 

not provide specific responses to the 

comments in this notice. 

III. EPA Action 

No comments were submitted that 

change our assessment of the rule as 

described in our proposed action. 

Therefore, as authorized in section 

110(k)(3) of the Act, the EPA is 

approving this rule into the California 

SIP. 

The January 6, 2023 version of Rule 

1118 will replace the previously 

approved version of this rule in the SIP. 

IV. Incorporation by Reference 

In this rule, the EPA is finalizing 

regulatory text that includes 

incorporation by reference. In 

accordance with requirements of 1 CFR 

51.5, the EPA is finalizing the 

incorporation by reference of SCAQMD 

Rule 1118, ‘‘Control of Emissions from 

Refinery Flares,’’ amended on January 6, 

2023, which regulates emissions of 

VOCs and NOX from refinery flares. The 

EPA has made, and will continue to 

make, these documents available 


lotter on DSK11XQN23PROD with RULES1