Deadline for qualified intermediary status extended for some entities
TAX ALERT |
For non-U.S. taxpayers that were not able to get their application for Qualified Intermediary (QI) status submitted by the previously announced deadline of March 31, 2017, the IRS has granted some last minute relief. On March 31, the IRS extended the deadline for certain entities to renew or submit new QI applications to May 31, 2017.
Prior to this application deadline, the IRS rolled out a new accounts management system for QIs (a system tediously named the Qualified Intermediary, Withholding Foreign Partnership, and Withholding Foreign Trust Application and Account Management System, and somewhat less tediously abbreviated to the QI/WP/WT System). Apparently, in light of the difficulties some existing QIs faced in submitting applications using the new system, all properly submitted and approved renewal applications for existing QIs will be granted an effective date of Jan. 1, 2017, if submitted by May 31, 2017. This includes, but is not limited to, applications containing a request for Qualified Derivatives Dealer (QDD) status.
In addition, in recognition of the novelty of QDD status, the deadline for any new QI applications that includes a request for QDD status is extended to May 31, 2017, for QI/QDD status effective Jan. 1, 2017. Out of luck, however, are new applicants for QI status that are not also making a request for QDD status. If applicants meeting that criteria did not get their applications submitted by March 31, 2017, no extension is available and they will not be able to achieve QI status effective Jan. 1, 2017.
Although QI applicants who had struggled to meet the March 31 deadline may find the two-month extension to be quite generous, May 31, 2017, is almost upon us. We highly recommend that aspiring QIs get their applications in as soon as possible. The IRS has not indicated that it will extend the deadline again, irrespective of pending comments or future complaints from taxpayers or industry professionals about the new QI/WP/WT system.