KPMG report: Transition to new transmitter control code application for FIRE reporting, considerations for Swiss banks

New developments that affect reporting on IRS FIRE system for Swiss banks

New developments that affect reporting on IRS FIRE system for Swiss banks

The IRS announced new developments that affect the reporting on the IRS filing information returns electronically (FIRE) system for existing users.

As a reminder, reporting on FIRE requires a transmitter control code (TCC), which until September 2021 could be obtained by filing Form 4419. Since then, new TCC applications can only be filed electronically, using the new IR application for TCC portal. Read TaxNewsFlash

The IRS announced that existing FIRE users who already have a TCC need to move to the new TCC portal and update their application online anytime between September 2022 and 1 August 2023. Otherwise, any existing TCCs will be deactivated and no longer available for filing on FIRE. This will require validation of the identity of the person designated as responsible official (as listed on Form 4419) through Secure Access, for which most notably a U.S. taxpayer identification number (TIN) will be required.

The following steps need to be taken by Swiss qualified intermediary (QI) banks due to this change:

  • Review whether the TCC information previously submitted to the IRS with Form 4419 is still up-to-date (including current contact name, email address and phone number, correct spelling of the QI’s legal name, etc.). Any changes to the existing data using Form 4419 must be made before 1 August 2022. 
  • In order to keep an existing TCC, an IR-TCC application will need to be completed and submitted by logging onto the TCC portal by 1 August 2023. This will require designating a person as responsible official that has a U.S. TIN. 
  • Any Forms 1042-S for the year 2023 (to be filed in 2024) and onwards can only be filed on FIRE with a valid IR-TCC application or by enlisting an authorized third party to file. 

The Form 1042-S reporting for the year 2022 (to be filed in 2023) can still be filed on FIRE under the current process and existing TCC.

KPMG observation

Swiss banks will likely struggle to find a person to act as responsible official that meets the IR-TCC application requirements. In particular, a non-U.S. person may find it difficult to obtain a U.S. TIN for this purpose, and it is the tax professional’s understanding that the process currently may take up to one year (additional hurdles remain, such as providing US tax filing status, financial account data, 30-day validity for activation code sent by mail absent a U.S. mobile phone number).

The only solution provided by the IRS currently is to enlist a third party to file Forms 1042-S in FIRE (see IRS FAQ #17), which will not be a practical solution for most Swiss banks. Tax professionals continue lobbying with the IRS in order to achieve a workable solution allowing QIs to continue filing their 1042-S reporting on FIRE.

Read a June 2022 report prepared by the KPMG member firm in Switzerland

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.