Top 5 Upcoming US Tax Regulatory Impacts

Top 5 Upcoming Regulatory Changes 

Monitoring regulatory changes is crucial to ensure compliance with evolving regulations, and guidelines that govern the financial industry.

By monitoring regulatory changes, TAINA plans to stay ahead of the curve and help our clients do so too.

With this in mind, below are our Top 5 Upcoming Regulatory changes to watch out for:

1. New Tax Certification Form Revisions:

• The IRS is working on a new revision of form W-9 to allows for entities with specific tax classifications to notify the requestor of the form if they have foreign partners, owners, or beneficiaries.

• The IRS is also working on a new revision of form W-8EXP. This form is getting updates to align with prior revisions to forms W-8BEN-E and W-8ECI regarding regulations in section 1445. There is a new Chapter 3 election option, as well as formatting changes for Chapter 4.

  • Draft Instructions for the new W-8EXP have just been published by the IRS on September 12, 2023.

2. The Long-awaited publication of a Qualified Intermediary (QI) inventory list.

• In an update to the QI Agreement, all new and existing QIs must consent to have their name, QI status, and QI-EIN disclosed on a public list that will be published on the IRS website.

• According to the IRS, this list will be published in an effort to prevent entities that are not QIs from representing themselves as QIs. Once the list is published, this could be considered a reason-to-know check for withholding agents when validating Forms W-8IMY provided by QIs.

  • This list will be similar to the current FATCA FI list which is used to validate Global Intermediary Identification Number (GIIN list).

  • The publication of this list will start quarterly with the IRS driving to publish monthly (like the GIIN list).

• The IRS has not yet confirmed if QDDs will be included.

3. Paying Agents letters

• IRS agent announces the Service’s plan to issue Paying Agents a letter when they have reported income paid to an entity with a valid W-8ECI, but the ECI never filed a tax return.

  • Once in receipt of this notice, the Paying Agent will need to update the applicable customer’s account/s to invalid and start withholding.

  • There is no published announcement and likely will not be one because this as considered an extension of IRS audit/penalty notice powers.

4. Treaty changes:

• There is a recently ratified by Congress IGA between the US and Chile. Still to be signed by the President of the United States.

• Other items being worked through and awaiting ratification by Congress are

  • An update to US and Poland treaty

  • New treaties between the US and Croatia and the US and Vietnam

• Given the need for ratification by Congress and the President’s signature before coming into force these updates can take many years to come into effect. That said they are items to be aware of as they can come into effect quickly.

5. Digital Asset information reporting guidance, with updates to 6045 Regs (Crypto updates revision 2023).

• IRS issued transition guidance for brokers on how to report sales and exchanges of digital assets by customers, including Cryptocurrency.

• The proposed regulations cover a range of digital asset issues where there have been questions, including defining brokers and requiring proceeds to be reported to the IRS on new Form 1099-DA.

• For sales or exchanges of digital assets that take place on or after Jan. 1, 2025, the proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors and certain digital asset hosted wallet providers, to report gross proceeds on a newly developed Form 1099-DA and to provide payee statements to customers.

How do we tackle Regulatory changes at TAINA?

At TAINA we focus on using our technology to remove complex, repetitive and time-consuming tasks. Ultimately, we are focused on giving back to our clients and their end customers the most valuable commodity, time. Through this focused approach we also reduce risk, improve efficiency, lower costs, and deliver better experiences to clients.

Updating operations to match regulatory changes can be very stressful for an institution. For our clients, we try to take that away. Not only can you see what we are actively monitoring and how the changes can impact our clients, but you will see how our work progresses. In preparation for these changes, be aware:

• Work has already begun on prepping the TAINA platform to handle any new form revisions or treaty changes.

• Regarding the QI inventory, we are poised to take advantage of the new (QI) inventory list to enhance our form data crosscheck.

  • We work in an agile manner with a dedicated onshore development team to bring out releases and updates every month.

  • System upgrades are efficient and take only a few minutes. Often deploying new features for a client will not require code changes but smaller configuration on our side.

• Whilst there is no announcement on the Paying Agent letters to come, we

  • Regularly speak with our clients to understand the challenges that they face and use this insight to drive prioritization of our work.

  • Maintain weekly calls with our Big Four partners to stay on top of changes as they occur.

  • When this becomes a consideration for our clients, we will be in a position to listen, help and respond.

We would value to discuss with you more about your compliance process and how our award-winning FATCA and CRS Validation platform can help you manage the latest regulatory updates. 

For more information get in touch or request a demo to see it in action.