Common use of Allocation of Payment on Withholding Statement Clause in Contracts

Allocation of Payment on Withholding Statement. A participating FFI must allocate a withholdable payment of U.S. source FDAP income to each payee of the payment on its withholding statement by providing payee specific information. A participating FFI may include, however, on the withholding statement information that indicates the portion of such withholdable payment that is allocated to each of its chapter 4 withholding rate pools (consisting of separate pools for each class of recalcitrant account holders, for nonparticipating FFIs, and for U.S. payees). If a participating FFI applies the escrow procedure for dormant accounts described in section 5.02 of this agreement, the participating FFI must indicate the portion of such payment allocated to a chapter 4 withholding rate pool of recalcitrant account holders that hold dormant accounts that the participating FFI (and not the withholding agent) will hold in escrow. A participating FFI must identify its pools of recalcitrant account holders in accordance with the chapter 4 reporting pools provided on Form 1042-S and its accompanying instructions. If, however, a participating FFI elects to apply backup withholding instead of withholding under chapter 4 with respect to a recalcitrant account holder that is described in section 4.01(D) of this agreement, the withholding statement provided to the withholding agent must indicate the portion of such payment subject to backup withholding under section 3406 that is allocated to the account holder and include the other information required under chapter 61 for the withholding agent to report with respect to the payment. See Form 1042-S and its accompanying instructions for information on the chapter 4 withholding rate pools applicable to recalcitrant account holders, nonparticipating FFIs, and U.S. payees. If any portion of a withholdable payment is allocable to payees not subject to withholding or reporting under chapter 4, but the payment is subject to withholding or reporting under chapters 3 or 61, see §§1.1441-1(e)(3)(iv), 1.1441-5(c)(3)(iv), 1.1441- 5(e)(5)(iv), and 1.6049-5(d) for the additional requirements for allocating a payment to payees with regard to chapters 3 or 61 (including the requirements applicable to the withholding statement and the appropriate documentation to be provided with respect to each such payee). In addition to allocating the portion of the payment to each such payee, the withholding statement must include the information necessary for the withholding agent to report the payment on Form 1042-S or Form 1099. Additionally, in a case in which a withholdable payment is allocable to an account holder of the FFI that is a passive NFFE with one or more substantial U.S. owners (or controlling persons as defined in the applicable Model 2 IGA), the participating FFI may certify on the withholding statement that it is reporting the account holder as a U.S. account required under this agreement. See §1.1471-3(c)(3)(iii)(B)(2) for the circumstances in which a participating FFI may allocate a withholdable payment to a chapter 4 withholding rate pool of U.S. payees on an FFI withholding statement, and see §1.6049-4(c)(4)(iii) for when a participating FFI may also allocate reportable payments to a chapter 4 withholding rate pool of U.S. payees on an FFI withholding statement. To the extent a payment is not subject to reporting by the withholding agent on Form 1042-S, Form 1099, or Form 8966, a participating FFI may allocate a portion of a withholdable payment to a group of documented account holders (other than nonqualified intermediaries or flow-through entities) for whom withholding and reporting is not required (an exempt payee pool) instead of allocating the payment to each payee of the payment on its withholding statement. For example, a participating FFI can provide a withholding rate pool of exempt payees for a payment of U.S. bank deposit interest that is allocable to a group of documented foreign account holders. If a participating FFI has an account holder that is acting as an intermediary or is a flow- through entity with respect to a withholdable payment and that has provided the information described in §1.1471-3(c)(2) necessary for the withholding agent to report the payment, the participating FFI must provide to its withholding agent the account holder information or pool reporting information provided to it by such other entity for determining the amount of withholding or the reporting required under chapter 4. See

Allocation of Payment on Withholding Statement. A participating FFI must allocate a withholdable payment of U.S. source FDAP income to each payee of the payment on its withholding statement by providing payee specific informationstatement. A participating FFI may include, however, on the withholding statement information that indicates the portion of such withholdable payment that is allocated to each of its chapter 4 withholding rate pools (consisting of separate pools for each class classes of recalcitrant account holders, for nonparticipating FFIs, and for U.S. payees). If a participating FFI applies the escrow procedure for dormant accounts described in section 5.02 of this agreement, the participating FFI must indicate the portion of such payment allocated to a chapter 4 withholding rate pool of recalcitrant account holders that hold dormant accounts that the participating FFI (and not the withholding agent) will hold in escrow. A participating FFI must identify its pools of recalcitrant account holders in accordance with the chapter 4 reporting withholding rate pools provided on Form 1042-S and its accompanying instructions. If, however, a participating FFI elects to apply backup withholding instead of withholding under chapter 4 with respect to a recalcitrant account holder holders that is are known U.S. persons as described in section 4.01(D) of this agreement, the withholding statement provided to the withholding agent must indicate the portion of such payment subject to backup withholding under section 3406 that is allocated to the chapter 4 withholding rate pool of recalcitrant account holder and holders that are known U.S. persons. A chapter 4 withholding rate pool of U.S. payees should include only those holders of U.S. accounts that the other information required participating FFI reports under chapter 61 for the withholding agent to report with respect to the payment4. See Form 1042-S and its accompanying instructions for information on the chapter 4 withholding rate pools applicable to recalcitrant account holders, nonparticipating FFIs, and U.S. payees. If any portion of a withholdable payment is allocable to payees not subject to withholding or reporting under chapter 4, but the payment is subject to withholding or reporting under chapters 3 or 61, see §§1.1441-1(e)(3)(iv), 1.1441-5(c)(3)(iv), 1.1441- 5(e)(5)(iv), and 1.6049-5(d) for the additional requirements for allocating a payment to payees with regard to chapters 3 or 61 (including the requirements applicable to the withholding statement and the appropriate documentation to be provided with respect to each such payee). In addition to allocating the portion of the payment to each such payee, the withholding statement must include the information necessary for the withholding agent to report the payment on Form 1042-S or Form 1099. Additionally, in a case in which a withholdable payment is allocable to an account holder of the FFI that is a passive NFFE with one or more substantial U.S. owners (or controlling persons as defined in the applicable Model 2 IGA), the participating FFI may certify on the withholding statement that it is reporting the account holder as a U.S. account required under this agreement. See §1.1471-3(c)(3)(iii)(B)(2) for the circumstances in which a participating FFI may allocate a withholdable payment to a chapter 4 withholding rate pool of U.S. payees on an FFI withholding statement, and see §1.6049-4(c)(4)(iii) for when a participating FFI may also allocate reportable payments to a chapter 4 withholding rate pool of U.S. payees on an FFI withholding statement. To the extent a payment is not subject to reporting by the withholding agent on Form 1042-S, Form 1099, or Form 8966, a participating FFI may allocate a portion of a withholdable payment to a group of documented account holders (other than nonqualified intermediaries or flow-through entities) for whom withholding and reporting is not required (an exempt payee pool) instead of allocating the payment to each payee of the payment on its withholding statement. For example, a participating FFI can provide a withholding rate pool of exempt payees for a payment of U.S. bank deposit interest that is allocable to a group of documented foreign account holders. If a participating FFI has an account holder that is acting as an intermediary or is a flow- through entity with respect to a withholdable payment and that has provided the information described in §1.1471-3(c)(2) necessary for the withholding agent to report the payment, the participating FFI must provide to its withholding agent the account holder information or pool reporting information provided to it by such other entity for determining the amount of withholding or the reporting required under chapter 4. See.