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FATCA & CRS News

Foreign Account Tax Compliance Act & Common Reporting Standard

Latest Releases of IRS Forms and Instructions

On October 22, 2021, the IRS released 2021 draft versions for Forms 1042 and 8804, the 2022 draft versions for Forms 1042-S, 1099-G, and 1099-K, and the 2022 draft instructions for Forms 1099-G and 1099-K. More information on the draft forms and draft instructions can be found here.

On October 25, 2021, the IRS published revised instructions for Form W-8IMY (Rev. Oct 2021). The updated instructions include guidance under 1446(f), additional guidance under the Section 871(m) regulations, new line 9b (with the GIIN line being redesignated as line 9a) for qualified derivative dealers to include their foreign tax identification number, guidance for a NQI that provides an alternative withholding statement, and guidance on the use of electronic signatures. The revised version of the Form W-8IMY has not yet been published. Additionally, on November 3, 2021, the IRS published an update to the revised instructions to reflect minor text revisions. More information on the instructions can be found here.

On October 28, 2021, the IRS released draft instructions for the tax year 2022 Form 1042-S. The revised instructions include new income code 56 to report section 871(m) transactions resulting from combining transactions under IRS Regulations Sections 1.871(15n), new income code 57 for brokers required to report or withhold on the transfer of interests in publicly traded partnerships (PTPs), new Chapter 3 status code 38 to report payments to or from PTPs, and new limitation on benefits code 12 to indicate that there is no LOB code in the applicable treaty qualifying the taxpayer for a treaty benefit.

On November 1, 2021, the IRS released draft instructions for the tax year 2022 Form 1099-R. The revised instructions include a requirement that payments from qualified plans to state unclaimed property funds under escheat laws must be reported on the 1099-R pursuant to Rev. Rul. 2020-24, 2020-45 I.R.B. 965.

Comments to the IRS in regard to these instructions can be submitted via https://www.irs.gov/formscomments.

FATCA & CRS News 8/2021

Infrastructure Bill: Reporting of Digital Assets

On Friday, November 5th, U.S. Congress passed the bipartisan infrastructure bill, which includes important provisions relating to information reporting of transactions in cryptocurrency and other digital assets. The bill is expected to be signed by the President into law imminently.

Specifically, section 80603 of the bill amends the definition of “broker” under Internal Revenue Code (IRC) section 6045 to include persons providing services relating to effectuating transfers of cryptocurrency and other digital assets on behalf of third parties.

Amended IRC section 6045 is drafted broadly and seems to incorporate crypto exchanges, custodians, wallet providers and similar businesses who help effectuate exchanges in crypto assets for a fee. Separately, the bill amends IRC section 6050I to include digital assets within the definition of ‘cash’ for purposes of that section, requiring persons receiving greater than FMV $10,000 in digital assets in the course of their trade or business to report such receipts.

A summary of the legislation is included in this PDF.

For questions please feel free to contact us.

FATCA & CRS News 7/2021

IRS releases new Form W-8BEN-E

On October 12, 2021, the IRS released the final version of the Form
W-8BEN-E "Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)" (Rev. October 2021). Note that the IRS allows withholding agents to use older versions of Form W-8s for only 6 months after the revision date shown on a more recent published version effectively giving withholding agents until May 1, 2022 to discontinue using the prior 2017 versions.

The corresponding instructions for Form W-8BEN-E are also now available.

FATCA & CRS News 6/2021

IRS publishes final versions of W-8BEN and W-8ECI

The IRS recently released final versions of Form W-8BEN “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)” (Rev. October 2021) and Form W-8ECI “Certificate of Foreign Person’s Claim that Income is Effectively Connected With the Conduct of a Trade or Business in the United States” (Rev. October 2021). Note that the IRS allows withholding agents to use older versions of Form W-8s for only 6 months after the revision date shown on a more recent published version effectively giving withholding agents until May 1, 2022 to discontinue using the prior 2017 versions.

The corresponding instructions for Form W-8BEN and the corresponding instructions for Form W-8ECI are also now available.

FATCA & CRS News 5/2021

IRS Issues Draft forms W-8BEN, W-8BEN-E, W-8ECI, and W-8IMY

The Internal Revenue Service issued draft forms W-8BEN, W-8BEN-E, W-8ECI and W-8IMY and their corresponding instructions (draft W-8BEN Instructions, draft W-8BEN-E Instructions, draft W-8ECI Instructions, draft W-8IMY Instructions). The W-8BEN draft form was published August 30, 2021, W-8BEN-E draft form was published September 2, 2021, W-8ECI draft form was published August 25, 2021, and W-8IMY draft form was published on August 26, 2021. The comment period for all four forms is currently open with the revision date scheduled for October 2021.

FATCA & CRS News 4/2021

IRS extends Enforcement Date of Amended Regulations regarding Publicly Traded Partnerships (PTP)

On August 22, 2021 the IRS issued Notice 2021-51 which extends the effective date of certain withholding requirements under the final 1446(f) regulations published in November 30, 2020. The new effective date for such withholding has been moved from January 1, 2022 to January 1, 2023. This extension of time was in response to concerns raised by taxpayers on the burden of updating their withholding and reporting systems in time for the January 1, 2022 deadline.

FATCA & CRS News 3/2021

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Extended Due Dates for QI certifications

On April 13, 2021, the IRS announced the extension of the Qualified Intermediary (QI)/Withholding Partnership (WP)/Withholding Trust (WT) Certification and Waiver Application due dates for periodic certifications due in 2021. The automatic extended due date for certifications and applications to waive the periodic review requirement for 2018/2019 is December 1, 2021, and for 2020, March 1, 2022.

The IRS also reminded QI/WP/WT that the periodic review year cannot be changed after it is selected and confirmed in the QI system.

More information on the updates can be found here.

FATCA & CRS News 2/2021

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Updated FATCA FAQs

On March 12, 2021, the IRS updated and published a new FAQ (Q23) on the FATCA – FAQs General page under the section General Compliance.

The FAQ extends penalty relief for the 2020 and 2021 calendar years in situations where a withholding agent withholds and reports a dividend equivalent payment made with respect to a derivative referencing a partnership, on Forms 1042 and 1042-S to September 15, 2021 (for the 2020 calendar year) or September 15, 2022 (for the 2021 calendar year).

More information on the penalty relief extension can be found here.

FATCA & CRS News 1/2021

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