FATCA - Updates to withholding foreign partnership, withholding foreign trust agreements under Rev. Proc. 2014-47 

August 8: The IRS today released Rev. Proc. 2014-47, which provides guidance for entering into withholding foreign partnership (WP) and withholding foreign trust (WT) agreements applicable to foreign partnerships and trusts that wish to enter into a WP or WT withholding agreement with the IRS under Reg. section 1.1441-5(c)(2)(ii) and (e)(5)(iv).

The objective of the WP agreement and/or WT agreement is to allow a foreign partnership or foreign trust to become a WP or WT and to assume the withholding and reporting obligations under chapter 3 and chapter 4 (FATCA) for payments of U.S. source income (such as interest, dividends, and royalties) made to its partners, beneficiaries, or owners, and in some cases, persons holding interests in the WP or WT through one or more foreign intermediaries or flow-through entities.

Rev. Proc. 2014-47 [PDF 307 KB] provides:

  • Background on the withholding and reporting requirements of chapters 3 and 4 of the Code
  • Changes to the existing WP agreement and WT agreement published in Rev. Proc. 2003-64
  • Application procedures for becoming a withholding foreign partnership or withholding foreign trust and for renewing a WP agreement or WT agreement
  • Revised text of the WP agreement and the WT agreement

The WP and WT agreements provided in Rev. Proc. 2014-47 apply to WP and WT agreements with effective dates on or after June 30, 2014.

Updated FAQ

The IRS today also posted a new “frequently asked question” (FAQ) with regards to the application of the pre-existing obligation election to intermediaries and flow-through entities.

According to an IRS transmittal message, the new FAQ is posted under the topic “General Compliance” and is indicated with this notation: “Date posted: 8/8/2014.”

Read: FATCA - FAQs General

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