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Tax News
SIFMA asks the IRS to issue a FAQ regarding “document repositories” under Regulations 1.1471-3(c)(6)(iv) and 1.1441-1(e)(4)(iv)(C)
February 10, 2015
Miscellaneous
We wanted to pass the following along in case you missed it. Apparently SIFMA members, who encompass some of the largest investment funds and financial institutions in the Country, are in a predicament regarding document repositories and whether current practices with respect to those repositories meet FATCA regulations. Investment managers have to provide various forms such as W-9s or W-8BEN-Es to withholding agents to open accounts and receive transaction authorization. For managers who have relationships with hundreds of investment funds this would encompass a lot of documents. According to SIFMA, these documents are often held in third party document repositories, such as those managed by Markit. The withholding agent asks for access to the repository in order to meet its due diligence obligations and the investment manager grants such access.

This is a fund administration and compliance issue regarding which we cannot speak from experience, but SIFMA is saying that withholding agents are split as to whether the current rules permit agents to validate documents through third party repositories. Some withholding agents believe that they cannot accept such documents unless the IRS issues clear guidance regarding the issue. This, according to SIFMA, leads to a competitive advantage of those agents who accept such documents over those who do not. Ergo, SIFMA asks the IRS to come up quickly with a FAQ that addresses the issue. No regulatory changes were sought.  We will keep you posted if anything comes out of this. The comment could be found on SIFMA’s website, here.
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Tags: 1.1471-3(c), document repository, FATCA, SIFMA