American Jobs Creation Act of 2004 and Qualified Interest Income Summary (QII)
Federated has identified a group of funds for which we provide reporting to non-resident alien ("NRA") shareholders with an exemption to tax withholding. The exemption was legislated through the American Jobs Creation Act of 2004, and is applied to reduce the amount of tax withheld by a percentage called the Qualified Interest Income (QII).
The funds are:
- Government Obligations Fund
- Government Obligations Tax-Managed Fund
- Prime Cash Obligations Fund
- Prime Obligations Fund
- Treasury Obligations Fund
- U.S. Treasury Cash Reserves Fund
Clients who maintain omnibus positions may have accounts on their internal recordkeeping systems that qualify for the exemption.
There is a one month lag time with the reporting of the QII percentages. Percentages for a given month should be applied to the distributions and activity on the following month. For example, the percentage provided for March 2007 should be applied for April 2007 dividend distributions and redemptions.
Aside from distributions and redemptions, the QII percentage is also provided to clients and shareholders via year-end 1042-S tax reporting. The 1042-S tax forms are produced in February of each year for all foreign accounts. If the account is eligible for the QII withholding exemption, it will be reflected on the 1042-S tax form. To assist our clients, recordkeepers, and financial service providers prepare 1042-S forms, Federated also publishes the standard ICI NRA spreadsheet that includes data for the QII exemption and other related NRA information.
If you have any questions, please consult your tax advisor or you may also Contact Us.