The IRS today announced that a new “frequently asked question” (FAQ) has been added to the list of FAQs as guidance under the FATCA regime.
The new FAQ is available on the IRS’s FATCA webpage, and full text of today’s FAQ is as follows:
Q23. For the 2017 calendar year, will a withholding agent be subjected to interest, penalties, or additions to tax for failing to withhold and report by March 15, 2018, on a payment of a dividend equivalent made with respect to a derivative referencing a partnership?
For the 2017 calendar year, a withholding agent will not be subject to interest, penalties, or additions to tax with respect to a dividend equivalent payment made with respect to a derivative referencing a partnership provided that the withholding agent withholds and reports on Form 1042 and Form 1042-S with respect to the payment by September 17, 2018. In a case in which a withholding agent withholds after March 15, 2018, the withholding agent should file a Form 1042 (if the dividend equivalent payments are the only payments reportable for the year) or an amended Form 1042 by September 17, 2018, and write “Dividend Equivalent—Partnership” in the top center portion of the 2017 Form 1042. The withholding agent should also file Form(s) 1042-S or amended Form(s) 1042-S by September 17, 2018, with respect to the dividend equivalent payment. Finally, when depositing the tax withheld for a dividend equivalent payment made in 2017, the withholding agent must designate the payment as being made for the 2017 calendar year in accordance with the instructions to Form 1042.
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