U.S.A.: Notice 2016-42: Proposed Qualified Intermediary Agreement issued by the IRS
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On 1 July 2016, the Internal Revenue Service (IRS) issued Notice 2016-42 setting out the proposed Qualified Intermediary (QI) withholding agreement entered into under Reg. section 1.1441-1(e)(5) of the Internal Revenue Code.
The QI agreement allows foreign persons to enter into an agreement with the IRS to simplify their obligations as a withholding agent under chapters 3 and 4 and as a payor under chapter 61 and section 3406 for amounts paid to their account holders.
This new version of the QI agreement includes the requirements and obligations applicable to Qualified Derivative Dealers (QDDs).
Customers are reminded that the QI agreement currently in effect pursuant to Revenue Procedure 2014-39 (the 2014 QI agreement) expires on 31 December 2016.
The proposed changes to the QI agreement (subject to any modifications included in a revenue procedure containing the final QI agreement, to be issued later in 2016) will apply to QI agreements that are in effect on or after 1 January 2017.
We are currently reviewing the Notice and will continue to provide information as it becomes available.
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