Guidance Revised for Financial Institutions That Must Report TINs

Internal Revenue Service

The IRS has issued guidance (Notice 2017-46) for financial institutions that must collect taxpayer identification numbers and dates of birth under temporary regulations (<a href="/lr/resolve//d0cm">T.D. 9808</a>) under chapter 3 or a Model 1 intergovernmental agreement. The Model 1 IGA provides that a reporting Model 1 FFI will report specified information on U.S. reportable accounts maintained by the FFI to the partner jurisdiction tax authority that will automatically exchange such information with the U.S. competent authority. If a reporting Model 1 FFI fails to report required U.S. TINs for U.S. reportable accounts, the U.S. competent authority may notify the partner jurisdiction competent authority that there is significant noncompliance regarding the reporting Model 1 FFI. Treasury and the IRS are aware that some reporting Model 1 FFIs need more time to implement practices and procedures to obtain and report required U.S. TINs for preexisting accounts that are U.S. reportable accounts. Thus the guidance provides that FFIs in Model 1 IGA jurisdictions will not be in significant noncompliance with an applicable IGA during 2017, 2018, and 2019 solely as a result of a failure to report U.S. TINs for preexisting accounts, if the FFI reports the account holder’s date of birth, makes annual requests for the TIN, and searches its electronic records for missing U.S. TINs before reporting information for 2017. The IRS will provide further instructions regarding appropriate reporting for the TIN data element for preexisting accounts that are U.S. reportable accounts with missing required U.S. TINs. After the temporary chapter 3 regs were issued in January, Treasury and the IRS received comments from withholding agents about difficulties in obtaining and reporting foreign TINs and dates of birth from account holders in the time provided. In response to those comments, they intend to amend those regs to narrow the circumstances in which a foreign TIN and date of birth are required; to provide exceptions from the foreign TIN requirement for some account holders; and to provide a phase-in of the rules for obtaining a foreign TIN. They also intend to amend the regs to provide relief from obtaining a date of birth for some withholding certificates signed before January 1, 2018. Accordingly, for U.S. financial institutions, the guidance delays until January 1, 2018, the start date of the requirement to collect foreign TINs for account holders, provides a phase-in period for obtaining foreign TINs from account holders documented before January 1, 2018, and narrows the circumstances in which a foreign TIN is required. Until amendments to the regs are issued, taxpayers may rely on the guidance regarding the content of the amendments. The guidance also describes changes that the IRS will make to the instructions for Form 1042-S.

Supplemented by <a href="/lr/resolve//26y79">Notice 2018-20</a>.

The IRS has issued guidance for financial institutions that must collect taxpayer identification numbers and dates of birth under temporary regulations under Chapter 3 or a Model 1 intergovernmental agreement.

The IRS has issued guidance (Notice 2017-46) for financial institutions that must collect taxpayer identification numbers and dates of birth under temporary regulations (T.D. 9808) under chapter 3 or a Model 1 intergovernmental agreement. The Model 1 IGA provides that a reporting Model 1 FFI will report specified information on U.S. reportable accounts maintained by the FFI to the partner jurisdiction tax authority that will automatically exchange such information with the U.S. competent authority. If a reporting Model 1 FFI fails to report required U.S. TINs for U.S. reportable accounts, the U.S. competent authority may notify the partner jurisdiction competent authority that there is significant noncompliance regarding the reporting Model 1 FFI. Treasury and the IRS are aware that some reporting Model 1 FFIs need more time to implement practices and procedures to obtain and report required U.S. TINs for preexisting accounts that are U.S. reportable accounts. Thus the guidance provides that FFIs in Model 1 IGA jurisdictions will not be in significant noncompliance with an applicable IGA during 2017, 2018, and 2019 solely as a result of a failure to report U.S. TINs for preexisting accounts, if the FFI reports the account holder’s date of birth, makes annual requests for the TIN, and searches its electronic records for missing U.S. TINs before reporting information for 2017. The IRS will provide further instructions regarding appropriate reporting for the TIN data element for preexisting accounts that are U.S. reportable accounts with missing required U.S. TINs. After the temporary chapter 3 regs were issued in January, Treasury and the IRS received comments from withholding agents about difficulties in obtaining and reporting foreign TINs and dates of birth from account holders in the time provided. In response to those comments, they intend to amend those regs to narrow the circumstances in which a foreign TIN and date of birth are required; to provide exceptions from the foreign TIN requirement for some account holders; and to provide a phase-in of the rules for obtaining a foreign TIN. They also intend to amend the regs to provide relief from obtaining a date of birth for some withholding certificates signed before January 1, 2018. Accordingly, for U.S. financial institutions, the guidance delays until January 1, 2018, the start date of the requirement to collect foreign TINs for account holders, provides a phase-in period for obtaining foreign TINs from account holders documented before January 1, 2018, and narrows the circumstances in which a foreign TIN is required. Until amendments to the regs are issued, taxpayers may rely on the guidance regarding the content of the amendments. The guidance also describes changes that the IRS will make to the instructions for Form 1042-S.

Sec. 1471 Withholdable payments to foreign financial institutions

Sec. 1472 Withholdable payments to other foreign entities

Sec. 1473 Definitions

Sec. 1474 Special rules

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Guidance Revised for Financial Institutions That Must Report TINs