SIFMA Submits Comments to IRS on the Qualified Intermediary Agreement Related to FATCA

SIFMA submitted comments to the IRS on the Qualified Intermediary Agreement (the "QI Agreement"), which the IRS revised previously to address changes brought about by the enactment of the Foreign Account Tax Compliance Act ("FATCA"). SIFMA raised concerns and requested clarifications with respect to various parts of the QI Agreement, including the restrictions imposed on the type of entities that would be eligible for joint account treatment, the application of the QI Agreement to qualified securities lenders, the propriety of requiring cost-basis reporting from non-U.S. payors and the obligations of a Responsible Officer with respect to its qualified intermediary.

SIFMA also noted that the current QI Agreement does not address U.S.-source dividend equivalent payments under section 871(m) of the Internal Revenue Code. In particular, SIFMA noted that under proposed regulations, a qualified intermediary may be unable to invoke its QI Agreement when it makes payments as the principal (rather than as an intermediary). SIFMA recommended that a qualified intermediary be permitted to apply its QI Agreement to dividend equivalent payments if it also reports such payments on Form 1042-S.

See: SIFMA Comment Letter.See also: FATCA Specialty Page (available to Cabinet subscribers only).