Contract analysis

I. Executive Summary This memorandum analyzes the application of the Foreign Account Tax Compliance Act ("FATCA") (Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC")) to the proposed issuance of $500,000,000 in aggregate principal amount of asset-backed notes (the "Notes") by Quorum Receivables Funding 2022-1 LLC ("QRF 2022-1" or the "Issuer"). The analysis addresses the

II. Background on FATCA A. Legislative and Regulatory Framework The Foreign Account Tax Compliance Act was enacted on March 18, 2010 as part of the Hiring Incentives to Restore Employment Act (the "HIRE Act"), Pub. L. No. 111-147, §§ 501–541, 124 Stat. 71, 97–117. FATCA is codified at IRC §§ 1471 through 1474 and represents one of the most significant developments in international tax enforcement in recent decades. T

III. Classification of QRF 2022-1 Under FATCA A. Entity Status for U.S. Federal Income Tax Purposes QRF 2022-1 is a limited liability company organized under the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq. The sole member of QRF 2022-1 is Quorum Receivables Holding LLC ("QRH"), also a Delaware limited liability company. QRH is in turn wholly owned by QPF, a Delaware limited liability company,

IV. Withholdable Payments Analysis A. Interest on the Notes Interest payments on each tranche of the Notes will constitute U.S.-source interest income. The Notes are obligations of a U.S. entity (QRF 2022-1, a domestic Delaware LLC), and interest paid on such obligations is U.S.-source income under IRC § 861(a)(1). The preliminary pricing guidance for each tranche is as follows: • Class A Notes (preliminary CUSIP 748

V. FATCA Withholding Obligations and Procedures A. When Withholding Applies FATCA requires withholding at the rate of 30% on withholdable payments (here, interest on the Notes) made to any of the following categories of payees:

1. Non-participating FFIs. An FFI that has not entered into an FFI agreement with the IRS under IRC § 1471(b) and is not otherwise exempt from FATCA or treated as a deemed-compliant FFI. Non-participating FFIs are subject to FATCA withholding because they have not agreed to identify and report their U.S. account holders to the IRS.

2. Recalcitrant account holders. A holder of the Notes (or a beneficial owner thereof) that fails to provide the withholding agent with the documentation required under FATCA—specifically, a valid W-8 or W-9 form, as applicable. Under Treas. Reg. § 1.1471-5(g), an account holder is treated as "recalcitrant" if the holder fails to comply with documentation requests or if the documentation provided is insufficient to d

3. Non-exempt NFFEs. A passive NFFE (i.e., a non-financial foreign entity in which more than 50% of gross income is passive income or more than 50% of assets produce passive income) that does not provide certification regarding its "substantial U.S. owners" (i.e., U.S. persons who own, directly or indirectly, more than 10% of the entity). Under IRC § 1472, a withholding agent must withhold 30% on withholdable payment

1. U.S. persons. Payments to holders that are U.S. persons (as certified on Form W-9) are not subject to FATCA withholding. U.S. persons are, however, subject to the standard backup withholding rules under IRC § 3406 if they fail to provide a taxpayer identification number ("TIN"). Given that the Notes will be offered primarily to U.S. qualified institutional buyers under Rule 144A, the majority of holders are expect

2. Participating FFIs and deemed-compliant FFIs. Payments to FFIs that have entered into an FFI agreement with the IRS (participating FFIs) or that qualify as "deemed-compliant FFIs" under Treas. Reg. § 1.1471-5(f) are exempt from FATCA withholding, provided the FFI has furnished a valid W-8BEN-E form to the withholding agent identifying its FATCA status and, if applicable, providing its GIIN.

3. Exempt beneficial owners. Payments to certain categories of exempt beneficial owners are not subject to FATCA withholding. These include foreign governments (as defined in IRC § 892), international organizations, foreign central banks of issue, governments of U.S. territories, and certain retirement funds. The exemption must be documented on a W-8BEN-E or W-8EXP form, as applicable.

4. Active NFFEs and excepted NFFEs. Payments to NFFEs that qualify as "active NFFEs" (i.e., less than 50% of gross income and assets are passive) or "excepted NFFEs" (e.g., publicly traded corporations, affiliates of publicly traded corporations, certain territory entities, and certain nonprofit organizations) are not subject to FATCA withholding.

5. Passive NFFEs that provide owner certification. Payments to passive NFFEs that certify on a W-8BEN-E that they have no substantial U.S. owners, or that identify each substantial U.S. owner, are exempt from FATCA withholding. The withholding agent must report the identity of any substantial U.S. owners to the IRS on the applicable information returns.

6. Entities in IGA partner jurisdictions. FFIs and NFFEs organized in jurisdictions that have entered into an IGA with the United States may be treated as compliant with FATCA under the terms of the applicable IGA, provided they comply with the IGA's reporting requirements. The specific treatment depends on whether the entity is in a Model 1 or Model 2 IGA jurisdiction and whether it has registered as required. C. Op

1. Collection of W-8 and W-9 Forms. Calvoneth Trust should obtain a completed and signed IRS Form W-8 (the applicable version depending on the holder's status, as discussed in Section VI below) or Form W-9 from each noteholder at or before the time of purchase of the Notes. For Notes held through DTC in global form, Calvoneth Trust should coordinate with DTC and its participants to ensure that W-8 or W-9 forms are ob

2. Validation of Documentation. Calvoneth Trust should validate the documentation received from each holder under the applicable due diligence standards set forth in Treas. Reg. §§ 1.1471-3 and 1.1471-4. This includes reviewing each W-8 form for completeness, internal consistency, and consistency with other account information, and verifying GIINs against the IRS FFI List (published and updated periodically by the IR

3. Application of Withholding. Calvoneth Trust should apply withholding at the rate of 30% on any payment of interest on the Notes to a holder or beneficial owner that (a) has not provided a valid W-8 or W-9 form, (b) has provided a W-8 form that indicates the holder is a non-participating FFI, (c) has provided a W-8BEN-E indicating that the holder is a passive NFFE without the required substantial U.S. owner certifi

4. Reporting of Withheld Amounts. Calvoneth Trust should report all amounts withheld under FATCA on the applicable IRS information returns. Specifically, Calvoneth Trust should file an annual Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) and issue a Form 1042-S to each non-U.S. recipient of withholdable payments, as discussed further in Section XI below.

5. Record Retention. Calvoneth Trust should maintain records of all W-8 and W-9 forms received, all withholding calculations, and all FATCA-related correspondence for the period prescribed by applicable law—generally, at least three years from the date of the last return filed or the date the last payment is made, whichever is later. We recommend that these operational procedures be documented in a FATCA compliance a

VI. W-8 Documentation Requirements for Non-U.S. Holders A. Applicable Forms Non-U.S. holders of the Notes will be required to provide the appropriate IRS Form W-8 to the withholding agent in order to establish their FATCA status and, where applicable, to claim an exemption from FATCA withholding. The following W-8 forms are relevant: W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax With

VII. Offering Structure Considerations — Rule 144A / Regulation S A. Rule 144A Placement (Domestic) The Notes will be offered in the United States to qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act of 1933, as amended. Rule 144A purchasers will primarily be U.S. institutional investors—including insurance companies, asset managers, banks, pension funds, and other large institu

VIII. No Gross-Up Obligation Consistent with prevailing market practice for asset-backed securities, the Notes should not carry a gross-up or additional amounts obligation. A "gross-up" provision would obligate the Issuer to increase the amount of each payment to non-U.S. holders to compensate them for any amounts withheld under FATCA, such that the holder receives the same net amount as it would have received absent

IX. Interaction with Chapter 3 Withholding and Tax Treaties A. Chapter 3 Withholding (IRC §§ 1441–1443) Interest payments on the Notes to non-U.S. persons are also potentially subject to withholding under Chapter 3 of the Code (IRC §§ 1441–1443). Chapter 3 imposes a 30% withholding tax on U.S.-source FDAP income paid to non-resident alien individuals (under IRC § 1441) and foreign corporations (under IRC § 1442), sub

X. Recommendations for Transaction Documents A. Indenture Provisions The Indenture (currently in execution draft v4, dated October 12, 2022) should include a standalone FATCA section—we suggest designating it as Section 3.12 (Tax Compliance — FATCA) or incorporating it into the existing tax provisions—providing for the following: (a) Withholding Authority. The Indenture should expressly authorize the Trustee and the