The IRS recently issued an update to the 2017 Instructions for Form 1042-S. These modified instructions include Boxes 13i and 13L, which are for Recipient Foreign Taxpayer Identification Number (TIN) and Date of Birth, respectively. These updates are meant to provide greater detail and clarity with regard to a few aspects of the instructions, as detailed below.
Box 13i, Recipient’s Foreign Taxpayer Identification Number: Use box 13i to enter the recipient’s identification number used in the recipient’s country of residence for tax purposes. You must enter a foreign taxpayer identification number for any of the following recipients:
Any foreign person claiming a reduced rate of, or exemption from, tax under a tax treaty between a foreign country and the United States if such person provides a foreign taxpayer identification number in lieu of a U.S. TIN for income for which an exemption from the TIN requirement does not apply (see instructions for boxes 13e and 13h, earlier).
Any recipient that is an account holder of a financial account (as defined in Regulations section 1.1471-5(b)) maintained at a U.S. office or branch of a financial institution to the extent that such recipient has furnished a withholding certificate that provides a foreign taxpayer identification number.
The second section relating to recipients was modified to include all account holders rather than just those who received a payment with respect to an obligation maintained at a U.S. office or branch of a financial institution.
Box 13L, Recipient’s Date of Birth: Use box 13l to enter the recipient’s date of birth if it is available in the withholding agent’s electronically searchable information. The correct format if entered is YYYYMMDD (for example, enter “20001205” for a date of birth of December 5, 2000). For 2017, a financial institution making a payment with respect to a financial account (as defined in Regulation section 1.1471-5(b)) maintained at its U.S. office or branch must report the recipient’s date of birth (if the recipient is an individual) to the extent that such recipient has furnished a withholding certificate that provides a date of birth or the recipient’s date of birth is available in the withholding agent’s electronically searchable information (as defined in Regulations section 1.1471-1(b)(38)).
These instructions were modified to include a reference to the definition of “financial account” per Regulations Section 1.1471-5(b), and “electronically searchable information” per Regulations Section 1.1471-1(b)(38). It also removes the term “documentation” and specifies said documentation by requiring a withholding certificate.
To review this update from the IRS, please click here.
About the Author
Paul Ogawa is a Junior Regulatory Counsel at Sovos Compliance. As part of the Regulatory Analysis team, his main areas of focus are state and federal tax withholding, the Affordable Care Act (ACA), and Canadian tax information reporting. Prior to Sovos, Paul worked as a litigation attorney in Boston area law firms, representing clients in insurance subrogation claims, family law matters, and employment disputes. Paul is a member of the Massachusetts Bar, earned his B.A. from Brandeis University and his J.D. from the Suffolk University Law School.More Content by Paul Ogawa