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Renewal of Withholding Foreign Partnerships and Withholding Foreign Trusts

How will Withholding Foreign Partnerships (WP) and Withholding Foreign Trusts (WT) renew their WP and WT agreements, if the revised WP and WT agreements will not be published before June 30, 2014?

Treasury and the IRS anticipate publishing the revised withholding agreements for Withholding Foreign Partnerships (WPs) and Withholding Foreign Trusts (WTs) in July 2014. Because an existing agreement for an entity acting as a WP or WT expires after June 30, 2014 unless renewed before then, a WP or WT that seeks to renew its status as a  WP or WT is required to do so by June 30, 2014 by submitting a registration form through the FATCA registration website.  See Notice 2013-43, 2013-31 I.R.B. 113 for the automatic extension provided for certain WP and WT agreements until June 30, 2014. Notwithstanding this requirement, the IRS will permit a WP or WT to represent itself as a WP or WT to a withholding agent for a payment received before August 1, 2014 provided that the WP or WT continues to comply with its obligations under a WP or WT agreement in effect as of June 30, 2014.  The allowance provided in the preceding sentence does not extend to a WP or WT that is a foreign financial institution (FFI) that does not obtain a chapter 4 status required of a WP or WT that is an FFI by the date of the payment. See §1.1441-5(c)(2)(ii) and (e)(5)(v) for the chapter 4 status required of a WP or WT that is an FFI. Apart from this chapter 4 status requirement, an entity that wishes to renew its status as a WP or WT and obtain the benefit of this transitional treatment will have until July 31, 2014 to register with the IRS to renew its WP or WT status and will not be required to assume the requirements of an updated agreement before August 1, 2014 (regardless of whether the entity registers for WP or WT status before or after the publication date of the revised agreement). Because the revised WP and WT agreements will require these entities to assume primary chapter 4 withholding responsibilities with respect to their partners, beneficiaries and owners (as applicable) under sections 1471 and 1472 in addition to their existing withholding requirements under the WP and WT agreements, a WP or WT that makes a distribution for which withholding is required under chapter 4 before August 1, 2014 with respect to a partner, beneficiary or owner and does not withhold may apply the procedures referenced in §1.1474-2(b) to satisfy any underwithholding. See the instructions to Form 8957, Foreign Tax Compliance Act (FATCA) Registration, for further information regarding the registration of an entity seeking to renew a WP or WT agreement.

Page Last Reviewed or Updated: 25-Jun-2014