Guidance addresses information reporting and withholding rules

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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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Dominick Dell'Imperio

Dominick Dell'Imperio

Partner, PwC US

Kevin Brown

Kevin Brown

Principal, Tax Controversy and Regulatory Services Leader, PwC US

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