QI status : practical issues in dealing with US tax regulations

Abstract

The overall scope of this study was to analyse issues Qualified Intermediaries (QIs) are faced with in dealing with the US Tax Regulations and to assess the effects FATCA has had on institutions attempting to deal with these regulations. The key objectives of this study were to assess the overall effectiveness of the regulations, highlight the main issues that these regulations have brought about and assess possible actions that may be taken to improve overall efficiency. The main elements of both the IRS Chapter 3 and Chapter 4 were analysed in conjunction with technical literature dealing with the main arising concerns and the potential effects of these regulations on QIs. Interviews were held with QIs to observe how the QI regulations were handled including their introduction, the associated costs, changes in organisation’s dynamics and the general challenges faced by these entities. Interviews were also held with compliance specialists since they assist various QIs in compliance, and to further shed light on the overall effectiveness, costs and general problems and challenges that arise in dealing with the regulations in Malta. The critical issues highlighted by compliance specialists included a lack of awareness and in-depth knowledge of these regulations in the local scene and the requirements for compliance. Costs have been identified as a major concern and were highlighted throughout the research. Concurrently, the lack of accessibility of the IRS has also been highlighted by QIs as another main issue they are faced with. On the other hand, it has been suggested that the regulations have been effective in attainment of their goals. The recommendations suggested included increasing opportunities for further education and professional development for QIs prior to signing the agreement, revising the years for certification procedures, increasing the authority level of Responsible Officers (ROs), increasing the outreach by the IRS to QIs for assistance and finally adaption of QI regulations to account for an international applicability.