• Jason Zücker, Director |

It is the time of year again for Swiss financial institutions (“SFI”) to prepare their annual QI and FATCA reporting. This blog shall provide an overview of the relevant forms and deadlines, reminders of key points for compliance with the reporting requirements, and highlight key changes compared to the previous year.

QI and FATCA reporting deadlines

The table below summarizes the relevant forms and deadlines for the 2021 QI and FATCA reporting to be filed in 2022:

Forms Deadline to report to the IRS
Filing Extension request possible?
8966
Non-consenting U.S. accounts
31 January 2022 Electronically via IDES No extension of time to file is permitted to report non-consenting U.S. accounts
1042 15 March 2022
(or 15 September 2022 if extension of time)
Paper format Yes, by completing Form 7004 until 15 March 2022 for an automatic 6-month extension of time
1042-S 15 March 2022
(or 14 April 2022 if extension of time)
Electronically via FIRE Yes, by completing Form 8809 until 15 March 2022 for an automatic 30-day extension of time
8966
Consenting U.S. accounts
31 March 2022
(or 29 June 2021 if extension of time)
Electronically via IDES Yes, by completing Form 8809-I until 31 March 2022 for an automatic 90-day extension of time

KPMG observations on 2021 version of forms

  • The Form 1042 is unchanged from its 2020 version.
    As a reminder, SFI (including branches) acting as QDD must attach an additional statement regarding their QDD tax liability, which is the Schedule Q (Form 1042). Under the transition rules in effect for Section 871(m) SFI will typically not have a QDD tax liability to report and thus no need to file a (duplicative) reporting on Form 1120-F for 2021 and Schedule Q (Form 1120-F) (unless a Form 1120-F must be filed for any other reason, e.g., tax reclaim, ECI reporting). In case a Form 1120-F would need to be filed, it would be due by the 15th day of the 6th month after the end of an SFI’s tax year (e.g. 15 June 2022 for SFI with a 31 December financial year-end).

  • The Form 1042-S is unchanged from its 2020 version.
    As a reminder, QIs may continue to rely on proposed regulations reducing the burden under FATCA and Chapter 3 for 2021. For SFI this is in particular relevant for adjustments to overwithholding under the reimbursement and set-off procedures, which can be made until the extended due date for filing Form 1042-S (i.e. 14 April 2022) – or the actual filing date if earlier. SFI may also use the extended due date for filing a Form 1042 (i.e. 15 September 2022) to claim a credit for any adjustments made to overwithholding by completing box 9 “overwithheld tax repaid to recipient pursuant to adjustment procedures”.

    In addition, SFI issuing Forms 1042-S on a recipient-by-recipient basis are reminded that a separate extension of time to furnish statements to recipients (i.e. copy B, C and D) must be made via fax until 15 March 2022 in accordance with the instructions to Form 1042-S.

    The date until which the test system for FIRE is open (typically end of February) still needs to be published on the FIRE website.

  • The Form 8966 is unchanged from the 2020 version.
    The date at which the test system for IDES will open (typically end of January) still needs to be published on the IDES website.

The 2021 forms and instructions are available on the IRS website.

Reminders for compliance with 1042 reporting obligations

Please note that compliance with Form 1042 and 1042-S reporting is one of the key areas of the IRS’ current enforcement and compliance initiatives. Many SFI have already experienced this, having received numerous and detailed follow-up queries on their QI reporting (especially variances in the 1042-S reconciliation) as part of the QI certifications filed by the Responsible Officer. We have also seen enforcement letters being sent by the IRS to SFI to explain and correct issues identified upon review of SFI’s annual Form 1042 and Form 1042-S reporting. Keeping that in mind, SFI should ensure that they have robust procedures and controls in place for their annual Form 1042 and Form 1042-S review, in particular for the Form 1042-S reconciliation, in order to avoid follow-up action by the IRS.

We strongly recommend that SFI make use of the new option to test the integrity of their 1042-S data via the Form 1042-S Data Integrity Tool. The IRS will take into account a SFIs use of the tool when making enforcement and penalty determinations in the event of any errors.

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