What are some of the key upcoming US tax regulatory impacts?


In order to ensure compliance with evolving regulations and guidelines that govern the financial industry, it is vital to monitor regulatory changes.

In a recent post by Taina Technology, the firm outlined the top five upcoming regulatory changes to watch out for.

In a significant update to tax compliance, the IRS is introducing revisions to form W-9, enabling entities with certain tax classifications to inform the form requestor of foreign partners, owners, or beneficiaries. Concurrently, form W-8EXP is undergoing modifications to align with earlier changes to forms W-8BEN-E and W-8ECI.

These updates, reflecting section 1445 regulations, include a new Chapter 3 election option and format adjustments for Chapter 4. As of September 12, 2023, draft instructions for the updated W-8EXP are available from the IRS.

The IRS plans to publish a Qualified Intermediary (QI) inventory list, as part of the QI Agreement update. New and existing QIs must consent to public disclosure of their name, QI status, and QI-EIN on the IRS website. This initiative aims to prevent non-QIs from misrepresenting themselves as QIs. Similar to the FATCA FI list, this publication will commence quarterly, with aspirations for monthly updates, akin to the GIIN list. However, the inclusion of QDDs remains unconfirmed by the IRS.

An IRS agent disclosed plans to issue letters to Paying Agents when income is reported for entities with a valid W-8ECI but lacking a corresponding tax return. Upon receiving this notice, Paying Agents must mark the relevant accounts as invalid and commence withholding. This move, an extension of the IRS’s audit and penalty notice powers, will not be formally announced.

Congress recently ratified an Intergovernmental Agreement (IGA) between the US and Chile, awaiting the President’s signature. Other treaties undergoing ratification include updates to the US-Poland treaty and new treaties with Croatia and Vietnam. While these treaties require Congressional ratification and presidential approval, their potential for rapid enactment warrants attention.

The IRS has issued transitional guidance for brokers on reporting sales and exchanges of digital assets, including cryptocurrencies. The proposed regulations address various digital asset issues, defining brokers and mandating the reporting of proceeds on the new Form 1099-DA. Effective January 1, 2025, brokers, digital asset trading platforms, payment processors, and certain hosted wallet providers will be required to report gross proceeds using Form 1099-DA and provide payee statements to customers.

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