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reported on all Forms 1042-S filed by the

payments related to grandfathered

Name of the QDD (following the naming

withholding agent for the calendar year

obligations (for example, obligations

protocol used for applying to be a QDD),

(including amounts reported under both

outstanding on July 1, 2014). See

Regular EIN of the QI (not the QI-EIN)

chapter 3 and chapter 4). You must

Regulations section 1.1471-2(b). The

or a statement that the QI does not have a

complete this section even if you did not

amount reported on this line should

regular EIN (as applicable), and

make any payments subject to chapter 4

generally equal the aggregate amount

The table described below.

withholding during the calendar year. This

reported in box 2 on all of the

In addition to providing a separate table

section also allows reporting of the

Forms 1042-S you filed for the calendar

for each QDD, if a taxpayer has a taxable

amounts of U.S. source FDAP income for

year for which the exemption code 13,

year other than the calendar year, the

which chapter 4 withholding is required

Grandfathered payment, was included in

taxpayer must provide separate tables for

and reporting of the amounts for which

box 4a.

each QDD for the portion of the calendar

withholding is not required according to

Line 2d. Enter the amounts of U.S.

year in the first taxable year and the

the exemption from chapter 4 withholding

source FDAP income that are not

portion in the second taxable year.

applicable to each such amount.

withholdable payments because they are

Table. The attachment must include a

payments of effectively connected

Note. The amounts of U.S. source FDAP

table with columns for the gross amount,

income. The amount reported on this line

income reportable for chapter 4 are:

the rate of tax, and the amount of tax

should generally equal the aggregate

Payments of U.S. source FDAP income

liability. The table must have the following

amount reported in box 2 on all of the

for which withholding under chapter 4 was

rows:

Forms 1042-S you filed for the calendar

applied to the payment, plus

Total section 871(m) amount,

year for which the exemption code 14,

Payments of U.S. source FDAP income

Total dividends received in its equity

Effectively connected income, was

for which withholding under chapter 4 was

derivatives dealer capacity,

included in box 4a.

not required but that are subject to

Total QDD tax liability pursuant to

reporting for chapter 3 purposes on Forms

Line 2e. Enter the sum of all amounts

section 3.09(A) of the Qualified

1042-S.

of U.S. source FDAP income required to

Intermediary Agreement (for these

be reported on Form 1042, but that are not

Line 1. Enter the amounts of U.S. source

purposes, only include the amount of the

required to be withheld upon under

FDAP income required to be withheld

tax liability),

chapter 4 (sum of lines 2a through 2d).

upon under chapter 4 including amounts

Total QDD tax liability pursuant to

withheld upon but for which no deposit

section 3.09(B) of the Qualified

Line 4. Enter the sum of all amounts

has been made under an escrow

Intermediary Agreement, and

shown on Form 1042-S, box 2 that are

procedure.

Total QDD tax liability pursuant to

payments of U.S. source FDAP income

section 3.09(C) of the Qualified

(including amounts reported under both

Line 2. Enter amounts of U.S. source

Intermediary Agreement.

chapter 3 and chapter 4). The amount on

FDAP income not required to be withheld

line 4 should equal the total gross

upon under chapter 4 on lines 2a through

Note. For 2017 and 2018, the columns for

amounts reported on line 62c.

2d according to the exception to

total section 871(m) amount and total

withholding that applied to each payment

Line 5. The amount on line 5 should be

QDD tax liability pursuant to Section

reportable on Form 1042-S. The amount

the total reported on line 4 (total amount

3.09(A) of the Qualified Intermediary

on line 2e should equal the sum of lines 2a

reported on all forms 1042-S) less the total

Agreement should state “Not Applicable.”

through 2d.

reported on line 3 (total U.S. source FDAP

Third Party Designee

reportable under chapter 4).

Line 2a. Enter the amounts of U.S.

source FDAP income that are

If you want to allow any individual,

Line 6. If the amount reported on line 5 is

withholdable payments, but for which the

corporation, firm, organization, or

other than zero, use this line to provide an

withholding agent has obtained

partnership to discuss your 2017 Form

explanation for the variance. If additional

documentation that establishes a

space is needed, attach a sheet to Form

1042 with the IRS, check the “Yes” box in

chapter 4 status that does not require

the Third Party Designee section of the

1042 explaining the difference noted on

withholding under chapter 4 (for example,

return. Also, enter the designee's name,

line 5.

Participating FFI). The amount reported on

phone number, and any five digits the

Section 3

this line should generally equal the

designee chooses as his or her personal

aggregate amount reported in box 2 on all

identification number (PIN). The

Check the box if you are a withholding

of the Forms 1042-S you filed for the

authorization applies only to the tax form

agent that makes any payment under a

calendar year for which exemption code

upon which it appears.

potential section 871(m) transaction

15, Payee not subject to chapter 4

during the year, including a notional

withholding, was included in box 4a.

If you check the “Yes” box, you are

principal contract or other derivative

authorizing the IRS to call the designee to

contract that references in whole or in part

Line 2b. Enter the amounts of U.S.

answer any questions relating to the

source FDAP income that are not

a U.S. stock or underlying security. See

information reported on your tax return.

Regulations section 1.871-15(a)(12) for

withholdable payments because they are

You also are authorizing the designee to:

the definition of a potential section 871(m)

nonfinancial type payments (for example,

Exchange information concerning your

transaction.

royalties, services, rents). The amount

tax return with the IRS, and

reported on this line should generally

Request and receive written tax return

Section 4

equal the aggregate amount reported in

information relating to your tax return,

box 2 on all of the Forms 1042-S you filed

If a QI (whether the home office or any

including copies of specific notices,

for the calendar year for which the

branch) makes any payments (whether or

correspondence, and account transcripts.

exemption code 16, Excluded nonfinancial

not the payments are subject to

You are not authorizing the designee to

payment, was included in box 4a.

withholding) during the year in its QDD

receive any refund check, bind you to

capacity, check the box and attach a

Line 2c. Enter the amounts of U.S.

anything (including additional tax liability),

statement with the following information

source FDAP income that are not

or otherwise represent you before the IRS.

for each QDD:

withholdable payments because they are

If you want to expand the designee’s

Instructions for Form 1042 (2017)

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Instructions For Form 1042 - Annual Withholding Tax Return For U.s. Source Income Of Foreign Persons - 2017 Page 9

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