Below are common
tax terms used throughout this website as well as definitions.
Click on a term below to jump to the definition.
Employer Identification Number
Individual Taxpayer Identification Number (ITIN)
Nonqualified Intermediary (NQI)
Pro-Rata Basis Reporting
Qualified Intermediary (QI)
Qualified Intermediary Employer Identification
Social Security Number (SSN)
Taxpayer Identification Number (TIN)
Transmitter Control Code (TCC)
Withholding Foreign Partnership (WP) or Withholding
Foreign trust (WT)
An amended return is an information return submitted
by the transmitter to amend an information return that was
previously submitted to and processed by IRS/IRB, but contained
The beneficial owner of income is, generally, the
person who is required under U.S. tax principles to include the
income in gross income on a tax return.
A correction is an information return submitted by
the employer/transmitter to correct an information return that was
previously submitted to and successfully processed by IRS, but
contained erroneous information.
Submission of information returns electronically via
A nine-digit number assigned by IRS for Federal tax
Employees hours worked
The average number of employee hours worked per
business day during a month is figured by dividing the total hours
worked during the month by all your employees who are employed in a
food or beverage operation by the average number of days in the
month that each food or beverage operation at which these employees
worked was open for business.
The organization supplying their information. Use
the same name and EIN you used on your Forms W-2 and Forms 941.
A large food or beverage establishment that provides
food or beverage for consumption on the premises; where tipping is a
customary practice; and where there are normally more than 10
employees who work more than 80 hours on a typical business day
during the preceding calendar year.
For purposes of this Revenue Procedure, a file
consists of one Transmitter "T" Record at the beginning of the file,
a Withholding Agent “W” Record, followed by the Recipient “Q” Record
(s), a Reconciliation “C” Record summarizing the number of preceding
“Q” Records and total of preceding money fields. Follow with any
additional “W”, “Q”, and “C” Record sequences as needed. The last
record on the file will be the End of Transmission "F" Record.
Nothing should be reported after the End of Transmission "F" Record.
Person (may be withholding agent and/or transmitter)
submitting information returns to IRS.
The calendar year in which the information returns
are being submitted to IRS.
A flow-through entity is a foreign partnership
(other than a withholding foreign partnership) or a foreign simple
or grantor trust (other than a withholding foreign trust). For any
payments for which a reduced rate of withholding under an income tax
treaty is claimed, any entity is considered to be a flow-through
entity if it is considered to be fiscally transparent under IRC
Section 894 with respect to the payment by an interest holder’s
A foreign person includes a nonresident alien
individual, a foreign corporation, a foreign partnership, a foreign
trust, a foreign estate, and any other person who is not a U.S.
person. The term also includes a foreign branch or office of a U.S.
financial institution or U.S. clearing organization, if the foreign
branch is a Qualified Intermediary. Generally, a payment to a U.S.
branch of a foreign institution is a payment to a foreign person.
Gross income includes income from all sources,
except certain items expressly excluded by statute. Gross income is
the starting point for computing adjusted gross income and taxable
Identification Number (ITIN)
A nine-digit number issued by IRS to individuals who
are required to have a U.S. taxpayer identification number for tax
purposes but are not eligible to obtain a Social Security Number (SSN).
ITIN may be used for tax purposes only.
The vehicle for withholding agents to submit
required tax information about a recipient to IRS. For this Revenue
Procedure, it is information about a foreign person’s U.S. source
income subject to withholding, and the information return is Form
An intermediary is a person who acts as a custodian,
broker, nominee, or otherwise as an agent for another person,
regardless of whether that other person is the beneficial owner of
the amount paid, a flow-through entity, or another intermediary.
More than 10 employees
An employers is considered to have more than 10
employees on a typical business day during the calendar year if half
the sum of: the average number of employee hours worked per business
day in the calendar month in which the aggregate gross receipts from
food and beverage operations were greatest, plus the average number
of employee hours worked per business day in the calendar month in
which the total aggregate gross receipts from food and beverage
operations were the least, equals more than 80 hours.
A Nonqualified Intermediary is a foreign
intermediary who is not a U.S. person and is not a Qualified
A payer is the person for whom the withholding agent
acts as a paying agent pursuant to an agreement whereby the
withholding agent agrees to withhold and report a payment.
The presumption rules are those rules prescribed
under Chapter 3 and Chapter 61 of the Internal Revenue Code that a
withholding agent must follow to determine the status of a
beneficial owner as a U.S. or foreign person when it cannot reliably
associate a payment with valid documentation.
Pro-Rata Basis Reporting
If the withholding agent has agreed that an NQI may
provide information allocating a payment to its account holders
under the provisions of Regulations section 1.1441-1(e) (3) (iv)
(D), and the NQI fails to allocate the payment in a
withholding rate pool to the specific recipients in the pool, the
withholding agent must file a Form 1042-S for each recipient on a
Qualified Intermediary (QI)
A Qualified Intermediary is a foreign intermediary
who is a party to a withholding agreement with the IRS, in which it
agrees to comply with the relevant terms of Chapters 3 and 61 of the
Internal Revenue Code and is in a country with approved
know-your-customer rules. See Notice 2006-35.
A nine-digit number assigned by IRS to a QI for
Federal tax reporting purposes. A QI-EIN is only to be used when a
QI is acting as a qualified intermediary.
Person (nonresident alien individual, fiduciary,
foreign partnership, foreign corporation, Qualified Intermediary,
Withholding Rate Pool, or other foreign entity) who receives
payments from a withholding agent as a beneficial owner or as a
qualified intermediary acting on behalf of a beneficial owner. A
non-qualified intermediary cannot be a recipient.
A replacement file is an information return file
sent by the filer at the
request of IRS/IRB because
of certain errors encountered while processing the filer’s original
Person or organization
with whom the withholding agent has a contract to prepare and/or
submit information return files to IRS/IRB. A parent company
submitting data for a subsidiary is not considered a service bureau.
Social Security Number (SSN)
A nine-digit number assigned by Social Security
Administration to an individual for wage and tax reporting purposes.
Any character that is not a numeric, an
alpha, or a blank.
Refers to either an Employer Identification Number (EIN),
Social Security Number (SSN), Individual Taxpayer Identification
Number (ITIN), or a Qualified Intermediary Employer Identification
The year in which payments were made by a
withholding agent to a recipient.
Refers to the person or organization submitting
file(s) electronically. The transmitter may be the payer, agent of
the payer, or withholding agent.
Transmitter Control Code
A five-character alpha/numeric number assigned by
IRS/IRB to the transmitter prior to filing electronically. An
application Form 4419 must be filed with IRS/IRB to receive this
number. This number is inserted in the Transmitter "T" Record (field
positions 190-194) of the file and must be present before the
file can be processed. Transmitter Control Codes assigned to 1042-S
filers will always begin with “22”.
For this Revenue Procedure, an unknown recipient is
a recipient for whom no documentation has been received by a
withholding agent or intermediary or for which documentation
received cannot be reliably associated. This includes incomplete
documentation. An unknown recipient is always subject to withholding
at the maximum applicable rate. No reduction of or exemption from
tax may be applied under any
service bureaus that produce information return files on electronic
files for withholding agents. Vendors also include companies that
provide software for those who wish to produce their own electronic
Any person, U.S. or foreign, who has control,
receipt, or custody of an amount subject to withholding or who can
disburse or make payments of an amount subject to withholding. The
withholding agent may be an individual, corporation, partnership,
trust, association, or any other entity. The term withholding agent
also includes, but is not limited to, a qualified intermediary, a
nonqualified intermediary, a withholding foreign partnership, a
withholding foreign trust, a flow-through entity, a U.S. branch of a
foreign insurance company or foreign bank that is treated as a U. S.
person, and an authorized foreign agent. A person may be a
withholding agent under U.S. law even if there is no requirement to
withhold from a payment or even if another person has already
withheld the required amount from a payment.
Partnership (WP) or Withholding Foreign Trust (WT)
A foreign partnership or trust that has entered into
a withholding or agreement with the IRS in which it agrees to assume
primary withholding responsibility for all payments that are made to
it for its partners, beneficiaries, or owners.