United States: Updated FAQs provide default codes for missing U.S. TINs

Default codes to be used for Model 1 foreign financial institutions (FFIs)

Default codes to be used for Model 1 foreign financial institutions (FFIs)

The IRS updated a set of “frequently asked questions” (FAQs) to provide default codes to be used for Model 1 foreign financial institutions (FFIs) that have been unable to obtain U.S. taxpayer identification numbers (TINs).

New FAQ #6 (reproduced below and added 13 May 2021 under the Reporting section) notes that use of the default codes is not mandatory and does not mean that the Model 1 FFI will not be at risk of being found significantly non-compliant for failure to report all required U.S. TINs.

Q6. We are a Model 1 FFI and have not obtained a U.S. TIN for an account as required in the 2020 data. Are there TIN codes we can use to populate the TIN field where we have not yet been able to obtain the TIN due to specific circumstances?

As a Model 1 FFI you are required to obtain and exchange the U.S. taxpayer identification number (TIN) data element for each specified U.S. person that is an account holder or a controlling person of a non-U.S. entity (a specified U.S. person) in accordance with the Intergovernmental Agreement between the United States of America and your Model 1 jurisdiction (IGA). 

However, in the IRS’ efforts to better understand the issues that FFIs face in obtaining a U.S. TIN, the IRS has developed a series of codes that may be used by a reporting Model 1 FFI to populate the TIN field where the TIN has not been obtained in specified scenarios.  The use of these codes is not mandatory and does not mean that an FFI will not be at risk for being found significantly non-compliant due to a failure to report each required U.S. TIN.  The IRS will take into account the facts and circumstances leading to the absence of the U.S. TIN, such as the reasons why the TIN could not be obtained, whether the FFI has adequate procedures in place to obtain TINs, and the efforts made by the FFI to obtain TINs.  For example, whether the FFI is contacting account holders annually to request any missing TINs.  The expectation is that the use of these codes will allow our tax administrations to better understand the facts and circumstances behind the missing U.S. TINs, both in general and with respect to a specific reporting Model 1 FFI.  The TIN field code and related scenarios are as follows:

—   222222222 – Preexisting individual account with only U.S. indicia being a U.S. place of birth.

—   333333333 – New individual account that (1) has indicia of a U.S. place of birth, and (2) either:

(a)    has a change in circumstances causing the self-certification originally obtained at account opening to be incorrect or unreliable, and a new self-certification has not been obtained, or

(b)    was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification has not been obtained.

—   444444444 – Preexisting individual and entity account that (1) has U.S, indicia other than a U.S. place of birth, and (2) either:

(a)    has a change in circumstances, causing the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained, or

(b)    was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.

—   555555555 – New individual and entity account that has a U.S, indicia other than a U.S. place of birth, and (2) either:

(a)    has a change in circumstances causing the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained, or

(b)    was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.

—   666666666 – Preexisting entity account with account balance exceeding $1,000,000 held by a passive NFFE with respect to which no self-certifications have been obtained, and no U.S. indicia has been identified in relation to its controlling persons.

—   777777777 – For pre-existing accounts where there is no TIN available and the account has been dormant or inactive, but remains above the reporting threshold, also known as a “dormant account”.  For reference, the U.S. defines “dormant account” in U.S. Treasury Regulations §1.1471-4(d)(6)(ii).

Note that the IRS system will still generate an error notification to indicate the entry is invalid when one of the above codes is used.  The error notification will provide 120 days to correct the issues, which is consistent with Paragraph 4.2.2 “Administrative or Other Minor Errors” of the Competent Authority Arrangement.  Consistent with the Intergovernmental Agreement (IGA) and Competent Authority Arrangement (CAA), if applicable if the TIN is not provided within that 120 day period, the U.S. will evaluate the data received and determine through a consideration of the facts and circumstances if there is significant non-compliance.  (See Reporting FAQ #3 for a full discussion of the significant non-compliance process.)

Added: 05-13-2021

 

 

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