The Internal Revenue Service (IRS) on December 30, 2016 released Rev. Proc. 2017-15, which sets forth the final 2017 qualified intermediary (QI) agreement (2017 QI Agreement). The 2017 QI Agreement provides procedures for QIs (including qualified derivatives dealers (QDDs)) and qualified securities lenders (QSLs)) to comply with their US information reporting and withholding obligations. See our Insight: IRS releases final qualified intermediary agreement for more information.
Historically, the process for applying for QI status has been a paper process that included the completion of Form 14345, Application for Qualified Intermediary, Withholding Foreign Partnership, or Withholding Foreign Trust, and IRS approval. The IRS currently is implementing an electronic QI application (QI Portal) process. In addition to the actual application, the QI portal has a link to a user guide and a frequently asked questions (FAQ) section as well as links to other resources for portal users. See https://www.irs.gov/businesses/corporations/qualified-intermediary-system.
Similar to systems used to manage foreign financial institution (FFI) agreements, the QI Portal provides users a secure system, a convenient method to upload certain supportive documents, the ability to receive electronic notifications regarding changes to status, renewal reminders, and other updates, and reduces the need to contact the IRS directly in many cases.
Observation: The QI Portal is the system that withholding foreign partnerships (WPs) and withholding foreign trusts (WTs) will use to apply for WP and WT status as well. The WP and WT agreements technically expired on December 31, 2016. The IRS has indicated that WP and WT agreements that were in effect prior to December 31, 2016 will continue until the agreements are updated in January 2017.
Prospective QIs and QIs renewing their status should take careful note of the additional information that must be provided in the application. For QDDs, the amount of information required may pose real challenges to their ability to timely complete the application process. The 2017 QI Agreement provides that 2017 is a ‘phase-in year’ for QDDs that act in good faith. Hopefully, this approach also will apply to efforts to complete the application process.