Guide to Global Payroll Management - 2020 - D-80

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Guide to Global Payroll Management

permitted to combine all payments of
income on a single substitute Form
1042-S. For more information, see
Substitute Forms, later.

Account-by-account reporting by
U.S. financial institutions. A U.S.
financial institution or a U.S. branch of a
foreign financial institution maintaining
an account within the United States is
required to report payments of the same
type of income (as determined by the
income code in Box 1) made to multiple
financial accounts held by the same
beneficial owner on separate Forms
1042-S for each account. See
Account-by-Account Reporting by
Certain Financial Institutions, later.
Withholding agent's status codes.
Withholding agents must enter both a
chapter 3 and a chapter 4 status code
regardless of the type of payment being
made. See Boxes 12b and 12c,
Withholding Agent's Chapter 3 and
Chapter 4 Status Code, later.
Recipient country code. If the
recipient is unknown, leave Box 13b,
Recipient's country code, blank and
enter "Unknown Recipient" in Box 13a,
Recipient's name.

Treaty claims and limitation on benefits articles. Withholding agents that
are withholding at a reduced rate based
on a treaty claim by an entity must
include a limitation on benefits code
(LOB code) in Box 13j for the recipient
when they receive documentation
establishing the applicable limitation on
benefits provision of the treaty under
which the entity qualifies. Withholding
agents are not, however, required to
obtain new documentation unless they
are otherwise required to renew such
documentation. See Box 13j, LOB
Code, later.

Chapter indicator. Withholding agents
must enter either "3" or "4" in Box 3 to
indicate the chapter with respect to
which a Form 1042-S is being filed. See
Chapter indicator under Box 3, later, for
more information.
Filing Information Returns Electronically (FIRE) System. For files
submitted on the FIRE System, it is the
responsibility of the filer to check the
status within 5 business days to verify
the results of the transmission. The IRS
will not mail error reports for files that
are bad. See Pub. 1187, Specifications
for Electronic Filing of Form 1042-S,
Foreign Person's U.S. Source Income
Subject to Withholding.
Unique form identifier. Withholding
agents must assign a unique identifying

number to each Form 1042-S they file.
This identifying number is used, for
example, to identify which information
return is being corrected or amended
when multiple information returns are
filed by a withholding agent with respect
to the same recipient. The unique
identifying number cannot be the
recipient's U.S. or foreign TIN. The
unique identifying number must be
numeric. The length of a given
identifying number must be exactly 10
digits. The identifying number must be
unique to each original Form 1042-S
filed for the current year. The identifying
number can be used on a new original
form in a subsequent year.

Amended forms. Withholding agents
filing an amended form must indicate
the amendment number (see top of form
below title, to the right of the "Amended"
checkbox). The amendment number
must be numeric and the length must be
exactly one digit. Any amended form
must have the same unique form
identifier as the original form that is
being amended. Each time that you
amend the same form (as determined
by the unique form identifier), you must
provide the amendment number in the
box provided on the form (using "1" for
the first amendment and increasing
sequentially for each subsequent
amendment). See Amended Forms,
later, for more information.
List of foreign country codes. Form
1042-S filers must use the same list of
country codes used on other IRS forms
(for example, Forms 926, 1118, 3520,
and 8805). This list of foreign country
codes may be found at IRS.gov/
CountryCodes.

Note. Although the list of country codes
is maintained by Modernized e-File,
Form 1042-S filers who file
electronically will continue to use the
FIRE System. See the instructions for
Electronic Reporting, later. Also, if
applicable, the option to file Form
1042-S by paper is still available.

Foreign tax identification number
and date of birth. A financial institution
that files a Form 1042-S with respect to
a payment on an obligation that it
maintains at its U.S. office or U.S.
branch must report the recipient's
foreign tax identification number (FTIN)
and date of birth (if the recipient is an
individual). See Box 13i, Recipient's
Foreign Tax Identification Number and
Box 13l, Recipient's Date of Birth, later,
for additional information regarding this
requirement.
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D-80

Purpose of Form

Use Form 1042-S to report income
described under Amounts Subject to
Reporting on Form 1042-S, later, and to
report amounts withheld under
chapter 3 or chapter 4.
Use Form 1042-S to report specified
federal procurement payments paid to
foreign persons that are subject to
withholding under section 5000C.

Use Form 1042-S to report payments
of eligible deferred compensation items
or distributions from nongrantor trusts to
covered expatriates that are subject to
withholding under section 877A. See
Box 1, Income Code, later.

Use Form 1042-S to report certain
distributions that are made by publicly
traded trusts and qualified investment
entities (as defined under section 897(h)
(4)(A)). See Distributions Attributable to
Dispositions of U.S. Real Property
Interests by Publicly Traded Trusts and
Qualified Investment Entities, later.
Also use Form 1042-S to report
distributions of effectively connected
income by a publicly traded partnership
or nominee. See Publicly Traded
Partnerships (Section 1446 Withholding
Tax), later.

Every person required to deduct
and withhold any tax under
CAUTION chapter 3 or chapter 4 is liable
for such tax.

Do not use Form 1042-S to report an
item required to be reported on any of
the following forms.
* Form W-2 (wages and other
compensation made to employees
(other than compensation for dependent
personal services for which the
beneficial owner is claiming treaty
benefits), including wages in the form of
group-term life insurance).
* Form 1099.
* Form 8288-A, Statement of
Withholding on Dispositions by Foreign
Persons of U.S. Real Property Interests,
or Form 8805, Foreign Partner's
Information Statement of Section 1446
Withholding Tax. Withholding agents
otherwise required to report a
distribution partly on a Form 8288-A or
Form 8805 and partly on a Form 1042-S
may instead report the entire amount on
Form 8288-A or Form 8805.
* Form 8966, FATCA Report. Foreign
financial institutions (FFIs), sponsoring
entities of certain FFIs and other foreign
entities, and withholding agents are
required to report on Form 8966 certain
account holders and payees. An FFI or
withholding agent may also be required
Instructions for Form 1042-S (2020)

Guide to Global Payroll Management - 2020

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