[Federal Register Volume 85, Number 113 (Thursday, June 11, 2020)]
[Rules and Regulations]
[Pages 35557-35558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11111]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9394]
RIN 1545-BD80


Special Rules To Reduce Section 1446 Withholding; Correcting 
Amendment

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to Treasury Decision 9394, 
which was published in the Federal Register on Tuesday, April 29, 2008. 
Treasury Decision 9394 contained final regulations regarding when a 
partnership may consider certain deductions and losses of a foreign 
partner to reduce or eliminate the partnership's obligation to pay 
withholding tax under section 1446 on effectively connected taxable 
income allocable under section 704 to such partner.

DATES: These corrections are effective on June 11, 2020, and applicable 
as of April 29, 2008.

FOR FURTHER INFORMATION CONTACT: Ronald M. Gootzeit at (202) 317-6937 
(not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations (TD 9394) that are the subject of this 
correction are under section 1446 of the Code.

Need for Correction

    As published on April 29, 2008 (73 FR 23069), the final regulations 
(TD 9394; FR Doc. E8-9356) contained errors that need to be corrected.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

[[Page 35558]]

Correction of Publication

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

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

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


0
Par. 2. Section 1.1446-3 is amended by adding paragraph (b)(2)(i)(B) to 
read as follows:


Sec.  1.1446-3  Time and manner of calculating and paying over the 1446 
tax.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (B) Calculation rules when certificates are submitted under Sec.  
1.1446-6--(1) To the extent applicable, in computing the 1446 tax due 
with respect to a foreign partner, a partnership may consider a 
certificate received from such partner under Sec.  1.1446-6(c)(1)(i) or 
(ii) and the amount of state and local taxes permitted to be considered 
under Sec.  1.1446-6(c)(1)(iii). For the purposes of applying this 
paragraph (b)(2)(i)(B), a partnership shall first annualize the 
partner's allocable share of the partnership's items of effectively 
connected income, gain, deduction, and loss before--
    (i) Considering under Sec.  1.1446-6(c)(1)(i) the partner's 
certified deductions and losses;
    (ii) Determining under Sec.  1.1446-6(c)(1)(ii) whether the 1446 
tax otherwise due with respect to that partner is less than $1,000 
(determined with regard to any certified deductions or losses); or
    (iii) Considering under Sec.  1.1446-6(c)(1)(iii) the amount of 
state and local taxes withheld and remitted on behalf of the partner.
    (2) The amount of the limitation provided in Sec.  1.1446-
6(c)(1)(i)(C) shall be based on the partner's allocable share of these 
annualized amounts. For any installment period in which the partnership 
considers a partner's certificate, the partnership must also consider 
the following events to the extent they occur prior to the due date for 
paying the 1446 tax for such installment period--
    (i) The receipt of an updated certificate or status update from the 
partner under Sec.  1.1446-6(c)(2)(ii)(B) certifying an amount of 
deductions or losses that is less than the amount reflected on the 
superseded certificate (see Sec.  1.1446-6(e)(2) Example 4);
    (ii) The failure to receive an updated certificate or status update 
from the partner that should have been provided under Sec.  1.1446-
6(c)(2)(ii)(B); and
    (iii) The receipt of a notification from the IRS under Sec.  
1.1446-6(c)(3) or (5) (see Sec.  1.1446-6(e)(2) Example 5).
* * * * *

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2020-11111 Filed 6-10-20; 8:45 am]
BILLING CODE 4830-01-P