# Time and manner of calculating and paying over the 1446 tax.
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendments.
**SUMMARY:**
This document contains corrections to Treasury Decision 9394, which was published in the *Federal Register* on Tuesday, April 29, 2008. Treasury Decision 9394 contained final regulations regarding when a partnership may consider certain deductions and losses of a foreign partner to reduce or eliminate the partnership's obligation to pay withholding tax under section 1446 on effectively connected taxable income allocable under section 704 to such partner.
**DATES:**
These corrections are effective on *June 11, 2020,* and applicable as of April 29, 2008.
**FOR FURTHER INFORMATION CONTACT:**
Ronald M. Gootzeit at (202) 317-6937 (not a toll-free number).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations (TD 9394) that are the subject of this correction are under section 1446 of the Code.
**Need for Correction**
As published on April 29, 2008 (73 FR 23069), the final regulations (TD 9394; FR Doc. E8-9356) contained errors that need to be corrected.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**Correction of Publication**
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:
**PART 1—INCOME TAXES**
**26 CFR Part 1**
*Paragraph 1.* The authority citation for part 1 continues to read in part as follows:
**Authority:**
26 U.S.C. 7805 * * *
**26 CFR Part 1**
*Par. 2.* Section 1.1446-3 is amended by adding paragraph (b)(2)(i)(B) to read as follows:
§ 1.1446-3
(b) * * *
(2) * * *
(i) * * *
(B) *Calculation rules when certificates are submitted under § 1.1446-6* —( *1* ) To the extent applicable, in computing the 1446 tax due with respect to a foreign partner, a partnership may consider a certificate received from such partner under § 1.1446-6(c)(1)(i) or (ii) and the amount of state and local taxes permitted to be considered under § 1.1446-6(c)(1)(iii). For the purposes of applying this paragraph (b)(2)(i)(B), a partnership shall first annualize the partner's allocable share of the partnership's items of effectively connected income, gain, deduction, and loss before—
( *i* ) Considering under § 1.1446-6(c)(1)(i) the partner's certified deductions and losses;
( *ii* ) Determining under § 1.1446-6(c)(1)(ii) whether the 1446 tax otherwise due with respect to that partner is less than $1,000 (determined with regard to any certified deductions or losses); or
( *iii* ) Considering under § 1.1446-6(c)(1)(iii) the amount of state and local taxes withheld and remitted on behalf of the partner.
( *2* ) The amount of the limitation provided in § 1.1446-6(c)(1)(i)(C) shall be based on the partner's allocable share of these annualized amounts. For any installment period in which the partnership considers a partner's certificate, the partnership must also consider the following events to the extent they occur prior to the due date for paying the 1446 tax for such installment period—
( *i* ) The receipt of an updated certificate or status update from the partner under § 1.1446-6(c)(2)(ii)(B) certifying an amount of deductions or losses that is less than the amount reflected on the superseded certificate (see § 1.1446-6(e)(2) *Example 4* );
( *ii* ) The failure to receive an updated certificate or status update from the partner that should have been provided under § 1.1446-6(c)(2)(ii)(B); and
( *iii* ) The receipt of a notification from the IRS under § 1.1446-6(c)(3) or (5) (see § 1.1446-6(e)(2) *Example 5* ).
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration).