Guidance addresses information reporting and withholding rules
January 2017
Overview
The US Department of the Treasury and the Internal Revenue Service recently issued a series of extensive regulatory guidance (combined over 950 pages) related to the US information reporting and withholding rules which impact both US and non-US persons. While a number of provisions of the US Internal Revenue Code and related regulations are affected, most of the impact is to the following areas:
- Chapter 3 dealing with withholding of tax on nonresident aliens and non-US corporations,
- Chapter 4 (which is commonly referred to as the Foreign Account Tax Compliance Act or FATCA) relating to the withholding tax used to enforce reporting on certain non-US accounts,
- Chapter 61 requiring the reporting of certain payments or transactions with respect to US persons who are not exempt recipients,
- Section 871(m) which provides rules around the taxation and reporting of dividend equivalent payments, and
- Safe harbor for penalty relief for de minimis incorrect information returns.
Observation: While a significant portion of the guidance codified and further explained changes provided in prior Notices and public comments, a large portion of the guidance is new and will need to be assessed for its impact on existing processes and systems.
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