US IRS issues FATCA regulations, updates agreements for FFIs, QIs

The US IRS in late December issued a slew of FATCA guidance, including updated agreements for foreign financial institutions (FFIs) and qualified intermediaries (QIs).

Included in the release were final chapter 4 regulations; temporary chapter 4 regulations; regulations finalizing certain temporary regulations under chapters 3 and 61 and sections 871, 3406, and 6402; and new temporary regulations providing guidance under chapter 3.

Rev. Proc. 2017-16 sets out an updated FFI agreement and related guidance.

The revenue procedure also provides guidance for FFIs and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement (IGA).

Rev. Proc. 2017-15 sets out the IRS’s final qualified intermediary (QI) withholding agreement and related guidance. Such agreements allow foreign persons to enter into an agreement with the IRS to simplify their obligations as withholding agents.

The QI agreement also allows certain foreign persons to enter into an agreement with the IRS to act as qualified derivatives dealers and to assume primary withholding and reporting responsibilities on all dividend equivalent payments that they make.

In this guidance, the Service announced that the withholding foreign partnership and withholding foreign trust agreements currently in effect will remain in force until they are updated.

The IRS issued final and temporary regulations (T.D. 9809) regarding information reporting by FFIs with respect to US accounts and withholding on certain payments made to FFIs and other foreign entities.

The Service said the final regulations adopt temporary regulations issued in 2014, with some changes. The final regs also make corrections and some modifications to 2013 final regulations. Temporary and proposed regulations provide additional rules under chapter 4, revising some parts of the 2013 final regulations, the Service said.

The IRS also issued regulations (T.D. 9808) finalizing temporary regulations regarding the withholding of tax on certain US source income paid to foreign persons, information reporting and backup withholding with respect to payments made to certain US persons, and the treatment of portfolio interest paid to nonresident alien individuals and foreign corporations.

According to the IRS, the 303-page regulation package makes only “minor changes” to proposed regulations issued in March 2014.

Related proposed and temporary regulations add more rules under chapter 3 of the Code and affect persons making payments of US source income to foreign persons.

Further, the IRS released proposed and temporary regulations (REG-103477-14) on the verification and certification of compliance requirements and events of default for entities that agree to perform chapter 4 due diligence, withholding, and reporting requirements on behalf of certain FFIs or the chapter 4 due diligence and reporting obligations on behalf of certain non-financial foreign entities.

These proposed regulations also describe the certification requirements and procedures for IRS’s review of certain trustees of trustee-documented trusts and the procedures for IRS’s review of periodic certifications provided by registered deemed-compliant FFIs. In addition, the proposed regulations describe the procedures for future modifications to the requirements for certifications of compliance for participating FFIs.

These proposed regulations further describe the requirements for certifications of compliance for participating FFIs that are members of consolidated compliance groups.

Finally, the IRS issued proposed and temporary regulations (REG-134247-16) (T.D. 9808) that revise final regulations regarding the withholding tax on certain US source income paid to foreign persons and requirements for certain claims for refund or credit of income tax made by foreign persons.

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