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Comply Connect – August 2023 – Issue 3

Comply Connect Issue 3 August 2023
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Comply Connect – August 2023 – Issue 3

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David Marley CEO

The dynamic advancements in tax technology are driving a wave of exciting innovation, offering the potential for enhanced operational efficiency and precision. At Comply Exchange, we are at the forefront of this transformation, harnessing cutting-edge AI & ML solutions, such as ChatGPT and DocAI. We collaborate with industry leaders like Kofax for expanded OCR capabilities, and seamlessly integrate with prominent onboarding platforms like SAP for supplier onboarding. Our proprietary validation and verification algorithms, built upon 15 years of pioneering excellence in tax applications, further augment these solutions. Stay tuned as we prepare to introduce more of these ground breaking developments soon!

COMING UP IN September 2023:

COMING UP IN September 2023:

Barbados: Extended FATCA and CRS Reporting Deadline

The Barbados Revenue Authority (BRA) updated the BRA AEOI Portal reflecting new extended FATCA and CRS reporting deadlines. The deadline has been further extended to September 8, 2023, for both.  

Extended Deadline to file Form 1042 is Approaching

As a reminder, if you filed an extension to file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, the deadline is September 15, 2023, for TY 2022. In issuing this reminder, the IRS also provided the following best practices and considerations: 

  • Refer to the Form 1042 instructions 
  • Complete all the required fields consistently 
  • Check to make sure that Form 1042 is consistent with the aggregate amounts reported on all Forms 1042-S 
  • With respect to amounts, remember rounding applies and negative amounts cannot be reported 
  • Verify that all of the required deposits have been made to the IRS using the Electronic Federal Tax Payments System (EFTPS) 
  • Verify that Tax Liability reported is correct


Note: The Form 1042 is now available for e-filing for tax year 2022, although it is not required. Certain withholding agents will however be required to file the Form 1042 electronically starting in 2024, so the tax year 2023 Form 1042. For additional information on electronic filing, reference Publication 4163. 

FAQ extending penalty relief, Forms 1042 and 1042-S

On August 24, the IRS has revised FAQ 23 extending penalty relief for years 2022, 2023, and 2024 when withholding agents withhold and report on Forms 1042 and 1042-S by September 15 of the applicable year.  

As per the IRS, penalty relief will apply with respect to dividend equivalent payments made with respect to a derivative referencing a partnership. 

August 2023 KEY UPDATES:

Form 1099-B 

On August 2, the IRS released the draft 2024 version of Form 1099-B (Proceeds From Broker and Barter Exchange Transactions). 

Form W-9 

On August 9, the IRS released the new draft Oct. 2023 revision of the Form W-9 in Spanish. 

Form 1042-S 

On August 17, the IRS released revised 2023 instructions for Form 1042-S. The updates were made to address the second portion of instructions under Publicly Traded Partnerships and the notes under Boxes 16a through 16e (Payer’s Name, TIN, GIIN, and Status Code). 

Proposed Digital Asset Reporting Requirements 

On August 28, the IRS and Treasury issued proposed regulations for digital assets, Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions. 

The proposed regulations outline a phased-in approach, starting with gross proceeds reporting, followed by cost basis reporting and then cost basis transfers reporting. The proposed regulations also speak to, in several instances, the need for valid tax forms on file, such as the Form W-9 for US persons with a valid taxpayer identification number. 

August 2023 FATCA AND CRS HEADLINES:

IRS 

The IRS Public Key for FATCA filings is due to expire soon. The IRS has a new Public Key that will replace the existing key on Thursday, October 5, 2023. After Wednesday, October 4, at 11:59pm EST, you will need to download the new IRS Public Key from IDES to file your FATCA Reports. 

OECD 

The OECD published information on Tax Identification Numbers (TIN) for the following jurisdictions: 

  • Latvia 
  • Kuwait 
  • Pakistan 


Anguilla: Suspension of Exchanges and Sharing of Tax Information: Russia and Belarus
 

On August 21, 2023, the Ministry of Finance and Health of the Government of Anguilla issued a press release. Beginning August 3, 2023, the Government of Anguilla, in solidarity with the United Kingdom government, suspended the exchange and sharing of tax information with Russia and Belarus. With this suspension, Russia will no longer receive information under any of Anguilla’s exchange of information agreements, including Common Reporting Standard (CRS), Country by Country Reporting (CbCR), or Exchange of Information on Request (EOIR).  

Canada: Updated Guidance Notes 

On August 23, the Canadian Revenue Agency (CRA) published updated guidance notes for both FATCA and CRS. See here for a summary of the updates.  

Gibraltar: Reportable Jurisdictions & Explanatory Notes 

On August 11, 2023, HM Government of Gibraltar released AEOI: CRS & FATCA Reportable Jurisdictions & Explanatory Notes.  

Guernsey: Revised Reportable and Participating Jurisdictions  

On August 16, 2023, States of Guernsey Revenue Service published a revised Bulletin 2023/1 for reportable and participating jurisdictions for reporting period 2022/2023. The revised Bulletin has removed eight participating jurisdictions from the list for CRS 2023: Georgia, Kenya, Moldova, Niue, Rwanda, Trinidad & Tobago, Tunisia and Ukraine.  

Jersey: AEOI Portal Closure 

On August 21, 2023, the International Taxation Department of the Government of Jersey released a communication informing Reporting Financial Institutions (RFIs) that the AEOI Portal is closed to FATCA and CRS reporting until October 2, 2023. During this closure, all submitted reports for 2022 will be extracted, compiled and transmitted to respective jurisdictions. The portal will remain open for other functions and CbC reporting. An email confirmation will be sent once the portal reopens for FATCA and CRS reporting.  

Saint Lucia: Updated CRS Guidelines  

The Inland Revenue Department (IRD) of Saint Lucia issued an updated version of its CRS guidelines, Standard for the Automatic Exchange of Financial Account Information Guidelines Version 7.0.  

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Draft Form W-9

New Draft Form W-9

On July 26, the IRS released a draft version of the Form W-9 (Rev. October 2023). There are several changes to the form, notably: The draft version of the Form W-9 and instructions can be found here. Follow Comply Exchange for industry updates and subscribe to the Comply Connect for a full industry round-up at the end of each month!

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