Wolters Kluwer has launched an enhanced version of its Capital Changes 871M Automated Compliance Tool.
The solution helps banks, brokers and other financial services firms comply with IRS rules already in place, in addition to new, complex regulatory changes that will go into effect 1 January, 2019, based on IRS Notice 2017-42 relating to certain equity-linked financial derivatives.
Brokers and other US withholding agents generally must already comply with a set of rules that went into effect 1 January, 2017, relating to payments for certain equity-linked financial derivatives. However, the IRS released additional regulatory requirements regarding these financial instruments in January 2017 and again in August, adding important guidance. The financial consequences of failing to comply with these new requirements could be severe.
“Complying with the complicated new US withholding tax rules on non-cash changes in value to financial derivatives can be a difficult challenge for financial institutions,” says Stevie Conlon, Vice President, Tax and Regulatory Counsel, with Wolters Kluwer’s Investment Compliance business. “Our Capital Changes 871M Automated Compliance Tool is an industrial-strength solution designed to help financial institutions avoid costly errors in applying difficult new withholding tax rules. This is a capability that is especially crucial for firms, given the daily processing, batch file transfers, and high volumes of their customers’ activities.”
The Capital Changes 871M Automated Compliance Tool manages compliance with US withholding and other reporting requirements regarding dividend equivalents on US source derivative financial instruments sold to non-US persons. Additionally, the tool solves challenging aspects of broker compliance for option contracts, as well as for certain similar contracts and thousands of tax lots.
