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Entities Are Encouraged to Obtain or Renew the QI Agreement by July 31, 2014

Entities are encouraged to obtain or renew the QI Agreement by July 31, 2014. QI Agreements not renewed by July 31, 2014 are not retroactive and a 90-day deadline is prescribed for new QIs to register for their chapter 4 statuses (when required) to obtain a QI agreement applicable for 2014.

On June 27, 2014, Treasury and the IRS published a revised Qualified Intermediary (QI) agreement in Revenue Procedure 2014-39, 2014-29 I.R.B. 151. Section 1 of the Revenue Procedure provides that an entity seeking QI status (other than a renewal) that submits an application to the IRS before July 31, 2014 and that is approved by the IRS during the calendar year may, for the period beginning on January 1, 2014 and ending on June 30, 2014, act as a QI in accordance with the QI agreement set forth in Notice 2000-12, 2001-1 C.B. 387, as if the QI agreement were effective during that period. With respect to an entity that applies the allowance described in the preceding sentence, the entity’s QI agreement set forth in Rev. Proc. 2014-29 will be effective on June 30, 2014, regardless of whether the entity’s QI status is approved later during the calendar year, subject to the allowance provided in the next paragraph for how a QI may apply the QI agreement before August 1, 2014. Additionally, the IRS will require that the entity register on the FATCA registration website with respect to its chapter 4 status (if applicable) by the date is that is 90 days from the date the entity is approved for QI status.

With respect to an entity with a QI agreement in effect before June 30, 2014, the Revenue Procedure provides that its agreement expired on June 30, 2014 and further provides that an entity that has submitted a renewal application/request in the manner described in the Revenue Procedure has a revised QI agreement is effective on June 30, 2014. For purposes of this requirement, the IRS will permit a QI to renew its status as a QI (including on the FATCA registration portal when required) on or before July 31, 2014, to be eligible to act as a QI beginning June 30, 2014. A QI will not be required to assume the further requirements of the updated agreement in the Revenue Procedure before August 1, 2014 (regardless of whether the QI registered to renew its QI status before June 30, 2014), and may apply the provisions of the QI agreement set forth in Notice 2000-12 between June 30, 2014 and July 31, 2014. A renewal of QI status after July 31, 2014, will be effective on the date of renewal (and will not be retroactive). Therefore, QIs are encouraged to renew their agreement by July 31, 2014.

Because a QI is a withholding agent for chapter 4 purposes, a QI that receives a payment for which withholding is required under chapter 4 after June 30, 2014 and before August 1, 2014 with respect to an account holder may apply the procedures referenced section 9.05 of the QI agreement to satisfy any under withholding. See the instructions to Form 8957, Foreign Tax Compliance Act (FATCA) Registration, for further information regarding the registration of an entity seeking to renew a QI agreement.

Page Last Reviewed or Updated: 12-Jul-2016