IRS Issues Revised Qualified Intermediary Agreement under FATCA and New Instructions to Form 1042-S

The IRS issued a new Qualified Intermediary Agreement as a last-minute "gift" to banks and other withholding agents prior to the July 1, 2014 implementation of FATCA. The changes in Revenue Procedure 2014-39 reflect the enactment of the Foreign Account Tax Compliance Act ("FATCA") and the related regulations under chapters 3, 4 and 61 and Section 3406 of the Internal Revenue Code, the IRS said. Rev. Proc. 2014-39 updates and supersedes the prior Qualified Intermediary Agreement published in Rev. Proc. 2000-12 with respect to requirements of a qualified intermediary that apply on or after June 30, 2014.

The IRS also released new instructions for Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. This is the form withholding agents will use to report any U.S. source payments or withholding under FATCA and Chapter 3 of the Code. In the instructions, the IRS said the form "has been modified to accommodate reporting of payments and amounts withheld under the provisions" of FATCA.

See: Revenue Procedure 2014-39; Instructions for Form 1042-S. See also: Cabinet FATCA Materials (for Cabinet subscribers only). For more information, please contact Daniel Mulcahy and Mark Howe.