Revenue Procedure 2017-15 – Final QI Agreement
The Internal Revenue Service (IRS) on December 30, 2016 released Rev. Proc. 2017-15, which sets forth the final 2017 qualified intermediary (QI) agreement (2017 QI Agreement). The QI regime permits certain foreign persons acting as intermediaries to simplify their federal tax withholding and information reporting responsibilities (1) under Chapter 3 and Chapter 4 of the Internal Revenue Code (Code) and (2) as a payor under Chapter 61 and Section 3406 of the Code (i.e., Form 1099 reporting and backup withholding).
The 2017 QI Agreement is based on the 2016 Proposed QI Agreement released by the IRS in July 2016, but contains certain changes and points of clarification made in response to stakeholder comments regarding certain provisions of the QI agreement. See our Insight: IRS proposes updated qualified intermediary agreement for more information on the 2016 Proposed QI Agreement. The more notable changes and points of clarification among others include information on:
- QI compliance program including the periodic review and certification of compliance;
- Partnerships or trusts applying the joint account or agency options;
- Entities eligible for QI agreements;
- Documentation requirements relating to account holders;
- Application for QI status, term of the agreement, effective date; and
- Qualified Derivatives Dealers (QDDs)
The 2017 QI Agreement has an effective date of January 1, 2017. QIs with expired agreements must renew before March 31, 2017 to have a new QI agreement with a retroactive effective date of January 1, 2017.
For additional information on these new provisions and clarifications, please see PwC’s Tax Insight on the 2017 QI Agreement.
Revenue Procedure 2017-16 – Final FFI Agreement
The Internal Revenue Service (IRS) on December 30, 2016 released Rev. Proc. 2017-16 which provides guidance to foreign financial institutions (FFIs) that are treated as participating FFIs (PFFIs) and as reporting financial institutions under an applicable Model 2 intergovernmental agreement (IGA) (Reporting Model 2 FFIs). Rev. Proc. 2017-16 updates the 2014 FFI agreement, which was set forth in Rev. Proc. 2014-38 and expired on December 31, 2016, to provide guidance on new and renewed FFI agreements.
The 2017 FFI agreement, which expires on December 31, 2018, has been revised to provide clarification with respect to certain compliance requirements and to be consistent with various provisions of concurrently released final and temporary Chapter 4 regulations implementing the Foreign Account Tax Compliance Act (FATCA). Modifications contained in the 2017 FFI agreement address:
- the expiration of transitional periods;
- clarification of the requirements for Reporting Model 2 FFIs and branches; and
- new procedures for final certifications of compliance and other obligations upon termination of an FFI agreement.
For additional information on these modifications, please see PwC’s Tax Insight on the 2017 FFI Agreement.