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2013

Department of the Treasury

Internal Revenue Service

Instructions for Form 1042

Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

Section references are to the Internal Revenue

You pay gross investment income to

Rev. Proc. 2005-77, 2005-51 I.R.B.

Code unless otherwise noted.

foreign private foundations that are

1176, available at

subject to tax under section 4948(a).

Future Developments

You pay any foreign person specified

Withholding foreign partnership (WP)

For the latest information about

Federal procurement payments.

or withholding foreign trust (WT). A

developments related to Form 1042 and

WP or WT is a foreign partnership or trust

Withholding Agent

its instructions, such as legislation

that has entered into a withholding

enacted after they were published, go to

Any person required to withhold tax is a

agreement with the IRS in which it agrees

withholding agent. A withholding agent

to assume primary withholding

may be an individual, trust, estate,

responsibility for all payments that are

General Instructions

partnership, corporation, nominee (under

made to it for its partners, beneficiaries, or

section 1446), government agency,

owners. For information on these

Purpose of Form

association, or tax-exempt foundation,

withholding agreements, see Rev. Proc.

whether domestic or foreign.

2003-64, Appendix 1 and Appendix 2.

Use Form 1042 to report the following.

Also see Rev. Proc. 2004-21 and Rev.

The tax withheld on certain income of

Liability for tax. As a withholding agent,

Proc. 2005-77.

foreign persons, including nonresident

you are personally liable for any tax

aliens, foreign partnerships, foreign

required to be withheld. If you fail to

Nonqualified intermediary (NQI). An

corporations, foreign estates, and foreign

withhold and the foreign payee fails to

NQI is any intermediary that is not a U.S.

trusts.

satisfy its U.S. tax liability, then both you

person and that is not a QI.

and the foreign person are liable for tax,

The section 5000C 2% excise tax due

Qualified securities lender (QSL). A

on specified Federal procurement

as well as interest and any applicable

QSL is a foreign financial institution that is

payments.

penalties.

a bank, custodian, broker-dealer, or

The applicable tax will be collected

Publicly traded partnerships (section

clearing organization subject to regulatory

only once. If the foreign person satisfies its

1446 withholding tax). For purposes of

supervision in its home jurisdiction and

U.S. tax liability, you are not liable for the

reporting on Form 1042, a publicly traded

that is:

tax but remain liable for any interest and

partnership (PTP) must withhold section

1. Regularly engaged in the business

penalties for failure to withhold.

1446 tax on distributions of effectively

of borrowing securities of U.S.

connected income (ECI) to its foreign

corporations and lending such securities

Intermediary

partners. A nominee that receives a

to unrelated customers; and

distribution of ECI from a PTP and is

An intermediary is a person who acts as a

2. Subject to audit by the IRS under

treated as the withholding agent must use

custodian, broker, nominee, or otherwise

section 7602 or, in the case of a QI, an

Form 1042 to report the tax withheld. For

as an agent for another person, regardless

external auditor.

this purpose, a nominee is a domestic

of whether that other person is the

person holding an interest in the PTP on

beneficial owner of the amount paid, a

For further information about QSL

behalf of one or more foreign partners. For

flow-through entity, or another

status and the withholding requirements

more information, see Regulations section

intermediary.

for substitute dividend payments, see

1.1446-4 and Pub. 515, Withholding of

Notice 2010-46, 2010-24 I.R.B. 757,

Qualified intermediary (QI). A QI is an

Tax on Nonresident Aliens and Foreign

available at

intermediary that is a party to a

Entities.

withholding agreement with the IRS. An

entity must indicate its status as a QI on a

Who Must File

Where and When To File

Form W-8IMY submitted to a withholding

Every withholding agent or intermediary

Mail Form 1042 by March 17, 2014, to:

agent.

(see definitions next) who receives,

For information on a QI withholding

controls, has custody of, disposes of, or

Ogden Service Center

agreement, see:

pays any fixed or determinable annual or

P.O. Box 409101

Rev. Proc. 2000-12, which is on

periodical income must file an annual

Ogden, UT 84409

page 387 of Internal Revenue Bulletin

return for the preceding calendar year on

2000-4 at

Form 1042. Also, any PTP or nominee

Use Form 1042-T to transmit paper

irb00-04.pdf;

making a distribution of ECI under section

Forms 1042-S.

Notice 2001-4, which is on page 267 of

1446 must file Form 1042 for the

Internal Revenue Bulletin 2001-2 at

Extension of time to file. If you need

preceding calendar year.

irb01-02.pdf;

more time to file Form 1042, you may

You must file Form 1042 if any of the

Rev. Proc. 2003-64, Appendix 3,

submit Form 7004, Application for

following applies.

2003-32 I.R.B. 306, available at

Automatic Extension of Time To File

You are required to file Form(s) 1042-S

Certain Business Income Tax, Information,

(whether or not any tax was withheld or

Rev. Proc. 2004-21, 2004-14 I.R.B.

and Other Returns.

was required to be withheld). File Form

702, available at

Form 7004 does not extend the time for

1042 even if you file Forms 1042-S

payment of tax.

electronically.

and

Oct 02, 2013

Cat. No. 54843T

Instructions For Form 1042 - Annual Withholding Tax Return For U.s. Source Income Of Foreign Persons - 2013

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