General Revision of Regulations Relating to Withholding of Tax on
Certain U.S. Source Income Paid to Foreign Persons & Related
Collection, Refunds, & Credits; Revision of Information Reporting &
Backup Withholding Regulations; & Removal of Regulations Under
Part 35a & of Certain Regulations Under Income Tax Treaties

[4830-01-u] DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1, 31, 35a, 301, 502, 503, 509, 513, 514, 516, 517, 520, and 521 [INTL-O62-90; INTL-0032-93; INTL-52-86; INTL-52-94] RINS 1545-AO27; 1545-AR90; 1545-AL99; 1545-AT00

TITLE: General Revision of Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Related Collection, Refunds, and Credits; Revision of Information Reporting and Backup Withholding Regulations; and Removal of Regulations Under Part 35a and of Certain Regulations Under Income Tax Treaties

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and withdrawal of notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations relating to the withholding of income tax under sections 1441 and 1442 on certain U.S. source income paid to foreign persons, the related tax deposit and reporting requirements under section 1461, and the related collection, refunds, and credits of withheld tax under sections 1461 through 1463 and section 6402. Additionally, this document contains proposed regulations relating to the statutory exemption under sections 871(h) and 881(c) for portfolio interest. This document proposes to remove certain temporary employment tax regulations under the Interest and Dividend Compliance Act of 1983 and to amend existing regulations under sections 6041A and 6050N. This document also proposes changes to proposed regulations contained in project number INTL-52-86, published on February 29, 1988 (53 FR 5991) under sections 6041, 6042, 6045, and 6049. This document proposes related changes to the regulations under sections 163(f), 165(j), 3401, 3406, 6114, and 6413 and proposes further changes to the proposed regulations under section 6109 contained in project number IL-0024-94 published on June 8, 1995 (60 FR 30211). This document proposes to remove certain regulations under income tax treaties. The IRS and Treasury have reviewed current withholding and reporting procedures applicable to cross-border flows of income and have concluded that changes are necessary in view of the substantial growth in such flows over the past 15 years. This document also removes proposed regulations published on July 12, 1976 (41 FR 28517) and September 10, 1984 (49 FR 355110), respectively.

DATES: Written comments and requests for a public hearing must be received by July 22, 1996.

ADDRESSES: Send submissions to: CC:DOM:CORP:R ([INTL-0032-93]), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative, submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R ([INTL-0032-93]), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Philip Garlett, telephone (202) 622-3880 (not a toll-free number), for questions on proposed regulations under sections 1441, 1442, 1461, 1462, 1463, 3401, 6402, and 6413; Gwendolyn A. Stanley, telephone (202) 622-3860 (not a toll-free number) for questions on payments to partnerships; Carl Cooper, telephone (202) 622-3840 (not a toll-free number) for questions on proposed regulations under sections 163(f), 165(j), 871(h) and 881(c) and on withholding agreements; Teresa Burridge Hughes, telephone (202) 622-3880 (not a toll-free number), for questions on proposed regulations under sections 6041 through 6049, 6050N; Teresa Burridge Hughes, telephone (202) 622-3880 and Renay France, telephone (202) 622-4910, for questions on proposed regulations under section 3406; Elissa Shendalman (202) 622-3870 on proposed regulations under section 6045 and 6049 relating to the reporting of payments made in a currency other than the U.S. dollar or transactions subject to section 988; Lilo Hester, telephone (202) 874-1490 (not a toll-free number), for questions on proposed regulations under section 6109; David F. Bergkuist, telephone (202) 622-3860 (not a toll-free number), for questions on proposed regulations under section 6114.

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