The 2017 IQ agreement allows some non-U.S. securities dealers and lenders to obtain QIis, enter into an agreement with the IRS to trade as qualified derivatives (QDD) traders for transactions that result in surcharges related to Section 871 (m) code transactions and alternative interest. The QDD solves the problem of encoding or overloading certain derivatives and securities lending transactions by providing that no withholding tax is required for certain payments to a QDD acting as an investor. Section 1.02 of the 2014-39 Revenue Procedure provides that a Central BANK issuing an IQ agreement can reach an agreement. A central bank issuing it is not obliged to register on the registration portal, in order to obtain participating FFI or FFI status (as described in sections 1.02 and 3.02 of Revenue Procedure 2014-39), apply for or renew the IQ agreement by filing an application or renewal application with the Foreign Media Program under 3.01 of Procedure Revenue 2014-39. An exit central bank, described in the sentence above, which renews its IQ agreement on July 31, 2014 or before July 31, 2014, will have a qi agreement effective June 30, 2014. If this IQ continues after July 31, 2014, the effective date of the IQ agreement is the renewal date indicated in the IRS Authorization Notification. A central bank issuing that is not required to obtain participating FFI status or registered FFI status and which claims IQ status has entered into an IQ agreement with the date on which it issued an IQ-EIN. The Internal Revenue Service (IRS) issued on December 30, 2016 rev. Proc. 2017-15, in which it established the final agreement on compliance with the agreement (IQ) for qualified intermediaries (IQ) (qi agreement of 2017).
Non-U.S. companies and certain foreign branches of U.S. companies may enter into the IRS IQ agreement in 2017 to simplify their obligations as withholding agents in accordance with Chapters 3 and 24 (Foreign Account Tax Compliance Act or FATCA) of the Internal Income Code (Code) and as payers in accordance with Chapter 61 and Section 3406 of the Code for amounts paid to account holders. The corrections described above are consistent with the coordination rule 1.6049-4 (c) (4) (i) by removing the requirement to report Form 1099 for non-U.S. companies. Payers reporting peasant 1-FFis models when the conditions of S. 1.6049-4 (c) (4) (i) are met. The security retention reference in point 8.06 (A) of the revised IQ agreement is also removed to be compatible with Section 8.06(B) and, where appropriate, security retention requirements are specifically covered in Section 8.06 (A) (1) (6) of the revised qi agreement.
Rev. Proc. 2017-15 follows the 2016-42 communication, published in July 2016, which contains a proposed IQ agreement (2016 Proposed IQ Agreement) containing provisions that contain conditions and requirements for QDD. The IRS has sought and received numerous stakeholder advice on the 2016 IQ agreement.