Insights & News

Tax Insights, January 27, 2016
Tracking Tax News You Need to Know

January 27, 2016
Publications

IRS Intends to Amend Nonresident Withholding and FATCA Regulations
The IRS issued Notice 2016-8, 2016-6 IRB, announcing that it intends to amend regulations with respect to chapters 3 (withholding of tax on nonresident aliens and foreign corporations) and 4 (the Foreign Account Tax Compliance Act) of the Internal Revenue Code, as amended (the Code) to reduce a number of compliance burdens. Prior to the issuance of the amended regulations, taxpayers can rely on the rules described in the notice. The amended regulations will: (1) delay the date for submitting to IRS the pre-existing account certifications required of certain foreign financial institutions (FFIs) a participating FFI or Model 2 FFI that has an FFI agreement with an effective date of June 30, 2014, will be required to submit a preexisting account certification to the IRS by July 1, 2018, as opposed to by Aug. 29, 2016; (2) specify the period and date for submitting to IRS the periodic certification of compliance described in Treasury Regulation Section 1.1471-5(f)(1)(ii)(B) for a registered deemed compliant FFI the notice corrects an error in the regulations, which will be modified to conform to the FFI agreement so that the periodic certification of compliance must be submitted on or before July 1 of the calendar year following the certification period as opposed to no later than six months following the end of the certification period; (3) modify the transitional information reporting rules for accounts of nonparticipating FFIs to eliminate the requirement to report on gross proceeds for the 2015 year under prior rules, a participating FFI, registered deemed-compliant FFI or Model 2 FFI would be required to report to the IRS certain foreign source payments, including gross proceeds, paid to an account held by an nonparticipating FFI for calendar years 2015 and 2016, but participating FFIs and Model 2 FFIs would not be required to report gross proceeds paid to U.S. accounts and accounts held by owner-documented FFIs for calendar year 2015; and (4) specify the circumstances under which a withholding agent may rely on electronically furnished Forms W-8 and W-9 collected by intermediaries and flow-through entities.

Due Date Extended for Social Welfare Organizations to Provide Notification Required by PATH Act
The IRS issued Notice 2016-9, 2016-6 IRB, providing interim guidance on Section 506 (section references are to the Code), which was newly added to the Code by the Protecting Americans from Tax Hikes (PATH) Act of 2015. Section 506 requires new and certain existing social welfare organizations to notify the IRS of their intent to operate under Section 501(c)(4). The notice states that the due date for organizations subject to the requirement will be at least 60 days from the issue date of forthcoming temporary regulations on Section 506. An organization that wants certainty regarding its qualification as tax-exempt under Section 501(a) as an organization described in Section 501(c)(4) may file a request for a determination letter, along with the required user fee, with IRS.

Norway-U.S. FATCA IGA Competent Authority Arrangement Available
The Norway and U.S. competent authorities have signed an arrangement under the two jurisdictions’ 2013 intergovernmental agreement to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act.

Spain-U.S. FATCA IGA Competent Authority Arrangement Available
The Spanish and U.S. competent authorities have signed an arrangement under the two jurisdictions’ 2013 intergovernmental agreement to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act.

St. Lucia-U.S. FATCA Agreement Available
The text is available of the agreement signed by St. Lucia and the U.S. to improve international tax compliance and implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act.

IRS Releases Draft Form W-8BEN-E for 2016
The IRS has released a draft version of the 2016 Form W-8BEN-E, “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).”

IRS Releases Additional International Practice Units
The IRS made available its international practice unit on foreign base company sales income, which is income derived by a controlled foreign corporation (CFC) from a purchase or sale of personal property involving a related party in which the goods are both manufactured and sold for use or consumption outside the CFC’s country of organization. The IRS also released international practice units on:

Massachusetts Department of Revenue Announces Commencement of Tax Amnesty Program
Massachusetts’ Tax Amnesty Program for 2016 is scheduled to commence on Apr. 1 and conclude on May 31. Subject to some exceptions, the program will be available to any individual or business not currently registered with the Massachusetts Department of Revenue, any individual or business that has not filed a tax return, and any individual or business that has not reported the full amount of tax owed on a previously filed return. The program offers a limited look-back period of three years. Taxes due for periods on or before Dec. 31, 2015, are eligible.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2016 Stradley Ronon Stevens & Young, LLP. All rights reserved.

Related Services

back to top