The Comply Catch-Up – December 2021 Issue 13

Dec 20, 2021

Comply Updates

Comply Exchange is excited to announce our new partnership with Certa! This innovative partnership has the capability to entirely automate your customer lifecycle. From managing onboarding and risk management to IRS Forms W-8 and W-9 withholding certificate collection and validation, this partnership can be leveraged to ensure your company remains compliant and mitigates risk.

With a technology-first approach, this fully integrated and automated solution seamlessly onboards and verifies your customers and collects and validates required IRS withholding certificates all through enhanced API architecture.

To find out more about this offering, email contact@complyexchange.com. If you’re interested in partnering with us, head on over to our partnership page!

With year-end reporting quickly upon us, check out our Year-End Reporting brochure available here. Within this document, we walkthrough best practices, common errors and challenges, and hot topics for reporting year 2021, while looking ahead to 2022.

From everyone here at Comply Exchange, we would like to wish you a Happy Holiday season. We would also like to extend our gratitude to all our clients, partners, followers and friends for a wonderful year. We couldn’t have done this without you and can’t wait to show you what we have in store for 2022!

Key Updates and Reminders

    • In case you missed it, the Internal Revenue Service Advisory Council (IRSAC) published its November 2021 report. In it, there are a number of issues relevant to the U.S. federal tax information reporting community. To find out more about the 2021 November IRSAC Report, read our full article here.
    • On November 30, 2021, the IRS published the 2021 Form 945, Annual Return of Withheld Federal Income Tax. The form has been updated for the 2021 calendar year with no other changes.
    • On December 1, 2021, the IRS published Instructions for Forms 1099-INT and 1099-OID and updated Form 1099-INT, which has been converted from the annual revision to a continuous use form. You can access the latest Forms and Instructions here:
    • On December 10, 2021, the IRS published a few Forms 1099 of note. The new Form 1099-MISC (Rev. January 2022) is now a continuous use form and includes updates such as new checkbox 12 for FATCA Filing Requirement and a renumbering of subsequent boxes. The 2022 Forms 5498 and 1099-R are not continuous use forms and meant for reporting 2022 tax year information in 2023.  Check out the latest forms here:
    • On December 13, 2021, the IRS published 2022 Form 1042-S.  There are a number of changes to codes. You can find details on the changes here. 
    • On December 14, 2021, the IRS published Form 1099-NEC (Rev. January 2022), a continuous use form.  The boxes align a bit differently from the 2020 form and there are a few changes to note. You can review the changes here. It is worth noting that the instructions for the payor now push the payor to the current General Instructions for Certain Information Returns for filing and furnishing instructions, due dates, and requests for filing or furnishing extensions.
    • As a reminder, year-end reporting deadlines are approaching soon. See below for a few key deadlines and reminders:
      • Form 1099-MISC –
        • If filing by paper, the Form 1099-MISC is due to the IRS by February 28, 2022, or by March 31, 2022, if filing electronically.
        • The due date for furnishing statement to recipients is January 31, 2022.
      • Form 1099-NEC –
        • The Form 1099-NEC is due to both the IRS and recipients by January 31, 2022.
        • There is not an automatic 30-day extension available for the Form 1099-NEC. To request an extension, payers should file Form 8809 before the filing due date. File Form 8809 as soon as you know an extension of time to file is necessary, but not before January 1 of the year in which the return is due.
      • Form 1042/1042-S –
        • The Forms 1042, 1042-S and 1042-T (if transmitting paper forms) must be filed by March 15 of the year following the calendar year in which the income subject to reporting was paid. If March 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Therefore, the 2021 deadline is March 15, 2022.
          • By filing Form 8809, you will get an automatic 30-day extension to file Form 1042-S. If you need more time, you may submit a second Form 8809 before the end of the initial extended due date.
          • By filing Form 7004, you can request an automatic 6-month extension of time to file Form 1042.
      • For additional Form 1099 due dates and extension information, please refer to the General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G).

    FATCA / CRS Key Dates & Reminders – Select Jurisdictions

    Barbados

    • The Barbados Revenue Authority (the “Authority”) published a press release regarding a collaboration with the Canada Revenue Agency (“CRA”) to enhance the Authority’s capacity in tax administration. As part of the collaboration, the revenue authorities have completed a knowledge-sharing event on the Exchange of Information and the role this tool plays in tackling tax avoidance, while learning events on small and medium-sized enterprises and international and large business compliance are ongoing.

    Bermuda

    Canada

    • The Canada Revenue Agency (“CRA”) issued an updated XML schema, version 1-22-2, for reporting information under FATCA and CRS. The updated schema is to be used to file information returns in 2022.

    Germany

    • The Federal Central Tax Office (BZSt) published CRS Newsletter 07/2021. It informs Reporting Financial Institutions (RFIs) of the following:
      • Introduction of the plausibility check on the ‘IN’ field of the financial institution, which was previously announced in CRS Newsletter 03/2021. With the introduction of the plausibility check, the specification of the tax number to be entered changes to the 13-digit tax number in the standardized federal scheme for electronic transmission, also called ELSTER scheme. Due to the introduction of the plausibility check, RFIs should refrain from reporting data for the reporting period 2021 before April 2022.
      • Due to the introduction of the plausibility check, CRS Part 2 and Part 4 Communication Manuals have been adapted accordingly.

    Singapore

    • The Inland Revenue Authority of Singapore (“IRAS”) published an updated e-Tax Guide for the Common Reporting Standard (Second Edition).
    • IRAS also published the following updates regarding FATCA and CRS:
      • CRS:
        • Increased penalties for CRS regulation and filing offences. With effect from 16 November 2021, the penalties for CRS non-regulation and non-filing offences have been increased to $5,000 upon conviction, and a further fine of $100 per day for a continuing offence.
        • New excluded accounts for the purposes of CRS. With effect from 1 December 2021, accounts in which moneys are deposited from maintenance funds (established by developers), management funds or sinking funds (established by management corporations or subsidiary management corporations) that are regulated under the Building Maintenance and Strata Management Act (BMSMA) will be treated as excluded accounts for the purposes of CRS.
      • FATCA:
        • Increased penalties for FATCA filing offences. With effect from 16 November 2021, the penalties for FATCA non-filing offences have been increased to $5,000 upon conviction, and a further fine of $100 per day for a continuing offence.
    • IRAS also released information regarding the following feedback forms:
      • Voluntary disclosure of errors for FATCA or CRS. This form is designed for Reporting SGFIs to disclose errors in their FATCA or CRS reporting. IRAS encourages Reporting SGFIs who have made errors in their FATCA or CRS returns to come forward voluntarily as soon as they have uncovered the error to disclose these errors or omissions.
      • Reporting of potential FATCA or CRS non-compliance. This form allows information to be shared on potential FATCA or CRS non-compliance through the use of schemes, products, and/or structures to circumvent reporting under CRS or FATCA with IRAS.

    Switzerland

    • The Federal Tax Administration (FTA) of Switzerland updated its list of AEOI partner states. Beginning January 1, 2022, Kazakhstan has been identified as a reciprocal jurisdiction, while Maldives and Oman have been identified as non-reciprocal jurisdictions.

    Taiwan

    • The Ministry of Finance of Taiwan issued a press release regarding the amendment to financial accounts listed as ‘financial accounts that present a low risk of being used to evade tax’. From 2022, the following accounts will not be subject to reporting obligations conducted by Reporting Financial Institutions:
      • Microinsurance
      • An account held on behalf of a party involved in connection with a settlement or mediation transcript, the court’s approval of a mediation agreement conducted by a township or county-administered city’s mediation committee, or an arbitration award, all of which have the same effect as a final court judgment with binding effect