The 2023 International Tax Withholding and Information Reporting Conference hosted by Kaplan brought together tax professionals, compliance experts, and the IRS to discuss the latest and greatest in tax information reporting. Read below as we summarize some key takeaways and reminders from the conference.
TAKEAWAY 1: WITHHOLDING CERTIFICATES
(Discussion With IRS Chief Counsel International | Jonathan Jackel, EY, Laurie Hatten-Boyd, KPMG, Subin Seth, IRS ACCI)
The IRS announced that a new Form W-9 is expected to be released. The new Form W-9 update is expected to be related to partnerships, with a way to indicate the status of the underlying partners. While no timeline was provided on when exactly to expect the new Form W-9, it is something we would recommend keeping an eye out for this year.
While no additional updates were given, an updated Form W-8EXP is expected to be released in draft relatively soon with updates for FIRPTA withholding (Section 1445).
TAKEAWAY 2: FORM W-8 & TREATY DEVELOPMENTS
(Form W-8 And 1042-S Developments | Danielle Nishida, KPMG, David Weisner, BBH)
- Forms W-8: Instructions clarify that a partner in a partnership that earns effectively connected income (ECI) is not only required to obtain a US TIN but must also provide that US TIN on the Form W-8.
While the prior instructions implied this, it did not expressly state that the US TIN should be provided.
- Tax Treaty Updates:
- With the termination of the Hungary treaty, the termination is generally effective January 1, 2023, but it is effectively terminated January 1, 2024, with respect to withholding taxes.
- As a result, the US-Hungary Intergovernmental Agreement (IGA) is expected to terminate.
- Tax Treaty with Chile is pending, with the treaty clearing the Senate Foreign Relations Committee and moving to the Senate to vote.
- Turkey has been added to the list of countries in International Exchange Agreement so FTIN requirements now apply to residents of Turkey.
- With the termination of the Hungary treaty, the termination is generally effective January 1, 2023, but it is effectively terminated January 1, 2024, with respect to withholding taxes.
TAKEAWAY 3: 2023 GREENBOOK PROPOSAL
(Form W-8 And 1042-S Developments | Danielle Nishida, KPMG, David Weisner, BBH)
There is a Form W-9 proposal in the 2023 Greenbook that would require Forms W-9 to be collected for all reportable payments under Chapter 61. As a result of this, income that is currently reportable on a Form 1099-MISC would now need to be documented with a Form W-9 instead of just a TIN. No grandfathering provisions have been indicated as of yet, and this would apply to all payments after December 31, 2021.
TAKEAWAY 4: Transmitter Control Code (TCC)
(IRS Enforcement and Electronic Filing Update | Kim Schoenbacher, Dianne Garibatto, Nicole Cammarota, IRS)
After August 1, 2023, any TCC that does not have a completed IR Application for TCC will be dropped and will not be available for e-file. The IRS has made an exception to this for non-US employers.
The IRS is working on an authentication/authorization solution for non-U.S. individuals who are acting on behalf of their non-U.S. employers (e.g., Non-US Entities, Non-US based Financial Institutions, Qualified Intermediaries, etc.) and who may not be able to obtain a Social Security number or Individual Taxpayer Identification Number. While the solution is being developed, existing foreign TCCs will still be able to login in at FIRE with the EIN, TCC, Company Name, User ID and PIN.
TAKEAWAY 5: Hot Topics
(Hot Topics, Including CRS and CARF | Rob Limerick, PWC, Jonathan Cutler, Deloitte, Jenny Turner, UBS)
Under Notice 2023-11, many Model 1 IGA jurisdictions have announced the adoption of the transition relief and reiterated mandatory use of TIN codes. A non-exhaustive list of these countries is provided here: Australia, Belgium, BVI, Cyprus, Czech Republic, Dominican Republic, Finland, Guernsey, Honduras, Ireland, Isle of Man, Jersey, Malta, Mauritius, New Zealand, Saint Lucia, Slovak Republic, Slovenia, Spain, Sweden, UK.
Countries are following IRS example and providing for missing TIN codes in reporting schema. For example, Singapore has “optional” missing TIN codes (IRAS101 to 104) for AEI reportable accounts. Where codes were not used, IRAS have followed up with inquiries about collection of TINs. Where the OECD website indicates that TINs are issued to all taxpayers, reasonable explanation for no TIN has been challenged. This does call into question the accuracy of the OECD website.
In the event of missing TINs, Tax Authorities are asking for a) date the account was opened; b) reason for the non-collection of the self-certification or for not having a TIN; and c) explanation and evidence of the efforts made to obtain a self-certification.
CONCLUSION & SPECIAL THANKS
We would like to thank Kaplan for the opportunity to both sponsor and attend the 2023 International Tax Withholding and Information Reporting Conference, as well as thank all of the speakers for their engaging sessions at this year’s conference. We hope that these key insights and takeaways are useful for you and we look forward to continued updates from the IRS.
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