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United States: Updated FAQ, external reviewer of QI / WP / WT

United States: Updated FAQ, external reviewer

The IRS updated a “frequently asked question” (FAQ) to provide guidance for applying the independence standard for an external reviewer of a qualified intermediary / withholding foreign partnership / withholding foreign trust (QI/WP/WT) entity for periodic review years prior to 2019.


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The updated FAQ (Q2) is available on the “FATCA - FAQs General” webpage, under the topic: “Certifications and Periodic Reviews.”

Q2. How should the independence standard for an external reviewer of a QI, WP, or WT be applied for periodic review years prior to 2019?

A2. Section 10.04 of the QI agreement and section 8.04 of the WP and WT agreements provide that an internal or external reviewer must be independent. The preamble to the QI agreement provides that the reviewer must have sufficient independence to conduct the review objectively and cannot review his or her own work or the work of others in the same "firm." The IRS has received requests for clarification of the independence standard for external reviewers and, in particular, how the IRS construes the term "firm" for purposes of this requirement. Given these requests, for review years prior to 2019, the IRS will permit an external reviewer of a QI, WP, or WT to apply the standards of independence that would otherwise apply to its engagement to conduct the periodic review (such as the standards for an agreed-upon procedures engagement by a certified public accountant). The IRS intends to update this FAQ to provide further guidance on the independence standard for reviews of calendar years 2019 and later.

Added:  04-05-2019

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