QI periodic review and certification requirements

Summary of periodic review and certification requirements

With respect to each certification period, a Qualified Intermediary (QI) must designate an independent reviewer to perform a periodic review with respect to one year of the certification period.

• The reviewer must assess the QI’s compliance with respect to the documentation, withholding, reporting, and other obligations under the QI Agreement as well as the applicable FATCA requirements. The results of the periodic review form the basis for the QI’s periodic certification.

• The focus of the periodic review consists of reviewing a sample of the QI’s account holders who received US source income during the review year.

• A QI whose certification period ends on 31 December 2020 may select either 2018, 2019 or 2020 as the review year. Selecting 2019 as the review and having the review conducted in H2 2020 may be the preferred option for many QIs as it leaves them more time to remediate potential findings in advance of the periodic certification and enables better alignment between the QI and FATCA certification.

The Responsible Officer (RO) of a QI must make a periodic certification to the IRS after the end of every certification period.

• The RO must make either a Certification of Effective Internal Controls or, in case there are/were material failures, a Qualified Certification. In addition, the RO must provide together with the certification certain factual information to the IRS based, in part, on the results of a periodic review.

• For QIs whose certification period ends on 31 December 2020, the periodic certification is due on 1 July 2021 (if the periodic review is performed for 2018 or 2019) or 31 December 2021 (if 2020 is selected as the review year).

Special rules regarding QI reviews and certifications

Waiver from the periodic review

• If the reportable amounts received by a QI during each year of the certification period do not exceed USD 5 million (and QI fulfils other applicable criteria), the QI may apply for a waiver from the periodic review.

• Such QIs must nevertheless make a periodic certification to the IRS.

Review of Sec. 871(m) activities

• Exemption for Qualified Derivatives Dealer (QDD) activities during the periodic review for the certification period ending on 31 December 2020.

• Nevertheless, Sec. 871(m) instruments held in custody for a QI’s account holders are in scope of the 

Consolidated compliance groups

• There are special review and certification requirements for QIs under common ownership who are part of a consolidated compliance programme.

• In order to form a consolidated compliance group and benefit from these special procedures, a separate application with the IRS is required.

Typical steps of a QI periodic review

1. Facilitation of initial workshop to present requirements, determine the scope and agree on form of collaboration 
2. Development of review plan taking into consideration QI’s compliance programme and account types 
3. Validation of total account population, calculation of sample size and selection of sample population based on the safe harbour method 
4. Provision of information request list allowing QI to prepare relevant data/documentation 
5. On-site documentation, withholding and reporting review for sampled accounts (and interim status updates to RO) 
6. Preparation of draft review report and meeting with RO to discuss findings and necessary remediation activities 
7. Submission of final review report (taking into consideration remediation activities) to RO
   

Deloitte’s QI periodic review offering

Through the use of its established methodology, Deloitte can participate in or perform the QI periodic review:

• The use of Deloitte’s QI work program ensures a consistent and highly efficient on-site review
• We apply a pragmatic approach on the basis of our longstanding in-house and advisory expertise with respect to QI operational processes
• We have a skilled and experienced team that already performed numerous QI reviews and health checks
• We have access to IRS QI team to support complex remediation activities
• We offer a transparent and attractive pricing