Federal Register: April 2, 2009 (Volume 74, Number 62)
DOCID: fr02ap09-3 FR Doc E9-7392
DEPARTMENT OF THE TREASURY
Internal Revenue Service
CFR Citation: 26 CFR Part 1
RIN ID: RIN 1545-BD80
TD ID: [TD 9394]
NOTICE: RULES
DOCID: fr02ap09-3
DOCUMENT ACTION: Correcting amendments.
SUBJECT CATEGORY:
Special Rules To Reduce Section 1446 Withholding; Correction
DATES: This correction is effective on April 2, 2009, and is applicable on April 29, 2008.
DOCUMENT SUMMARY:
This document contains corrections to final regulations (TD 9394) that were published in the Federal Register on Tuesday, April 29, 2008 (73 FR 23069) regarding when a partnership may consider certain deductions and losses of a foreign partner to reduce or eliminate the partnership's obligation to pay withholding tax under section 1446 on effectively connected taxable income allocable under section 704 to such partner. The regulations will affect partnerships engaged in a trade or business in the United States that have one or more foreign partners.
SUMMARY:
Special Rules To Reduce Section 1446 Withholding; Correction,
SUPPLEMENTAL INFORMATION
Background
The final regulations that are the subject of this document are under sections 1446, 1464, 6071, 6091, 6151, 6302, and 6414 of the Internal Revenue Code.
Need for Correction
As published, final regulations (TD 9394) contains errors that may prove to be misleading and are in need of clarification.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements. Correction of Publication
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:
PART 1INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.14466 is amended as follows:
1. Paragraph (c)(2)(i) is revised.
2. The last sentence of paragraph (d)(3)(ii) is revised and a new sentence is added at the end of the paragraph.
3. Paragraphs (e)(1)(vi) second occurrence, (e)(1)(vii), and
(e)(1)(viii) are redesignated as paragraphs (e)(1)(vii), (e)(1)(viii), and (e)(1)(ix), respectively.
4. The first sentence of paragraph (e)(2) Example 2.(i) is revised.
5. The third and fourth sentences of paragraph (e)(2) Example 2.(ii) are revised.
6. The fourth sentence of paragraph (e)(2) Example 4. is revised. 7. Paragraph (e)(2) Example 6.(ii) is revised.
The revisions and addition read as follows:
Sec. 1.14466 Special rules to reduce a partnership's 1446 tax with
respect to a foreign partner's allocable share of effectively connected taxable income.
* * * * *
(c) * * *
(2) * * *
(i) Form of certification. A partner's certification to a
partnership under paragraph (c)(1)(i) or (iii) of this section shall be
made using Form 8804C, ``Certificate Of PartnerLevel Items to Reduce
Section 1446 Withholding'' in accordance with the instructions of the form and the rules of this section.
* * * * *
(d) * * *
(3) * * *
(ii) * * * To permit the partnership to reasonably rely on such
certificate, the partnership shall be considered to have satisfied the
requirements of paragraph (d)(3)(i) of this section if the partnership
demonstrates that such failure was due to reasonable cause and not
willful neglect and if once the partnership becomes aware of the
failure, the partnership attaches the certificate and computation, as
well as a written statement setting forth the reasons for the failure
to comply with the requirements of paragraph (d)(3)(i) of this section, to an amended Form 8813 or amended Forms 8804 and 8805
[[Page 14932]]
for the relevant period. All such submissions should be sent to the address provided in the instructions to Form 8804C.
* * * * *
(e) * * *
(2) * * *
Example 2. * * *
(i) Assume the same facts as in Example 1. * * *
(ii) * * * As described in Example 1, NRA's year 4 U.S. income
tax return is a qualifying U.S. income tax return because it will
report income or gain effectively connected with a U.S. trade or
business and is described under paragraph (b)(2)(iii)(C) of this
section. Although NRA's year 5 U.S. income tax return reports income
or gain effectively connected with a U.S. trade or business or
deductions or losses properly allocated and apportioned to such
activities it is not a qualifying U.S. income tax return under paragraph (b)(2)(iii) of this section. * * *
* * * * *
Example 4. * * * NRA timelyfiled (within the meaning of
paragraph (b)(2) of this section) U.S. income tax returns for years
1 through 6 reporting its allocable share of ECTI (or loss) from XYZ (and timely paid all tax shown on such returns). * * *
* * * * *
Example 6. * * *
(ii) If PRS had considered only $900 (or a lesser amount) of
NRA's certified net operating loss when computing and paying its
1446 tax during year 4 then, under paragraph (d)(2)(iii) of this
section, PRS would not be liable for 1446 tax because it did not
consider a net operating loss greater than the amount actually available to NRA.
Par. 3. Section 1.14641 is amended by revising paragraph (c) to read as follows:
Sec. 1.14641 Refunds or credits.
* * * * *
(c) Effective/Applicability date. The last sentence in paragraph
(a) of this section shall apply to partnership taxable years beginning after April 29, 2008.
Par. 4. Section 1.61511 is amended by revising paragraph (e) to read as follows:
Sec. 1.61511 Time and place for paying tax shown on returns. * * * * *
(e) Effective/Applicability date. Paragraph (d)(2) of this section
shall apply to publicly traded partnerships described in Sec. 1.14464
for partnership taxable years beginning after April 29, 2008. * * * * *
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).
[FR Doc. E97392 Filed 4109; 8:45 am]
BILLING CODE 483001P
FOR FURTHER INFORMATION CONTACT
Ronald M. Gootzeit at (202) 622-3860 (not a tollfree number).