IRS has made several corrections in Notice 2016-8, Timing of Submitting Preexisting Accounts and Periodic Certifications; Reporting of Accounts of Nonparticipating FFIs; Reliance on Electronically Furnished Forms W–8 and W–9 .
IRS has now made the following corrections to Notice 2016-8:
1. Preexisting Account Certifications.
Participating FFIs and reporting Model 2 FFIs are required to certify to IRS that, within the applicable timeframe for preexisting accounts, they have complied with the required procedures. This preexisting account certification must be made no later than 60 days following the date that is two years after the effective date of the FFI agreement.
In the revised version, IRS has now indicated that participating FFIs and reporting Model 2 FFIs must not only certify to IRS that they have complied with the due diligence procedures for preexisting accounts within the applicable timeframe, they must also certify that they did not have practices and procedures to assist account holders in the avoidance of chapter 4.
2. Accounts of nonparticipating FFIs.
A participating FFI or registered deemed-compliant FFI that maintains an account of a nonparticipating FFI must provide transitional reporting to IRS of all foreign reportable amounts paid to or with respect to the account for each calendar year 2015 and 2016. A foreign reportable amount means foreign source payments described in Reg. § 1.1471-4(d)(4)(iv). Alternatively, a participating FFI or registered deemed-compliant FFI may report all income, gross proceeds, and redemptions paid to or with respect to an account held by a nonparticipating FFI, instead of reporting only foreign reportable amounts. (Reg. § 1.1471-4(d)(2)(ii)(F)) Similar transitional reporting rules apply to reporting Model 2 FFIs for accounts of nonparticipating FFIs for calendar years 2015 and 2016. (Notice 2016-8, Sec. III.A).
In the revised version, IRS has deleted the reference to a registered deemed-compliant FFI and now only states that under Reg. § 1.1471-4(d)(2)(ii)(F), a participating FFI that maintains an account of a nonparticipating FFI (including a limited branch and limited FFI treated as a nonparticipating FFI) must provide transitional reporting to IRS of all foreign reportable amounts paid to or with respect to the account for each calendar year 2015 and 2016.
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Sources:
Read more at: Tax Times blog
