Instructions For Forms 1099-Sa And 5498-Sa - 2006 (Page 19 of 25) in pdf

Nonwithholding foreign partnership, simple trust, or

that the payee of the income is a U.S. nonexempt recipient, it

grantor trust. A nonwithholding foreign partnership is any

must file a Form 1099 even if the payment has been subject to

foreign partnership other than a withholding foreign partnership.

withholding by another payer. The NQI or QI reports the amount

A nonwithholding foreign simple trust is any foreign simple trust

withheld by the other payer on Form 1099 as federal income tax

that is not a withholding foreign trust. A nonwithholding foreign

withheld.

grantor trust is any foreign grantor trust that is not a withholding

Definitions

foreign trust.

Foreign intermediary. A foreign intermediary is any person

Fiscally transparent entity. An entity is treated as fiscally

who is not a U.S. person and acts as a custodian, broker,

transparent with respect to an item of income to the extent that

nominee, or otherwise as an agent for another person,

the interest holders in the entity must, on a current basis, take

regardless of whether that other person is the beneficial owner

into account separately their shares of an item of income paid

of the amount paid, a flow-through entity, or another

to the entity, whether or not distributed, and must determine the

intermediary. The intermediary can be a qualified intermediary

character of the items of income as if they were realized directly

or a nonqualified intermediary.

from the sources from which they were realized by the entity.

For example, partnerships, common trust funds, and simple

Qualified intermediary (QI). A qualified intermediary is a

trusts or grantor trusts are generally considered to be fiscally

person that is a party to a withholding agreement with the IRS

transparent with respect to items of income received by them.

and is:

•

A foreign financial institution or a foreign clearing

organization (other than a U.S. branch or U.S. office of the

T. Need Help?

institution or organization),

•

A foreign branch or office of a U.S. financial institution or a

Information Reporting Customer Service Site

foreign branch or office of a U.S. clearing organization,

•

A foreign corporation for purposes of presenting claims of

If you have questions about reporting on Forms 1096, 1098,

benefits under an income tax treaty on behalf of its

1099, 5498, W-2, W-2G, and W-3, you may call a toll-free

shareholders, or

number, 1-866-455-7438. You may still use the original

•

Any other person the IRS accepts as a qualified intermediary

telephone number, 304-263-8700 (not toll free). For TTY/TDD

and who enters into a withholding agreement with the IRS.

equipment, call 304-267-3367 (not toll free). The call site can

also be reached by email at mccirp@irs.gov. The hours of

For details on QI agreements, see:

•

operation for the call site are Monday through Friday from 8:30

Rev. Proc. 2000-12 that is on page 387 of Internal Revenue

a.m. to 4:30 p.m., Eastern time.

Bulletin 2000-4 at

•

Other tax-related matters. For other tax information related to

Modified by Rev. Proc. 2003-64, Section 4A (Appendix 3),

business returns or accounts, call 1-800-829-4933.

that is on page 306 of Internal Revenue Bulletin 2003-32 at

If you have access to TTY/TDD equipment, call

•

Further modified by Rev. Proc. 2004-21 that is on page 702

1-800-829-4059 to ask tax account questions or to order forms

of Internal Revenue Bulletin 2004-14 at

and publications.

irs-irbs/irb04-14.pdf; and

•

Internal Revenue Bulletin

Also see Rev. Proc. 2005-77 which amends the final

The Internal Revenue Bulletin (IRB), published weekly, contains

withholding partnership and withholding foreign trust

newly issued regulations, notices, announcements, legislation,

agreements by expanding the availability of simplified

court decisions, and other items of general interest. You may

documentation, reporting, and withholding procedures, further

find this publication useful to keep you up to date with current

modifying Rev. Proc. 2003-64. Rev. Proc. 2005-77 is available

developments. See How To Get Forms and Publications on

on page 1176 of Internal Revenue Bulletin 2005-51at

page GEN-16.

gov/pub/irs-irbs/irb05-51.pdf.

Unresolved Tax Issues

Generally, a branch of a financial institution may not

operate as a QI after December 31, 2006, in a country

If you have attempted to deal with an IRS problem

that does not have approved know-your-customer (KYC)

unsuccessfully, you should contact the Taxpayer Advocate. The

CAUTION

rules. Branches of financial institutions that operate in non-KYC

Taxpayer Advocate independently represents your interests

approved jurisdictions will be required to act as non-qualified

and concerns within the IRS by protecting your rights and

intermediaries after December 31, 2006, or after December 31,

resolving problems that have not been fixed through normal

2007, if an extension to operate as a QI was approved by the

channels.

IRS. For additional information, see Notice 2006-35 which is on

While Taxpayer Advocates cannot change the tax law or

page 708 of Internal Revenue Bulletin 2006-14 at gov/

make a technical decision, they can clear up problems that

pub/irs-irbs/irb06-14.pdf.

resulted from previous contacts and ensure that your case is

Nonqualified intermediary (NQI). A nonqualified

given a complete and impartial review.

intermediary is any intermediary that is not a U.S. person and

Your assigned personal advocate will listen to your point of

that is not a qualified intermediary.

view and will work with you to address your concerns. You can

Foreign flow-through entity (FTE). A flow-through entity is a

expect the advocate to provide:

•

foreign partnership (other than a withholding foreign

A “fresh look” at a new or on-going problem.

•

partnership), a foreign simple trust or foreign grantor trust (other

Timely acknowledgment.

•

than a withholding foreign trust), or, for payments for which a

The name and phone number of the individual assigned to

reduced rate of withholding is claimed under an income tax

your case.

•

treaty, any entity to the extent the entity is considered to be

Updates on progress.

•

fiscally transparent under section 894 with respect to the

Timeframes for action.

•

payment by an interest holder’s jurisdiction.

Speedy resolution.

•

Courteous service.

Withholding foreign partnership or withholding foreign

trust. A withholding foreign partnership or withholding foreign

When contacting the Taxpayer Advocate, you should provide

trust is a foreign partnership or a foreign simple or grantor trust

the following information:

•

that has entered into a withholding agreement with the IRS in

Your name, address, and employer identification number

which it agrees to assume primary withholding responsibility for

(EIN).

•

all payments that are made to it for its partners, beneficiaries, or

The name and telephone number of an authorized contact

owners. See Rev. Proc. 2003-64 as amended by Rev. Proc.

person and the hours he or she can be reached.

•

2004-21, for procedures for entering into a withholding foreign

The type of tax return and year(s).

•

partnership or trust agreement.

A detailed description of the problem.

GEN-15

Instructions For Forms 1099-Sa And 5498-Sa - 2006 Page 19

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