The IIB discovered unintended consequences for Form 1099 reporting for foreign subsidiaries of foreign banks due to the repeal of section 958(b)(4)

On 20 November 2018, the Institute of International Bankers (“IIB”) sent a letter to the Internal Revenue Service in the United States (“IRS”) to request guidance to eliminate new U.S. tax reporting obligations on foreign subsidiaries of foreign banks (Link).

The IIB states that the repeal unintentionally imposes new U.S. tax reporting obligations on foreign subsidiaries of foreign banks, if the bank has a U.S. subsidiary. The IIB therefore requests that the IRS issue guidance that controlled foreign corporations (“CFCs”) created due to the repeal of section 958(b)(4) will not be treated as “U.S. Payors” for purposes of Form 1099 reporting (chapter 61) and backup withholding (section 3406) purposes.

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