On 27 June 2014, Treasury and the IRS published Revenue Procedure 2014-39 which provided a revised Qualified Intermediary (QI) Agreement (see our FATCA e-alert 2014-24 / QI News 2014-06 for additional information). The Revenue Procedure provides details for new and existing QI Agreements and deadlines for submissions and renewals. As the deadline approaches, a review of requirements is provided in IRS Issue #2014-03 and is provided below.
QI Agreement Effective Dates
The QI Agreement described in Rev. Proc. 2014-39 picks up on the extended termination date of 30 June 2014, for existing agreements and became effective on that date, provided:
Existing QI Agreements
With respect to an entity with a QI Agreement in effect before 30 June 2014, the Revenue Procedure provides that its agreement expired on 30 June 2014 and further provides that an entity that has submitted a renewal request, has a revised QI agreement that is effective on 30 June 2014. For purposes of this requirement, the IRS will permit a QI to renew its status as a QI on or before 31 July 2014, to be eligible to act as a QI beginning 30 June 2014. Renewal is encourage on the FATCA Registration portal, but can also be completed using Form 8957.
A QI will not be required to assume the further requirements of the updated agreement in the Revenue Procedure before 1 August 2014 (regardless of whether the QI registered to renew its QI status before 30 June 2014), and may apply the provisions of the expired QI Agreement between 30 June 2014 and 31 July 2014.
It is important to note that a QI that registered on the IRS Portal prior to the issuance of the new QI Agreement and answered questions 6 and 13-15 (QI confirmations), does not need to do anything more to “reconfirm” its QI status.
An entity that has submitted an application for QI status before 31 July 2014, that is approved during calendar year 2014, may act as a QI in accordance with the QI agreement which was in effect at the time. With respect to an entity that applies this allowance, the entity’s QI agreement will be effective on 30 June 2014, regardless of whether the entity’s QI status is approved later during the calendar year. Additionally, the IRS will require that the entity register on the FATCA registration website with respect to its chapter 4 status (if applicable) by the date that is 90 days from the date the entity is approved for QI status.
QI Agreements not in Effect by 31 July 2014 - Withholding Ramifications
Agreements not renewed by 31 July 2014 are not retroactive. If a QI is operating under the old QI agreement until 8/1, it may have account holders that should have been withheld upon for FATCA purposes from 7/1 to 8/1 and will need to apply adjustments to underwithholding pursuant to section 9.05 of the agreement.
For Your Reference
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