1 See Institute Memorandum to Tax Committee No. 3-99, Operations Committee No. 4-99, Transfer Agent Advisory
Committee No. 12-99, and Bank and Trust Advisory Committee No. 3-99, dated February 3, 1999.
2 The final withholding tax regulations, as amended, will apply to certain amounts paid by US persons after December 31,
2000 to persons who are neither citizens nor residents of the United States, including QIs. See, e.g., Institute Memorandum to
Bank and Trust Advisory Committee No. 34-99, Operations Members No. 30-99, Tax Members No. 45-99, and Transfer
Agent Advisory Committee No. 83-99, dated December 30, 1999.
3 A US fund will not receive a copy of a QI agreement entered into between a QI and the IRS. Rather, the pertinent
information regarding the foreign intermediary’s qualified status and withholding responsibilities will be conveyed to the US
fund on Form W-8IMY.
[11541]
January 11, 2000
TO: BANK AND TRUST ADVISORY COMMITTEE No. 1-00
OPERATIONS COMMITTEE No. 1-00
TAX COMMITTEE No. 1-00
TRANSFER AGENT ADVISORY COMMITTEE No. 2-00
RE: IRS ISSUES FINAL MODEL QUALIFIED INTERMEDIARY AGREEMENT
______________________________________________________________________________
Under final withholding tax regulations issued by the Internal Revenue Service (IRS),1 certain
foreign intermediaries (such as banks and brokers) and foreign branches of US banks may apply to the
IRS to be treated as “qualified intermediaries” (QIs) for US withholding tax and information reporting
purposes. To apply for QI status, an eligible foreign entity or branch must submit a completed “QI
agreement” to the IRS using the final model QI agreement provided in the attached Revenue Procedure.
Foreign entities or branches may wish to obtain QI status because, unlike intermediaries that are
not “qualified,” QIs generally may receive payments from US sources that are subject to reduced rates of
US withholding (and backup withholding) without disclosing the beneficial owner’s identity to the US
payor or to the IRS. Instead, the QI generally collects the necessary tax certifications from the beneficial
owner and, pursuant to the QI agreement entered into between the QI and the IRS, either provides the
US payor with “generic” withholding information for the affected account or withholds US tax itself on
amounts subsequently paid to the beneficial owner. In either case, the QI must provide a Form W-
8IMY to the US payor which describes its qualified status and assumption (or not) of US withholding
responsibilities.
Although US funds are not eligible to become QIs, they may begin making payments to QIs
after December 31, 2000 under the final withholding tax regulations.2 For this reason, the potential US
withholding tax and information reporting responsibilities that may be assumed by a QI, pursuant to the
final model QI agreement in the attached Revenue Procedure, are of relevance to US funds.3
Deanna Flores
Assistant Counsel
Attachment