On its website, the IRS has announced that, for a Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) with a periodic certification due date of July 1, 2020, the due date for the periodic certification and request to waive the periodic review requirement is extended until December 15, 2020, without the need to file a request for extension with the IRS.
Background.
The Hiring Incentives to Restore Employment Act of 2010 (P.L. 111-147) added Chapter 4 to the Code (Code Sec. 1471 through Code Sec. 1474, FATCA). In general, Chapter 4 requires withholding agents to withhold 30% from certain payments made to a foreign financial institution (FFI) unless the FFI has, among other things, entered into an “FFI agreement” with the U.S. to report certain information with respect to U.S. accounts (a participating FFI).
A QI is an eligible person that submits an application and enters into a QI Agreement with IRS. Generally, under a QI Agreement, the QI agrees to assume certain documentation and withholding responsibilities in exchange for simplified information reporting for its foreign account holders and the ability not to disclose proprietary account holder information to a withholding agent that may be a competitor. (Rev Proc 2017-15, 2017-3 IRB 437)
Similar to the QI Agreement, there is one standard agreement for WPs and WTs (the WP/WT Agreement), which is intended to simplify withholding and reporting obligations for payments to partners of a WP and beneficiaries or owners of a WT. The WP/WT Agreement is tailored to fit the unique situations of foreign partnerships and trusts in much the same way that the QI Agreement is designed to meet the needs of FFIs. (Rev Proc 2017-21, 2017-6 IRB 791)
Both the QI and WP/WT Agreements (both together, “the Agreements”) provide compliance procedures that require the QI/WP/WT to designate a responsible officer who appoints a reviewer to review (“periodic review”) the QI/WP/WT’s documentation, withholding, reporting, and other obligations under the Agreements.
Both Agreements provide that the QI/WP/WT can request a waiver of the periodic review requirement. The request is made with the QI/WP/WT’s periodic certification (see below).
Both Agreements provide that the QI/WP/WT must certify it is complying with the Agreement during a certification period. The initial certification period is, effectively, the period beginning on the effective date of the Agreement and ending on the third full calendar year that the Agreement is in effect.
Subsequent certification periods (“periodic certifications”) are every three calendar years following the initial certification period.
For a QI/WP/WT that uses the last year of the certification period for its periodic review, the periodic certification is due on or before December 31 of the calendar year following the end of the certification period.
For a QI/WP/WT that uses a year other than the last year of the certification period for its periodic review, and for a QI/WP/WT that wishes to obtain a waiver of the periodic review requirement, the periodic certification (or request for a waiver) is due on or before July 1 of the year following the certification period. See FATCA FAQs updates QI/WP/WT certification and periodic review requirements (02/25/2020) .
Due date extended.
For a QI/WP/WT with a periodic certification due date of July 1, 2020, the due date for the periodic certification or for a request to waive the periodic review requirement is extended until December 15, 2020, without the need to file a request for extension with the IRS.
To continue your research on reporting under FATCA, see FTC 2d/FIN ¶O-13330 et seq.; United States Tax Reporter ¶14,714 et seq.
Subscribe to our Checkpoint Daily Newsstand email to get all the latest tax, accounting, and audit news delivered to your inbox each weekday. It’s free!
