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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Notices
Comments may be submitted by any of the following methods:

SECURITIES AND EXCHANGE
COMMISSION

Electronic Comments
Release No. 3492682; File No. SRNSCC
2021009

Use the Commissions internet comment form http www.sec.gov/
rules/sro.shtml; or Send an email to rule-comments@
sec.gov. Please include File Number SR
FINRA2021019 on the subject line.
Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 205491090.

jbell on DSKJLSW7X2PROD with NOTICES

All submissions should refer to File Number SRFINRA2021019. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions internet website http www.sec.gov/
rules/sro.shtml. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commissions Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SRFINRA
2021019 and should be submitted on or before September 13, 2021.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26
Jill Peterson, Assistant Secretary.
FR Doc. 202117964 Filed 82021; 8:45 am BILLING CODE 801101P
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CFR 200.303a12.

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Self-Regulatory Organizations;
National Securities Clearing Corporation; Order Approving a Proposed Rule Change To Modify the Rules & Procedures of National Securities Clearing Corporation in Connection With the Implementation of Section 1446f of the Internal Revenue Code of 1986
August 17, 2021.

On July 14, 2021, National Securities Clearing Corporation NSCC filed with the Securities and Exchange Commission Commission, pursuant to Section 19b1 of the Securities Exchange Act of 1934 Act 1 and Rule 19b4 thereunder,2 proposed rule change SRNSCC2021009 to modify NSCCs Rules & Procedures Rules 3
in connection with the implementation of Section 1446f of the Internal Revenue Code of 1986.4 The proposed rule change was published for comment in the Federal Register on July 23, 2021,5 and the Commission received no comment letters regarding the changes proposed in the proposed rule change.
For the reasons discussed below, the Commission is approving the proposed rule change.
I. Description of the Proposed Rule Change A. Background Section 1446f generally imposes a ten percent withholding tax on the payment of gross proceeds arising from the sale or other disposition by a nonU.S. person of an interest in a publicly traded partnership Section 1446f Withholding that is engaged in a U.S.
trade or business.6 A tax withholding obligation is imposed on the buyer of the partnership interest, who is required to remit the withheld tax amount to the U.S. Internal Revenue Service IRS, unless or to the extent an applicable exception applies. The buyer obligated to withhold the ten percent tax is liable for any amount that it underwithheld,
plus associated interest and penalties.
Further, partnerships that are publicly traded on exchanges PTPs in respect of transfers that occur on or after January 1, 2022 will be subject to Section 1446f Withholding. The U.S.
Treasury Department Treasury Department and the IRS implemented a tax withholding requirement pursuant to Treasury Regulation Section 1.1446f4a.7
Section 1.1446f4b provides certain exceptions to 1.1446f4a.
Under one of the exceptions, U.S.
clearing organizations, which, under its definition, would include NSCC, are discharged from fulfilling Section 1446f Withholding at this time. The Treasury Department and the IRS
provided this exception because they understood that there are no nonqualified intermediary Members that participate directly in the net settlement system at a U.S. clearing organization at the present time.8
NSCC represents that, all of NSCCs non-U.S. Members are currently of the types of entities permitted to perform the Section 1446f Withholding themselves either because i they are the types of entities allowed to perform U.S. tax withholdings pursuant to applicable Treasury Regulations, or ii they have entered into the requisite agreements with the IRS that allow them to perform U.S. tax withholdings commonly known as the Qualified Intermediary Agreements.9 NSCC
further represents that nearly all such Members have historically accepted the responsibility to perform all U.S. tax withholdings in respect of their NSCC
accounts, and it is NSCCs understanding that they would continue do the same for Section 1446f Withholding.10
B. Proposed Rule Changes NSCC proposes to amend its Rules to ensure that all NSCCs FFI Members 11
that are Members would accept the responsibility to perform the Section 1446f Withholding.12
First, NSCC proposes to add new definitions: Section 1446f, Section 1446f Withholding, Section 1446f 7 Id.;

1 15

U.S.C. 78sb1.
2 17 CFR 240.19b4.
3 Capitalized terms not defined herein are defined in the Rules, available at http www.dtcc.com//
media/Files/Downloads/legal/rules/nscc_rules.pdf.
4 26 U.S.C. 1446f.
5 Securities Exchange Act Release No. 92437 July 19, 2021, 86 FR 39092 July 23, 2021 Notice of Filing.
6 26 U.S.C. 1446f1; Withholding of Tax and Information Reporting With Respect to Interests in Partnerships Engaged in a U.S. Trade or Business, 85 FR 76910 Nov. 30, 2020 Final Regulations.

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26 CFR 1.1446f4a.
Regulations, supra note 6, at 76922.
9 Notice of Filing, supra note 5, at 39093.
10 Id.
11 The term FFI Member means any Member or Limited Member that is treated as a non-U.S. entity for U.S. federal income tax purposes. See Rules, supra note 3.
12 NSCC states that, based on the types of services that NSCC provides to Limited Members, notwithstanding any exception, NSCC would not need to perform Section 1446f Withholding with respect to Limited Members activities at NSCC.
Notice of Filing, supra note 5, at 39093.
8 Final
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