Many account holders have concluded, based on the provisions of the legal auditor`s independence of the 2014 qi agreement, that a periodic review of IQ must be consistent with the standards of a financial audit or other supporting documentation of a CPA (Rev. 2017-15, No. 4.02(7)). In response to this conclusion, it was stated in the 2016-42 Communication (proposed IQ Agreement) that, in accordance with the 2014 IQ Agreement, no independence standard is required as part of a periodic IQ review (communication 2016-42, point 2.02 (A)). In addition, the proposed IQ agreement replaced all references to the term “listener” in the 2014 qi agreement with the term “reviewer” (communication 2016-42, point 2.02 (A)). 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. The 2017 qi agreement (including QDD provisions) responds to some of these observations and implements the guidelines presented in The 2016-76 Communication, which have delayed many of the section 871 (m) code provisions. For more information on Notice 2016-76, see our insight: IRS note in accordance with Section 871 (m) and qualified derivatives trading regime. In the absence of a formal certificate, the new standard replaces, instead of traditional quality assessment standards, a more general requirement that the examiner has sufficient independence “to conduct the audit objectively and not be able to verify his or her own work” (Rev.
Proc. 2017-15, 4.02(7)). Industry stakeholders remain uncertain, which requires the importance of the new rules and the standard of living required by an external evaluator to conduct a periodic review on behalf of a qi. SIFMA has submitted comments to the Ministry of Finance and the Internal Revenue Service regarding the 2017-15 financial procedure, which contains the requirements for eligible derivatives traders, in accordance with the rules adopted under Section 871 (m) of the internal income code. The IRS has concluded the final agreement on qualified intermediaries (IQs) in accordance with the reg. 1.1441-1 (e) (5). An IQ allows foreign individuals to simplify their obligations as withholding agents in accordance with Chapters 3 and 4 and as payers for amounts paid to account holders under Chapter 61 and Code S. 3406.
The IQ agreement will enter into force on January 1, 2017 or after January 1, 2017 and will be valid for a period of six years.