Title 26, Internal Revenue CodeRelease 119-110

§1472 Withholdable Payments to Other Foreign Entities

Title 26 › Subtitle A — Income Taxes › CHAPTER 4 — TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS › § 1472

Last updated Sep 22, 2026|Official source

Summary

If a payment goes to a foreign business or group that is not a financial institution, and the person who really benefits is that same kind of foreign entity, the payer must withhold 30% of the payment unless certain owner information is given. To avoid withholding, the payer must get either a statement that the beneficial owner has no substantial U.S. owners or the name, address, and TIN for each substantial U.S. owner. The payer also must not know the information is wrong and must report owner details to the IRS as required. The rule does not apply to some groups (for example, regularly traded public corporations and related companies, entities owned by residents of U.S. possessions, foreign governments and their agencies, international organizations, foreign central banks, other classes the IRS names) or to payment types the IRS calls low risk. Non-financial foreign entity means any foreign entity that is not a financial institution.

Full Legal Text

Title 26, §1472

Internal Revenue Code, Source: USLM XML via OLRC

(a)In general

In the case of any withholdable payment to a non-financial foreign entity, if—

(1)the beneficial owner of such payment is such entity or any other non-financial foreign entity, and

(2)the requirements of subsection (b) are not met with respect to such beneficial owner,

then the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.

(b)Requirements for waiver of withholding

The requirements of this subsection are met with respect to the beneficial owner of a payment if—

(1)such beneficial owner or the payee provides the withholding agent with either—

(A)a certification that such beneficial owner does not have any substantial United States owners, or

(B)the name, address, and TIN of each substantial United States owner of such beneficial owner,

(2)the withholding agent does not know, or have reason to know, that any information provided under paragraph (1) is incorrect, and

(3)the withholding agent reports the information provided under paragraph (1)(B) to the Secretary in such manner as the Secretary may provide.

(c)Exceptions

Subsection (a) shall not apply to—

(1)except as otherwise provided by the Secretary, any payment beneficially owned by—

(A)any corporation the stock of which is regularly traded on an established securities market,

(B)any corporation which is a member of the same expanded affiliated group (as defined in section 1471(e)(2) without regard to the last sentence thereof) as a corporation described in subparagraph (A),

(C)any entity which is organized under the laws of a possession of the United States and which is wholly owned by one or more bona fide residents (as defined in section 937(a)) of such possession,

(D)any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing,

(E)any international organization or any wholly owned agency or instrumentality thereof,

(F)any foreign central bank of issue, or

(G)any other class of persons identified by the Secretary for purposes of this subsection, and

(2)any class of payments identified by the Secretary for purposes of this subsection as posing a low risk of tax evasion.

(d)Non-financial foreign entity

For purposes of this section, the term “non-financial foreign entity” means any foreign entity which is not a financial institution (as defined in section 1471(d)(5)).

Reference

Citations & Metadata

Citation

26 U.S.C. § 1472

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110