In the case of a foreign financial institution which is treated as a qualified intermediary by the Secretary for purposes of section 1441 and the regulations issued thereunder, the requirements of this section shall be in addition to any reporting or other requirements imposed by the Secretary for purposes of such treatment.
26 U.S. Code § 1471. Withholdable payments to foreign financial institutions
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(a) In general
(b) Reporting requirements, etc.
(1) In generalThe requirements of this subsection are met with respect to any foreign financial institution if an agreement is in effect between such institution and the Secretary under which such institution agrees—
to obtain such information regarding each holder of each account maintained by such institution as is necessary to determine which (if any) of such accounts are United States accounts,
in the case of any United States account maintained by such institution, to report on an annual basis the information described in subsection (c) with respect to such account,
(D) to deduct and withhold a tax equal to 30 percent of—
in the case of any passthru payment which is made by such institution to a foreign financial institution which has in effect an election under paragraph (3) with respect to such payment, so much of such payment as is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection,
(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
to attempt to obtain a valid and effective waiver of such law from each holder of such account, and
(2) Financial institutions deemed to meet requirements in certain casesA foreign financial institution may be treated by the Secretary as meeting the requirements of this subsection if—
(A) such institution—
such institution is a member of a class of institutions with respect to which the Secretary has determined that the application of this section is not necessary to carry out the purposes of this section.
(3) Election to be withheld upon rather than withhold on payments to recalcitrant account holders and nonparticipating foreign financial institutionsIn the case of a foreign financial institution which meets the requirements of this subsection and such other requirements as the Secretary may provide and which elects the application of this paragraph—
the withholding tax imposed under subsection (a) shall apply with respect to any withholdable payment to such institution to the extent such payment is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection, and
(C) the agreement described in paragraph (1) shall—
(c) Information required to be reported on United States accounts
(1) In generalThe agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution:
The account balance or value (determined at such time and in such manner as the Secretary may provide).
(2) Election to be subject to same reporting as United States financial institutionsIn the case of a foreign financial institution which elects the application of this paragraph—
(B) the agreement described in subsection (b) shall require such foreign financial institution to report such information with respect to each United States account maintained by such institution as such institution would be required to report under sections 6041, 6042, 6045, and 6049 if—
such institution were a United States person, and
(3) Separate requirements for qualified intermediaries
(d) DefinitionsFor purposes of this section—
(1) United States account
(A) In general
(B) Exception for certain accounts held by individualsUnless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if—
each holder of such account is a natural person, and
with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.
(C) Elimination of duplicative reporting requirementsSuch term shall not include any financial account in a foreign financial institution if—
such account is held by another financial institution which meets the requirements of subsection (b), or
(2) Financial accountExcept as otherwise provided by the Secretary, the term “financial account” means, with respect to any financial institution—
any depository account maintained by such financial institution,
any custodial account maintained by such financial institution, and
(3) United States owned foreign entity
(4) Foreign financial institution
(5) Financial institutionExcept as otherwise provided by the Secretary, the term “financial institution” means any entity that—
accepts deposits in the ordinary course of a banking or similar business,
as a substantial portion of its business, holds financial assets for the account of others, or
is engaged (or holding itself out as being engaged) primarily in the business of investing, reinvesting, or trading in securities (as defined in section 475(c)(2) without regard to the last sentence thereof), partnership interests, commodities (as defined in section 475(e)(2)), or any interest (including a futures or forward contract or option) in such securities,partnership interests, or commodities.
(6) Recalcitrant account holderThe term “recalcitrant account holder” means any account holder which—
fails to comply with reasonable requests for the information referred to in subsection (b)(1)(A) or (c)(1)(A), or
(e) Affiliated groups
(1) In generalThe requirements of subsections (b) and (c)(1) shall apply—
except as otherwise provided by the Secretary, with respect to United States accounts maintained by each other foreign financial institution (other than any foreign financial institution which meets the requirements of subsection (b)) which is a member of the same expanded affiliated group as such foreign financial institution.
(2) Expanded affiliated groupFor purposes of this section, the term “expanded affiliated group” means an affiliated group as defined in section 1504(a), determined—
A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this sentence).
(f) Exception for certain paymentsSubsection (a) shall not apply to any payment to the extent that the beneficial owner of such payment is—
any international organization or any wholly owned agency or instrumentality thereof,
A prior section 1471, act Aug. 16, 1954, ch. 736, 68A Stat. 361, related to recovery of excessive profits on government contracts, prior to repeal by Pub. L. 94–455, title XIX, § 1901(b)(13)(A), Oct. 4, 1976, 90 Stat. 1840.
Except as otherwise provided in this subsection, the amendments made by this section [enacting this chapter and amending sections 6414, 6501, 6513, 6611, and 6724 of this title] shall apply to payments made after December 31, 2012.
“(2)Grandfathered treatment of outstanding obligations.—
The amendments made by this section shall not require any amount to be deducted or withheld from any payment under any obligation outstanding on the date which is 2 years after the date of the enactment of this Act [Mar. 18, 2010] or from the gross proceeds from any disposition of such an obligation.
“(3)Interest on overpayments.—The amendment made by subsection (b) [amending section 6611 of this title] shall apply—
in the case of such amendment’s application to paragraph (3) of such section, to refunds paid after the date of the enactment of this Act (regardless of the taxable period to which such refund relates).”