It appears this line is intended for situations where an exemption is time limited. So it seems fairly irrelevant for overseas residents who receive annuities or royalties which are (by treaty) only taxable in the other country.
All the same it looks like it needs to be completed. The obvious interpretation is to do it in 12 month increments (even for once a year payments). So someone who had received an annual check for five previous years should enter 60 months?
But would it matter whether or not they had filed returns for those years? A person who receives only NEC income is not required to file if they were correctly withheld and don't owe any tax (page 4, para 2 of the instructions). Presumably though the treaty is still being "claimed"?
Could it even be the other way around, with the "prior tax years" referring to those where a return wasn't filed? (so the IRS knows that the treaty was claimed during that time?)
I'm probably overthinking this, but I want to be sure I fill everything in properly.
Thanks if anyone can help.