Qualified Intermediary Alert 2022-02
Qualified Intermediary (QI) updates regarding transition to IR (Information Returns) Application for Transmitter Control Code (TCC)
Qualified Intermediary (QI) updates regarding transition to IR (Information Returns)...
The Internal Revenue Service (IRS) has issued an e-News on the June 16th, 2022 announcing that it will initiate Phase 2 of the transition to the new Information Returns Transmitter Control Code (IR-TCC) Application for Filing Information Returns Electronically (FIRE), beginning in September 2022.
On the 26th July 2021, the IRS announced its intention to make significant improvements to the FIRE application process. This impacts all QIs regarding their QI reporting obligations because all the electronic 1042-S forms are filed via FIRE portal. TCC is one of the requirements to access the FIRE portal.
In this respect, two important dates should be paid attention to:
By August 1, 2022: All QIs must ensure that information on their application (submitted via Form 4419) contains the current contact’s name, current email address and current telephone number. Also, QIs should also verify that their current legal name is correct (spelling, abbreviations, special characters and spacing) to match IRS records.
By August 1, 2023: QIs must complete the new IR-TCC Application process to continue to file electronically and retain use of their current TCC(s). If any QI completes the IR-TCC Application after this date it will be issued new TCC(s).
Consequences of and rationale for the changes
As per the said notice, in order to keep existing TCCs active, FIRE TCC holders who received their TCC prior to September 26, 2021, will need to submit and complete the IR-TCC Application by logging into the IR Application for TCC portal, here.
The application can be submitted anytime between September 2022 and August 1, 2023. If the application is submitted after this date, then the applicant will be issued a new TCC. The IRS noted that the TCC will remain active for use until August 1, 2023. After that date, any FIRE TCC that does not have a completed IR-TCC Application will be dropped and will not be available for e-file.
QIs will need the following information to file an application:
- Business Legal Name and employer identification number (EIN)
- Business physical location and business mailing address
- Business structure (Corporation, LLC, Sole Proprietor etc.)
- Business telephone number
- The form type(s) QIs will be filing electronically – Select ONLY the forms that are required to be filed electronically
- Authorized Users, with a Social Security number or Individual Taxpayer Identification Number, title, U.S. telephone number, and date of birth for each
Additionally, Form 4419, Existing TCC for FIRE, will be phased out, with effective from August 1, 2022. Filers which do not plan to immediately submit the IR TCC application must review their application by August 1, 2022 and ensure that the information submitted via Form 4419 contains the current contact’s name, email address, and telephone number. The filer’s current legal name should be verified (spelling, abbreviations, special characters, and spacing) to match IRS records. If the information is not correct, the filer will not be able to log into the FIRE System.
KPMG Reminders and Observations:
The TCC is a code assigned by the IRS to approved applicants seeking to file information returns electronically. KPMG is of the view that there could be issues with the proposed TCC application process. Notably, non-U.S. persons seeking to fulfill their reporting obligations will likely experience difficulties obtaining an ITIN and using a third party is simply not a practical solution. KPMG has been involved in ongoing discussions with the IRS to come up with a working solution.
Considering the above, KPMG encourages filers/QIs to complete the transition as soon as possible to retain the use of their current TCC(s) by completing the online application and validating their identity using the latest IRS authentication process.