FATCA e-alert issue 2015-02 | KPMG | LU

FATCA e-alert issue 2015-02

FATCA e-alert issue 2015-02

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Requirement to electronically file 1042-S forms for calendar year 2014

A significant change to electronic filing requirement for Form 1042-S has been introduced in the instructions for Form 1042-S and has been confirmed by the revisions to 2014 Publication 1187:

Beginning 1 January 2014, financial institutions that are required to report payments under chapter 3 (and chapter 4 for payments made after 30 June 2014) must file Forms 1042-S electronically (regardless of the number of forms to be filed). Indeed it has been confirmed by the Internal Revenue Service (“IRS”) QI Team in New York that only non-financial entities may still file Forms 1042-S on paper, if they are required to file less than 250 Forms 1042-S.

Therefore Luxembourg banks must file Forms 1042-S electronically with the IRS by 16 March 2015, using the Filing Information Returns Electronically (“FIRE”) System. The production of the 1042-S electronic files will need to be done using an appropriate software and such file must meet all the specifications outlined in publication 1187.

KPMG’s tax reporting specialists are at your disposal for any further information you may need with regard to the above.

IRS re-posts final Form and Instructions for Form 8966

The IRS posted to its internet web site Form 8966, FATCA Report, and its Instructions – each with a posting date of 31 December 2014. The final version of Form 8966 that was previously released in March 2014 and the Instructions released in June 2014 are unchanged. It is important to note the IRS provided an Update to the Instructions for Form 8966 for 2014 on 17 December 2014. These instructions were not incorporated into the recently re-released Instructions dated 31 December 2014. The update clarifies relaxed reporting requirements for 2014 including:

  • Transitional Account Information Reporting Rules for 2014 and 2015 (page 6): for 2014, a Participating Foreign Financial Institution (PFFI) must report any account identified and documented as a U.S. account or an account held by an Owner-Documented Foreign Financial Institution (ODFFI) as of 31 December 2014, if the account was outstanding on or after the effective date of the PFFI’s FFI agreement. The change to the instructions of for reporting nonparticipating FFIs (NPFFIs) – the update removes an incorrect reference to reporting with respect to 2014 by a PFFI on an account held by a NPFFI. This reporting applies to calendar years 2015 and 2016.
  • Requirements for PFFIs reporting on an account closed or transferred in its entirety during a calendar year (see the Tip at the top of page 11). The Instructions state that for these accounts, a PFFI must report the amounts paid or credited to the account in the calendar year of closure or transfer and the amount or value withdrawn or transferred from the account at that time. The update clarifies that for 2014, a PFFI is required to report the amount or value withdrawn or transferred from such an account should be reported on the Account Balance line (line 3 of Part IV) and not the detailed income and proceeds lines (lines 4a through 4d). In 2015 and later years, the amounts paid or credited to the account for the calendar year until the date of closure or transfer should be reported on lines 4a through 4d of Part IV, and the amount or value withdrawn or transferred should be reported on line 3 of Part IV.

 

The FATCA Report is required to be filed by:

  • U.S. withholding agents
  • Participating foreign financial institutions (FFIs) and their U.S. branches not treated as a U.S. person
  • Registered deemed-compliant FFIs
  • Limited branches or FFIs, to the extent permitted under local laws
  • Reporting FFIs under a Model 2 IGA
  • Direct reporting nonfinancial foreign entities (NFFEs)
  • Sponsoring entities of sponsored FFIs or sponsored direct reporting NFFEs
  • Trustees of trustee-documented trusts
  • Qualified intermediaries, withholding foreign trusts and withholding foreign partnerships to the extent required by their separate agreements

 

A separate Form 8966 should be filed for each:

  • Substantial U.S. owner of a Passive NFFE
  • Specified U.S. person that owns an interest in an ODFFI
  • Group of accounts for which pooled reporting is permitted

Unlike the Form 1099 information reporting regime, a recipient copy is not required to be provided to U.S. persons reported on the Form 8966.

 

Due Date and Extensions

Form 8966 is required to be filed electronically with the IRS on or before 31 March 2015 for 2014 calendar year information. For calendar year 2014 only, an automatic 90-day extension is permitted to any filer without the need to complete an application – effectively moving the extended deadline to file Form 8966 to 30 June 2015.

 

For Your Reference

Form 8966 can be accessed by clicking here:http://www.irs.gov/pub/irs-pdf/f8966.pdf (PDF, 81 KB)The Instructions to Form 8966 can be accessed by clicking here:http://www.irs.gov/pub/irs-pdf/i8966.pdf (PDF, 227 KB)

The Update to the Instructions for Form 8966 for 2014 can be accessed by clicking here:Update-to-the-Instructions-for-Form-8966-For-2014

Text of IGAs signed by Bulgaria, Curaçao

The Treasury Department has added text of two FATCA intergovernmental agreements (IGAs) signed in December - one signed between representatives of the United States and representatives of Bulgaria on 5 December 2014, and the other with Curaçao signed on 16 December 2014. Both are listed as Model 1 IGAs on the Treasury website (as of January 2015).

Read text of the Bulgaria Model 1 IGA (PDF, 226 KB) and of the Curaçao Model 1 IGA (PDF, 240 KB).

 

For further information, please do not hesitate to contact us.

 

 

 

 

 


Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
 

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