Takeaways from the Kaplan International Tax Withholding & Information Reporting Conference

By David Bolner
Read Time: 3 minutes
Takeaways Kaplan International Tax Withholding & Information Reporting Conference

International Tax Withholding & Information Reporting Conference

The 2023 Kaplan Internal Tax Withholding and Information Reporting conference took place in New York on June 6-8. This meeting brought together the Internal Revenue Service (IRS) with financial services tax operations, tax advisory and corporate tax professionals. The conference was an in-person event after being virtual since 2020.  It was great to see all who could attend and recconect with industry thought leaders. From two days of informative presentations and robust panel discussion highlighted takeaways from the conference include:  

Conference Takeaways

  • 1446(f) and foreign Publicly Traded Partnerships (PTPs)
  • IRS is to publish a list of Qualified intermediaries (QIs)
  • Crypto reporting information reporting rules
  • TINS and FATCA preexisting accounts
  • Updates to W-8s
  • Updates to 1042-S
  • 2023 Green Book Form W-9 Proposal
  • A new W-9 and partnerships  


1446(f) and foreign Publicly Traded Partnerships (PTPs)

1446(f) was mentioned throughout the two days, including:1446 (f) and foreign PTPs. A highlighted welcomed discussion related to Identification of non-US Publicly Traded Partnerships (PTPs) which has been an issue and challenge since the proposed regulations.  Notice 2023-8 provides some relief and allows for the presumption that a non-US entity is not a PTP for U.S. tax purposes unless the broker has actual knowledge. This eases a significant challenge to complying with these new regulations.


IRS is to publish a list of Qualified intermediaries (QIs):

The IRS will start publishing a list of QIs. This will have operational impacts and can cause additional due diligence, reconciliation and change in circumstance monitoring for financial institutions to the IRS published list.


Crypto reporting information reporting rules:

Information reporting for digital assets was a hot topic at the conference. New information reporting rules that account for digital assets are still waiting issuance by the IRS. The longer it takes until the IRS rules are published a higher chance these new rules will not apply to 2024 or 2025 as many organizations state it can take 18 months minimum to implement any regulatory changes.


TINS and FATCA preexisting accounts:

FATCA relief for tax identification numbers (TINs) collection of preexisting accounts, Notice 2023-11 was issued in December 2022. This notice extends the prior relief for 2022, 2023, and 2024 for Model 1 IGA FFIs.


Updates to W-8s

New W-8 Instructions

  • New W-8 Instructions clarify that a partner in a partnership that earns effectively connected income (ECI) is required to obtain a US TIN AND must also provide that US TIN on the Form W-8.

W-8 Treaty claims

  • Updated forms have new limitation of benefits (LOB) box “No LOB Under Treaty.”
  • Instructions to the Special Rates & Conditions Line (Line 15 on Form W-8BEN-E and Line 10 on Form W-8BEN) now expressly state that persons claiming treaty benefits on business profits would be expected to complete the Special Rates & Conditions Line stating that the income is not attributable to a permanent establishment in the United States

As W-8s relate to 1446(f)

  • Form W-8BEN or W-8BEN-E, for treaty claims related to PTP interests, the person must identify the name of each PTP to which the claim relates (identified on form or attachment).  For Non-PTP Interests, transferee must mail a copy of the certification to the IRS within 30 days.


Updates to 1042-S including updated income codes

Updates to the form were added to address Sec 1446(f) withholding and reporting for publicly traded partnership interests include:

  • Income Code 57 – Amount realized under Sec 1446(f) (added to 2022 form).  Used by brokers, starting in 2023, to report amounts realized and the associated withholding on transfers of PTP interests pursuant to Sec 1446(f)
  • Income Code 58 – PTP distributions -- undetermined ̶.  Used by nominees when they are unable to determine the character of the income associated with a PTP distribution and therefore apply Treas. Reg. Sec. 1.1446-4(d)(1) to withhold on the distribution in the absence of a qualified notice specifying the income attributable to the distribution.
  • New Chap 3 Status Code 39 – Disclosing QI • Chap 3 Status Code 38 – PTP (added to 2022 form) ̶ Applies to payments to or from a PTP making a distribution.
  • 2023 Form 1042-S Removal of Chap 3 Status Codes for Territory Fis.  The form removes the chapter 3 status codes for Territory FIs (codes 3 & 4) and the chapter 3 exemption code for payments to territory FIs treated as US persons (code 9), Territory FIs should now use the chapter 3 codes for US branches but continue using the chapter 4 codes for Territory FIs.


2023 Green Book Form W-9 Proposal

Biden Administration Plan for 2022 & 2023 includes a Form W-9 Requirement for Non-Financial Payments. This would require Forms W-9 for all reportable payments under chap 61. Notably, income currently reportable on Form 1099-MISC would now need to be documented with a Form W-9 instead of just a TIN. This would apply to all payments after Dec 31, 2021. There is no grandfathering provision indicated yet.


A new W-9 and partnerships  

IRS referenced a future W-9 that can account for partnerships.  This was a high-level reference and can be something to watch out for. If published, this new W-9 could have operational impacts on validation and tracking of US partnership entity types.


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TAINA Team at the Kaplan International Tax Withholding & Information Reporting Conference
TAINA Team at the Kaplan International Tax Withholding & Information Reporting Conference
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