U.S.A.: Issuance of the official IRS Form 1042-S
From the beginning of this week, we have been sending out, to those of our customers with reportable payments under U.S. withholding tax rules for the year 2012, an original of the U.S. Internal Revenue Service (IRS) Form 1042-S (“Foreign Persons U.S. Source Income Subject to Withholding”) to use for recording their Clearstream Banking1 activities. This new version cancels and replaces the previous Form 1042-S that was sent at the beginning of March 2013.
This official version takes into account:
- The amendment requests that customers may have sent to us;
- The changes resulting from the 1042-S reconciliation with our upstream custodians or agents when such amendments were received after the issuance of our original 1042-S;
- The Real Estate Investment Trusts (REITs) income reclassification;
- The Regulated Investment Companies (RICs) income reclassification.
Regarding the RICs and REITs income reclassification, customers are reminded of the procedure that applies:
- For REITs, the market, data vendors and our custodians no longer report the capital gain portions of the reclassification.
The market consensus is by default to assume that the distribution is made to beneficial owners holding less than 5% of the outstanding shares of the same class of stock, such that the capital gain portion is considered as a dividend and is reported with income code 06.
However, if the customer has notified us that the 5% threshold is reached by a downstream client, we would request from our custodian the segregation of the dividend and the capital gain portions and amend our 1042-S accordingly. - For both RICs and REITs, we no longer refund tax withheld at source when the dividend is reclassified under non-taxable or exempt portions (Interest, Capital gain or Return of Capital).
The Qualified Intermediary (QI) Agreement does not allow us to claim such refunds after 15 March and we therefore have no possibility to obtain a refund from the IRS; only the final beneficial owner can claim such a refund directly from the IRS.
Detailed information regarding the tax treatment, reclassification and reporting of REIT and RIC instruments can be found on our website under Information Centre / Tax / USA / Tax Treatment of U.S. REITs and RICs.
To further assist our customers, our Tax Help Desk will provide, upon request, a spreadsheet file containing all the reclassification details for the customer’s account.
Further information
For further information, customers may contact the Clearstream Banking Tax Help Desk on:
| Luxembourg | Frankfurt | |
| Email: | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Customer Service or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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