IRC Section 1446(f) - Generally providing that if any portion of the gain or any disposition of an interest in a partnership would be treated under IRC Section 864(c)(8) as effectively connected with the conduct of a US trade or business, the entity transferring the interest must withhold a 10% tax on the disposition.IRC Section 864(c)(8) - Generally providing that gain or loss a non-US (foreign) person derives on the sale or exchange of an interest in a partnership that is engaged in a trade or business in the United States is treated as effectively connected gain/loss.The Tax Cuts and Jobs Act of 2017 (TCJA) added these new statutory provisions: An updated QI agreement, effective as of January 1, 2023, will include the proposed changes made in Notice 2022-23.įinal regulations addressing withholding under IRC Sections 1446(a) and 1446(f) (TD 9926 see Tax Alert 2020-2481), will also become effective as of January 1, 2023. The current QI agreement, established under Revenue Procedure 2017-15 (see Tax Alert 2017-0113), will expire on December 31, 2022. Generally, these changes would apply to a QI that sells an interest in a publicly traded partnership (PTP) or receives a distribution from a PTP on behalf of a QI account holder. The IRS has published changes ( Notice 2022-23) to the qualified intermediary (QI) withholding agreement rules that will allow a QI to assume withholding and reporting responsibilities for purposes of IRC Sections 1446(a) and (f).
Changes to QI withholding agreement rules expand QI withholding and reporting responsibilities
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