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Archive for Jim Calvin

Draft Instructions For Form 1042-S Released

The Internal Revenue Service released a draft of the instructions for Form 1042-S November 1. The Form 1042-S for 2014 has been modified to accommodate reporting of payments and amounts withheld under FATCA (Chapter 4) in addition to those payments and amounts withheld and required to be reported under Chapter 3 of the United States Internal Revenue Code.

Form 1042-S requires the reporting of an applicable exemption to the extent withholding under chapter 4 did not apply to a payment of U.S source fixed or determinable annual or periodical (FDAP) income (including deposit interest). Form 1042-S also requires, in certain cases, the reporting of additional information about a recipient of the payment, such as the recipient’s account number, date of birth, and foreign taxpayer identification number, if any. Read more

Hungary Initials Model 1 IGA

TaxConnections Blog PostExchange of information on tax issues between Hungary and the USA

Representatives of Hungary and the United States of America initialed an agreement to improve international tax compliance and assist the implementation of FATCA regulations.

According to the initialed version of the agreement, the data compiled from financial institutions will be forwarded to the tax authority of the US and information will also be received by the relevant authority of the country instead of the financial institutions involved. With the initialing of the agreement the phase of professional negotiations has been finalized and the document will be signed officially after the treaty has been endorsed by the Government.

Every country – among them Hungary — and several international organizations have recently placed special emphasis on combating international tax evasion and fraud. Among the measures introduced and initiated which are aimed to counter spreading tax abuse there are several solutions which Hungary intends to apply.

On the basis of the regulation based on the automatic exchange of information enacted by the USA which is designed to combat international tax evasion (Foreign Account Tax Compliance Act or FATCA), payments to financial institutions which do not provide information on the accounts held by United States citizens are subject to withholding tax of 30 percent. Read more

Overall Burden Calculation On FATCA Revised Forms

TaxConnections Picture - Tax On BackForm W-8BEN-E? 25.23 hours!

In the October 24, 2013 Federal Register, the Internal Revenue Service requested comments on Forms W–8BEN, W–8BEN–E, W–8ECI, W–8EXP, and W–8IMY as revised for Foreign Account Tax Compliance Act – FATCA. Included with their request for comments is a time estimate for purposes of an overall burden calculation.



Form Number of Respondents Time per respondent/hours Total annual burden hours
W-8BEN 3,000,000 7.18 21,540,000
W-8BEN-E 100,000 25.23 2,523,000
W-8ECI 180,000 9.13 1,643,400
W-8EXP 240 20.05 4,812
W-8IMY 400 25.23 10,092

FATCA Agreement Between Switzerland And United States Delayed By Six Months

Fatca Flag[1]Switzerland and the United States have amended the FATCA agreement in line with the new timetable for FATCA implementation by means of an exchange of notes. Swiss financial institutions now have to implement FATCA from 1 July 2014 rather than from 1 January 2014.

On 12 July 2013, the US Department of the Treasury announced that the FATCA implementation by foreign financial institutions would be postponed by six months. As the FATCA agreement signed between Switzerland and the United States on 14 February 2013 was based on the earlier timetable with commencement on 1 January 2014, it had to be adjusted to the new schedule.

This amendment lies within the authority of the Federal Council and assures Swiss financial institutions the same implementation deadlines as financial institutions in other countries. The agreement was amended by means of an exchange of notes. The amendment will enter into force at the same time as the FATCA agreement.

The agreement was approved and the implementing act adopted in the final vote of parliament on 27 September 2013. The changes necessitated by the postponement are taken into account in the federal decree and in the act. The FATCA agreement and the implementing act are subject to an optional referendum.

 In accordance with Circular 230 Disclosure

Correcting Amendments to the FATCA Regulations will be Released Today

Correcting Amendments to the FATCA Regulations will be Released TodayThe correcting amendments to final regulations (T.D. 9610) issued under FATCA as published in the Federal Register dated Sept. 10.

Internal Revenue Service
26 CFR Part 1
[TD 9610]
RIN 1545-BK68

Regulations Relating to Information Reporting by Foreign Financial Institutions and Withholding on Certain Payments to Foreign Financial Institutions and Other Foreign Entities; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

SUMMARY: This document contains corrections to final regulations (TD 9610), which were published in the Federal Register on Monday, January 28, 2013 (78 FR 5874).

The regulations related to information reporting by foreign financial institutions (FFIs) with respect to U.S. accounts and withholding on certain payments to FFIs and other foreign entities. Read more

IRS Releases Final Form W-9

TaxConnections Blogger Jim Calvin posts the new IRS Form W-9The Internal Revenue Service has released the final Form W-9 after releasing a draft version this past May. The final Form W-9 and instructions contain no substantive changes and are largely the same as the previously released draft. This may come as a disappointment to many in the industry that sought clarifications and changes to the updated form.

More significantly, the finalization of Form W-9 triggers the six-month grace period (absent additional guidance) found in the FATCA regulations to begin using the new form. This is particularly important for withholding agents currently using substitute Form W-9s (including embedded Form W-9s on paper or electronic forms). Updates may be necessary because the IRS generally requires substitute forms to be substantially similar to the official form, particularly when it comes to the required certifications. The final Form W-9 has added a new certification with respect to FATCA; thus, creating the potential need to update substitute forms within the six month grace period. It is unclear whether the certification is needed if a FATCA exemption does not apply (or never will for the particular withholding agent), so additional guidance from the IRS will be needed to clarify.

The Form W-9 (Rev. August 2013) adds two new fields; one to indicate the type of entity that is exempt from back-up withholding and the other to indicate the type of entity that is exempt from FATCA withholding. The instructions include an updated list of exempt payees for back-up withholding with a corresponding code to be entered into the new field, if applicable. The list removes the international organization and foreign central bank of issue payee types Read more

Responsible Officers: Removal of Penalty of Perjury Declaration

TaxConnections Blog Post Removal of Penalty of Perjury Declaration regarding FATCAIt had been expected that a Responsible Officer (RO) would be required to certify, under penalty of perjury, as to compliance with FATCA. The original post describing the possible consequences to a Responsible Officer making a false certification under FATCA can be found here.

Recently, the Internal Revenue Service opened the FATCA registration system and published additional guidance. There is not a full length “FFI Agreement” as the IRS had previously stated would be published in a Revenue Procedure before the opening of the registration site; instead, the Agreement is more of a broad and open-ended certification by the RO that the FFI will comply with FATCA. This is similar to that provided in a recent draft of Form 8957. The specific certification is as follows:

Financial Institution – Agreement

I, Joe Smith, as RO for the Financial Institution, certify that, to the best of my knowledge, the information submitted above is accurate and complete and agree that the Financial Institution (including its branches, if any) will comply with FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the Financial Institution based on its status in each jurisdiction in which it operates. Read more

Responsible Officers Certifications Under FATCA

TaxConnections Blogger Jim Calvin Posts about FATCAWhat could be the consequences to a Responsible Officer making a false certification under FATCA?

It is expected that participating FFIs will be required to identify a Responsible Officer who will be required to certify, under penalty of perjury, as to compliance with FATCA (Chapter 4 of the Internal Revenue Code). The proposed regulations describe several certifications by Responsible Officers and by others. Implementation will likely require that subordinate certifications and documentation from other persons will be required to support the certification made by the Responsible Officer.

The Internal Revenue Service may criminally prosecute a false document case under more than one statute. Only one of those possibilities is discussed below – that is, section 7206 of the Internal Revenue Code – because it is the one most likely to be invoked, and, in fact, it is the most frequently charged criminal tax violation. It applies where a “return, statement or other document…contains or is verified by a written declaration that it is made under penalties of perjury.” In addition, civil sanction may, and almost always does, follow a criminal investigation.

Sometimes referred to as the false-statement, tax perjury or fraud statute, section 7206 aptly illustrates the serious consequences of a false certification. Consider those consequences: Any person who willfully makes Read more