Swiss financial institutions which are Qualified Intermediaries (QIs) for US tax purposes need to know what has changed with the recent release of the new QI Agreement by the IRS.
This is a tax technical Blog intended for readers who are familiar with QI matters.
On 13 December 2022, the IRS released the final version of the new Qualified Intermediary (QI) Agreement (Rev. Proc. 2022-43), that applies from 1 January 2023. This replaces the current QI Agreement (Rev. Proc. 2017-15), which expired on 31 December 2022. The new QI Agreement is available here.
Furthermore, on 21 December 2022, the IRS issued Notice 2023-8 which states that it plans to release proposed regulations to modify certain obligations of QIs with respect to transfers of Publicly Traded Partnerships (“PTPs”) under Section 1446 of the U.S. tax code. In particular, this includes a new presumption rule for partnerships established outside of the U.S. Notice 2023-8 is available here.
In this Blog, we set out the key points relevant for Swiss QIs.
Key points relevant for Swiss QIs
Renewal of QI Agreement
The current QI Agreement expired on 31 December 2022. QIs that wish to renew their agreement with an effective date from 1 January 2023, for another six-year term, must do so via the online QI Portal no later than 31 March 2023. Responsible Officers (“RO”) should receive an email notification from the QI Portal to inform them that the functionality to renew their QI Agreement is open. All ROs should ensure that they act upon such notification to renew their QI Agreement in a timely manner (and no later than 31 March 2023) to ensure a seamless continuation of their QI status (and retain their existing QI-EIN).
IRS intention to publish a list of all QIs
The IRS intends to begin publishing a public list of QIs on its website (until now, no such public list of QIs was maintained). All QIs which renew their QI Agreement from 2023 (see above) will be required to consent to having their name, status as a QI, and QI-EIN publicly disclosed by the IRS.
Credentialing process to be able to access the QI Portal
The IRS intends to move the QI Portal to a new, modernized sign-in system. From Spring 2023, all existing users of the QI Portal will need to complete a credentialing process with a relevant Credential Service Provider (currently either ID.me or Login.gov) and utilize multi-factor authentication to be able to access the QI Portal going forward.