06.02.2015

9'

QI Reporting

Important changes in brief

Electronic filing of forms 1042-S

Starting in 2015, financial institutions (incl. QIs) are required to file forms 1042-S electronically regardless of the number of forms to file. The electronic filing of forms 1042-S is done through the IRS FIRE System. As QI you are exempt from receiving a hardship waiver, so the electronic filing is mandatory.

Continued Backup Withholding and 1099 Reporting obligation for Swiss Reporting Model 2 FFIs

According to the intergovernmental agreement between Switzerland and the U.S. (Swiss IGA) Reporting Swiss Financial Institutions do not have to apply FATCA withholding on their non-consenting accounts until they become recalcitrant account holders. With regards to the period during which an account is treated as non-consenting, as QI you must apply backup withholding on U.S. non-exempt recipients under chapter 61 on reportable payments, if required. As a result, as QI you, or your custodian, still have to make sure that the 1099 reporting for QI purposes is made.

Joint Account Treatment 

Considering the revisions made to the new QI agreement, you may apply the Joint Account Treatment according to section 4.05 of the revised QI agreement (former section 4A of the old QI agreement) for indirect, foreign account holders of trusts and partnerships with the following FATCA status:

Hence, as QI you have to know the FATCA status of partnerships and trusts in order to continue to apply the Joint Account Treatment. This also applies for preexisting entity accounts held by such partnerships and trusts. For the period from 1 July 2014 to 30 June 2015 you may continue to apply the Joint Account Treatment (incl. the corresponding documentation) according to the old QI agreement. As of 1 July 2015, however, these accounts must meet the conditions (incl. declaration and documentation of FATCA status) in accordance with the new QI agreement. If this is not the case, you have to disclose the indirect, foreign account holders of partnerships and trusts to the IRS, provided that they hold U.S. securities and receive U.S. source income.

Changes to form 1042 and 1042-S

For the reporting this year, forms 1042 and 1042-S have been modified and now include new information in order to additionally report amounts subject to FATCA withholding. You may use the new form 1042-S to either report under QI or FATCA. Accordingly, you must differentiate between the new or modified Income, Exemption and Status Codes as well as Reporting Pools for QI and FATCA purposes. Although you have to do the reporting under QI or FATCA separately, reporting amounts and payments under QI still requires you to indicate the Exemption and Status Code under FATCA. The new form 1042-S also requires you to provide additional information, for example, about the Primary Withholding Agent and your Gobal Intermediary Identification Number (GIIN) as well as the GIIN of Intermediaries, Flow-through Entities and other Recipients.

Recipient Specific and Pooled Reporting

Under the new QI Agreement the recipient specific reporting has been extended for FATCA purposes. As QI you must file a separate form 1042-S for each Nonqualified Intermediary (NQI) and flow-through entity to which you paid an amount subject to FATCA withholding and the recipient is or presumably is a Withholding Rate Pool of Nonparticipating FFIs (NPFFIs). In addition, you must file a separate form 1042-S for each NQI and flow-through entity that is a Participating FFI, Registered Deemed-Compliant or reporting Model 1 FFI and that receives an amount subject to FATCA withholding allocable to a Withholding Rate Pool of recalcitrant account holders or U.S. Payees.

1042-S and 1042 Reporting

You must file your 1042 reporting with the IRS by 16 March 2015. In case you cannot meet this deadline you must request an automatic extension of time to file.

Filing Forms

As mentioned above, you have to file forms 1042-S electronically starting this year. In order to do so you must submit form 4419 to the IRS to request authorization to file forms electronically and apply for a Transmitter Control Code (TCC). If the application is approved, you will be assigned a TCC which you need to use for all future electronic 1042-S reportings. You can find the specifications for electronic filing of forms 1042-S in Publication 1187.

We can assist you in generating the electronic file, if required. 

For filing form 1042 in paper form, please use the following address:

Ogden Service Center
P.O. Box 409101
Ogden, UT 84409
USA

Be sure to retain proof that you mailed the tax forms on time. By having proof of filing on time you can avoid late filing penalties. If you are using a private delivery service (i.e. DHL, FedEx etc.), you can use the following street address:

Ogden - Internal Revenue Submission Processing Center
1973 North Rulon White Blvd.
Ogden, UT 84404
USA

Extension Requests

In order for the extension request to be accepted you must file it with the IRS by 16 March 2015.

For an automatic 30-day extension of time to file forms 1042-S, use form 8809. 

For an automatic 6-month extension of time to file form 1042, use form 7004. Please note that by filing form 7004 you cannot extend the time to pay your taxes due. The deadline to pay your taxes remains unchanged. 

You can complete and submit form 8809 and 7004 to the IRS online through the FIRE System.

1099 Reporting

In case you have to file a 1099 reporting, you must meet one of the following deadlines depending on how you submit your 1099 reporting:

Please note that the 1099 reporting on paper cannot be performed using the downloadable pdf files. You must file the original 1099 paper forms which you have to order from the IRS. If you require original IRS forms for the 1099 reporting, you can also order them from us directly.

Please remember that the primary responsibility rests with you to ensure that the 1099 reporting has been performed, even if you have delegated the reporting to your custodian. Should your custodian fail to report as required under the QI agreement, you must report your reportable payments to U.S. persons directly to the IRS.

8966 FATCA Reporting

For the reporting this year, Reporting Swiss Financial Institutions have the following two deadlines:

Please remember that the responsibility for reporting under FATCA rests with you and cannot be delegated to your custodian.

Filing forms

As Reporting Swiss Financial Institution you have to do the 8966 FATCA reporting electronically through the International Data Exchange Service (IDES). IDES is online since mid-January 2015. The precondition to enrol to IDES is that you registered on the IRS FATCA Registration Portal as required for your FATCA status and that you are in possession of a GIIN. Additionally, you need to obtain an IRS approved digital certificate for identification purposes. For further information please consult the IDES User Guide. 

We recommend that you look through the FATCA XML Schemas and Business Rules for Form 8966 and the publications contained therein early enough in order to meet the FATCA reporting deadlines.

Additionally, we would like to remind you that the aggregated reporting of non-consenting accounts may result in a group request from the U.S., which, in turn, requires you as a Reporting Swiss Financial Institution to transmit account data to the Swiss Federal Tax Administration (FTA). The data and documentation you may need to send to the FTA additionally includes a SEI XML file and further documentation in pdf format. The final specification are to be expected in mid-February 2015. However, you may request a preliminary draft from the FTA. For further information we refer you to the information from the FTA concerning group requests in accordance with the FATCA agreement.