Tax & Accounting Blog

QIs Have No Choice with Regard to FATCA

1042-S, 1099, 6050W, Cost-Basis Reporting, Document and WorkFlow Management, Information Reporting for Wealth Management, International Reporting & Compliance, ONESOURCE, Tax Information Reporting, TIN Compliance, Trust Tax, W-8 & W-9 Foreign Reporting, Withholding Management November 7, 2011

In last week’s EEI conference, it was announced that Qualified Intermediaries (QIs) will have no choice but to register to become a Participating Foreign Financial Institution (PFFI).

This announcement came as quite a shock to some of the QIs that attended the Washington event, who assumed that they have the choice of becoming a non-participating FFI and, instead, opt to pay a 30% withholding rate at source.

There are currently a predicted 5,000 QIs worldwide, and it was announced that the IRS has predicted up to 75,000 institutions will be impacted by FATCA and will sign up as a PFFI. Speculation within and outside the IRS focused on how the IRS will cope with monitoring such a widespread regime. The IRS said that they are keen to keep the requirements “uncomplicated” in order to reduce the expected effort required from the PFFI and the IRS. Only time will tell …