| Under the new law with respect to each U.S. | | | | persons, are exempt from Form 1099 information |
| account (any financial account held by one or | | | | reporting because they are subject to |
| more specified U.S. Persons or U.S. owned foreign | | | | non-resident withholding rules. |
| entities (IRC 1471(d)(1)(A)), the foreign financial | | | | A non-resident investor who seeks withholding |
| institution must provide information about account | | | | tax relief for U.S. source investment income must |
| gross receipts and withdrawals. | | | | provide certification on the appropriate IRS Form |
| U.S.-Source investment income is subject to U.S. | | | | W-8 to the withholding agent to establish foreign |
| information reporting and tax withholding. | | | | status and eligibility for an exemption or reduced |
| Every person engaged in a trade or business in | | | | tax rate. |
| the United States must file with the IRS a Form | | | | A withholding agent making payments of U.S. |
| 1099 information return for payments totaling at | | | | source amounts to a foreign person is required to |
| least $600 that it makes to a U.S. Person in the | | | | report the payments, including any U.S. tax |
| course of its trade or business (IRC 6041). | | | | withheld, to the IRS on Forms 1042 and 1042-S |
| To avoid 28% back-up tax withholding (IRC | | | | by March 15th of the year following the year that |
| 3406), a U.S. Person must furnish the payor with | | | | the payment is made (T.R. ยง1.1461-1(b) and (c)). |
| Form W-9 establishing that the payee is a U.S. | | | | If the withholding agent withholds more than is |
| Person (T.R. 32.3406(d)-1 and T.R. 32.3406(h)-3). | | | | required, the payee may file a claim for refund. |
| The combination of Form 1099 tax reporting and | | | | A non-financial foreign entity that is a beneficial |
| 28% back-up tax withholding is intended to | | | | owner of a withholdable payment must certify |
| ensure that U.S. Persons pay tax on investment | | | | that it has no substantial U.S. owners or provide |
| income. | | | | identifying information for each substantial U.S. |
| U.S. source income amounts, paid to foreign | | | | owner. |