Page 45 - Withholding Taxes for Foreign Entities

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Fileid: … tions/P515/2020/A/XML/Cycle10/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
withholding statement upon which you may rely 2021. If those regulations are issued and effec- the official Form 1042-S and contains the exact
with respect to the payment allocable to such a tive for 2020 tax year returns, we will post an ar- same information as the copy filed with the IRS
pool, you should complete a separate Form ticle at IRS.gov/Form1042-S explaining the or submitted electronically. However, the size of
1042-S for each Chapter 4 withholding rate pool change. Otherwise, the same limits as applied a substitute Form 1042-S, copies B, C, and D,
(that is, pool of recalcitrant account holders, last year will apply for tax year 2020, as reflec- may be adjusted if the substitute form is presen-
pool of nonparticipating FFIs, pool of payees ted in these instructions. ted on a landscape-oriented page instead of
that are U.S. persons), treating the intermediary portrait. Only one Form 1042-S may be submit-
or flow-through entity as the recipient (and the Electronic reporting by partnerships. ted per page, regardless of orientation.
applicable pool as the Chapter 4 status of the Partnerships with a Form 1042-S filing require-
recipient). You need not issue a Form 1042-S to ment that are required to file 100 or more Forms Form 8966
each recipient included in such pool. You must 1042-S for the year 2020, must file Forms
use a separate Form 1042-S for each type of in- 1042-S electronically. You are encouraged to
come that you paid to the same recipient. See file electronically even if you are not required to. A withholding agent that makes a withholdable
Statements to recipients, later. Partnerships with 100 or more partners are re- payment to a passive NFFE with one or more
You must furnish a Form 1042-S for each re- quired to file Forms 1042-S electronically, re- substantial U.S. owners (or, in the case of a re-
cipient even if you did not withhold tax because gardless of the number of Forms 1042-S re- porting Model 2 FFI, controlling persons of such
an entity) or an owner-documented FFI with a
you repaid the tax withheld to the recipient or quired to be filed.
because the income payment was exempt from The Taxpayer First Act of 2019, enac- specified U.S. person owning certain equity or
debt interests in the FFI must report the pay-
tax under the Internal Revenue Code or under a ted July 1, 2019, authorized the IRS
U.S. income tax treaty (except for a withholda- ! and Treasury to issue regulations that ment and each such substantial U.S. owner (or
controlling person, as applicable) or specified
ble payment that is not a Chapter 4 reportable could change the Form 1042-S return limit for
CAUTION
amount). partnerships, potentially starting as early as with U.S. person owner of the passive NFFE or
owner-documented FFI, respectively, on Form
You can use a substitute Form 1042-S if it respect to 2020 returns required to be filed in 8966 (in addition to reporting the payment and
meets the requirements listed in Pub. 1179. Pa- 2021. If those regulations are issued and effec- tax (if any) on Forms 1042 and 1042-S when
per substitutes that totally conform to the format tive for 2020 tax year returns, we will post an ar- the payment is an amount subject to Chapter 3
and size of the official form may be used with- ticle at IRS.gov/Form1042-S explaining the withholding). An exception to the requirement to
out prior approval from the IRS. Get Pub. 1179 change. report on Form 8966 applies when the payment
for more information. is made to an account reported by an FFI as a
If you are reporting amounts withheld by an- A completed Form 4419 should be filed at U.S. account under the FFI’s applicable Chap-
other withholding agent, Form 1042-S requests least 30 days before the due date of the return. ter 4 requirements or the requirements of an ap-
the name and EIN of the withholding agent that Returns may not be filed electronically until the plicable IGA.
withheld the tax to the extent required in the In- application has been approved by the IRS.
For information and instructions on filing
structions for Form 1042-S. Forms 1042-S electronically, get Pub. 1187. If Form 8966 must be filed by March 31 of the
If you file a substitute for Copy A with you file electronically, you will use the Filing In- year following the calendar year in which the
payment is made. An automatic 90-day exten-
! the IRS that does not conform to the formation Returns Electronically (FIRE) system sion of time to file Form 8966 may be reques-
CAUTION specifications in Pub. 1179, you may at FIRE.IRS.gov. ted. To request an automatic 90-day extension
be subject to a penalty for failing to file a correct
return. See Penalties, later. Form 1042-T. If Form 1042-S is filed on paper, of time to file Form 8966, file Form 8809-I. See
it must be filed with Form 1042-T. You may the Instructions for Form 8809-I for where to file
that form. You should request an extension as
Joint owners. If all the owners provide need to file more than one Form 1042-T. See
documentation that permits them to receive the the instructions for that form for more informa- soon as you are aware that an extension is nec-
essary, but no later than the due date for filing
same reduced rate of withholding (for example, tion.
under an income tax treaty), you should apply Form 8966. Under certain hardship conditions,
the IRS may grant an additional 90-day exten-
the reduced rate of withholding. You are re- Deposit interest paid to certain nonresident
quired, however, to report the payment on one alien individuals. Interest earned by residents sion to file Form 8966. To request an additional
90-day extension of time to file Form 8966, file a
Form 1042-S to the person whose status you of certain foreign countries is subject to infor-
rely upon to determine the withholding rate. If, mation reporting. Deposit interest of $10 or second Form 8809-I before the end of the initial
extended due date.
however, any one of the owners requests its more paid to any nonresident alien individual
own Form 1042-S, you must furnish Form who is a resident of a foreign country with which Electronic filing requirement for Form 8966.
1042-S to the person who requests it. If more the United States has agreed to exchange tax An entity that is a financial institution is required
than one Form 1042-S is issued for a single information pursuant to an income tax treaty or to file Form 8966 electronically, irrespective of
payment, the total amount paid and tax withheld other convention or bilateral agreement, must the number of Forms 8966 filed. All other enti-
reported on all Forms 1042-S cannot exceed be reported on Form 1042-S. ties that file 250 or more Forms 8966 for calen-
the total amounts paid to joint owners. In any Revenue Procedure 2019-23, identifies dar year 2020 are required to file Form 8966
event, Form 1042-S must not be completed those countries for which reporting of deposit electronically.
with more than one of the joint owners as the re- interest is required with respect to a resident of
cipient. any such country. The Taxpayer First Act of 2019, enac-
Electronic reporting. Generally, withhold- Note. You may elect to report interest paid ! ted July 1, 2019, authorized the IRS
and Treasury to issue regulations that
CAUTION
ing agents or their agents that are required to to any nonresident alien. could reduce the 250 return limit to 100 and
file 250 or more Forms 1042-S for the year then to 10, potentially starting as early as with
2020, and financial institutions (whether U.S. or Statements to recipients. You must furnish a respect to 2020 returns required to be filed in
foreign) without regard to the 250 threshold, statement to each recipient for whom you are 2021. If those regulations are issued and effec-
must file Forms 1042-S electronically. You are filing a Form 1042-S by the due date for filing tive for 2020 tax year returns, we will post an ar-
encouraged to file electronically even if you are Forms 1042 and 1042-S with the IRS. You may ticle at IRS.gov/Form8966 explaining the
not required to. Partnerships see Electronic re- use a copy of the official Form 1042-S for this change. Otherwise, the same limits as applied
porting by partnerships, later. purpose. Any substitute forms must comply with last year will apply for tax year 2020, as reflec-
The Taxpayer First Act of 2019, enac- the rules set out in Pub. 1179. You must furnish ted in these instructions.
! ted July 1, 2019, authorized the IRS a separate substitute Form 1042-S for each To request a waiver from filing Form 8966
CAUTION and Treasury to issue regulations that type of income or payment. The withholding electronically, submit Form 8508-I. Waiver re-
could reduce the 250 return limit to 100 and agent must ensure that any substitute Form quests should be filed at least 45 days before
then to 10, potentially starting as early as with 1042-S copies B, C, and D, which are provided the due date of the returns. See the instructions
respect to 2020 returns required to be filed in to the recipient, conforms in format and size to for Form 8508-I for where to file and additional
Publication 515 (2020) Page 43