The Comply Catch-Up – June 2021 Issue 7

Jun 30, 2021

Comply Updates

Now that things are starting to return to normal, we want to share with you this message from our CEO.

Comply will be unveiling a new digital experience, ComplyLive, where we will be able to interact with you all directly via a live demo and chat feature! We will be starting with a showcase of our eForms solution on July 14th at 11am EST/ 4pm BST. Click here to register and gain access to the event.

We have been working closely to finalize some exciting partnerships that will help to provide a truly unique end-to-end U.S. Information Reporting and Withholding solution. Stay tuned for our upcoming partnership announcements. 

We sponsored this year’s International Tax Withholding & Reporting Virtual Conference hosted by Kaplan. You can read our key takeaways from the conference here.

Key Updates and Reminders

While no new Forms W-8 have been released yet, we are expecting new forms to start trickling out soon in draft form. We are expecting to see new Forms W-8IMY, W-8ECI, W-8BEN and W-8BEN-E.

Do you have exposure from not documenting and withholding on your payees correctly? With the IRS announcing that they will be increasing focus on audits of multi-national corporations and accounts payable functions, in addition to financial institution audits, now is the time to make sure your documentation solicitation and validation process is in order.

It is a great time review your “B” Notice process and run queries on your data to identify any potential for a mismatched name and TIN combination. The IRS considers a Name/TIN combination incorrect if it does not match, or cannot be found, on IRS or Social Security Administration files. The IRS expects:

  • The TIN is associated with the individual name provided.
  • A partnership, corporation, or non-disregarded Limited Liability Company uses an Employer Identification Number.
  • An individual (with a first name on file) uses a Social Security Number (SSN).
  • A Sole Proprietor uses his or her individual name that associates with an SSN.

 

Last month, the Department of the Treasury published its Fiscal Year 2022 Revenue Proposals (The Proposals) which impact U.S. federal tax information reporting and crypto brokers. Here are some key highlights, though you can read the full article here.

  • Attention all crypto brokers! The United States is cracking down on taxpayers concealing assets and taxable income by using offshore crypto exchanges, wallet providers, and hiding behind other entities. The Proposals are looking to third party information reporting for help in identifying these taxpayers and increasing voluntary tax compliance.
  • Enhancing tax information reporting compliance again! In looking to enhance compliance and modernize tax administration the Proposals intend to expand electronic filing to enhance the IRS ability to target its audit activity and allow the Secretary broader authority to require electronic filing.
  • Backup withholding, again! The Proposals seek to treat all income subject to backup withholding the same, which would allow the IRS to require payees of any reportable payments to furnish their TINs to payors under penalty of perjury. This means that the manner required for providing a TIN for all reportable payments would require a Form W-9 or equivalent. The proposal would be effective for payments made after December 31, 2021.
  • New financial account information reporting regime! Since the only information reported of gross receipts is limited to Forms 1099-MISC, 1099-NEC, and 1099-K, there is no information reporting on total deductible expenses or other types of gross receipts. The Proposals seek to create a comprehensive information reporting regime. This means that financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for each physical cash transactions with a non-U.S. account, and transfers to and from another account with the same owner. This will help increase visibility of gross receipts and deductible expenses to the IRS.

 

On June 28, 2021, the IRS published a DRAFT Pub. 1179 , General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. Visit our write-up here to see the possible changes for 2021 tax returns required to be filed in 2022.

FATCA / CRS Key Dates & Reminders – Select Jurisdictions

Bahamas

  • On June 9, 2021, The Bahamas Competent Authority published a revised list of AEOI/CRS Exchange Partners for information relating to the 2020 reporting year. Click here to see a complete list of the jurisdictions.

Barbados

  • The Barbados Revenue Authority advises all Reporting Barbados Financial Institutions that an extension has been granted until July 31, 2021, to file prior year reports for FATCA and CRS or to make any necessary corrections.

Cayman Islands

  • On June 3, 2021, the Cayman Islands Department for International Tax Cooperation (DITC) published an Updates Bulletin containing news and information on FATCA, CRS, and Economic Substance Reporting. Click here to read the full Updates Bulletin.

Cyprus

  • The Cyprus Tax Department published an updated List of Participating Jurisdictions under CRS. Costa Rica, Curacao, Grenada, and Peru were added to the list to exchange information starting in 2021. Click here to see the full List of Participating Jurisdictions.

Guernsey

  • The States of Guernsey Revenue Service issued a Bulletin regarding FATCA and CRS Compliance Information. The purpose of the information is to provide additional pointers and sources of information to provide practical support to financial institutions. Click here to read the Bulletin.

Isle of Man

  • The Isle of Man issued an Industry Advisory Notice on June 22, 2021, related to FATCA and CRS. The Notice reminded Isle of Man Financial Institutions that the filing deadline for 2020 reporting period for FATCA and CRS returns is June 30, 2021, and Isle of Man Financial Institutions must use version 2.0 of the CRS schema when submitting returns. Click here to read the full Industry Advisory Notice

Mauritius

  • The Mauritius Revenue Authority (MRA) released a list of common reporting errors made by Mauritius Financial Institutions (MFIs) when submitting CRS reports. Click here to read a full list of the common errors.