Start spreading the news: Updates from the Kaplan tax conference in New York - Tax and Legal blog

24.06.19_Tax Blog

The annual International Tax & Information Reporting Conference in New York represents an opportunity for industry to hear from the IRS and discuss tax technical challenges.

Hosted over two days in New York on the 5th and 6th of June, as active participants, Deloitte AG were able to hear first-hand the hot tax topics affecting US and non-US financial institutions.

So what were the key messages communicated by IRS representatives and what are challenges facing the financial services community? This blog summarises the key messages from the conference.

Insights from the IRS

The IRS confirmed that it is currently in the process of reviewing the first round of FATCA and QI certifications and have issued event of default notices to those FFIs that did not meet the deadline.

Embracing the technology available to them, the IRS encouraged all financial institutions to utilise the respective FATCA and QI portals. The portal represents the preferred means of FATCA communication for the IRS and financial institutions should ensure that the respective responsible officer (RO) and point of contact (POC) regularly access the portal and keep the information therein up to date.

Addressing concerns regarding future certifications, the IRS advised that a FATCA event of default notice received during this certification period should not have a negative impact on future certifications.

With regards to the QI certification, the IRS advised that it ‘had a few’ late or missing certifications, mainly due to the confusion regarding the respective QI vs. FATCA certification deadlines. Each QI certification has been assigned to a dedicated analyst at the IRS. As a result, communication from the IRS may come via email and not via the portal as commonly the case under FATCA. As an analyst has been assigned to the QI, any amounts subject to extrapolation (due to potential under-withholding) will be subject to discussion with the respective RO and as a result, there should be no surprises to the QI. Although optional, the IRS recommends that QIs upload their periodic review report as part of the certification. This will be the first thing that the IRS will request if they have any queries regarding the certification.

No major updates are expected to either the QI or FATCA portals. Minor enhancements may be made, such as the option for users to save information and revisit at a later date and the inclusion of additional pop-up boxes within the certification questions to provide further clarity.

In addition to the FATCA homepage receiving a revamp, the IRS also advised that it is looking at technology updates to enable implementation of validation technology on behalf of Form 1042/1042-S. Any changes to the longstanding FIRE application (used by QIs to file Form 1042-S) are likely to see the filings move to the standardized XML schema.

The latest US withholding tax headache

At the end of 2017, new rules were published which introduced a new 10% withholding tax for dispositions of partnership interests held by non-US partners. IRS Notice 2018-08 temporarily suspended this withholding for interests in publicly traded partnerships (PTPs). In May 2019, the IRS and Treasury released proposed regulations under section 1446(f), which end the suspension of this withholding.

PTPs have proved popular with non-US investors, but have historically presented intermediaries with an operational headache, due to the nominee reporting requirements associated with K-1 reporting. As a result of these new rules (effective 60 days after publication of the final regulations), financial institutions should expect:

  •  Modifications to the series of IRS Forms W-8
  • Updates to Form 1042-S reporting; and
  • Changes to the QI agreement

Much of the two-day conference focused on the operational challenges associated with the new 10% withholding tax and the IRS indicated that it welcomes comments on the implementation of the regime. As the new withholding tax will impact intermediaries that hold PTPs under custody, this is a topic that Deloitte will be monitoring closely. Both primary withholding and non-primary withholding QIs should assess the potential impact to their operating model and the need for client communication.

Ongoing compliance challenges

Many of the participants were hoping to hear further developments regarding section 871(m). However, with the US tax reform continuing to be an ongoing priority for the US government, industry continues to stay in a ‘wait and see’ holding pattern. In the absence of further guidance, attendees were advised to focus on their 871(m) good faith efforts, with the expert panel reminding participants that what might have been considered good faith in 2018/2019, might not be considered good faith in 2020/2021. Impacted financial institutions should revisit their 871(m) efforts and the knowledge and skill of the impacted teams in order to ascertain if these meet the expected good faith standards.

In addition to the US topics that were discussed during the conference, far-reaching regimes such as CRS and DAC6 were also discussed; reminding industry that compliance efforts will not ease off over the coming months and years.


By: Glen Lovelock, Senior Manager, Financial Services Tax

If you would like to discuss more on this topic, please do reach out to one of the key contacts below:

Sponsoring Partners


Brandi Caruso - Partner, Financial Services Tax 

Brandi heads the Tax Transparency offering within the Financial Services Tax practice across Switzerland, responsible for services related to QI, 871(m), FATCA, CRS, and DAC6. She is a technical advisor and a subject matter expert to a number of Swiss-based trust companies and banks and leads the Deloitte Trust Forum. She has more than 15 years of experience with Deloitte in the US, UK, and in Switzerland.


Key contacts

Karim Schubiger_110x110

Karim Schubiger – Director, Financial Services Tax & Legal

Karim leads the Tax Transparency team in the Suisse Romande and Ticino markets within the Financial Services Tax & Legal practice, responsible for services related to QI, FATCA, CRS, and 871(m). He is a technical advisor and subject matter expert to financial institutions in the banking, trust, and insurance sectors. Prior to joining Deloitte, Karim worked for eight years in support teams of Swiss banks, in particular in areas such as operations, project and change management as well as operational taxes.



Michael Grebe - Director, Financial Services Tax

Michael is a Director in the Financial Services Tax practice. He advises banks, trust companies, and insurers in relation to the interpretation and implementation of the global transparency related regimes. He has over ten years of experience in the financial industry covering a broad spectrum ranging from Process- over Project- to Product- Management. Prior to joining Deloitte, he led the FATCA and CRS implementation project for a global financial institution.



Glen Lovelock - Senior Manager, Financial Services Tax

Glen is a Senior Manager in the Financial Services Tax practice. Prior to joining Deloitte, he was Head of Tax Operations at a multinational global private bank based in Switzerland. He has over 15 years relevant experience and has had direct exposure to the QI regime since inception in 2001. In addition to acting as QI, FATCA and CRS subject matter expert for various non-U.S. financial institutions, Glen also spent nine years working as a dedicated European tax resource on behalf of a U.S. financial institution.



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