The Comply Catch-Up – October 2021 Issue 11

Oct 29, 2021

Comply Updates

We would like to send a big thank you to Sovos for hosting such an exciting and informative conference earlier this month! We also appreciate everyone who joined both our tax technical and product showcase sessions.

As a reminder, Comply and Sovos have partnered to offer an automated end-to-end withholding and reporting solution, including documentation collection and validation, withholding rate calculations, end-of-year reporting, and much more!

If you’re interested in our partnership offerings, you can contact us at:

www.complyexchange.com or email contact@complyexchange.com

B notice season is upon us! As such, we have created a short video outlining what to do if you receive a CP2100 or CP2100A from the IRS this season.

Remember, you can find informative training videos like this using our premium subscription, ComplyPro. Head on over to our home page for more details.

Key Updates and Reminders

  • The month of October saw many of the draft forms and their instructions go final, including the W-8BEN, W-8BEN-E and W-8ECI. This means that within six months, withholding agents and payors must begin using this new form. Check in with your withholding certificate service providers to confirm updates. Final Forms and their Instructions are included below for your reference:
  • On October 4, 2021, the IRS published the 2021 Form 1042-T Transmittal Form. Have a look at the 2021 form here.
  • On October 5, 2021, The Financial Crimes Enforcement Network (FinCEN) issued a notice extending the filing date of Reports of Foreign Bank and Financial Account (FBARs) for victims of recent natural disasters, including Hurricane Ida, the California Wildfires, and Tropical Storm Fred. Victims of these recent natural disasters will have until December 31, 2021 to file FBARs for the 2020 calendar year.
  • On October 19, 2021, the IRS published DRAFT 2021 Form 1042 and 2022 Form 1042-S. Although there are not many changes to the face of the form, here are a few notable code updates:
    • Box 1.
      • Dividends, Income Code 56, Dividend equivalents under IRC section 871(m) as a result of applying the combined transaction rules.
      • Other Income, Income Code 57, Amount realized under IRC section 1446(f).
    • Boxes 12b, 12c, 13f, 13g, 15b, 15c, 16d, and 16e. Withholding Agent, Recipient, Intermediary, and Payer Chapter 3 and Chapter 4 Status Codes. Type of Recipient, Withholding Agent, Payer, or Intermediary Code.
      • Chapter 3 Status Codes. Code 38, Publicly Traded Partnership
    • Check out the DRAFT 2022 Form 1042-S here and the DRAFT 2021 Form 1042 here.
  • On October 26, the IRS published final 2021 Instructions for Form W-8IMY (Rev. October 2021). You can view the instructions here.
  • On October 26, the IRS published an updated DRAFT 2022 Form 1042-S, which includes a new Box 13j limitations on benefits (LOB) Code 12 for ‘No LOB article in treaty.’ Check out the updated DRAFT 2022 Form 1042-S here.

FATCA / CRS Key Dates & Reminders – Select Jurisdictions

Bermuda

  • The Bermuda Ministry of Finance (the “Ministry”) updated the previously released notice regarding the Annual CRS Compliance Certification Form (the “CRS Compliance Form”). The updated notice indicates that the implementation of the CRS Compliance Form has been delayed and is now anticipated to be available within the portal by November 5, 2021. The form for the period ending December 31, 2020 must now be submitted no later than January 15, 2022. In future periods, the CRS Compliance Form must be submitted no later than September 30 following the end of the reporting period.
  • The Ministry also published updated Annual CRS Compliance Certification Form Guidelines (Version 2.0). Updates to the Guidelines include:
    • Section 1.4 Timing
    • Section 3.2 Excluded and Non-Reportable Accounts
    • Section 4 Other Guidance

Canada

Cayman Islands

  • On October 19, 2021, The Cayman Islands Department for International Tax Cooperation (“DITC”) published an Updates Bulletin. The Bulletin includes updates on:
    • Communicating with the DITC
    • Economic Substance
    • DITC Compliance Updates: The DITC has commenced analysis of data submitted for CRS for reporting year 2020 and identified a number of compliance issues, including:
      • A high volume of FIs who have a CRS reporting obligation but have not filed a 2020 CRS Filing Declaration or CRS Compliance Form. FIs with outstanding CRS returns, CRS Filing Declarations and CRS Compliance Forms are advised to submit these, as a matter of urgency, via the DITC Portal.
      • A significant number of CRS returns submitted for 2020 did not include the TIN or functional equivalent and/or date of birth for individuals and controlling persons, or the TIN or functional equivalent for entities.
      • The CRS only permits accounts to be reported as undocumented in very limited circumstances. Despite numerous communications on this issue, the DITC received a number of organisation accounts reported as an undocumented account for 2020, which is incorrect reporting.
  • The DITC also published an updated DITC Portal User Guide (v7.0).

Singapore

  • The Inland Revenue Authority of Singapore (IRAS) published updated FATCA and CRS FAQs. Read the FAQs below:

Switzerland

On October 11, 2021, the Federal Tax Administration (FTA) of Switzerland published a press release with information regarding the Automatic Exchange of Information. The press release indicates that currently around 8,500 reporting financial institutions are registered with the FTA. The FTA has exchanged information with 96 countries and sent information on around 3.3 million financial accounts to partner states and received information on around 2.1 financial accounts. Read the full press release here.