New IRS Rules for Interest Reporting on Nonresident Alien Accounts: Effective with 2013 Tax Year

Date: August 28, 2012

Time: 2:00 PM- 3:30 PM CST

Registration Options:
Live Webinar- $200
The live webinar option allows you to have one telephone connection for the audio portion and one Internet connection (from a single computer terminal) to view online visuals as the presentation is delivered. You may have as many people as you like listen from your office speaker phone. Registrants receive a toll-free number and pass code that allow entrance to the seminar. The session will be approximately 90 minutes, including question and answer sessions. Seminar materials, including instructions, PIN number, and handouts will be emailed to you prior to the broadcast. You will need the most-current version of Adobe Reader available free at www.adobe.com.

On-Demand Web Link & Free CD ROM- $200
Can’t attend the live webinar? The on-demand web link is a recording of the live event, including audio, visuals, and handouts. We even provide the presenter’s email address so you may ask follow-up questions. Approximately one week prior to the webinar, you will receive an email with the web link. This web link can be viewed anytime 24/7, beginning 6 business days after the webinar and will expire 6 months after the live program date.
As an added bonus, you will also receive a FREE audio/visual CD ROM.* The CD ROM includes the original audio/visual presentation, the question and answer sessions, and the handouts. Use the on-demand link or this “off-the-shelf” training program for those that could not attend the live seminar and for future training. (LIMITED AVAILABILITY: The on-demand web link and CD ROM may ONLY be ordered for 6 months following the webinar. Neither the link nor CD will be available after this time.)

Both Live Webinar & On-Demand Web Link- $250
Options 1 and 2 described above (Included free CD Rom)

Special Registration Option for member credit unions under $20 million- $169
On-demand link only (does not include CD or live webinar)

About:
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.

      Highlights
      > Why is this happening?  What is the goal of the US?
      > Who is affected?  Which countries?
      > Who is a nonresident alien?  How will NRA interest be reported?
      > How will this affect W-8BENs?
      > Will W-8BENs have to be reported every three years if interest is reported annually?
      > What if we can’t tell whether the NRA lives in an affected country?  
      > Will the affected countries change every year?
      > What should your plan be now to get ready for the change?  
      > Do you need to change your CIP on NRAs?  Should more country information be gathered?
      > Are there any fines and penalties for noncompliance?
      > All of these questions and many more will be answered in this program

*To register for this webinar, CLICK HERE 

For more information, please contact Carrie Buchholz at:
(P) 405.702.8622 ext. 215
(E) carrie@cuaok.org