871(m) Updates – Fall 2017

Draft 1120-F Instructions include QDD Tax Liability Information

For 2017, Form 1120-F is the form to be used by Qualified Derivatives Dealers (“QDD”) for purposes of reporting their QDD Tax Liability.  According to the draft instructions for the Form 1120-F published by the IRS on 10 October 2017, the QDD tax liability will be reported by attaching a statement to the Form 1120-F.

This statement is required to contain a table with columns for the gross amount, the rate of tax and the tax liability and must contain the following rows:

  • total section 871(m) amount;
  • total dividends received in the QDD’s equity derivatives dealer capacity;
  • total QDD tax liability pursuant to section 3.09(A) of the Qualified Intermediary (“QI”) Agreement (Revenue Procedure 2017-15);
  • total QDD tax liability pursuant to section 3.09(B) of the QI agreement; and
  • total QDD tax liability pursuant to section 3.09(C) of the QI agreement.

Second Report to the President on Executive Order 13789

On 2 October 2017, Secretary of the Treasury, Steven T. Mnuchin, published his second report to the President on identifying and reducing tax regulatory burdens.  The content of the report is focused on providing recommended actions to eliminate or mitigate the burdens imposed on taxpayers by eight regulations that the Department of the Treasury identified for review under Executive Order 13789.

Although the regulations under Section 871(m) have not been previously identified for review, the Secretary notes within this report that the Treasury is continuing to analyze all recently issued significant regulations and is considering possible reforms of several recent regulations not identified in the first report.  Specifically, the Secretary mentions that the regulations published under Section 871(m) as well as the regulations published under the Foreign Account Tax Compliance Act are included within this review.

We will continue to keep you updated as we learn more on these topics.

Should you have any further questions, please contact one of the following persons:

Christoph Schaerer
+41 58 792 4282
christoph.shaerer@ch.pwc.com

Melanie Taosuwan
+41 58 792 4249
melanie.taosuwan@ch.pwc.com

Thomas Plank
+41 58 792 4584
thomas.plank@ch.pwc.com

Published by

Melanie Taosuwan

Melanie Taosuwan

melanie.taosuwan@ch.pwc.com

Melanie Taosuwan is a Tax Director in the Financial Services practice at PwC. Melanie is the Swiss FATCA, QI and Section 871(m) Knowledge Manager and has more than five years of experience in supporting and advising Swiss financial institutions on these topics.