General Instructions

Purpose of Form

Form 8804-C is used by a foreign partner who chooses to provide to a partnership a certification under Regulations section 1.1446-6 to reduce or eliminate the partnership's withholding tax obligation under section 1446 (1446 tax) on the partner's allocable share of effectively connected taxable income (ECTI) from the partnership. The foreign partner uses Form 8804-C to certify to the partnership that it has certain partner-level deductions and losses that can reduce or eliminate the 1446 tax on its allocable share of ECTI from the partnership or that its investment in the partnership is its only activity giving rise to effectively connected income, gain, loss, or deduction. The foreign partner also uses Form 8804-C to update information previously certified to the partnership for the same tax year (updated certificate).

Each foreign partner who chooses to submit a certificate to a partnership must submit a separate Form 8804-C. Also, a foreign partner must submit a new Form 8804-C for each tax year in which it chooses to utilize the provisions of Regulations section 1.1446-6.

A partnership that receives a Form 8804-C from a foreign partner may consider the form in calculating, paying, and reporting the 1446 tax due with respect to the ECTI allocable to the foreign partner. A partnership may consider, in whole or in part, a Form 8804-C received from a foreign partner to reduce or eliminate the 1446 tax withheld and paid with respect to that partner based on the deductions and losses certified by the foreign partner on the Form 8804-C.

A partnership may also eliminate the 1446 tax due with respect to a partner that certifies, using Form 8804-C, that its investment in the partnership is its only activity giving rise to effectively connected income, gain, loss, or deduction, if the partnership estimates that the annualized (or, in the case of a partnership completing its Form 8804, the actual) 1446 tax otherwise due for that partner is less than $1,000, without taking into account any deductions or losses certified by the partner to the partnership or any state and local taxes paid by the partnership on behalf of the partner.

Who Must File

Foreign partner.   A foreign partner must use Form 8804-C to provide a certification to a partnership under Regulations section 1.1446-6 to reduce or eliminate the 1446 tax the partnership must withhold and pay on ECTI allocable to the foreign partner. The foreign partner uses Form 8804-C to certify to the partnership that it meets all the requirements of the regulations, and represents that the information provided, including filing requirements, is true, correct, and complete.

Failure to accurately supply all the information requested by the form (including attachments) may result in the IRS rejecting the form and prevent the partnership from considering the certifications in the form in calculating its 1446 tax on the partner's allocable share of ECTI.

A foreign partner should not file Form 8804-C with the IRS. Only the partnership files Form 8804-C with the IRS.

Partnership.   A partnership that receives a Form 8804-C from a foreign partner is not obligated to consider the Form 8804-C in computing the 1446 tax due with respect to that foreign partner. However, if the partnership considers the Form 8804-C in computing the 1446 tax due with respect to a foreign partner, the partnership must submit a copy of the Form 8804-C to the IRS as explained in When To File below.

If the partnership receives written notification from the IRS that a foreign partner's certificate is defective, the partnership may not use that certificate or any other certificate submitted by the foreign partner for the year submitted or any subsequent year until the partnership receives written notification from the IRS revoking or modifying the original notification.

When To File

Foreign partner.   A foreign partner may submit a Form 8804-C to a partnership at any time during the partnership's year and prior to the partnership's filing of its Form 8804.

Partnership.   A partnership must make installment payments of 1446 tax with respect to a foreign partner using Form 8813. For the first installment period in which the partnership considers a Form 8804-C in calculating an installment payment of 1446 tax, the partnership must attach a copy of the Form 8804-C to the Form 8813. For all subsequent installment periods for which the partnership considers the same Form 8804-C, the partnership may, instead of attaching a copy of the Form 8804-C, attach to the Form 8813 a statement listing the following information for each foreign partner whose certificate was relied upon during that installment period:
  • Name,

  • Taxpayer identification number, and

  • The amount of certified deductions and losses, and the amount of state and local taxes (if any) the partnership may consider under Regulations section 1.1446-6(c)(1)(iii).

  If the partnership is relying on a de minimis certification submitted by a foreign partner, the statement attached to the Form 8813 should instead indicate that no 1446 tax is due with respect to that partner based on the de minimis certification.

  In all events, the partnership must attach the foreign partner's most recently submitted Form 8804-C to the Form 8805 filed for the partnership's tax year in which the Form 8804-C was considered.

  Also, in all events, the partnership must attach a copy of the computation of 1446 tax due with respect to such foreign partner to all Forms 8813, Partnership Withholding Tax Payment Voucher (Section 1446), and Forms 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, filed with the IRS for any installment period or year for which such Form 8804-C is considered in computing the partnership's 1446 tax. The computation of 1446 tax due attached to each form must include the amount, if any, of state and local taxes described in Regulations section 1.1446-6(c)(1)(iii) that is taken into account with respect to that partner.

  A partnership that considers a Form 8804-C received from a foreign partner (including an updated Form 8804-C) when computing its 1446 tax due with respect to such partner must file Form 8813 for each installment period for which the Form 8804-C is considered, even if, as a result of relying on the certificate, no 1446 tax (or an installment of such tax) is due with respect to such foreign partner. The same rule applies with respect to the filing of Forms 8804 and 8805 at the end of the partnership's tax year.

  A partnership that fails to timely file a valid certificate and computation of 1446 tax due is considered to have satisfied the above filing requirements if the partnership demonstrates to the IRS that the failure was due to reasonable cause and not willful neglect. See Regulations section 1.1446-6(d)(3)(ii) for more information, including the requirements and documents necessary to be submitted to satisfy this requirement. All required documentation should be mailed to:

 
Department of the Treasury 
Internal Revenue Service Center 
Philadelphia, PA 19255-0549

  
A partnership that fails to comply with the above requirements will not qualify to consider a foreign partner's Form 8804-C in calculating its 1446 tax. Therefore, a partnership that considers a foreign partner's Form 8804-C under these circumstances will have underpaid its 1446 tax and may be subject to an underpayment penalty. See Regulations sections 1.1446-3(b)(2) and 1.1446-6(d)(3).

Tiered Partnership Rules

The following special rules apply to a partnership (upper-tier partnership), with one or more foreign partners, that is also a partner in another partnership (lower-tier partnership).

  1. An upper-tier partnership may submit Forms 8804-C for its direct or indirect foreign partners to a lower-tier partnership only to the extent that Regulations section 1.1446-5 applies to allow the lower-tier partnership to look through the upper-tier partnership (and any partnership owning an interest in the upper-tier partnership for which the upper-tier partnership is submitting Forms 8804-C for that partnership) to its partners. Included in this requirement is that the upper-tier partnership provide the lower-tier partnership sufficient documentation under Regulations section 1.1446-1 to determine the status of these partners and determine their indirect share of the lower-tier partnership's ECTI. See Regulations sections 1.1446-5(c) and (e).

  2. An upper-tier partnership that submits a Form 8804-C of a direct or indirect foreign partner to a lower-tier partnership may not submit that Form 8804-C to another lower-tier partnership.

  3. An upper-tier partnership that relies on a Form 8804-C submitted to it by a direct or indirect foreign partner to compute its 1446 tax due on ECTI allocable to that partner (other than ECTI allocated to it from a lower-tier partnership) may not submit that Form 8804-C to any lower-tier partnership.

  4. A lower-tier partnership that relies on a Form 8804-C of a foreign partner in an upper-tier partnership to reduce the 1446 tax due with respect to such foreign partner must submit sufficient information with each Form 8813, and Form 8805, so that the IRS may reliably associate the ECTI and the Form 8804-C with the foreign partner in the upper-tier partnership. The information submitted must include the foreign partner's name and taxpayer identification number, as well as the allocations of effectively connected items at each partnership level.

Avoid Common Errors

Foreign partner.   To ensure that your Form 8804-C is accepted, be sure that you:
  • Answer all applicable questions completely.

  • Complete the date of certification in the space provided in Part I.

  • Enter your complete name, address, and identifying number in Part I, Section A.

  • Enter the complete name, address, and EIN of the partnership in Part I, Section B.

  • Attach any statement required by line 5f, 8b, 8d, 8e, or 8f, if the line(s) is applicable.

  • If making the certification in Part II, complete lines 8a through 8f accurately to allow the IRS to determine the benefit you are claiming.

  • List on line 4a all returns that have not been filed.

  • Sign and date Part IV. If signed by an authorized representative, be sure to attach a copy of the power of attorney.

Partnership.   To qualify to consider a Form 8804-C to reduce the amount of 1446 tax withheld and paid, be sure to:
  • Attach Form 8804-C to Form 8813 for the first installment the Form 8804-C is considered. For subsequent installments, see When To File, earlier. Also attach Form 8804-C to Form 8805 when filing Form 8804.

  • Attach the required computation of 1446 tax due (see When To File, earlier) to Form 8813 for any installment period such Form 8804-C is considered in computing the partnership's 1446 tax. Also attach the required computation of 1446 tax due to Form 8805 when filing Form 8804.


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