The IRS announced on 22 February 2018 that the deadline for Responsible Officers of Qualified Intermediaries (QIs), Withholding Partnerships (WPs) and Withholding Trusts (WTS) to make their certification of compliance will be extended by two months.
The QI Agreement allows non-US intermediaries to simplify their obligations as a withholding agent/payer if the intermediary agrees to the terms of the agreement. As part of the new QI Agreement, the QI must designate a responsible officer (“RO”) to certify compliance to the IRS regarding the compliance program.
The compliance procedures for a QI, WP, and WT have two key components: (1) a certification of internal controls, and (2) a periodic review (or obtaining a waiver of the periodic review from the IRS).
The certification due date depends on the year selected for the periodic review. As a result of the extension, the new certification deadlines are as follows:
Separately, for a QI/WP/WT that obtained a waiver of its periodic review, the IRS has now provided an automatic extension for its certification due date to 1 September 2018.
The IRS also announced that the QI/WP/WT application and account management system will be open to accept certifications from early April. It is still currently unclear whether a QI/WP/WT will need to apply for the automatic extension on the portal.
For many QI’s this will mean that there is now a 12 month period for them to complete the necessary steps to make the certification of compliance including the periodic review. However, for Responsible Officers that have yet to start preparing for these requirements, there is still a strong need to start putting actions into place as soon as possible in order to make the most of the time available.
If you would like to discuss any of these areas in more detail, don’t hesitate to get in touch with us.