[Federal Register Volume 68, Number 150 (Tuesday, August 5, 2003)]
[Rules and Regulations]
[Pages 46081-46087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19273]


=======================================================================
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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 301 and 602

[TD 9082]
RIN 1545-AY24


Revision of Income Tax Regulations Under Sections 897, 1445, and 
6109 To Require Use of Taxpayer Identifying Numbers on Submissions 
Under the Section 897 and 1445 Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains final and temporary regulations to 
require the use of taxpayer identifying numbers on submissions under 
sections 897 and 1445. The regulations are necessary to properly 
identify foreign taxpayers for which submissions are made for the 
reduction or elimination of tax under sections 897 and 1445. The 
regulations also address certain additional issues under section 1445.

DATES: Effective Date: These regulations are effective August 5, 2003.
    Applicability Date: For dates of applicability, see Sec. Sec.  
1.897-3(h), 1.897-5(e), 1.1445-1(h), 1.1445-2(b)(2)(iii), 1.1445-
2(d)(2)(iv), 1.1445-2(e), 1.1445-3(h), 1.1445-5(b)(8)(iii), 1.1445-
5(h), and 1.1445-6(h).

FOR FURTHER INFORMATION CONTACT: Robert W. Lorence, Jr. (202) 622-3860 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in these final regulations 
have been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under 
control number 1545-1797. The collection of information in these final 
regulations are in Sec. Sec.  1.1445-2(d)(2) and 1.1445-3. These 
collections of information are required to notify the IRS of 
dispositions of U.S. real property interests by foreign persons that 
otherwise are subject to taxation under section 897 and the collection 
of a withholding tax under section 1445.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number assigned by the Office of 
Management and Budget.
    The estimated annual burden per respondent varies from 3 to 5 
hours, depending on individual circumstances, with an estimated average 
of 4 hours.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:T:T:SP, 
Washington, DC 20224, and to the Office of Management and Budget, Attn: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, DC 20503.
    Books or records relating to these collections of information must 
be retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains amendments to 26 CFR parts 1 and 301. On 
July 26, 2002, a notice of proposed rule-making (REG-106876-00), 
relating to the use of taxpayer identifying numbers on submissions 
under sections 897 and 1445 of the Internal Revenue Code (Code), was 
published in the Federal Register (67 FR 48823). No public hearing was 
requested or held. Written comments responding to the notice of 
proposed rule-making were received. After consideration of the 
comments, the proposed regulations are adopted as amended by this 
Treasury decision. The revisions are discussed below.

Summary of Public Comments and Explanation of Revisions

A. Use of Taxpayer Identifying Number

    This document contains final regulations under sections 897, 1445, 
and 6109 that require foreign transferors of U.S. real property 
interests (and transferees where applicable) to provide their taxpayer 
identifying numbers (TINs) on withholding tax returns, applications for 
withholding certificates, and other notices and elections under 
sections 897 and 1445 and the regulations thereunder. TINs are required 
so that the IRS can identify foreign taxpayers and more easily match 
applications, withholding tax returns, notices, and elections with the 
transferors' income tax returns.

[[Page 46082]]

    Applications for withholding certificates, and other notices and 
elections under section 897 and 1445 will be considered incomplete and 
generally will not be processed by the IRS unless the TIN of the 
transferor is provided. Amounts withheld under section 1445 must still 
be reported and paid to the IRS on withholding tax returns (Form 8288, 
``U.S. Withholding Tax Return for Dispositions by Foreign Persons of 
U.S. Real Property Interests'', and Form 8288-A, ``Statement of 
Withholding on Dispositions by Foreign Persons of U.S. Real Property 
Interests'') if the appropriate TINs are not provided. The final 
regulations provide that although such amounts have been paid, if the 
transferor's TIN is not included, a receipt (Form 8288-A) for 
withholding tax paid to the Service will not be stamped to show receipt 
and will not be mailed to the transferor.
    In many cases, the foreign taxpayer will already have a TIN, 
because the taxpayer will have already filed a U.S. tax return. If the 
taxpayer does not already have a TIN, the TIN requirement under the 
regulations merely accelerates the time to obtain a TIN, because the 
foreign taxpayer must have a TIN to file its U.S. income tax return for 
the year of the disposition of the U.S. real property interest. In the 
case of foreign entities (such as foreign corporations) that are 
required to have employee identification numbers (EINs), the EINs can 
be obtained without delay through existing procedures.
    Commentators have expressed concern about the time it takes 
nonresident alien individuals to obtain TINs and how it could effect 
the timing of transactions. The IRS is aware of this concern and is 
exploring approaches for addressing it. For example, the IRS is 
considering implementing a program in which applications for 
withholding certificates will be processed in conjunction with 
applications for TINs. The need to obtain a TIN generally should not 
delay the time it takes to get a withholding certificate under Sec.  
1.1445-3. In addition, the portion of these regulations that imposes a 
requirement concerning TINs, will not be applicable until 90 days after 
the date of publication in the Federal Register in order to permit 
taxpayers that currently own real property additional time to obtain a 
TIN, if necessary.

B. Section 1031 Like-Kind Exchanges

    Section 1031(a) provides for the nonrecognition of gain or loss on 
the exchange of like-kind property which is held for productive use in 
a trade or business or held for investment. Section 1031(a)(3) provides 
for the exchange of like-kind property in deferred exchanges, where the 
taxpayer has 45 days after it relinquishes the property to the 
transferee to identify replacement property and the transferee has 
until the earlier of 180 days or the due date of the tax return for the 
year of transfer to deliver such property to the transferor.
    Notices of nonrecognition under Sec.  1.1445-2(d) are limited to 
exchanges (including section 1031 exchanges) that qualify for 
nonrecognition treatment in their entirety (thus, a notice of 
nonrecognition may not be used if the transferor receives money or 
other property, i.e., boot). Consistent with the proposed regulations, 
these final regulations provide that in the case of a simultaneous 
exchange of like-kind U.S. real property interests (where there is no 
boot), the foreign transferor can provide a notice of nonrecognition 
under Sec.  1.1445-2(d)(2) to the transferee, and the transferee can 
rely on such notice, because the like-kind exchange will be fully 
completed on the day of the exchange. In the case of a deferred like-
kind exchange of U.S. real property interests, the transferee cannot 
rely on a notice of nonrecognition, because the transferee cannot be 
assured that the exchange will qualify for nonrecognition treatment 
under section 1031 (e.g., that the property to be received by the 
foreign transferor will be identified within the 45-day period required 
under section 1031(a)), or even if the exchange qualifies under section 
1031, that the foreign transferor will not receive boot in the 
transaction. Although a notice of nonrecognition is not available in a 
deferred like-kind exchange, the transferee may withhold a reduced 
amount based on a claim of nonrecognition upon receipt of a withholding 
certificate pursuant to the procedures of Sec.  1.1445-3.
    Commentators have proposed that using a notice of nonrecognition 
for deferred like-kind exchanges should be permitted if a ``claim of 
intent'' to engage in an exchange qualifying for nonrecognition under 
section 1031 is provided. The IRS continues to believe that notices of 
nonrecognition are inappropriate for deferred like-kind exchanges. In a 
deferred like-kind exchange, until the replacement property has been 
identified and a contract for its purchase is executed, the transferor 
does not know with certainty that the exchange will qualify for 
nonrecognition under section 1031. Moreover, it is uncertain whether 
boot will be received in the exchange if the replacement property is 
not identified at the time the relinquished property is transferred to 
the transferee. Accordingly, the regulations do not permit a notice of 
nonrecognition in the case of a deferred like-kind exchange and require 
the taxpayer to obtain a withholding certificate.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It has also been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations. These 
regulations impose no new collection of information on small entities; 
therefore, a Regulatory Flexibility Analysis under the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to 
section 7805(f) of the Code, the proposed regulations preceding these 
regulations were submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Drafting Information

    The principal author of these regulations is Robert W. Lorence, 
Jr., Office of Associate Chief Counsel (International). However, other 
personnel from the IRS and Treasury Department participated in their 
development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting, and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR parts 1, 301 and 602 are amended as follows:

PART 1--INCOME TAXES

0
1. The authority for part 1 continues to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *


Sec.  1.897-1  [Amended]

0
2. In Sec.  1.897-1, paragraph (p), the first sentence is amended by 
adding the language ``or the identification number assigned by the 
Internal Revenue Service (see Sec.  301.6109-1 of this chapter)''

[[Page 46083]]

immediately after the language ``United States social security 
number''.


Sec.  1.897-2  [Amended]

0
3. Section 1.897-2 is amended as follows:
0
For each of the paragraphs listed in the first column, remove the 
language in the second column and add in its place the language in the 
third column:

------------------------------------------------------------------------
         Paragraphs                  Remove                  Add
------------------------------------------------------------------------
(g)(1)(i)(B)................  Director, Foreign     Commissioner, Small
                               Operations District   Business/Self
                               (``Director'').       Employed Division
                                                     (SB/SE).
(g)(1)(i), fourth sentence    Director............  Commissioner.
 of concluding text
 immediately following
 paragraph (g)(1)(i)(B).
(g)(1)(iii) heading.........  Director............  Commissioner.
(g)(1)(iii)(A), first,        Director............  Commissioner.
 fourth, and last sentences.
(g)(1)(iii)(A), third         Director, Foreign     Commissioner, Small
 sentence.                     Operations            Business/Self
                               District; 1325 K      Employed Division
                               St. NW; Washington,   (SB/SE); S C3-413
                               DC 20225.             NCFB, 500 Ellin
                                                     Road, Lanham, MD
                                                     20706.
(g)(1)(iii)(B) heading......  Director's..........  Commissioner's.
(g)(1)(iii)(B) introductory   Director............  Commissioner.
 text.
(g)(1)(iii)(B) concluding     Director............  Commissioner.
 text immediately following
 (g)(1)(iii)(B)(2).
(g)(1)(iii)(C) both places    Director............  Commissioner.
 it appears.
(g)(1)(iii)(D) heading......  Director............  Commissioner.
(g)(1)(iii)(D)..............  Director............  Commissioner.
(g)(2)(i)(B)................  Director............  Commissioner.
(g)(2)(iii) heading.........  Director............  Commissioner.
(g)(2)(iii)(A), first,        Director............  Commissioner.
 fourth, and fifth sentence
 (both places it appears).
(g)(2)(iii)(A), third         Director, Foreign     Commissioner, Small
 sentence.                     Operations            Business/Self
                               District; 1325 K      Employed Division
                               St. NW.;              (SB/SE); S C3-413
                               Washington, DC        NCFB, 500 Ellin
                               20225.                Road, Lanham, MD
                                                     20706.
(g)(2)(iii)(B) heading......  Director's..........  Commissioner's.
(g)(2)(iii)(B) introductory   Director............  Commissioner.
 text.
(g)(2)(iii)(B) concluding     Director............  Commissioner.
 text immediately following
 (g)(2)(iii)(B)(2).
(g)(2)(iii)(C), first and     Director............  Commissioner.
 second sentences.
(g)(2)(iii)(D) heading......  Director............  Commissioner.
(g)(2)(iii)(D)..............  Director............  Commissioner.
(g)(2)(iv), fourth sentence.  Director............  Commissioner.
(h)(2)(v), third sentence...  Assistant             Director,
                               Commissioner          Philadelphia
                               (International),      Service Center,
                               Director, Office of   P.O. Box 21086,
                               Compliance,           Drop Point 8731,
                               OP:I:C:E:666, 950     FIRPTA Unit,
                               L'Enfant Plaza        Philadelphia, PA
                               South, SW., COMSAT    19114-0586.
                               Building,
                               Washington, D.C.
                               20024.
(h)(4)(ii), first sentence..  Assistant             Director,
                               Commissioner          Philadelphia
                               (International),      Service Center,
                               Director, Office of   P.O. Box 21086,
                               Compliance,           Drop Point 8731,
                               OP:I:C:E:666, 950     FIRPTA Unit,
                               L'Enfant Plaza        Philadelphia, PA
                               South, SW., COMSAT    19114-0586.
                               Building,
                               Washington, D.C.
                               20024.
------------------------------------------------------------------------

    4. Section 1.897-3 is amended as follows:

0
1. For each of the paragraphs listed in the first column, remove the 
language in the second column and add in its place the language in the 
third column:

----------------------------------------------------------------------------------------------------------------
             Paragraphs                              Remove                                  Add
----------------------------------------------------------------------------------------------------------------
(c), introductory text.............  Director of the Foreign Operations     Director, Philadelphia Service
                                      District, 1325 K St., NW,              Center, P.O. Box 21086, Drop Point
                                      Washington, DC 20225.                  8731, FIRPTA Unit, Philadelphia, PA
                                                                             19114-0586.
(c)(1), introductory text, last      which must set forth.................  which must contain all the following
 sentence.                                                                   information.
(d)(1), fourth sentence............  Foreign Operations District..........  Philadelphia Service Center.
(d)(2)(i), penultimate sentence....  Director, Foreign Operations District  U.S. Treasury.
(f)(1), second sentence............  Director, Foreign Operations           Director, Philadelphia Service
                                      District, 1325 K St., NW.,             Center, P.O. Box 21086, Drop Point
                                      Washington, DC 20225.                  8731, FIRPTA Unit, Philadelphia, PA
                                                                             19114-0586.
(f)(1), fifth sentence.............  Foreign Operations District..........  Philadelphia Service Center
(g)(1), second sentence............  Director of the Foreign Operations     Director, Philadelphia Service
                                      District.                              Center.
----------------------------------------------------------------------------------------------------------------

0
2. In paragraph (c)(1)(i), remove the parenthetical ``(if any)'' after 
the words ``identifying number''.
0
3. Paragraph (h) is added to read as follows:


Sec.  1.897-3  Election by foreign corporation to be treated as a 
domestic corporation under section 897(i).

* * * * *
    (h) Effective date. The requirement in paragraph (c)(1)(i) of this 
section that the statement making the section 897(i) election contain 
the identifying number of the foreign corporation (in all cases) is 
applicable November 3, 2003.

0
5. Section 1.897-5 is added to read as follows:

[[Page 46084]]

Sec.  1.897-5  Corporate distributions.

    (a) through (d)(1)(iii)(E) [Reserved]. For further guidance, see 
Sec.  1.897-5T(a) through (d)(1)(iii)(E).
    (d)(1)(iii)(F) Identification by name and address of the 
distributee or transferee, including the distributee's or transferee's 
taxpayer identification number;
    (d)(1)(iii)(G) through (d)(4) [Reserved]. For further guidance, see 
Sec.  1.897-5T(d)(1)(iii)(G) through (d)(4).
    (e) Effective date. This section is applicable to transfers and 
distributions after November 3, 2003.

0
6. In Sec.  1.897-5T, paragraph (d)(1)(iii)(F) is revised to read as 
follows:


Sec.  1.897-5T  Corporate distributions (temporary).

* * * * *
    (d) * * * (1) * * *
    (iii) * * *
    (F) [Reserved]. For further guidance, see Sec.  1.897-
5(d)(1)(iii)(F).
* * * * *


Sec.  1.897-6T  [Amended]

0
7. Section 1.897-6T is amended as follows:
0
1. In paragraph (a)(2), second sentence, the language ``, 1034'' is 
removed.
0
2. Paragraph (a)(5) (including the undesignated paragraph at the end) 
is removed and reserved.
0
3. Paragraph (a)(7), Example 2 and Example 3 are removed and reserved.

0
8. Section 1.1445-1 is amended as follows:
0
1. In paragraph (c)(1), second sentence, remove the language ``filed 
with the Internal Revenue Service Center, Philadelphia, PA 19255'' and 
add in its place the language ``filed at the location as provided in 
the instructions to Forms 8288 and 8288-A''.
0
2. In paragraph (c)(1), two sentences are added at the end.
0
3. In paragraph (c)(2)(i)(B), second sentence, remove the phrase ``, if 
any,'' after the words ``taxpayer identification number''.
0
4. In paragraphs (d)(1)(i) and (d)(1)(ii), remove the parenthetical 
``(if any)'' after the words ``identifying number''.
0
5. In paragraphs (d)(2)(i), (d)(2)(iv)(B), and (d)(2)(vi)(B), remove 
the parenthetical ``(if any)'' after the words ``identifying number''.
0
6. In paragraph (f)(2), the first sentence is revised, and a sentence 
is added after the first sentence.
0
7. In paragraph (f)(3)(i), the last sentence is revised.
0
8. Paragraphs (g)(9) and (g)(10) are revised.
0
9. Paragraph (h) is added.
0
The additions and revisions read as follows:


Sec.  1.1445-1  Withholding on dispositions of U.S. real property 
interests by foreign persons: In general.

* * * * *
    (c) * * *
    (1) * * * Forms 8288 and 8288-A are required to include the 
identifying numbers of both the transferor and the transferee, as 
provided in paragraph (d) of this section. If any identifying number as 
required by such forms is not provided, the transferee must still 
report and pay over any tax withheld on Form 8288, although the 
transferor cannot obtain a credit or refund of tax on the basis of a 
Form 8288-A that does not include the transferor's identifying number 
(see paragraph (f)(2) of this section).
* * * * *
    (f) * * *
    (2) * * * A stamped copy of Form 8288-A will be provided to the 
transferor by the Service (under paragraph (c) of this section) if the 
Form 8288-A is complete, including the transferor's identifying number. 
Except as provided in paragraph (f)(3) of this section, a stamped copy 
of Form 8288-A must be attached to the transferor's return to establish 
the amount withheld that is available as a credit. * * *
    (3) * * *
    (i) * * * Such a transferor must attach to its return a statement 
which supplies all of the information required by Sec.  1.1445-1(d), 
including the transferor's identifying number.
* * * * *
    (g) * * *
    (9) Identifying number. Pursuant to Sec.  1.897-1(p), an 
individual's identifying number is the social security number or the 
identification number assigned by the Internal Revenue Service (see 
Sec.  301.6109-1 of this chapter). The identifying number of any other 
person is its United States employer identification number.
    (10) Address of the Director, Philadelphia Service Center. Any 
written communication directed to the Director, Philadelphia Service 
Center is to be addressed as follows: P.O. Box 21086, Drop Point 8731, 
FIRPTA Unit, Philadelphia, PA 19114-0586.
    (h) Effective date for taxpayer identification numbers. The 
requirement in paragraphs (c)(2)(i)(B), (d)(1)(i) and (ii), (d)(2)(i), 
(d)(2)(iv)(B), and (d)(2)(vi)(B) of this section that taxpayer 
identification numbers be provided (in all cases) is applicable for 
dispositions of U.S. real property interests occurring after November 
3, 2003.

0
9. Section 1.1445-2 is amended as follows:
0
1. Paragraph (b)(2)(iii) is redesignated as paragraph (b)(2)(iv), and 
new paragraph (b)(2)(iii) is added.
0
2. Newly designated paragraph (b)(2)(iv)(B) is revised.
0
3. In paragraph (d)(2)(i)(B), the language ``Assistant Commissioner 
(International)'' is removed, and ``Director, Philadelphia Service 
Center'' is added in its place, and the parenthetical ``(if any),'' is 
removed after the words ``identifying number''.
0
4. Paragraphs (d)(2)(iii) and (d)(2)(iv) are added immediately 
following the concluding text following paragraph (d)(2)(ii)(B).
0
5. In paragraphs (d)(3)(iii)(A)(2) and (d)(3)(iii)(A)(3), the 
parenthetical ``(if any)'' is removed after the words ``identifying 
number''.
    6. Paragraph (e) is added.
    The revision and additions read as follows:


Sec.  1.1445-2  Situations in which withholding is not required under 
section 1445(a).

* * * * *
    (b) * * *
    (2) * * *
    (iii) Disregarded entities. A disregarded entity may not certify 
that it is the transferor of a U.S. real property interest, as the 
disregarded entity is not the transferor for U.S. tax purposes, 
including sections 897 and 1445. Rather, the owner of the disregarded 
entity is treated as the transferor of property and must provide a 
certificate of non-foreign status to avoid withholding under section 
1445. A disregarded entity for these purposes means an entity that is 
disregarded as an entity separate from its owner under Sec.  301.7701-3 
of this chapter, a qualified REIT subsidiary as defined in section 
856(i), or a qualified subchapter S subsidiary under section 
1361(b)(3)(B). Any domestic entity must include in its certification of 
non-foreign status with respect to the transfer a certification that it 
is not a disregarded entity. This paragraph (b)(2)(iii) and the sample 
certification provided in paragraph (b)(2)(iv)(B) of this section (to 
the extent it addresses disregarded entities) is applicable for 
dispositions occurring September 4, 2003.
    (iv) * * *
    (B) Entity transferor.

    ``Section 1445 of the Internal Revenue Code provides that a 
transferee of a U.S. real property interest must withhold tax if the 
transferor is a foreign person. For U.S. tax purposes (including 
section 1445), the owner of a disregarded entity (which has legal 
title to a U.S. real property interest under local law) will be the 
transferor of the property and not the disregarded entity. To inform 
the transferee that withholding of tax is not required upon the 
disposition of a U.S. real

[[Page 46085]]

property interest by [name of transferor] , the undersigned hereby 
certifies the following on behalf of [name of the transferor]:
    1. [Name of transferor] is not a foreign corporation, foreign 
partnership, foreign trust, or foreign estate (as those terms are 
defined in the Internal Revenue Code and Income Tax Regulations);
    2. [Name of transferor] is not a disregarded entity as defined 
in Sec.  1.1445-2(b)(2)(iii);
    3. [Name of transferor]'s U.S. employer identification number is 
------; and
    4. [Name of transferor]'s office address is --------------.
    [Name of transferor] understands that this certification may be 
disclosed to the Internal Revenue Service by transferee and that any 
false statement contained herein could be punished by fine, 
imprisonment, or both.
    Under penalties of perjury I declare that I have examined this 
certification and to the best of my knowledge and belief it is true, 
correct, and complete, and I further declare that I have authority 
to sign this document on behalf of [name of transferor].

[Signature(s) and date]

[Title(s)]''
* * * * *
    (d) * * *
    (2) * * *
    (iii) Contents of the notice. No particular form is required for a 
transferor's notice to a transferee that the transferor is not required 
to recognize gain or loss with respect to a transfer. The notice must 
be verified as true and signed under penalties of perjury by the 
transferor, by a responsible officer in the case of a corporation, by a 
general partner in the case of a partnership, and by a trustee or 
equivalent fiduciary in the case of a trust or estate. The following 
information must be set forth in paragraphs labeled to correspond with 
the designation set forth as follows--
    (A) A statement that the document submitted constitutes a notice of 
a nonrecognition transaction or a treaty provision pursuant to the 
requirements of Sec.  1.1445-2(d)(2);
    (B) The name, identifying number, and home address (in the case of 
an individual) or office address (in the case of an entity) of the 
transferor submitting the notice;
    (C) A statement that the transferor is not required to recognize 
any gain or loss with respect to the transfer;
    (D) A brief description of the transfer; and
    (E) A brief summary of the law and facts supporting the claim that 
recognition of gain or loss is not required with respect to the 
transfer.
    (iv) No notice allowed. The provisions of this paragraph (d)(2) do 
not apply to exclusions from income under section 121, to simultaneous 
like-kind exchanges under section 1031 that do not qualify for 
nonrecognition treatment in their entirety (see paragraph (d)(2)(ii)(A) 
of this section), and to non-simultaneous like-kind exchanges under 
section 1031 where the transferee cannot determine that the exchange 
has been completed and all the conditions for nonrecognition have been 
satisfied at the time it is otherwise required to pay the section 1445 
withholding tax and file the withholding tax return (Form 8288, ``U.S. 
Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real 
Property Interests''). In these cases, the transferee is excused from 
withholding only upon the timely application for and receipt of a 
withholding certificate under Sec.  1.1445-3 (see Sec.  1.1445-3(b)(5) 
and (6) for specific rules applicable to transactions under sections 
121 and 1031). This paragraph (d)(2)(iv) is applicable for dispositions 
and exchanges occurring September 4, 2003.
* * * * *
    (e) Effective date for taxpayer identification numbers. The 
requirement in paragraphs (d)(2)(i)(B), (d)(2)(iii)(B), and 
(d)(3)(iii)(A)(2) and (3) of this section that taxpayer identification 
numbers be provided (in all cases) is applicable for dispositions of 
U.S. real property interests occurring after November 3, 2003.
* * * * *

0
10. Section 1.1445-3 is amended as follows:
0
1. In paragraph (a), after the seventh sentence, one sentence is added.
0
2. For each of the paragraphs listed in the column below, remove the 
language ``Assistant Commissioner (International)'', and add 
``Director, Philadelphia Service Center'' in its place.

Paragraphs

(b)(1), first sentence
(f)(1), first sentence
(f)(2)(iii), heading
(f)(2)(iii), first sentence
(g), third sentence, introductory text

0
3. In paragraph (b)(1), last sentence, remove the language ``of this 
section'' and add '', and to the extent applicable, paragraph (b)(5) or 
(6) of this section'' in its place.
0
4. Paragraph (b)(2) is revised.
0
5. Paragraphs (b)(5) and (b)(6) are added.
0
6. In paragraphs (f)(3)(i) and (g)(1), remove the parenthetical ``(if 
any)'' after the words ``identifying number''.
0
7. Paragraph (h) is added.
    The revision and additions read as follows:


Sec.  1.1445-3  Adjustments to amount required to be withheld pursuant 
to withholding certificate.

    (a) * * * In no event, however, will a withholding certificate be 
issued without the transferor's identifying number. * * *
    (b) * * *
    (2) Parties to the transaction. The application must set forth the 
name, address, and identifying number of the person submitting the 
application (specifying whether that person is the transferee or 
transferor), and the name, address, and identifying number of other 
parties to the transaction (specifying whether each such party is a 
transferee or transferor). The Service will deny the application if 
complete information, including the identifying numbers of all the 
parties, is not provided. Thus, for example, the applicant should 
determine if an identifying number exists for each party, and, if none 
exists for a particular party, the applicant should notify the 
particular party of the obligation to get an identifying number before 
the application can be submitted to the Service. The address provided 
in the case of an individual must be that individual's home address, 
and the address provided in the case of an entity must be that entity's 
office address. A mailing address may be provided in addition to, but 
not in lieu of, a home address or office address.
* * * * *
    (5) Special rule for exclusions from income under section 121. A 
withholding certificate may be sought on the basis of a section 121 
exclusion as a reduction in the amount of tax due under paragraph 
(c)(2)(v) of this section. The application must include information 
establishing that the transferor, who is a nonresident alien individual 
at the time of the sale (and is therefore subject to sections 897 and 
1445) is entitled to claim the benefits of section 121. For example, a 
claim for reduced withholding as a result of section 121 must include 
information that the transferor occupied the U.S. real property 
interest as his or her personal residence for the required period of 
time.
    (6) Special rule for like-kind exchanges under Section 1031. A 
withholding certificate may be requested with respect to a like-kind 
exchange under section 1031 as a transaction subject to a 
nonrecognition provision under paragraph (c)(2)(ii) of this section. 
The application must include information substantiating the 
requirements of section 1031. The IRS may require additional 
information during the course of the application

[[Page 46086]]

process to determine that the requirements of section 1031 are 
satisfied. In the case of a deferred like-kind exchange, the 
withholding agent is excused from reporting and paying the withholding 
tax to the IRS within 20 days after the transfer only if an application 
for a withholding certificate is submitted prior to or on the date of 
transfer. See Sec.  1.1445-1(c)(2) for rules concerning delayed 
reporting and payment where an application for a withholding 
certificate has been submitted to the IRS prior to or on the date of 
transfer.
* * * * *
    (h) Effective date for taxpayer identification numbers. The 
requirement in paragraphs (b)(2), (f)(3)(i), and (g)(1) of this section 
that taxpayer identification numbers be provided (in all cases) is 
applicable for dispositions of U.S. real property interests occurring 
after November 3, 2003.
* * * * *


Sec.  1.1445-4  [Amended]

0
11. In Sec.  1.1445-4, paragraph (c)(2), second sentence, is amended by 
removing the language ``Assistant Commissioner (International)'' and 
adding ``Director, Philadelphia Service Center'' in its place.

0
12. Section 1.1445-5 is amended as follows:
0
1. In paragraph (b)(2)(ii), first sentence, remove the language 
``Assistant Commissioner (International)'' and add ``Director, 
Philadelphia Service Center'' in its place.
0
2. In paragraphs (b)(2)(ii)(B) and (b)(2)(ii)(C), remove the 
parenthetical ``(if any)'' after the words ``identifying number''.
0
3. In paragraph (b)(5)(i), second sentence, remove the language ``filed 
with the Internal Revenue Service Center, Philadelphia, PA 19255'' and 
add in its place the language ``filed at the location as provided in 
the instructions to Forms 8288 and 8288-A''.
0
4. In paragraph (b)(5)(i), the fifth sentence is revised.
0
5. In paragraph (b)(7), the fifth sentence is revised.
0
6. Paragraph (b)(8)(iii) is revised.
0
7. In paragraph (c)(3)(v), first and fifth sentences, remove the 
language ``Assistant Commissioner (International)'' and add ``Director, 
Philadelphia Service Center'' in its place.
0
8. Paragraph (e)(1)(ii) is revised.
0
9. Paragraph (e)(2) is redesignated as paragraph (e)(3), and new 
paragraph (e)(2) is added.
0
10. In newly designated paragraph (e)(3)(iii)(B), remove the language 
``Sec.  1.1445-5(e)(2)(iii)(B)'' and add ``Sec.  1.1445-
5(e)(3)(iii)(B)'' in its place; and remove the language ``paragraph 
(e)(2)(iii)(B)'' and add ``paragraph (e)(3)(iii)(B)'' in its place.
0
11. Paragraph (h) is added.
    The revisions and additions read as follows:


Sec.  1.1445-5  Special rules concerning distributions and other 
transactions by corporations, partnerships, trusts and estates.

* * * * *
    (b) * * *
    (5) * * *
    (i) * * * Form 8288-A will be stamped by the Internal Revenue 
Service to show receipt, and a stamped copy will be mailed by the 
Service to the interest holder if the Form 8288 is complete, including 
the transferor's identifying number, at the address shown on the form, 
for the interest-holder's use. * * *
    (7) * * * Such an interest-holder must attach to its return a 
statement which supplies all of the information required by Sec.  
1.1445-1(d)(2). * * *
    (8) * * *
    (iii) Distributions by certain domestic corporations to foreign 
shareholders. The provisions of section 1445(e)(3) and paragraph (e)(1) 
of this section, requiring withholding upon distributions in redemption 
of stock under section 302(a) or liquidating distributions under Part 
II of subchapter C of the Internal Revenue Code by U.S. real property 
holding corporations to foreign shareholders, shall apply to 
distributions made on or after January 1, 1985. The provisions of 
section 1445(e)(3) and paragraph (e)(1) of this section requiring 
withholding on distributions under section 301 by U.S. real property 
holding corporations to foreign shareholders shall apply to 
distributions made after August 20, 1996. The provisions of paragraph 
(e) of this section providing for the coordination of withholding 
between sections 1445 and 1441 (or 1442 or 1443) for distributions 
under section 301 by U.S. real property holding corporations to foreign 
shareholders apply to distributions after December 31, 2000 (see Sec.  
1.1441-3(c)(4) and (h)).
* * * * *
    (e) * * * (1) * * *
    (ii) There is a distribution of property in redemption of stock 
treated as an exchange under section 302(a), in liquidation of the 
corporation pursuant to the provisions of Part II of subchapter C of 
the Internal Revenue Code (sections 331 through section 346), or with 
respect to stock under section 301 that is not made out of earnings and 
profits of the corporation.
    (2) Coordination rules for Section 301 distributions. If a domestic 
corporation makes a distribution of property under section 301 to a 
foreign person whose interest in such corporation constitutes a U.S. 
real property interest under the provisions of section 897 and the 
regulations thereunder, then see Sec.  1.1441-3(c)(4) for rules 
coordinating withholding obligations under sections 1445 and 1441 (or 
1442 or 1443)).
* * * * *
    (h) Effective date for taxpayer identification numbers. The 
requirement in paragraphs (b)(2)(ii)(B) and (C) of this section that 
taxpayer identification numbers be provided (in all cases) is 
applicable for dispositions of U.S. real property interests occurring 
after November 3, 2003.
* * * * *

0
13. Section 1.1445-6 is amended as follows:
0
1. The section heading is revised.
0
2. In paragraph (a), after the seventh sentence, one sentence is added.
0
3. Paragraph (b)(3) is revised.
0
4. For each of the paragraphs listed in the column below, remove the 
language ``Assistant Commissioner (International)'' and add ``Director, 
Philadelphia Service Center'' in its place.

Paragraphs

(f)(1), first sentence
(f)(2)(iii), heading
(f)(2)(iii)
(g), introductory text, second sentence

0
5. Paragraphs (f)(3)(i) and (g)(1) are amended by removing the 
parenthetical ``(if any)'' after the words ``identifying number''.
0
6. Paragraph (h) is added.
    The revision and additions read as follows:


Sec.  1.1445-6  Adjustments pursuant to withholding certificate of 
amount required to be withheld under section 1445(e).

* * * * *
    (a) * * * In no event, however, will a withholding certificate be 
issued without the transferor's identifying number.* * *
    (b) * * *
    (3) Relevant taxpayers. An application for withholding certificate 
pursuant to this section must include all of the following information: 
the name, identifying number, and home address (in the case of an 
individual) or office address (in the case of an entity) of each 
relevant taxpayer with respect to which adjusted withholding is sought.
* * * * *

[[Page 46087]]

    (h) Effective date for taxpayer identification numbers. The 
requirement in paragraphs (b)(3), (f)(3)(i), and (g)(1) of this section 
that taxpayer identification numbers be provided (in all cases) is 
applicable for dispositions of U.S. real property interests occurring 
after November 3, 2003.
* * * * *


Sec.  1.1445-9T  [Removed]

0
14. Section 1.1445-9T is removed.

PART 301--PROCEDURE AND ADMINISTRATION

0
15. The authority for part 301 continues to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
16. Section 301.6109-1 is amended as follows:
0
1. In paragraph (b)(2)(v), remove the word ``and''.
0
2. In paragraph (b)(2)(vi), remove the period at the end of the 
paragraph and add ``; and'' in its place.
0
3. Paragraph (b)(2)(vii) is added.
0
4. In paragraph (c), first and third sentences, remove the language 
``or (vi) of this section'' and add ``(vi), or (vii) of this section'' 
in its place.
    The addition reads as follows:


Sec.  301.6109-1  Identifying numbers.

* * * * *
    (b) * * *
    (2) * * *
    (vii) A foreign person whose taxpayer identifying number is 
required to be furnished on any return, statement, or other document as 
required by the income tax regulations under section 897 or 1445. This 
paragraph (b)(2)(vii) applies as of November 3, 2003.
* * * * *

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
17. The authority citation for part 602 continues to read as follows:

    Authority: 26 U.S.C. 7805.

0
18. In Sec.  602.101, paragraph (b) is amended by revising the entries 
for 1.1445-2 and 1.1445-3 to read as follows:


Sec.  601.601  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                          Current OMB
  CFR part or section where identified and described      control No.
------------------------------------------------------------------------
 
                                * * * * *
1.1445-2.............................................          1545-0902
                                                               1545-1060
                                                               1545-1797
1.1445-3.............................................          1545-0902
                                                               1545-1060
                                                               1545-1797
 
                                * * * * *
------------------------------------------------------------------------


Robert E. Wenzel,
Deputy Commissioner for Services and Enforcement.
    Approved: July 9, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
[FR Doc. 03-19273 Filed 8-4-03; 8:45 am]
BILLING CODE 4830-01-P