Presenter: Deborah L. Crawford, gettechnical inc
Date: Tuesday, August 28, 2012
Time: 2:00 - 3:30 pm Central
Effective with the 2013 tax year, financial institutions must begin reporting interest on many nonresident alien consumers on IRS form 1042-S.* Are you able to identify your nonresident alien (NRA) members? Many institutions do not have tax identification numbers on NRA consumers and have even been reporting these members as US persons using interest form 1099-INT instead. All of this is about to change and your credit union doesn’t have much time to prepare a plan for 2013 and the trillion-dollar business that nonresident aliens have in institutions in the US.
The United States government wants to share information on taxes with other countries. The rules are changing to allow them to exchange information with other countries that may have information about US citizen accounts overseas. Therefore, the new regulations will require financial institutions to report interest payments aggregating $10 or more on a deposit maintained at a US office of a financial institution and paid to any nonresident alien individual. This means that it may be beneficial to have a TIN for nonresident aliens with interest bearing accounts.
In each calendar year, payors will only be required to report interest on deposits maintained at an office within the United States and paid to a nonresident alien individual who is a resident of a country identified in the Revenue Procedure as of December 31 of the prior calendar year. These identified countries are those with which the US has an information exchange agreement in effect. To address any potential burden associated with reporting on this basis, the final regulations provide that for any year for which the information return under Sec. 1.6049-4(b)(5) is required, a payor may elect to report interest payments to all nonresident alien individuals.
*Note: Bill H.R. 4078 Regulatory Freeze for Jobs Act (nicknamed the “Red Tape Reduction and Small Business Job Creation Act”) was approved by a 251-165 vote and has been sent to the Senate. This Act would stop the IRS’s final rule requiring U.S. financial institutions to annually report deposit interest paid to nonresident aliens (NRA). If the bill is approved by the Senate and is signed by the President, the NRA reporting details on the form 1042S in the webinar materials would change. All other content would remain the same. Financial institutions will still have to identify NRAs, obtain a signed W-8BEN, and update the W-8BEN every three years.
The major difference would be interest reporting to the IRS. If H.R. 4078 fails, financial institutions will begin reporting NRA interest on the 1042S for all NRA accounts that earn more than $10.00 annually in 2013. If it passes as written, this requirement would not come into being. However, the President’s Office of Management and Budget has stated that, “If the President were presented with H.R. 4078, his senior advisors would recommend that he veto the bill.” See http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/112/saphr4078r_20120723.pdf.
What You Will Learn
Who Should Sign Up?
This informative session is for new accounts personnel, compliance specialists, BSA officers, deposit operations and anyone who works with interest reporting.
About the Presenter:
Deborah Crawford is the President of gettechnical inc., a Baton Rouge-based firm, specializing in the education of financial institutions across the nation. Her 27+ years of experience began at Hibernia National Bank in New Orleans. She graduated from Louisiana State University with both her bachelor’s and master’s degrees. Debbie specializes in the education of financial institution employees and officers in the area of deposit account laws, new account documentation, insurance, complex compliance regulations, and IRAs.