IRS Notice 2022-43

Qualified Intermediary Agreement for Tax Years 2023-2029

The Treasury and the Internal Revenue Service (IRS) released an advanced copy of Rev. Proc. 2022-43 on December 13, 2022, providing the final qualified intermediary (QI) agreement (new QI agreement) for tax years beginning in 2023. The new QI agreement as described in Treas. Reg. §1.1441-1(e)(5) is effective as of January 1, 2023, and provides for a six-year term as of that effective date. The final QI agreement incorporates most of the proposed changes to the QI agreement in Notice 2022-23, with several notable differences.

Significantly, substantial changes were made to the sections permitting a QI to act in that capacity for holdings of a publicly traded partnership (PTP) when it receives income from a PTP distribution that is effectively connected to the PTP's US trade or business on behalf of a non-US account holder and under §864(c)(8) and §1446(f). The changes allow QIs to act as such even if they do not have all the US taxpayer identification numbers (TIN) as customarily required, though they are expected to have all accounts compliant by 2025. Section 6031 substitute Schedule K-1 information must also [WC1] be reported.

Changes from the previous QI agreement were to provide relief by limiting the time requests for a recipient-specific Form 1042-S are allowed; clarifying the reporting pools with different LOB codes; allowing for secure e-mail communications with the IRS; and additional detail regarding periodic review procedures.

All earlier QI agreements expired on December 31, 2022. Per section 11.08 of the new QI agreement, any QI that intends to renew its agreement must submit an application for renewal to the IRS on the QI Portal by March 31, 2023. The new agreement will be effective from January 1, 2023, if the renewal is submitted on time and runs through December 31, 2028.

The agreement will be renewed only upon the agreement of both the QI and the IRS. A QI that seeks to renew its QI agreement and become a Qualified Derivatives Dealer (QDD) must supplement the renewal request by providing a statement containing all information required by Form 14345 relating to a QDD.

On December 28, 2022, the IRS published six frequently asked questions (FAQs) regarding the renewal process. Existing QIs will notice that many of the application responses will be prepopulated and should be updated if not still accurate. In addition, you will be asked whether there has been a change in the legal name of the entity and whether the entity is compliant with all applicable withholding and reporting requirements, including the filing of Forms 945, 1042, 1042-S, 1099, and 8966, to the extent required for all calendar years for which the due date has passed.

Finally, a QI that seeks to enter into or renew its QI agreement will be required to consent to have its name, status as a QI, and QI-EIN disclosed on a public list of QIs to be published by the IRS on its website.

S&P Global Tax Solutions will be pleased to assist you with any questions on the new QI agreement or any other tax matter. We can assist with QI applications or the renewal of existing QIs. S&P Global Tax Solutions can also help with periodic reviews, policies and procedure documentation, review, and assistance updating existing documents.

_________________________________________________________________________________________________

Copyright © 2019 by S&P Global Market Intelligence, a division of S&P Global Inc. These materials have been prepared solely for information purposes based upon information generally available to the public and from sources believed to be reliable. S&P Global Market Intelligence, its affiliates, and third party providers (together, "S&P Global") do not guarantee the accuracy, completeness or timeliness of any content provided, including model, software or application, and are not responsible for errors or omissions, or for results obtained in connection with use of content. S&P Global disclaims all express or implied warranties, including (but not limited to) any warranties of merchantability or fitness for a particular purpose or use.

S&P Global Market Intelligence's opinions, quotes and credit-related and other analyses are statements of opinion as of the date they are expressed and not statements of fact or recommendation to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security.

S&P Global keeps certain activities of its divisions separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain divisions of S&P Global may have information that is not available to other S&P Global divisions.

S&P Global provides a wide range of services to, or relating to, many organizations. It may receive fees or other economic benefits from organizations whose securities or services it may recommend, analyze, rate, include in model portfolios, evaluate, price or otherwise address.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.