Form 1042-S Compliance: Mastering Filing Challenges and ...media.straffordpub.com/products/form-1042-s... · 10/6/2015 · Generally means all income other than gains from the sale

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Form 1042-S Compliance: Mastering Filing

Challenges and Avoiding Steep Penalties

TUESDAY, OCTOBER 6, 2015 1:00-2:50 pm Eastern

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mailto:[email protected]

Oct. 6, 2015

Form 1042-S Compliance

Laurie Hatten-Boyd

KPMG

[email protected]

Danielle Nishida

KPMG

[email protected]



Notice

ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY

THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY

OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT

MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR

RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.

You (and your employees, representatives, or agents) may disclose to any and all persons,

without limitation, the tax treatment or tax structure, or both, of any transaction

described in the associated materials we provide to you, including, but not limited to,

any tax opinions, memoranda, or other tax analyses contained in those materials.

The information contained herein is of a general nature and based on authorities that are

subject to change. Applicability of the information to specific situations should be

determined through consultation with your tax adviser.

Stafford Webinar:

Form 1042-S Compliance

October 06, 2015

Laurie Hatten-Boyd, Principal

KPMG LLP

Danielle Nishida, Managing Director

KPMG LLP

FATCA Updates

© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Notice 2015-66

Withholding Updates:

• Withholding on Gross Proceeds delayed until January 1, 2019

• Withholding on foreign pass thru payments delayed until at least January 1, 2019

• Modifications to Grandfathering of Collateral

• Definition of a grandfathered obligation is expanded to include any obligation that gives rise to a substitute payment and that is created as a result of the payee posting collateral that is otherwise a grandfathered obligation

• Clarifies that for collateral that secures both grandfathered obligations and non-grandfathered obligations, the withholding agent may elect to withhold on all collateral or apply the pro rata approach set forth in the regulations



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Notice 2015-66

Registration Updates

• Limited Branch and Limited FFI status extended until January 1, 2017, BUT Limited FFIs and Limited Branches must re-register to maintain this status during 2016 (i.e., should re-register by December 31, 2015)

• Deadline for registering sponsored entities (RDCFFI Sponsored Entities and sponsored direct reporting NFFEs) extended until January 1, 2017

• When sponsored entity obtains its GIIN it may provide new GIIN to withholding agent orally or through written confirmation (e.g., email).

• Countries with an IGA in substance but not yet in force on September 30, 2015, will continue to be treated as having an IGA in substance provided reporting for 2014 year is exchanged by September 30, 2016.

Reporting Delays

• Model 1 countries that cannot exchange required data by September 30, 2015, have until September 30, 2016, to exchange data if the country notified US competent authority of delay by September 30, 2015.

Withholding



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FATCA’s application to U.S. Withholding Agents (“USWA”)

Withholding Agents must withhold 30% when—

1) The withholding agent makes a “withholdable payment” to

2) A payee that is treated as a noncompliant payee (e.g.,

nonparticipating FFI or passive NFFE that does not provided

requisite owner information)

NOTE--USWAs are only required to document “payees” of withholdable

payments not all account holders



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Who Has a FATCA Withholding Obligation?

U.S. Withholding Agents ■Have primary FATCA withholding obligation as most withholding is passed up to them

Participating FFIs ■ Withholding required on NPFFIs and recalcitrant account holders

■ Technically will have a withholding obligation but, unless FFI is also a QI, WP, or WT, most withholding will get passed up to an upstream withholding agent

■ Generally only required to withhold when entity generates the withholdable payment though this obligation is temporarily suspended due to offshore non-intermediated exception (that applies only until 2017)

■ FFI does have residual withholding obligation when passing up incorrect information to upstream withholding agent

Model 2 IGA FFIs ■ Same as Participating FFI except that M2 FFIs should not have direct recalcitrant account

holders so withholding is limited to NPFFIs and recalcitrants passed up from other FFIs

Model 1 IGA FFIs ■ No withholding obligation for FATCA but have an obligation to pass up withholding to

upstream withholding agents whenever possible



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Payees subject to FATCA withholding

Withholding generally required on the following payees when those payees

receive withholdable payments:

– Nonparticipating FFIs (NPFFIs)

– Passive Nonfinancial Foreign Entities (Passive NFFEs) that do not provide required owner

certification

– Recalcitrant account holders of PFFIs/RDCFFIs

– PFFIs / RDCFFIs that pass up withholding

– Entities not documented and presumed to be NPFFIs under FATCA presumption rules:

Exempt recipients receiving withholdable payment (except pre-2015 obligations)

Entities with foreign indicia

Payments outside the U.S. for offshore obligations

– NOTE: Most entities not presumed to be NPFFIs will be subject to 28% backup withholding



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What is a Withholdable Payment?

FATCA: “Withholdable Payments”

30% Punitive withholding under chapter 4/ FATCA applies to any “withholdable

payment” made to a non-compliant payee

Withholdable Payments are:

– U.S. source fixed, determinable, annual,

periodic (FDAP) payments of income

(beginning July 1, 2014)

– Gross proceeds from property that could

product U.S. source interest or dividends

(beginning on January 1, 2019)

– UNLESS a payment exception applies

FDAP

Interest

Dividends

Rents

Royalties

Awards

Wages

Scholarship

Annuities



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Withholding Only Required on Withholdable Payments (pre-2017)

Step 1: Is it FDAP Income?

■ Generally means all income other than gains from the sale of property

Step 2: Is it U.S. source?

■ Different sourcing rules apply to each type of payment

■ For example interest is sourced to the obligor while dividends are sourced to the

residence of the corporation that pays the dividends

Step 3: Does any payment exception apply?

■ Exceptions are different from the exceptions that apply under Chap 3

■ For example, treaties are irrelevant to FATCA but there is a new exception for

certain non-financial payments



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Withholdable payment exclusions

Payment of interest or OID on short-term obligations

Effectively connected income

Nonfinancial payments (ordinary course of business payments) – specifically excluded:

Payments for services (including wages and other forms of employee compensation (such

as stock options), payments for the use of property, office and equipment leases, software

licenses, transportation and freight, gambling winnings, awards, prizes, scholarships, interest

on outstanding accounts payable arising from the acquisition of goods or services

Does not apply to certain financial payments, such as payments related to lending and

financial instruments, insurance premiums, broker or custodian fees, dividends, and most

interest

Gross proceeds from sales of excluded property

Fractional shares

Offshore payments of U.S. source FDAP income prior to 2017 (unless acting as an

intermediary)

– Exception does not apply to debt or equity issued by a US person other than deposit

accounts of foreign branch of USFI

Collateral before 2017 but must be made by “secured party” or to a secured party (other than

an NPFFI)



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Withholdable payment exclusions: Grandfathered Obligations

Grandfathered Obligations

Relief extended to obligations outstanding on July 1, 2014

– All material terms must be established by July 1, 2014 (generally master agreements not eligible)

– Obligation must have set maturity date (does not apply to equity or roll-overs)

Extension also applies to:

– Obligations where payments are captured under section 871(m) executed within 6 months after the date the obligations will be subject to the rules;

– Obligations captured under the foreign passthru payment rules executed within 6 months of when the final regulations defining the term are published;

– Payments related to collateral posted to secure a grandfathered obligation;

– Substitute payments made with respect to collateral that is a grandfathered obligation; and

– Life insurance contracts payable upon death.

Must monitor for a material modification

– Withholding agent reliance on issuer statement



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Deadlines for Withholding and Documentation

Withholding technically starts 7/1/14 BUT only withhold on earlier of:

• Date that entity’s FATCA status must be documented –or—

• Date entity is documented as NPFFI

Documentation Deadline for New Entity Payees– Starting 1/1/15

■ Withholding agents must obtain documentation prior to making a withholdable

payment or must apply presumption rules (generally leading to withholding)

Documentation Deadline for Preexisting Obligations (Prima Facie FFIs) – By

1/1/15

Prima Facie FFI means either identified as QI or NQI in electronic system or has

certain listed SIC/NAICS code for payee in electronic system

This deadline does not apply to Model 1 and 2 IGA FFIs

Documentation Deadline for Preexisting Obligations (All other entities) – By

7/1/16



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FATCA Withholding Can Have a Wide Impact Across

Various Business Lines

• Most financial institutions anticipate applying FATCA withholding to the following:

• Deposit Accounts

• Custodial Accounts

• Insurance Products

• Equity Interests in Funds

• However, FATCA withholding may apply to any business line that makes a payment. This is includes, for example:

• Accounts Payable

• Trade Finance

• Loan Syndication

• Collateral Arrangements

• Cash Pooling Arrangements (if short term obligation exception does not apply)

• Treasury Functions and Payments to Related Entities

• Derivative Transactions

• Payments made through Trust Services (i.e., payments made on behalf of trust)



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Timing of Withholding Determination

Determination of whether a payment should be withheld upon should

be done PRIOR to the time the payment is made

From an operational perspective this means documentation should be

collected upfront:

• Documentation should be collected at account opening, formation of the

contract, or at the start of the payee relationship

• This includes form validation and due diligence

• While documentation is pending or due diligence not complete, presume payee

is undocumented

• Status of payee should also be continuously monitored throughout the

relationship



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Timing of Withholding Determination

From an operational perspective, classification of payment as

withholdable payment or not should be done in advance:

• Recommend conducting complete impact assessment to determine all situations

in which withholding agent may make a withholdable payment

• Payments for depository/custodial accounts should be anticipated prior to

account opening so that circumstances in which a withholdable payment results

are known in advance

• For accounts payable, recommend preparing chart for payables group identifying

all types of payments made and the documentation requirements, potential

withholding, and potential reporting required for each payment type

• For payments under derivative contracts, determine whether contract can

produce FDAP payments prior to entering into transaction

• For trade finance, identify and assess types of fee payments and payments to

beneficiaries prior to entering into contract (Do not wait until payment is due)

• Evaluate pooling relationships to ensure agreements do not require withholding

Form 1042-S Reporting



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When do USWAs have Form 1042-S Reporting

Obligations?

A withholding agent must report on Form 1042-S any chapter 3 reportable amount or chapter 4 reportable amount

• Exception applies for individuals that are not acting in the course of a trade or business with respect to the payment

Chapter 3 Reportable Amounts

• All payments that have been withheld upon (whether necessary or not) • All payments that should have been withheld upon (even if they weren’t) and • Amounts subject to withholding under chapter 3 (which includes most U.S. source

FDAP payments) unless specifically excepted

Notable Exceptions Include:

• Bank deposit interest paid to an entity

• Bank deposit interest paid to an individual resident in a country not identified in Rev. Proc. 2015-50

• Short term interest or OID

• Insurance premiums subject to the excise tax under section 4371



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When do USWAs have Form 1042-S Reporting

Obligations?

Chapter 4 Reportable Amounts

Any of the following:

• All payments that have been withheld upon (whether necessary or not)

• All payments that should have been withheld upon (even if they weren’t) and

• Any withholdable payment that must be reported for chapter 3 purposes

In addition, for payments that are not withholdable payments but that must be reported for

chapter 3 purposes, the withholding agent will need to provide a FATCA exemption code

on the Form 1042-S. However, a withholding agent is only required to identify the FATCA

status of the payee if the payment is a withholdable payment.

Thus, the withholding agent will need to have a system that characterizes, tracks, and

reports FATCA payments regardless of whether they are actually subject to FATCA

withholding

Examples where reporting not required: o Bank deposit interest payments to an entity if FATCA withholding is not required (e.g.,

grandfathered obligation or payee is not subject to withholding)

o Insurance premiums subject to excise tax under IRC 4371 and reported on a Form 720

for which FATCA withholding is not required (e.g., grandfathered obligation or payee not

subject to withholding)



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When do FFIs have Form 1042-S Reporting Obligations?

As a general rule, FFIs are withholding agents and have a Form 1042-S

reporting obligation when the FFI makes payments subject to withholding or

reporting

Practically, however, FFIs that are not QIs, WPs, or WTs will have a limited

Form 1042-S reporting responsibilities due to the following:

• Model 1 IGA FFIs have no withholding obligation and, accordingly, have no Form

1042-S reporting obligation unless the FFI is a QI, WP, or WT

• FFIs that are passing up withholding responsibility to an upstream withholding

agent have only residual reporting obligations (meaning that such FFIs only have

a Form 1042-S obligation when they have reason to know that the upstream

withholding agent did not withhold or report properly)

• Due to the offshore non-intermediated payment exception, most FFIs will not

make payments subject to withholding and reporting prior to 2017 unless the

withholding and reporting is being passed up to an upstream withholding agent



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Form 1042-S & 1042 Filing Requirements

Due Date for Forms 1042-S and 1042 • March 15th following the year of the payment

Extensions • Automatic 30 day extension available for Forms 1042-S (IRS Copies) by filing Form

8809 prior to due date

• Additional 30 day extension may be available for Forms 1042-S (IRS Copies) by filing

Form 8809 again prior to end of extension period

• Max. 30 day extensions for Forms 1042-S (Recipient copies) by writing letter to IRS

including a reason for delay and postmarked by the due date

• Automatic 6-month extension available for Form 1042 (Form 7004 prior to due date)

Electronic Filing Requirement • Financial institutions must now file electronically through the IRS FIRE System

• All other withholding agents must file electronically through the IRS FIRE System if they file

250 or more Forms 1042-S per year



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Updates to Form 1042-S

The IRS has published final Forms 1042-S for 2014 and 2015 which includes updates for FATCA reporting.

Key highlights include:

• Requirement to provide chapter 3 and chapter 4 status (when making a withholdable payment) for recipient, withholding agent, and intermediary (if applicable).

• Requirement to indicate whether Form is being provided for chapter 3 or chapter 4 purposes and indicate exemption code.

• Substitute Forms:

• For 2015, electronic reporting must match the reporting provided to recipients (all fields on recipient copy must match the copy filed with the IRS)

• WA must furnish recipients with a different form per type of income or payment

• Substantially limits benefit of substitute reporting forms

• Pending for 2016 reporting: Account-by-account reporting requirement for USFIs

There were significant changes to existing reporting codes for which WAs will need to update their existing systems.



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Completing the Form 1042-S

Lines 1-2:

• Enter income code and gross amount of income paid

Box 3 & 4:

• Check Box 4 if FATCA withholding applies

• Check Box 4 if payment is made to a U.S. payee pool

• Check Box 3 if either chapter 3 withholding applies or no withholding applies on

payment to foreign person

• One box must always be checked but never both



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Completing the Form 1042-S (cont.)

Lines 3a & 3b:

• If 30% chapter 3 withholding applies Enter “00” in Line 3a and “30.00” in Line 3b

• If chapter 3 withholding applies at reduced rate (greater than 0) Enter "00" in Line 3a and enter appropriate tax rate in Line 3b (e.g., "15.00")

• If no withholding applies (under either chapter 3 or FATCA) Enter appropriate exemption code in Line 3a and “00.00” in Line 3b

• If no chapter 3 withholding applies because FATCA withholding is imposed

• You may enter exemption code 12 in Line 3a and tax rate “00.00” in Line 3b.

• Alternately you may enter an appropriate chapter 3 exemption code and the tax rate that would have applied if chapter 4 withholding was not imposed

• For payments made to a U.S. Payee pool Leave Line 3a blank and enter “00.00” in Line 3b

• For payments to which back up withholding was applied Leave Line 3a blank and enter “28.00” in Line 3b

Lines 4a & 4b:

• If 30% FATCA withholding applies Enter “00” in Line 4a and “30.00” in Line 4b

• If no FATCA withholding applies Enter the appropriate exemption code in Line 4a and “00.00” in Line 4b



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Line 5-6

• Only complete for the following income codes: 16, 17, 18, 19, 20, or 42

Line 7-10

• Enter total amount withheld in Line 7.

• Enter “-0-” in Line 7 if no tax was withheld. Do not leave Line 7 blank

• Complete Line 8 only if you are reporting income already withheld upon by another withholding

agent. Include any credit forward of prior withholding on substitute dividends in this amount.

• Complete Line 9 when WA has paid the tax rather than withholding it from the recipient

• Line 10 should be the total of Lines 7 and 8

Line 11:

• Complete Line 11 only if WA repaid recipient during 2016 under the reimbursement procedure

and WA is reimbursing itself by reducing amount deposited

• Do not complete Line 11 if WA reimbursed recipient during 2015

Escrow Box

• Check this box only if an amount withheld was not deposited because the WA is using the

escrow procedures when the character or source of the payment is unknown



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Lines 12a to 12i (Withholding Agent Information)

• Complete all information with respect to withholding agent

• If a paying agent is completing this form pursuant to an agreement whereby the paying agrees to withhold and report, enter the paying agent’s information here

• Withholding agent’s Chapter 3 status (Line 12b) is only required if the payment is an amount subject to Chapter 3 withholding

• Withholding agent’s Chapter 4 status (Line 12c) is only required if the payment is a withholdable payment

• USWAs are not required to enter a GIIN

• For forms reporting bank deposit interest paid to an individual, a telephone number for the withholding agent should be entered along with the address

Lines 13a to 13i (Recipient Information)

• Enter Recipient’s information

• QIs, WPs, and WTs are treated as recipients

• If payment is made to a QI or FFI that attributes the payment to a FATCA pool, the FATCA status should be the code associated with the FATCA pool rather than the QI’s or FFI’s own FATCA status



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Lines 14a & 14b (Primary Withholding Agent) NEW*

• Should only be completed when the withholding agent filing the return is

reporting an amount that was withheld by another withholding agent

• Enter name and EIN of withholding agent that withheld the tax

• Was optional for 2014 but is now required when the circumstance arises

Lines 15a & 15i (Intermediary or Flow-Through Entity Information)

• Complete only if payment is made to an intermediary or flow-through entity

• However, generally do not complete if payment is made to QI, WP, or WT (these

entities are generally treated as recipients)

• FATCA status required only if payment is a withholdable payment

• If Intermediary or flow-through entity completed Part II of the form, enter the GIIN

from Part II in this section



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Line 16 (Recipient Account Number) NEW*

• Required to be reported when a financial institution is reporting a payment made to a financial account maintained at its U.S. branch unless the payment is made through an intermediary or flow-through entity

Line 17 (Recipient Date of Birth) NEW*

• Currently optional

• Starting in 2017, the WA will be required to report either an individual recipient’s foreign TIN or date of birth (However, only US branches of financial institutions are required to collect this information)

Lines 18-20 (Payer’s Information)

• Complete only if the WA filing the Form 1042-S is a paying agent acting pursuant to an agreement whereby it agrees to withhold and report the payment

• In such case, enter the information of the person on whose behalf the paying agent is acting in Lines 18-23

Lines 21-23 (State Taxes)

• Enter any information regarding state income taxes withheld, if any, here



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Common Mistake:

Making Income Determination at Time of Filing

Most Dangerous Mistake Made:

Waiting until the January-March of the year in which reporting is due to classify payments and payees

Risks:

• Withholding was required but was not done which can subject the withholding agent to the underlying tax if it can no longer be collected from payee

• Late deposit penalties

• Last minute rush to classify payments may result in late filing

Solution:

• Classify payees in system and code payees to chapter 3 and 4 status codes for reporting purposes immediately

• Classify payments in system in accordance with income types

• When no withholding is performed on payment, code payment to an exemption code in system immediately

• Form 1042-S coding can be added to onboarding and payment system for a smoother reporting process



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What Are the Risks of Not Classifying Payments Prior to Payment?

If withholding not done at time of payment--

US withholding agent liable for the amount that should have been withheld (section 1461/1474)

– Abated if underlying tax paid (Form 4669 signed by foreign taxpayer)

– Income is grossed up if there is an agreement to pay the tax

Interest imposed from original due date of Form 1042

Late deposit penalty (section 6656) – ranges from 2% (1 to 5 days late) to 5% (6 to 15 days late) to 10% (>15

days late) of amount that should have been deposited (amount of tax)

5% per month (up to 25% maximum) of amount of tax for failure to file return or failure to pay tax (section 6651)

20% negligence/substantial understatement of income tax penalty can also apply (section 6662)

– Form 1042 considered an income tax return (falls under Subtitle A)

– Substantial omission of gross income (>25%) on 1042 – 6 year SOL

If reporting not done on time--

Failure to file Return

– $250 penalty for 1042-S failures (sections 6721 & 6722)

– 10% of total payment (total income paid) for intentional disregard (6721)



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Common Mistake:

Reporting of Distributions from U.S. Partnership

A U.S. partnership is required to withhold on a foreign partner’s distributive

share on the earlier of:

1) The date the amount is distributed to the foreign partner, or

2) The earlier of the date the K-1 is provided to the partner or the deadline for

filing the K-1 (April 15th for calendar year partnership or Sept 15th with

extension)

For income earned and included in a partner’s distributive share, if no distributions

are made during the year in which the income is earned, the amount will be treated

as paid to the partner during the following year by the due date for the K-1 filing.

Therefore, all deemed distributions that are treated as made by the K-1 filing date

should be reported on the Form 1042-S for the year in which the deemed

distribution is made (i.e., one year after the amount was included in the foreign

partner’s distributive share)



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Common Mistake:

Reporting of Distributions from U.S. Partnership (cont.)

Example

Facts:

• U.S. Partnership (USP) is a calendar year partnership that earns $200 of FDAP income that is included in foreign partner’s (FP’s) distributive share during April 2015.

• On September 1, 2015, USP distributes $50 to FP

• On February 1, 2016, USP distributes $50 to FP

• USP makes no other distributions to FP during 2015 and 2016.

Withholding Result:

• $50 treated as paid to FP on Sept. 1, 2015, and should withheld upon, as required, at time of distribution

• $50 treated as paid to FP on Feb. 1, 2016, and should withheld upon, as required, at time of distribution

• $100 is treated as paid (via deemed distribution) on April 15, 2016 (presuming USP filed K-1 on this date) and should be withheld upon on April 15, 2016

Reporting Result:

• $50 should be reported on Form 1042-S for 2015 (filed by March 15, 2016)

• $150 should be reported on Form 1042-S for 2016 (filed by March 15, 2017)



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Example 1

Facts:

During 2015, U.S. Withholding agent, Metro North, made a payment of rent

amounting to $201,307.00 to ABC Financial. ABC Financial provided a Form W-

8BEN-E indicating that it is a corporation and a Model 1 FFI. The Form W-8BEN-E

does not include a treaty claim. Consequently, Metro North applied chapter 3

withholding of 30% to the payment.



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Form 1042-S For Example 1



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Example 2

Facts:

During 2015, U.S. Withholding agent, Metro North, made a payment of interest

amounting to $382,380.00 to Capital Corporation. Capital Corporation has

provided a Form W-8IMY indicating that Capital Corporation is an NQI and a

Reporting Model 1 FFI. The Form W-8IMY was accompanied by a withholding

statement that allocated 100% of the payment to Metal Industries and a Form W-

8BEN-E for Metal Industries which stated that Metal Industries is a corporation and

an active NFFE. The interest payment is eligible for the portfolio interest exception.

Accordingly, Metro North did not withhold on the payment.



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Example 3

Facts:

During 2015, U.S. Withholding agent, Metro North, made a payment of dividends

amounting to $179,520.00 to XZY Investments. XZY Investments has provided a

Form W-8IMY indicating that XZY Investments is an QI that does not assume

primary withholding responsibility and a Reporting Model 2 FFI. The Form W-8IMY

was accompanied by a withholding statement that allocated 100% of the payment to

an NPFFI pool. Accordingly, Metro North applied FATCA withholding of 30% on the

payment.



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Form 8966 Reporting



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Withholding Agents Also Have Form 8966 Reporting

Obligations

Withholding agents are required to report on a Form 8966 information

regarding identified U.S. owners of certain investment entities

(ODFFIs) and substantial US owners of passive NFFEs

■ Name of the ODFFI or NFFE

■ Name, address, and TIN of each specified US person that is a direct or

indirect owner

■ Account number, if any

■ Total of all payments made to the ODFFI or NFFE during the year

■ Account balance or value of the account (except USWAs don’t report

account balance for NFFEs)

■ Any other information required by the form instructions



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Form 8966 Reporting Issues

Electronic Filing Requirement (Schemas)

• Form 8966 must be reported electronically on either an IRS schema (for

PFFIs/RDCFFIs/Model 2 FFIs) or a local country schema (for Model 1 FFIs)

• Therefore, although referred to as Form 8966 reporting, the actual filing will take

place through the use of a schema rather than the actual Form 8966

• Note that local country schema filings vary based on FATCA portal established

by local government. Therefore, reporting requirements to Model 1 countries

are not consistent and conflicts exist between IRS requirements and local

country requirements

Recipient copies are not required

• However, WAs and FFIs should consider providing recipient copies anyway for

customer service purposes



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U.S. Disclaimer

ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT

BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES

THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER

PARTY ANY MATTERS ADDRESSED HEREIN.

You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax

treatment or tax structure, or both, of any transaction described in the associated materials we provide to you,

including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials.

The information contained herein is of a general nature and based on authorities that are subject to change.

Applicability of the information to specific situations should be determined through consultation with your

tax adviser.



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Contact Information

Laurie Hatten-Boyd

Principal, KPMG LLP

Email: [email protected]

Phone: 206-913-4489

Danielle Nishida

Managing Director, KPMG LLP

Email: [email protected]

Phone: 212-954-2774

Documents

Form 1042-S Compliance: Mastering Filing Challenges and ...media.straffordpub.com/products/form-1042-s... · 10/6/2015 · Generally means all income other than gains from the sale