§ 31.3406(g)-1. Exception for payments to certain payees and certain other payments.

¶(1) In general. A payor of any reportable payment (as defined in section 3406(b)) must not withhold under section 3406 if the payee is—

¶(2) Nonexclusive list. Paragraph (a)(1) of this section does not prescribe an exclusive list of payees that are exempt from information reporting and also are exempt from withholding under section 3406.

¶(1) Reportable payments other than gross proceeds from sales of digital assets. For reportable payments made after June 30, 2014, other than gross proceeds from sales of digital assets (as defined in § 1.6045-1(a)(19) of this chapter), a payor or broker is not required to backup withhold under section 3406 of the Code on a reportable payment that is paid and received outside the United States (as defined in § 1.6049-4(f)(16) of this chapter) with respect to an offshore obligation (as defined in § 1.6049-5(c)(1) of this chapter) or on the gross proceeds from a sale effected at an office outside the United States as described in § 1.6045-1(g)(3)(iii) of this chapter (without regard to whether the sale is considered effected inside the United States under § 1.6045-1(g)(3)(iii)(B) of this chapter). The exception to backup withholding described in the preceding sentence does not apply when a payor or broker has actual knowledge that the payee is a United States person. Further, no backup withholding is required on a reportable payment of an amount already withheld upon by a participating FFI (as defined in § 1.1471-1(b)(91) of this chapter) or another payor in accordance with the withholding provisions under chapter 3 or 4 of the Code and the regulations under those chapters even if the payee is a known U.S. person. For example, a participating FFI is not required to backup withhold on a reportable payment allocable to its chapter 4 withholding rate pool (as defined in § 1.6049-4(f)(5) of this chapter) of recalcitrant account holders (as described in § 1.6049-4(f)(11) of this chapter), if withholding was applied to the payment (either by the participating FFI or another payor) pursuant to § 1.1471-4(b) or § 1.1471-2(a) of this chapter. For rules applicable to notional principal contracts, see § 1.6041-1(d)(5) of this chapter. For rules applicable to reportable payments made before July 1, 2014, see § 31.3406(g)-1(e) in effect and contained in 26 CFR part 1 revised April 1, 2013.

¶(2) [Reserved]