Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, And W-2g - General Instructions For Certain Information Returns - 2018 Page 21
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30payments that are made to it for its partners, beneficiaries,
made to that payee after the expiration of the grace
or owners. See Rev. Proc. 2017-21, 2017-6 I.R.B. 791,
period.
available at IRS.gov/irb/2017-06_IRB#RP-2017-21, for
Rules for Payments Made to U.S. Nonexempt
procedures for entering into a withholding foreign
Recipients Through a QI, NQI, or FTE
partnership or trust agreement.
Nonwithholding foreign partnership, simple trust,
If you are the payer making a payment through a QI, NQI,
or grantor trust. A nonwithholding foreign partnership is
or FTE for a U.S. nonexempt recipient on whose behalf
any foreign partnership other than a withholding foreign
the QI, NQI, or FTE is acting, use the following rules to
partnership. A nonwithholding foreign simple trust is any
complete Form 1099.
foreign simple trust that is not a withholding foreign trust.
Known recipient. If you know that a payee is a U.S.
A nonwithholding foreign grantor trust is any foreign
nonexempt recipient and have the payee's name,
grantor trust that is not a withholding foreign trust.
address, and TIN (if a TIN has been provided), you must
Fiscally transparent entity. An entity is treated as
complete the Form 1099 with that information unless you
fiscally transparent with respect to an item of income to
are not required to report the payment under Regulations
the extent that the interest holders in the entity must, on a
section 1.6049-4(c)(4) (applicable only to certain
current basis, take into account separately their shares of
payments to specified FFIs). Also, on the second name
an item of income paid to the entity, whether or not
line below the recipient's name, enter “IMY” followed by
distributed, and must determine the character of the items
the name of the QI, NQI, or FTE.
of income as if they were realized directly from the
sources from which they were realized by the entity. For
For payments made to multiple recipients: (a) enter the
example, partnerships, common trust funds, and simple
name of the recipient whose status you relied on to
trusts or grantor trusts are generally considered to be
determine the applicable rate of withholding, and (b) on
fiscally transparent with respect to items of income
the second name line, enter “IMY” followed by the name
received by them.
of the QI, NQI, or FTE. However, if the QI has assumed
primary Form 1099 reporting or backup withholding
Presumption Rules
responsibility, you are not required to issue the Form 1099
or to backup withhold. See
Qualified intermediary
(QI),
For additional information including details on the
earlier.
presumption rules, see the Instructions for the
TIP
Requester of Forms W-8BEN, W-8BEN-E,
Unknown recipient. If you cannot reliably associate a
W-8ECI, W-8EXP, and W-8IMY; and Pub. 515. To order,
payment with valid documentation and are required to
see
How To Get Forms, Publications, and Other
presume a payee is a U.S. nonexempt recipient, do the
Assistance
under
part
T.
following.
1. File a Form 1099 and enter “unknown recipient” on
If you are the payer and do not have a Form W-9,
the first name line.
appropriate Form W-8, or other valid documentation, or
you cannot allocate a payment to a specific payee, prior to
2. On the second name line, enter “IMY” followed by
payment, you are required to use certain presumption
the name of the NQI or FTE.
rules to determine the following.
3. Enter the EIN of the NQI or FTE, if applicable, in the
The status of the payee as a U.S. or foreign person.
recipient's TIN box.
The classification of the payee as an individual, trust,
4. Furnish a copy of the Form 1099 with “unknown
estate, corporation, or partnership.
recipient” to the NQI or FTE who is acting on the
See Regulations sections 1.1441-1(b)(3), 1.1441-5(d)
recipient's behalf.
and (e), 1.6045-1(g)(3)(ii), and 1.6049-5(d).
A payer that is required to report payments made
to a U.S. nonexempt recipient account holder but
Under these presumption rules, if you must presume
!
does not receive the necessary allocation
that the payee is a U.S. nonexempt recipient subject to
CAUTION
information cannot report those payments on a pro rata
backup withholding, you must report the payment on a
basis. Report unallocated payments using the
Form 1099. However, if before filing Form 1099 with the
presumption rules described above.
IRS the recipient is documented as foreign, then report
the payment on a Form 1042-S.
Rules for Non-U.S. Payers
Conversely, if you must presume that the payee is a
Non-U.S. payers (foreign persons that are not U.S.
foreign recipient and prior to filing Form 1042-S with the
payers) generally have the same reporting obligations as
IRS you discover that the payee is a U.S. nonexempt
U.S. payers. A U.S. payer is anyone who is:
recipient based on documentation, then report all
A U.S. person;
payments made to that payee during the calendar year on
Any U.S. governmental agency;
a Form 1099.
A controlled foreign corporation (CFC);
A foreign partnership that has one or more U.S.
If you use the 90-day grace period rule to presume a
partners who, in the aggregate, hold more than 50% of the
payee is foreign, you must file a Form 1042-S to report all
gross income derived from the conduct of a U.S. trade or
payments subject to withholding during the grace period.
business;
If, after the grace period expires, you discover that the
payee is a U.S. nonexempt recipient subject to backup
withholding, you must file a Form 1099 for all payments
-21-
Gen. Instr. for Certain Info. Returns (2018)
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