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The Comply Catch-Up – October 2022 Issue 23

Comply Catch-Up October-2022

Key Dates and Reminders

  • On October 3, 2022, the IRS announced that it will soon transition the Qualified Intermediary, Withholding Foreign Partnership, Withholding Foreign Trust Application and Account Management System (QAAMS) to a new sign-in system. The new system will require new users to register or sign-in with ID.me, the current IRS credential service provider.
    • At this time, existing users do not need to take any action. Until further notice, QAAMs users with an active IRS username may continue to sign-in after the transition. New users will be required to create an ID.me account prior to accessing QAAMS. As part of the account creation process, the user will need to verify an email address, create a password, and set-up multi-factor authentication in order to secure an account.
    • The IRS continues to work on transferring access to all IRS systems to the IRS credential service provider (ID.me). While this does not impact existing users within QAAMS at this time, existing users should consider setting up an ID.me account to prevent disrupted access later in case there is an issue setting up the ID.me account.Click here to read the full announcement.

  • On October 11, 2022, the IRS announced that it has identified Sponsoring Entities that do not have Sponsored Entities registered in the FATCA Registration System. A Sponsored Entity is a Sponsored FFI or Sponsored Direct Reporting NFFE. The IRS will be contacting the Sponsoring Entities identified by posting a message on the Sponsoring Entity’s FATCA registration system message board. The IRS is requesting that Sponsoring Entities either cancel their FATCA agreement, if they do not meet the requirements for being a Sponsoring Entity, or if the entity has Sponsored FFIs or Sponsored Direct Reporting NFFEs, proceed with registering the Sponsored Entities in the system.If no action is taken within 60 days of the notification posted to the message board, the Sponsoring Entity will be removed from the published FFI List and may be subject to 30% withholding.

    Click here to read the full announcement.

  • The IRS is still expected to launch the electronic filing of Form 1042. On October 14, the IRS published two new draft forms related to electronically filing Form 1042 – the Form 8453-WH, E-file Declaration for Form 1042, and the Form 8879-WH, E-file Authorization for Form 1042.
    • In anticipation of the release of the electronic filing of Form 1042, withholding agents should begin to obtain an understanding of the Modernized e-File (MeF) process, including the process to obtain an Electronic Filing Identification Number (EFIN). EFINs are required to electronically file tax returns. In general, withholding agents should consider how electronic filing of the Form 1042 may change their current processes.

  • On October 24, the IRS issued a reminder to taxpayers that they may receive Form 1099-K, Payment Card and Third-Party Network Transactions, beginning in 2023, if the taxpayer earned income in 2022 from the sale of goods and/ or providing services.
    • Form 1099-K reports income from the sale of goods and/ or services provided that the payment is processed using payment card transactions or third-party payment network transactions of more than $600 for the year.
    • The IRS has provided guidance around Form 1099-K, including Understanding your Form 1099-K and FAQs.

  • The IRS updated multiple FAQs on the Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) Frequently Asked Questions (FAQs) page, including:
    • FAQ 20 to provide guidance on WP/WT agreement renewals.
    • FAQ 21 to include the French translation for viewing the Webinar on the QI/WP/WT certification and periodic review process.
    • FAQ 22 to provide guidance on how to update entity legal name changes.

Click here to view the FAQ page.

FATCA / CRS Key Dates & Reminders – Select Jurisdictions

  • On October 10, the Organisation for Economic Cooperation and Development (OECD) published a report, titled Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard, detailing reporting requirements around the reporting for crypto-assets.
    • This new Crypto-Asset Reporting Framework (CARF) looks to address a broader need for global tax transparency around digital assets, including cryptocurrency, stablecoins and certain non-fungible tokens.
    • Under CARF, reporting will be required at the transaction level with rules extending to both the transactions and the providers.
    • The rules would impose similar requirements as CRS, specifically around collecting self-certifications certifying tax residence and tax identification numbers, monitoring for changes in circumstances and general reasonableness checks of the information on the self-certification and reporting requirements based on the respective tax authority. It is not yet known which countries will be officially adopting CARF.

Comply Updates

Join us at the Sovos Comply and Connect Conference in Washington, D.C. on November 9 – 11. This annual event showcases experts addressing top changes and challenges your business faces in tax withholding and information reporting compliance. Register here.

We are hiring! Stay tuned for job postings and announcements on new members of the Comply Team. If you or someone you know is interested in a job here at Comply Exchange, please email jessica@complyexchange.com.

Join ComplyPro Subscription Application – Along with our monthly updates, our service provides CPE certified trainings. In addition, we are working on updating our site with need-to-know knowledge and tools to demystify the IRS information reporting and withholding requirements with ComplyPro 2.0, slated for a release in February!

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.

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