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Jan 16, 2023
The IRS and Treasury Updated Guidance
The Internal Revenue Service (IRS) and Treasury were extremely busy over the holiday season. The IRS decided to publish six key pieces of guidance just before the New Year concerning information reporting and withholding. Below, we summarize the updated guidance and link to more detail along with our thoughts on the impact to the industry.
- The Treasury and the IRS released an advanced copy of Rev.
Proc. 2022-43 on December 13, 2022, providing the final qualified
intermediary ("QI") agreement ("new QI agreement") for tax years
beginning in 2023. The new QI agreement as described in Treas. Reg.
§1.1441-1(e)(5) is effective as of January 1, 2023, and provides
for a six-year term as of that effective date. For a summary of the
Notice, click here (Notice 2022-43);
- Following the 2020 final regulations, the industry raised
concerns that brokers would have major challenges in determining
whether entities organized outside of the United States are
classified as Publicly Traded Partnerships for U.S. tax purposes
and thus subject to withholding. The IRS issued some further
guidance on Publicly Traded Partnerships (Notice 2023-8);
- The IRS issued transitional guidance under sections 6045 and
6045A with respect to the reporting of information on digital
assets by brokers (Notice 2023-2);
- One of the many requirements of the Foreign Account Tax
Compliance Act (FATCA) is for Foreign Financial Institutions (FFIs)
to report information on financial accounts held by U.S. taxpayers
or by foreign entities in which a U.S. taxpayer holds a certain
ownership interest. Model 1 FFIs were not required to report a
preexisting account's US tax identification number (TIN) if it was
not already in the Model 1 FFI's records. The IRS issued guidance
that provides additional relief for the reporting of preexisting
accounts for calendar years 2022, 2023, and 2024 (Notice 2023-11);
- The IRS released final regulations regarding the exception for
interests held by Foreign Pension Funds under 897 (TD 9971); and
- The IRS issued guidance that provides transition relief on reporting thresholds for third-party settlement organizations. (Notice 2023-10)
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