Td 9082

Section 897.—Disposition
of Investment in United
States Real Property
26 CFR 1.897–3: Election by foreign corporation to
be treated as a domestic corporation under section
897(i).

T.D. 9082
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 301 and 602
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
(IRS), Treasury.

Revenue

Service

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 6, 2003.
Applicability Date: For dates of applicability, see §§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

2003-41 I.R.B.

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
§§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, 2002–2 C.B. 392 [67
FR 48823]), 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. 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

807

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.
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

October 14, 2003

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 §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
§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 §1.1445–2(d)(2)
to the transferee, and the transferee can

October 14, 2003

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 §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 likekind 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 likekind exchange and require the taxpayer to
obtain a withholding certificate.

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.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 301 and
602 are amended as follows:
PART 1— INCOME TAXES
Paragraph 1. The authority for part 1
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
§1.897–1 [Amended]
Par. 2. In §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 §301.6109–1 of this chapter)” immediately after the language “United States
social security number”.
§1.897–2 [Amended]

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

808

Par. 3. Section 1.897–2 is amended as
follows:
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:

2003-41 I.R.B.

Paragraphs

Remove

Add

(g)(1)(i)(B)

Director, Foreign Operations District
(“Director”)

Commissioner, Small Business/Self
Employed Division (SB/SE)

(g)(1)(i), fourth sentence of concluding
text immediately following paragraph
(g)(1)(i)(B)

Director

Commissioner

(g)(1)(iii) heading

Director

Commissioner

(g)(1)(iii)(A), first, fourth, and last
sentences

Director

Commissioner

(g)(1)(iii)(A), third sentence

Director, Foreign Operations District;
1325 K St., N.W.;
Washington, D.C. 20225

Commissioner, Small Business/Self
Employed Division (SB/SE);
S C3-413 NCFB,
500 Ellin Road,
Lanham, MD 20706

(g)(1)(iii)(B) heading

Director’s

Commissioner’s

(g)(1)(iii)(B) introductory text

Director

Commissioner

(g)(1)(iii)(B) concluding text immediately
following (g)(1)(iii)(B)(2)

Director

Commissioner

(g)(1)(iii)(C) both places it appears

Director

Commissioner

(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, fourth, and fifth
sentence (both places it appears).

Director

Commissioner

(g)(2)(iii)(A), third sentence

Director, Foreign Operations District;
1325 K St. N.W.;
Washington, D.C. 20225

Commissioner, Small Business/Self
Employed Division (SB/SE);
S C3-413 NCFB,
500 Ellin Road,
Lanham, MD 20706

(g)(2)(iii)(B) heading

Director’s

Commissioner’s

(g)(2)(iii)(B) introductory text

Director

Commissioner

(g)(2)(iii)(B) concluding text immediately
following (g)(2)(iii)(B)(2)

Director

Commissioner

(g)(2)(iii)(C), first and second sentences

Director

Commissioner

(g)(2)(iii)(D) heading

Director

Commissioner

(g)(2)(iii)(D)

Director

Commissioner

(g)(2)(iv), fourth sentence

Director

Commissioner

2003-41 I.R.B.

809

October 14, 2003

(h)(2)(v), third sentence

Assistant Commissioner (International),
Director, Office of Compliance,
OP:I:C:E:666,
950 L’Enfant Plaza South, SW,
COMSAT Building,
Washington, D.C. 20024

Director, Philadelphia Service Center,
P.O. Box 21086,
Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114-0586

(h)(4)(ii), first sentence

Assistant Commissioner (International),
Director, Office of Compliance,
OP:I:C:E:666,
950 L’Enfant Plaza South, SW,
COMSAT Building,
Washington, D.C. 20024

Director, Philadelphia Service Center,
P.O. Box 21086,
Drop Point 8731, FIRPTA Unit,
Philadelphia, PA 19114-0586

Par. 4. Section 1.897–3 is amended as
follows:

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
District,
1325 K St., N.W.,
Washington, D.C. 20225

Director, Philadelphia Service Center,
P.O. Box 21086,
Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114-0586

(c)(1), introductory text, last sentence

which must set forth

which must contain all the following
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 District,
1325 K St., N.W.,
Washington, D.C. 20225

Director, Philadelphia Service Center,
P.O. Box 21086,
Drop Point 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
District

Director, Philadelphia Service Center

2. In paragraph (c)(1)(i), remove the
parenthetical “(if any)” after the words
“identifying number”.
3. Paragraph (h) is added to read as
follows:
§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 4, 2003.

October 14, 2003

Par. 5. Section 1.897–5 is added to read
as follows:

Par. 6. In §1.897–5T, paragraph (d)(1)
(iii)(F) is revised to read as follows:

§1.897–5 Corporate Distributions.

§1.897–5T Corporate distributions
(temporary).

(a) through (d)(1)(iii)(E) [Reserved].
For further guidance, see §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
§1.897–5T(d)(1)(iii)(G) through (d)(4).
(e) Effective date. This section is applicable to transfers and distributions after
November 4, 2003.

810

*****
(d) * * * (1) * * *
(iii) * * *
(F) [Reserved]. For further guidance,
see §1.897–5(d)(1)(iii)(F).
*****
§1.897–6T [Amended]
Par. 7. Section 1.897–6T is amended as
follows:

2003-41 I.R.B.

1. In paragraph (a)(2), second sentence,
the language “, 1034” is removed.
2. Paragraph (a)(5) is removed and reserved.
3. Paragraph (a)(7), Example 2 and Example 3 are removed and reserved.
Par. 8. Section 1.1445–1 is amended as
follows:
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”.
2. In paragraph (c)(1), two sentences
are added at the end.
3. In paragraph (c)(2)(i)(B), second
sentence, remove the phrase “,if any,” after the words “taxpayer identification number”.
4. In paragraphs (d)(1)(i) and (d)(1)(ii),
remove the parenthetical “(if any)” after
the words “identifying number”.
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”.
6. In paragraph (f)(2), the first sentence
is revised, and a sentence is added after the
first sentence.
7. In paragraph (f)(3)(i), the last sentence is revised.
8. Paragraphs (g)(9) and (g)(10) are
revised.
9. Paragraph (h) is added.
The additions and revisions read as follows:
§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

2003-41 I.R.B.

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 §1.1445–1(d),
including the transferor’s identifying number.
*****
(g) * * *
(9) Identifying number. Pursuant to
§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 §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 4, 2003.
Par. 9. Section 1.1445–2 is amended as
follows:
1. Paragraph (b)(2)(iii) is redesignated
as paragraph (b)(2)(iv), and new paragraph
(b)(2)(iii) is added.
2.
Newly designated paragraph
(b)(2)(iv)(B) is revised.

811

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”.
4. Paragraphs (d)(2)(iii) and (d)(2)(iv)
are added immediately following the
concluding text following paragraph
(d)(2)(ii)(B).
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:
§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 §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 on or after
September 5, 2003.
(iv) * * *
(B) Entity transferor.

October 14, 2003

“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 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 §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
§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 §1.1445–3 (see §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 on or
after September 5, 2003.
*****

October 14, 2003

812

(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 effective for
dispositions of U.S. real property interests
occurring after November 4, 2003.
*****
Par. 10. Section 1.1445–3 is amended
as follows:
1. In paragraph (a), after the seventh
sentence, one sentence is added.
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
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.
4. Paragraph (b)(2) is revised.
5. Paragraphs (b)(5) and (b)(6) are
added.

2003-41 I.R.B.

6. In paragraphs (f)(3)(i) and (g)(1),
remove the parenthetical “(if any)” after
the words “identifying number”.
7. Paragraph (h) is added.
The revision and additions read as follows:
§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

2003-41 I.R.B.

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 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
§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 4, 2003.
*****
§1.1445–4 [Amended]
Par. 11. In §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.
Par. 12. Section 1.1445–5 is amended
as follows:
1. In paragraph (b)(2)(ii), first sentence,
remove the language “Assistant Commissioner (International)” and add “Director,
Philadelphia Service Center” in its place.
2. In paragraphs (b)(2)(ii)(B) and
(b)(2)(ii)(C), remove the parenthetical “(if
any)” after the words “identifying number”.
3. In paragraph (b)(5)(i), second sentence, remove the language “filed with the

813

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”.
4. In paragraph (b)(5)(i), the fifth sentence is revised.
5. In paragraph (b)(7), the fifth sentence is revised.
6. Paragraph (b)(8)(iii) is revised.
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.
8. Paragraph (e)(1)(ii) is revised.
9. Paragraph (e)(2) is redesignated as
paragraph (e)(3), and new paragraph (e)(2)
is added,
10.
In newly designated paragraph (e)(3)(iii)(B), remove the language “§1.1445–5(e)(2)(iii)(B)” and
add “§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.
11. Paragraph (h) is added.
The revisions and additions read as follows:
§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
§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

October 14, 2003

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 §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 §1.1441–3(c)(4) for rules coordinating withholding obligations under sections 1445 and 1441 (or 1442 or 1443)).

Par. 13. Section 1.1445–6 is amended
as follows:
1. In paragraph (a), after the seventh
sentence, one sentence is added.
2. Paragraph (b)(3) is revised.
3. 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
4. Paragraphs (f)(3)(i) and (g)(1) are
amended by removing the parenthetical
“(if any)” after the words “identifying
number”.
5. Paragraph (h) is added.
The revision and additions read as follows:

§1.1445–9T [Removed]

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

§301.6109–1 Identifying numbers.

*****
(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.

*****
(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 4, 2003.

*****
(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 4, 2003.

*****

*****

October 14, 2003

814

Par. 14. Section 1.1445–9T is removed.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 15. The authority for part 301
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par.
16.
Section 301.6109–1 is
amended as follows:
1. In paragraph (b)(2)(v), remove the
word “and”.
2. In paragraph (b)(2)(vi), remove the
period at the end of the paragraph and add
“; and” in its place.
3. Paragraph (b)(2)(vii) is added.
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:

*****
(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 after
November 4, 2003.
*****
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 17. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 18. In §602.101, paragraph (b)
is amended by revising the entries for
1.1445–2 and 1.1445–3 to read as follows:
§601.601 OMB Control numbers.
*****
(b) * * *

2003-41 I.R.B.

CFR part or section where
identified and described

Current OMB
control No.

*****
1.1445–2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
......................................................................................
......................................................................................
1.1.445–3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
......................................................................................
......................................................................................

1545–0902
1545–1060
1545–1797
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.
(Filed by the Office of the Federal Register on August 4,
2003, 8:45 a.m., and published in the issue of the Federal
Register for August 5, 2003, 68 F.R. 46081)

Section 1274.—Determination of Issue Price in the Case
of Certain Debt Instruments
Issued for Property
(Also sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates;
adjusted federal long-term rate and the

2003-41 I.R.B.

long-term exempt rate. For purposes of
sections 382, 1274, 1288, and other sections of the Code, tables set forth the rates
for October 2003.

Rev. Rul. 2003–107
This revenue ruling provides various
prescribed rates for federal income tax
purposes for October 2003 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable federal rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth
the adjusted federal long-term rate and
the long-term tax-exempt rate described
in section 382(f). Table 4 contains the

815

appropriate percentages for determining
the low-income housing credit described
in section 42(b)(2) for buildings placed in
service during the current month. Finally,
Table 5 contains the federal rate for determining the present value of annuity, an
interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.

October 14, 2003