The Comply Catch-Up – January 2023 Issue 25

Jan 27, 2023

Key Dates and Reminders

  • On January 20, 2023, the IRS posted an updated Publication 1187, Specifications for Electronic Filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.
  • On January 23, 2023, the IRS launched the Information Returns Intake System (“IRIS”). The system allows for direct filing with the IRS and the production of paper forms for recipients. A user can also utilize the system to file a Form 1099 extension with the IRS and produce corrected forms.
    • Refer to the Taxpayer Portal User Guide for information around who can participate, what forms are available to file through IRIS, and how to navigate and file.
  • The IRS extended the due date for Qualified Intermediaries (QI) to renew their QI agreement under Rev. Proc. 2022-43 from January 1, 2023, to May 1, 2023. The Rev. Proc. originally gave QIs until March 31, 2023, to renew their agreement. The IRS has also acknowledged that the renewal link is not available to some QIs on the Qualified Intermediary Application and Account Management System (QAAMS) and the IRS is working to fix it.
  • In general, Forms 1099 must be furnished to recipients by January 31, 2023. In addition, Forms 1099 are required to be filed with the IRS by February 28, 2023, if paper filing, or March 31, 2023, if electronically filing. If paper filing with the IRS, then the Form 1096, Annual Summary and Transmittal of U.S. Information Returns, must be attached to the Forms 1099.
    • An automatic 30-day extension for filing Forms 1099 with the IRS can be obtained by filing Form 8809, Application for Extension of Time To File Information Returns. Since this is an automatic extension, the Form 8809 does not require a reason for the request, nor does it require a signature.
    • 1099-NEC is required to be filed with the IRS and furnished to the recipients by January 31, 2023.
      • For an extension to file the Form 1099-NEC with the IRS, the Form 8809 will require a reason and must be signed.
  • As a reminder, Forms 1042, 1042-S and 1042-T must be filed by March 15, 2023, with the IRS, unless an extension has been requested. You must also furnish Forms 1042-S to recipients, by March 15, 2023. To request an automatic 30-day extension of time to file Forms 1042-S with the IRS, file Form 8809, Application for Extension of Time To File Information Returns.
      • An automatic six-month extension of time to file Form 1042 can be obtained by filing Form 7004 on or before the due date for Form 1042.
      • The Form 1042-T must be attached to the Forms 1042-S when paper filing. It is not required for electronic filing and there is no requirement to request an extension.
  • The IRS released the following at the end of December. Please see below for a quick recap:
    • Announcement 2023-2 – Transitional guidance under sections 6045 and 6045A with respect to the reporting of information on digital assets by brokers
      • The IRS provided transitional relief and delayed the reporting for digital assets.
    • Notice 2023-10 – Revised Timeline Regarding Implementation of Amended Section 6050W(e)
      • The IRS announced that it will not enforce the threshold of reporting on payees receiving $600 or more thus defaulting back to the prior Form 1099-K rules that require reporting on a payer receiving $20,000 and over 200 transactions.
      • The only exception is in the case where withholding occurred in 2022 based on the $600 reporting threshold.
    • Notice 2023-11 – Foreign Financial Institution Temporary U.S. Taxpayer Identification Number Relief
      • The IRS provides continued relief to a Foreign Financial Institution (“FFI”), under a Model 1 Intergovernmental Agreement (“IGA”), without the tax identification number (“TIN”) of U.S. pre-existing accountholders.

FATCA / CRS Key Dates & Reminders – Select Jurisdictions

  • OECD
    • The OECD recently introduced: Model Reporting Rules for Digital Platforms: Frequently Asked Questions
      • The FAQs provided here are in response to questions received from businesses and government delegates.
      • Reporting by Digital Platforms of income (goods, personal services, intangible assets, and certain property) paid in 2023 will be due in January 2024 in jurisdictions that enacted these rules.
  • Argentina
    • The status of the Intergovernmental Agreement between the United States and Argentina was updated to In Force and is treated as having an IGA in effect as of January 1, 2023.
  • Australia
    • On January 23, 2023, the Australian Taxation Office published an update regarding reporting account holder US TINs for 2023. In response to Notice 2023-11 published by the IRS on December 30, 2022, Australian Financial Institutions will not be treated as non-compliant if they fail to report a US TIN on a pre-existing account and meet certain requirements. An FFI is eligible for relief if they:
      • Obtain and report birth date of each account holder that is an individual and controlling person whose US TIN is not reported;
      • Starting in calendar year 2023, annually request any missing US TINs from each account holder;
      • Starting in calendar year 2023, annually search the electronic data maintained by reporting Australian financial institutions for any missing US TINs, and
      • Report an accurate TIN Code for each account missing a required US TIN

Reporting for calendar year 2022, Australian FIs can use either TIN Codes issued by the IRS in May 2021 or updated TIN Codes to be issued by the IRS in early 2023.

Reporting for calendar years 2023 and 2024, Australian FIs must use the most recent TIN Codes issued by the IRS.

 

  • Germany
    • On December 15, 2022, the BZSt released a CRS newsletter highlighting the following:
      • Common concerns that apply to the AEOI audits within the Common Reporting Standards were added to the Question and Answers section of the BZSt website.
      • The CRS Test Manual was replaced with an explanatory test in the continuing testing option. Go to: BZSt – Elektronische Datenübermittlung
      • As of January 1, 2023, certain products previously considered exempt from FATCA and CRS will be considered financial accounts as raised in the BMF letter of June 15, 2022, amending the BMF letter of February 1, 2017.
        • These accounts will be subject to due diligence for the identification of reportable accounts. For example, certified Riester contracts.
        • For any account open prior to January 1, 2023 the preexisting account review methodology can be utilized. Any accounts opened after the January 1, 2023 date will require the use of the due diligence measures for new accounts.
  • Guernsey
    • On January 18, 2023, the States of Guernsey Revenue Service published Bulletin 2023/01 listing the reportable and participating jurisdictions for reporting period 2022/2023.
  • Isle of Man
  • Japan
    • National Tax Agency Japan published an updated version of “frequently asked questions” (“FAQ”) on the Automatic Exchange of Information (“AEOI”) under CRS.
      • The FAQ includes a question on confirming the completion of CRS reporting through the e-tax portal.
      • An update was made to the list of reportable jurisdictions.
  • Jersey
    • Revenue Jersey announced it is publishing a programme of compliance activities it will undertake during 2023. These activities are in accordance with its compliance strategy based on the Promote, Prevent and Respond Model. A few programmes to note:
      • Identifying entities that have incorrectly classified themselves for Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) reporting with a view to improving data quality and accuracy.
      • Review of the rationale for CRS/FATCA reporting by service providers.
      • Enhancement of FATCA and CRS validations for Jersey’s Automatic Exchange of Information (AEOI) portal in order to improve the quality of information provided.
      • Compliance interventions with financial institutions which present the highest risk of not complying with the FATCA and CRS rules, or the highest reputational risk to Jersey.
  • Mauritius
  • Singapore
    • On December 20, 2022, the Revenue Authority of Singapore issued a FATCA Fillable PDF Form updated to include the Tax Identification Number under the account holder or payee information.
  • United Arab Emirates (“UAE”)
  • United Kingdom
    • On January 5, 2023, HMRC published a list of reportable jurisdictions for the 2023 reporting year, in respect of 2022 reportable accounts. Moldova, Montenegro, Thailand and Uganda have been added to the list, while Morocco has been removed from the list.

Comply Updates

David Marley, Founder and CEO of Comply Exchange Ltd., has been accepted into the Forbes Technology Council. “We are honored to welcome David into the community,” said Scott Gerber, founder of Forbes Councils. View our full press release HERE.

If you would like to schedule a demo and discuss how Comply can help you automate and centralize your information reporting and withholding requirements, contact us at contact@complyexchange.com.