Coordinating Form 1099 and Form 8966 Information Reporting
The FATCA (Chapter 4) regulations require Reporting Model 2 FFIs to report their U.S. Accounts to the IRS on Form 8966. This reporting may in some cases be duplicative of the information required to be reported under the QI agreement on Form 1099 for payments made to U.S. non-exempt recipients. Therefore, the FATCA regulations provide an exemption from 1099 reporting for Reporting Model 2 FFIs (and others) on reportable payments made to accounts held by U.S. non-exempt recipients to the extent the Reporting Model 2 FFI has already reported the account and payments to the IRS on Form 8966 or electronic equivalent, and no withholding has occurred.
Many QIs still perform both Form 8966 and Form 1099 reporting (either themselves or via their custodian) even though in most cases this would not be necessary. This does not only lead to duplicative reporting (which might itself bear certain risks for the account holder) but also to additional costs for the QI. In order to do so, a Reporting Model 2 FFI that is also a QI will need to contact their custodian and provide them with updated Forms W-8IMY and Withholding Statements.
Reporting and Withholding on NPFFI accounts after the completion of the FATCA Due Diligence Procedures
Reporting Model 2 FFIs which did not receive or request a Chapter 4 classification for certain accounts held by entities during the FATCA Due Diligence Procedures are required to treat these accounts as accounts held by Non-Participating FFIs (NPFFIs) and to follow the appropriate withholding and reporting requirements under FATCA. However, according to the assessment of the FATCA Qualification Committee, the 8966 reporting has to be generated based on the status of an account holder on December 31, 2016. Therefore, a Reporting Model 2 FFI “only reports those accounts held by NPFFIs for which the NPFFI status was active by that date” (ref. to the assessment of the FATCA Qualification Committee as of July 07, 2016, p. 34).
Therefore, if an account held by NPFFIs can be classified under FATCA until December 31, 2016, it can be reevaluated as not being held by an NPFFI anymore, does not have to be reported and amounts withheld under Chapter 4 can be refunded. If the FATCA withholding has been performed via a custodian, now certain custodians also allow for the possibility to refund on these accounts.
FATCA Updates
IRS
IDES Data Preparation
FATCA Registration
The IRS recommends to log in to the FATCA Online Registration System in order to check if the contact information for the Responsible Officer and for other Points of Contact are up to date.
FATCA Qualification Committee (Swiss State Secretariat for International Financial Matters, SIF)
On July 11, 2016, the FATCA Qualification Committee publicized updated and new assessments regarding certain cases related to FATCA. The most important updates are:
The term „gross income“, as described in Article 2.1(9) of the Swiss IGA is defined according to local accounting standards.
An account held by an entity which is not an FFI, and which is under bankruptcy procedures or otherwise in liquidation qualifies can qualify as active NFFE under FATCA.
Rental deposit accounts are exempt under FATCA under the exemption rules for escrow accounts of the Final FATCA Regulations.