Comply Updates

Late last year, the IRS published the final revisions of Forms W-8BEN, W-8BEN-E, W-8ECI and W-8IMY and their instructions. If you haven’t already, head on over to our bonus section of the Comply Corner to get caught up on the changes.

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Key Updates and Reminders

On February 2, 2022, the Internal Revenue Service (IRS) posted Draft Publication 519, U.S. Tax Guide for Aliens, for use in preparing 2021 returns.

• One note to remember here is that for the tax year 2021, individuals or humans are not able to claim the COVID-19 medical condition travel exception to exclude days present in the United States in 2021 for purposes of calculating the substantial presence test. It is possible, though, that days present in the United States in 2020 may impact the calculation of the substantial presence test for the 2021 tax year.
  
  
• For more information on this exception for the 2020 tax year, check out the IRS FAQs for Nonresident Alien Individuals and Non-U.S. Businesses with Employees or Agents Impacted by COVID-19 Emergency Travel Disruptions.

On February 15, 2022, the Internal Revenue Service (IRS) finally released a Draft Publication 515, Withholding of Tax on Nonresident Aliens and Entities, for use in 2022. This long-awaited publication includes a number of updates including:

• Changes to Form 1042-S. New Income Codes to address section 871(m) transactions and section 1446(f) rules, as well as the new limitation on benefits (LOB) code 12 to report that there is no LOB article in the applicable tax treaty.
  
  
• Changes to Forms W-8BEN, W-8BEN-E, W-8ECI, W-8IMY based on the provisions in the final regulations under section 1446(f). There is a note that certain other forms may be revised in 2022. Stay tuned!
  
  
• Changes to Forms 8288 and 8288-A, also based on the provisions in the final regulations under section 1446(f).
  
  
• New form for reporting under section 1446(f)(4) is under development!

The 2022 General Instructions for Certain Information Returns are now final. In addition to the updates in our December 2021 post on the DRAFT General Instructions found here, the FINAL version includes information regarding the new Information Reporting Intake System (IRIS), which is an IRS Portal that:

• Provide taxpayers with IRS resources and guidance.
• Allows taxpayers to prepare, file, and distribute Forms 1099.
• Allows taxpayers to create and maintain tax records.
  
  

Check out the FINAL 2022 General Instructions for Certain Information Returns here.

On February 22, 2022, (2/22/22), the Internal Revenue Service (IRS) updated FAQ9 and FAQ10 regarding periodic certifications of Qualified Intermediaries (QIs), Withholding Partnerships (WPs), and Withholding Trusts (WTs). Here is some key information:

• FAQ9. QIs/WPs/WTs with a certification due date of July 1, 2022, must select the periodic review year of their certification period by July 1, 2022. This includes entities with an agreement effective date later than January 1, 2018, and earlier than January 2, 2019, but does not apply to termination certifications. These entities applying for a waiver of the periodic review must select 2019 for their periodic review year, complete Parts I, II, and III of the certifications, and submit their waiver application by July 1, 2022. These entities will not be required to perform a periodic review if their waiver application is approved.
  
  
• FAQ10. QI/WP/WT certification due dates depend on the year that the entity selected for its periodic review and whether the entity is applying for a waiver of the periodic review requirement with its periodic certification. For entities that chose 2019 or 2020 for their periodic review and that have a certification period ending December 31, 2021, then the date is July 1, 2022. For entities that selected 2021 for periodic review, then December 31, 2022, is the date. The same rules as FAQ9 apply, where the QI/WP/WT that applies for a wavier of the periodic review when making its periodic certification must select 2019 for its periodic review year and complete Parts I, II, and III of the certifications. These entities will not be required to perform a periodic review if their waiver application is approved.

2021 Information Returns (not reporting nonemployee compensation)

• The following information returns must be filed with the IRS by February 28, 2022 (March 31 if filing electronically):
  • Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
  • Form 1099-DIV, Dividends and Distributions
  • Form 1099-G, Certain Government Payments
  • Form 1099-INT, Interest Income
  • Form 1099-MISC, Miscellaneous Income
  • Form 1099-K, Payment Card and Third-Party Network Transactions
  • Form 1099-OID, Original Issue Discount
  • Form 1099-PATR, Taxable Distributions Received from Cooperatives
  • Form W-2G, Certain Gambling Winnings
    
    

Payors that need additional time to file the above-mentioned forms with the IRS can request a 30-day extension from the IRS by filing Form 8809, Application for Extension of Time to File Information Returns, by the due date of the form.

Forms 1042/1042-S

• Forms 1042-S must be filed with the IRS and furnished to the recipient of the income by March 15, 2022.
  • A 30-day extension of time to file Form 1042-S may be requested by filing form 8809, Application for Extension of Time to File Information Returns.
  • A 30-day extension of time to furnish recipients statements may be requested by faxing a letter to:
    Internal Revenue Service
    Technical Services Operation
    Attn: Extension of Time Coordinator
    Fax: 877-477-0572
    (International: 304-579-4105)
    
    
• Form 1042 must be mailed to the IRS by March 15, 2022.
  • An extension of time may be requested by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. Form 7004 does not extend the time for payment of tax.

FATCA / CRS Key Dates & Reminders – Select Jurisdictions

OECD

• The OECD published Tax Identification Number (TIN) information for Ecuador and Sint Maarten.
  
  
• The OECD also released an updated list of Signatories of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. Jamaica and Maldives were added with intended first information exchange date of September 2022, and Moldova and Uganda have been added with intended first information exchange date of September 2023.

Bermuda

• The Bermuda Ministry of Finance published an updated list of reportable jurisdictions for purposes of CRS for the 2021 reporting period. Recently added jurisdictions include Albania, Bonaire, Saint Eustatius and Saba, Curacao, Ecuador, Gibraltar, Grenada, Kazakhstan, Nigeria, and Peru.

British Virgin Islands

• The International Tax Authority (ITA) of the British Virgin Islands posted a Notice informing all relevant entities who are required to report under CRS, FATCA, and CbCr that effective September 1, 2022, the ITA intends to introduce an annual fee of $185 to each entity enrolled in the BVIFARs portal. The intended fee covers enrolment in the portal, review, and transmission of reporting submissions to partner jurisdictions, support, and maintenance.
  
  
• The ITA also posted a Notice regarding Tax Identification Numbers (TINs). The Notice reminds Financial Institutions that mandatory TIN information in filings was implemented for 2020 reporting year and onward. It also announced a new TIN update to BVIFARs portal. The portal has been updated to allow for an “Issued By” option, where the account holder that is not assigned a TIN or is not a holder of a TIN, but the account has a substantial U.S. owner.
  
  
• The BVIFARs portal will be offline commencing Monday 21 February 2022. The ITA will provide an update during the week of 21 February 2022 indicating when FIs can proceed to access the portal and make filings under the update feature.
  
  

Cayman Islands

• The Department for International Tax Cooperation (DITC) of the Cayman Islands published an Updates Bulletin. The Updates Bulletin included the following information:
  • DITC Portal updates including functionality to deactivate a Financial Institution from the portal.
  • An updated list of 2021 CRS Reportable Jurisdictions, which was published in the Cayman Islands Gazette, Issue No. 09/2022 on 31 January 2022. Jamaica, Kenya, and Morocco have been added as reportable jurisdictions for the 2021 reporting period (reports due in 2022), while Kuwait has been removed from the list.
  • Reminder regarding importance of correct classifications and notifications under CRS and FATCA regulations. The DITC is currently matching CRS and FATCA notification data against other data sources, such as Economic Substance notifications, CIMA licences/registrations, General Registry nature of business classifications, and the IRS GIIN registration list. The DITC will consider appropriate compliance and enforcement action where mis-classification is discovered.

Guernsey

• On January 27, 2022, the States of Guernsey Revenue Service published Bulletin 2022/2. The Bulletin provided an update on reporting requirements under Section 171F, which deals with failure to obtain a valid self-certification and the possible issue of freezing orders. Due to concerns raised in relation to the reporting requirement, the first reporting date has been extended from 31 January 2022 to 31 March 2022 for both new and pre-existing accounts.

Isle of Man

• The Income Tax Division of the Isle of Man published updated FATCA Guidance Notes (GN 55) and CRS Guidance Notes (GN 53) both updated as of January 27, 2022.

Malaysia

• The Inland Revenue Board of Malaysia (IRBM) announced the date for submitting 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, and 2022 reportable information and nil returns under FATCA to IRBM has been tentatively deferred to 2023.

Singapore

• The Inland Revenue Authority of Singapore (IRAS) published an updated list of reportable jurisdictions for CRS purposes for reporting year 2021. Albania, Andorra, Ecuador, Grenada, Kazakhstan, Nigeria, and Saint Lucia have been added to the list.
  
  
• IRAS published an updated list of participating jurisdictions for CRS purposes effective 4 February 2022. Jamaica, Kenya, and Morocco have been added to the list.
  
  
• IRAS also posted a reminder that the CRS registration deadline for an entity that became a Reporting SGFI between 1 January 2021 and 31 December 2021 is 31 March 2022 and deadline to submit 2021 CRS information is 31 May 2022.