QI News-Issue 2015-02

QI News-Issue 2015-02

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Review of Information Reporting Changes, IRS Filing Deadlines and Extension Procedures

As filers prepare their 2014 records for reporting to recipients and the IRS, a review of changes, upcoming due dates in the filing process and extension procedures is provided below.

 

Special Points for the 2015 Filing Season

  • Electronic Filing Requirement: Of significance for filing Form 1042-S for calendar year 2014 is the electronic filing requirement for financial institutions. As mandated by the FATCA regulations, beginning 1 January 2014, financial institutions that are required to report payments made under Chapters 3 or 4, must electronically file.
  • Form 8809, FATCA Report: 2015 is the first year Form 8809 is required to be filed with the IRS if filing requirements are met for 2014. The due date is on or before 31 March 2015. The form must be filed electronically unless a waiver is requested and granted. An automatic 90-day extension to file is permitted.
  • Highlights of Reporting Changes:
    • Form 1099-B: The form has been overhauled for 2014. The form’s redesign allows for conformity in the box numbers to Form 8949, Sales and Other Dispositions of Capital Assets. Additional changes:
      • Added box, Applicable Check Box on Form 8949, at the top center of the form. This box is used to enter a code (A, B, C, D or X) to assist the recipient in reporting the transaction on Form 8949 and/or Schedule D.
      • New reporting requirements for adjusted basis of certain debt instruments upon a sale of the debt instrument as well as to report the adjusted basis of certain securities futures contracts and options upon a sale or closing transaction along with the gross proceeds from the sale or closing transaction. Brokers also must report whether any gain or loss from these transactions is short-term, long-term, or ordinary.
      • New reporting requirements for a transfer of a debt instrument, an option, or a securities futures contract to another broker and for an organizational action that affects the basis of a debt instrument, an option, or a securities futures contract.
    • Form 1099-INT:
      • Box 10. Market Discount: for a covered security acquired with market discount, if the taxpayer notified you that a section 1278(b) election was made, enter the amount of market discount that accrued on the debt instrument during the tax year in the amount of $10 or more
      • Box 11. Acquisition Premium: for a taxable covered security acquired with acquisition premium, enter the amount of premium amortization for the part of the year the debt instrument was owned by the holder. If you amortized acquisition premium and reported a net amount of interest in boxes 1, 3, 8, or 9, as applicable, this box blank is left blank
    • Form 1099-OID:
      • Box 5. Market Discount: for a covered security acquired with market discount, if the taxpayer notified you that a section 1278(b) election was made, enter the amount of market discount that accrued on the debt instrument during the tax year in the amount of $10 or more
      • Box 6. Acquisition Premium: for a taxable covered security acquired with acquisition premium, enter the amount of premium amortization for the part of the year the debt instrument was owned by the holder. If you amortized acquisition premium and reported a net amount of interest in boxes 1, 3, 8, or 9, as applicable, this box blank is left blank
    • Form 1042:
      • Expanded to two page form, primarily due to additional details for Lines 62 through 64, plus added new sections 2 and 3
      • New Chapter 3 and 4 status codes of withholding agent at top of form. The status codes are the as those used on Form 1042-S for the withholding agent status codes in boxes 12b and 12c
      • Section 1 Changes:
        • Line 62 expanded for reporting gross amounts reported and breaking out substitute payments
        • Line 63 expanded for reporting taxes withheld or assumed
        • Line 64 expanded to breakdown adjustment and net liability totals between Chapters 3 and 4
        • Lines 65 through 71 are similar to last year’s Lines 64 through 71, with the addition of a new line 70 for overwithholding on US source income of foreign persons under chapters 3 or 4
      • New Section 2: Reconciliation of Payments of U.S. Source FDAP Income. Optional for 2014. Section 2 reconciles:
        • The amount of Chapter 4 income reportable under chapter 4 with the total amount of reported on all Forms 1042-S filed by the withholding agent for the calendar year.
        • The amounts of Chapter 4 withholding required to not required according Chapter 4 withholding exemptions
      • New Section 3: Notional Principal Contract Payments and Other Payments on Derivative Contracts that Reference a U.S. Security
        • New box to check if any payments (including gross proceeds) were made by the withholding agent under Notional Principal Contracts or other derivatives contracts that reference in whole or in part a U.S. security
    • Form 1042-S: The form is completed for each recipient of reportable amounts, and is revised to include chapter 3 and chapter 4 exemption codes and tax rates for withholding. Additional changes:
      • GIIN: report in box13b for the withholding agent producing the form; in box 17 if recipient is an FFI; or box 16b if payee is an intermediary
      • New codes for:
        • Exemption from withholding codes for both Chapters 3 and 4 (to input into boxes 3a and 4a) – where an exemption code is used, the tax rate would be zero; otherwise no exemption code requires a tax rate in boxes 3b and 4b
        • Withholding agent Status Code for Chapter 3 and Chapter 4 (to input into boxes 12b and 12c); same codes as used on Form 1042 identifying the withholding agent’s status (e.g., USWA-FI, US Branch of PFFI, US Branch of RDCFFI, etc)
        • Recipient Status Code for Chapter 3 and Chapter 4 (to input into boxes 13h and 13i); same status codes but for the recipient (e.g., payee)
        • Intermediary or flow-through entity Status Code for Chapter 3 and Chapter 4 (to input into boxes 15b and 15c); same status codes but for the intermediary (if applicable)
    • Payer name, address and tax identification number
    • Type(s) of return(s)
    • Specify the extension request is for recipient statements
    • Reason(s) for delay(s)
    • Signature(s) of payer(s) or authorized person(s)

 

Requests for Extensions of Time to File

To request an “automatic” 30-day extension of time to file information returns with the IRS, Form 8809, Application for Extension of Time to File Information Returns, must be submitted. This form cannot be used for requesting an extension of time for furnishing recipient copies of information returns. The Form 8809 request is automatically granted if submitted by the return due date. No signature or explanation is required by the filer on Form 8809 when requesting the automatic 30-day extension. Filers needing a second 30-day extension must complete the form in its entirety, including a signature and a detailed explanation (Line 7 of the form). The second extension request is not automatically granted. A letter will be issued by the IRS explaining approval or denial of the request.

Filers can complete and submit Form 8809 through the IRS’ electronic filing system, FIRE, (accessible at: http://fire.irs.gov), instead of submitting on paper. The electronic submission can only be used to request the automatic 30-day extension and must be completed by the due date of the return for each payer requesting an extension.

To request an extension of time to furnish recipient copies of information returns, a letter must be postmarked by the date on which the statements are due to the recipients. The letter must state the following information:

 

Reporting Timelines

The following charts show the statutory due dates for many commonly filed information returns, payee statements, and withholding tax returns, including forms and dates relevant to electronic filings of information returns. In addition, the charts describe certain forms needed to obtain an extension of time to file from the IRS.

 

Filing Returns for Payments Made to U.S. Persons

Form Due Date How to RequestAn Extension
Form 945:Annual return of withheld federal income tax – filed with the IRS 2 February 2015, (11 February 2015, if deposits were made on time and in full). N/A
Form 1099-B: Recipient copy 17 February 2015 Send letter to IRS, Information Returns Branch, Attn: Extension of Time Coordinator no later than the due date for mailing to recipients. See Publication 1220, Part A, Sec. 7.
Form 1099 series(1099s not mentioned above): Recipient copy 2 February 2015 Send letter to IRS, Information Returns Branch, Attn: Extension of Time Coordinator no later than the due date for mailing to recipients. See Publication 1220, Part A, Sec. 7.
Forms 1099 series:Filed with the IRS 2 March 2015 for paper forms31 March 2015 when filing electronically File Form 8809 no later than 2 March 2015 for an additional 30 days.If filing an extension request electronically, see Publication 1220, Part D,Sec. 1.

Form 1096:Transmittal form for filing Form 1099 with the IRS on paper

No transmittal form if filing electronically. See Pub. 1220 for specifications

See applicable filing dates for each form  

 

Filing Returns for Payments Made to Non-U.S. Persons and Foreign Entities

Form Due Date How to RequestAn Extension
Form 1042:Annual withholding tax return – filed with the IRS 16 March 2015 File Form 7004 no later than 16 March 2015, for an automatic 6 month extension. See Form 7004 instructions.
Form 1042-S:Recipient copy 16 March 2015

Send letter to IRS, Information Returns Branch, Attn: Extension of Time Coordinator no later than 16 March 2015, to request an extension - see Form 1042-S instructions for full mailing address. Generally, extensions will not exceed 30 days.

Extensions for more than 10 withholding agents must be submitted electronically. See the Form 1042-S instructions & Publication 1187, Part D

Form 8809 may not be used.

Form 1042-S:Filed with the IRS

16 March 2015

See Pub. 1187 concerning specifications for filing these returns electronicallyA non-qualified intermediary (NQI) using the alternative procedure of the final regulations must provide income allocation information to the upstream payor by 2 February 2015

File Form 8809 no later than 16 March 2015, for an automatic 30 day extension. This form may be used for extensions applicable to Forms 1042-S filed on paper or electronically.

Form 8809 may be completed online through the IRS FIRE system for requesting the automatic extension. For requesting an extension for 2 or more withholding agents, the form must be completed via the FIRE system.

See the Form 1042-S instructions and Publication 1187, Part D, for further information.

Form 1042-T:Transmittal form for filing Forms 1042-S with the IRS on paper only

No transmittal form if filing electronically.

See Form 1042-S filing date above; Unless a filer has an electronic filling waiver, this form would be unnecessary.

 

 

Electronic Forms

Form Due Date How to RequestAn Extension

Form 4419: Application For Filing Information Returns Electronically (FIRE)

Note: A separate Transmitter Control Code (TCC) is required for filing Forms 1099 and 1042-S

Form 4419 must be filed at least 45 days prior to the due date of the return. This form must be filed to obtain approval to file electronically. Once approved, there is no need to reapply for subsequent years.

Note: electronic filing is mandatory if 250 or more information reporting forms are required to be filed. This requirement applies separately to each type of form. IRS encourages other withholding agents to file electronically.

N/A
Form 8508:Request for Waiver from Filing Information Returns Electronically Should be filed at least 45 days before the return due date. Hardship grounds should be asserted for obtaining this waiver. See Pub. 1220 and Form 8508 for further information. N/A


For Your Reference

Publication 1220 can be accessed by clicking here:
http://www.irs.gov/pub/irs-pdf/p1220.pdf (PDF, 1.21 MB)

 

Form 8809 can be accessed by clicking here:
http://www.irs.gov/pub/irs-pdf/f8809.pdf (PDF, 95.6 KB)

 

Publication 1187 can be accessed by clicking here:
http://www.irs.gov/pub/irs-pdf/p1187.pdf (PDF, 1.06 MB)

 

Form 7004 can be accessed by clicking here:
http://www.irs.gov/pub/irs-prior/f7004--2012.pdf (PDF, 70 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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