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IRS issues list of qualified intermediary entities and branches
October 2024
In brief
What happened?
The IRS last week published a list of entities that represent themselves as:
- Qualified intermediaries (QIs), QI branches, and related branches;
- Qualified derivatives dealers (QDDs) and QDD branches; or
- Foreign branches of US entities with approved QI status.
The list is intended to assist QIs in maintaining current information with the IRS. It also serves as a verification tool for withholding agents that receive a Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting, indicating that their counterparty is a QI. Prior to this list, there was no official IRS publication to verify this status.
It should be noted that withholding foreign partnerships (WPs) and withholding foreign trusts (WTs) are not listed at this time.
Why is it relevant?
The IRS has stated orally that withholding agents eventually will be required to verify that payees claiming status as a QI possess valid QI-employer identification numbers (EINs) shown on the IRS QI list.
Observation: Currently, there is no clear and specific guidance directing withholding agents to verify QI-EINs and how such verifications should be performed, if required (e.g., the time period during which lists would be updated, transition rules for new QIs that may not yet appear on the list). The update issued by the IRS states that withholding agents can check the status of QIs utilizing the list but does not state that they must do so. Additionally, Treasury could update “reason to know” regulations prior to implementing this anticipated requirement, as the provisions now contain a limitation on a financial institution’s reason to know (which currently does not account for EIN checks).
Action to consider
While there is no regulatory requirement to verify the QI status of entities representing themselves as QIs, withholding agents should prepare to update their validation process to accommodate this check. QIs should review the list to ensure that their information is accurate and take appropriate steps to update any inaccurate information.
In detail
QI list
The QI list is maintained and updated quarterly by the QI Program, which administers agreements between foreign entities, or foreign branches of certain US entities, and the IRS regarding information reporting and tax withholding requirements for certain US-source income. Each quarterly update identifies QIs with an approved status two months or more before the first week of the quarter.
The QI list contains the following information:
- QI / QI branch / QDD branch designation;
- QI name / QDD branch name;
- QI-EIN last two digits (branches display the last two digits of their home office);
- Global intermediary identification number (GINN), if applicable;
- Country of organization or incorporation; and
- QDD status.
Correcting inaccurate information
QIs should review the QI list to ensure that their information is accurate. If information on the list is inaccurate, QIs should update their information using the account update features on the Qualified Intermediary Application and Account Management System (QAAMS) homepage. QAAMS is a secure, web-based application and account management system for certain entities that enter into agreements with the IRS to uphold tax withholding obligations under the QI Program. QIs that are not listed or have incorrect information on the QAAMS homepage should update their QI or related branch information by signing into their QAAMS account.
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