New Internal Revenue Service and Automatic Exchange of Information Guidance in May 2020

Who is Impacted


Anyone making payments of U.S. reportable income will be interested in a listing of notable new guidance posted by the Internal Revenue Service (IRS) in May 2020.

Anyone with Automatic Exchange of Information (AEoI) filing requirements under the Foreign Account Tax Compliance Act (FATCA) or the Common Reporting Standard (CRS) will be interested in staying connected with updates from tax authorities in various jurisdictions, including the Internal Revenue Service (IRS), the Treasury Department, and Organization for Economic Cooperation and Development (OECD) to find new and changing information as a result of the global COVID-19 crisis.

What Changed


In May 2020, the IRS published several important updates. Be sure to check the IRS site for other forms that your organization uses.

Also, Over the last few weeks, a number of countries have published guidance regarding reporting in the year 2020. Due to the ongoing COVID-19 crisis, many have delayed the reporting dates for this year among other changes.

This article will provide a quick listing of certain new IRS published materials and certain notable AEoI reporting.


IRS Publications and other Guidance


Publication 5262, Qualified Intermediary, Withholding Foreign Partnership, and Withholding Foreign Trust Application and Account Management User Guide.

IRS Forms and Instructions


Form 4419, Application for Filing Information Returns Electronically (FIRE) (May 2020).

Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information (May 2020 ).

Form 5498-ESA, Coverdell ESA Contribution Information (May 2020).

IRS Notable Draft Forms and Instructions

DRAFT Form 941(PR), Employer's Quarterly Federal Tax Return (Puerto Rico Version) (Rev. April 2020), as of May 20, 2020.


DRAFT Instructions for Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositor (June 2020) , as of May 20, 2020.


DRAFT Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands (April 2020), as of May 20, 2020.


DRAFT Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (June 2020), as of May 20, 2020.


DRAFT Instructions for Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (June 2020), as of May 20, 2020.


DRAFT 2019 Form 1040-NR, U.S. Nonresident Alien Income Tax Return, as of May 21, 2020.

AEoI Updates


Anguilla

Under the CRS, Government of Anguilla announced that the Competent Authority has requested an extension to file 2019 CRS reports. The proposed amended deadline is 15 September 2020. Further, the Competent Authority will seek an extension to the deadline for FATCA reporting for 2019. The proposed amended deadline for 2019 FATCA reporting is 15 December 2020.

See:

Government of Anguilla AEoI Announcement


Belgium

The Belgium Tax Authorities announced that the deadline for submitting both 2019 CRS and FATCA reports will be extended to 30 September 2020.

See:

Belgium FATCA Extension

Belgium CRS Extension


British Virgin Islands

ON May 11, the International Tax Authority (ITA) issued notifications to produce to the ITA written Policies and Procedures. Financial Institutions have been required to keep written Policies and Procedures since 2015 under the amendments to the Mutual Legal Assistance (Tax Matters) Act, 2003 (the “Act”), and the requirement was amplified in 2018 by further amendment to the Act. Policies and Procedures should include:

  • Identifying each jurisdiction in which an Account Holder or Controlling Person is resident for income tax or corporation tax purposes for the purposes of any tax imposed by the law of the jurisdiction that is of similar character of either of those taxes;

  • Applying the due diligence procedures set out in the CRS; and

  • Ensuring that any information obtained in accordance with the Act or a record of steps taken to comply with the Act in respect of a Financial Account is kept for at least six years from the end of the year to which the information relates during which the steps were taken.

Please see the ITA publication for additional information regarding exemptions and the fact that the ITA will take a pragmatic approach to these notifications understanding that they are facing difficulties due to the COVID-19 virus.


Cayman Islands

On 19 May 2020, the Cayman Islands Department for International Tax Cooperation (DITC) announced that the Cayman Islands Automatic Exchange of Information Portal is now offline. The DITC is developing a new portal for registration and reporting purposes, which will eventually encompass all legislative frameworks. The DITC will provide a new launch date for the DITC Portal in due course. All user accounts from the AEOI Portal will be migrated to the new DITC Portal along with their assigned Financial Institutions. Further, in accordance with the United States IRS announcement in FAQ5, the DITC extended the FATCA reporting deadline for the 2019 reporting period to 16 November 2020. The DITC also extended the CRS reporting deadline for 2019 reporting period to 16 November 2020. This extension is due to the DITC understanding that the global outbreak of the COVID-19 virus is likely to impact Financial Institutions and competent authorities in meeting the 2020 international exchange deadlines.

See:

DITC News and Updates as of 19 May 2020


Malaysia

The Malaysia Tax Authorities, in light of the COVID-19 pandemic, announced that the deadline for submission of the 2019 CRS report has been extended to 15 August 2020.

See:

Malaysia CRS Extension


Mauritius

The Mauritius Revenue Authority (MRA) announced that in light of the COVID-19 pandemic, the due date for the transmission of CRS information to the MRA, regarding filing obligations under CRS, has now been extended to 30 September 2020. The due date for transmission of FATCA information is the same date, 30 September 2020.

See:

MRA CRS Extension

MRA FATCA Extension


Singapore

The Inland Revenue Authority of Singapore (IRAS) automatically extended the CRS filing deadline for reporting year 2019 to 31 August 2020. Reporting Singapore Financial Institutions should submit their CRS returns by 15 August 2020 to allow sufficient time to resolve any issues. Further, if they are able, they should submit their returns as early as possible.

Similarly, the IRAS announced that consistent with the U.S. announcement and in light of the COVID-19 situation, the IRAS automatically extended the FATCA filing for reporting year 2019 to 31 August 2020 and encouraged Reporting Singapore Financial Institutions to submit their FATCA returns by 15 August 2020 or earlier if possible, to avoid any issues. Additionally, the updated FATCA Fillable PDF Form is now available. The IRAS strongly encourages Reporting Singapore Financial Institutions that intend to file their FATCA return via the Fillable PDF Form to use the updated version to ensure a smoother filing experience.

See:

IRAS CRS Update

IRAS FATCA Update


United Kingdom

Her Majesty’s Royal Counsel (HMRC) announced that for Common Reporting Standard and Foreign Account Tax Compliance Act, reports for the calendar year 2019 are due to be filed by 31 May 2020. Further, HMRC recognises that because of COVID-19, Financial Institutions may not be able to meet this deadline. As such, and in those circumstances, HMRC accepts that any financial institution that files a return late because of COVID-19 difficulties will have a reasonable excuse and so will not be liable to any penalties for that delay, so long as the Financial Institution submits a report without unreasonable delay after it resolves related issues.

See:

HMRC COVID-19 Update

For all other updates and additional information please visit the following links:

The IRS:

https://www.irs.gov/coronavirus

The Department of Treasury:

https://home.treasury.gov/coronavirus

The U.S. Government:

https://www.usa.gov/coronavirus (In English)

https://www.usa.gov/espanol/coronavirus (In Spanish)

Update on OECD Tax Work:

https://search.oecd.org/tax/beps/coronavirus-covid-19-update-on-oecd-tax-work.htm

Center for Disease Control (CDC):

https://www.coronavirus.gov/

How to Implement

Visit these websites often to stay informed of changes, both tax and health related! Also, consider the following helpful tips:

  • Update your Policies and Procedures Manuals regularly! Be sure that they are ready to deliver to tax authorities at any time and that they include relevant details depending on where the Financial Institution is located for purpose of FATCA and the CRS. Also, be sure to make general updates based on U.S. IRS guidance, forms, and instructions.

  • Update all timelines and keep double checking the latest and greatest information regarding the COVID-19 pandemic and any deadlines or processes that have changed as a result of its impact.

  • Keep your teams and departments informed of these changes and updates to timelines, as they may impact other areas of your organizations including Legal, Risk, and Treasury, just to name a few.

  • Maintain a working connection in each jurisdiction where your organization maintains a Financial Institution or has a FATCA or CRS reporting obligation. Be sure you understand the rules, regulation, and guidance in place and work towards compliance.

Share your experiences with us in the comments or e-mail us!

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