Yes, taxpayers use this form to make the treaty-based return position disclosure required by Internal Revenue Code section 6114. Dual-resident taxpayers use this form to make the treaty-based return position disclosure required by Regulations section 301.7701(b)-7.
This form is used by the IRS to determine if some of your foreign income is taxable or not. While some income may be exempt, there may be income that you wanted to claim certain tax treaty benefits specific to your country of residence. It provides an explanation to the IRS as to why certain income is receiving beneficial treatment because of the treaty. This is disclosed to the IRS but not to the foreign government. The IRS uses this from to allow or disallow certain income items.
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