New IRS Rules for Interest Reporting on Nonresident Alien Accounts: Effective with 2013 Tax Year

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New IRS Rules for Interest Reporting on Nonresident Alien Accounts: Effective with 2013 Tax Year



Friday, July 27, 2012

8 - 9:30 am PT
9 - 10:30 am MT
10 - 11:30 am CT
11 - 12:30 pm ET

Effective with the 2013 tax year financial institutions will begin to report interest on many of the nonresident alien customers on IRS form 1042-S.  Are you able to identify your nonresident alien (NRA) customers?  Many institutions do not have tax identification numbers on NRA customers and have even been reporting these customers as US persons using interest form 1099-INT instead.  All of this is about to change and your institution does not have much time to prepare a game plan for 2013 and the trillion dollar business that nonresident aliens have in institutions in the United States.

The new regulations provide that payments of interest aggregating $10 or more on a deposit maintained at a U.S. office of a financial institution and paid to any nonresident alien individual are subject to information reporting.  Financial institutions will be required to report interest payments of $10 or more.  This means that you will have to have a TIN for nonresident aliens with interest bearing accounts.  With respect to any calendar year, payors will only be required to report interest on deposits maintained at an office within the United States and paid to a nonresident alien individual who is a resident of a country identified in the Revenue Procedure as of December 31 of the prior calendar year.  These identified countries are those with which the United States has in effect an information exchange agreement. To address any potential burden associated with reporting on this basis, the final regulations provide that for any year for which the information return under Sec.  1.6049-4(b)(5) is required, a payor may elect to report interest payments to all nonresident alien individuals.

The United States government wants to share information on taxes with other countries.  They are changing these rules to allow them to exchange information with other countries that may have information about US citizen accounts overseas.

Continuing Education:
Attendance verification for CE credits provided upon request.


  • Why is this happening?  What is the goal of the US?
  • Who is affected?  What countries?
  • Who is a nonresident alien?  How will we report NRA interest?
  • How will this affect our W-8BENs?
  • Will we have to update W-8BENs every three years if we report interest annually?
  • What if we can’t tell if the NRA lives in an affected country?  Will the affected countries change every year?
  • What should your game plan be now to get ready for the change?  
  • Do we need to change our CIP on NRA?  Should we gather more country information?
  • Are there any fines and penalties for noncompliance?
  • All of these questions and many more will be answered in this program

This informative session is for New Accounts Personnel, Compliance Specialists, BSA Officers, Deposit Operations and anyone who works with interest reporting.

Deborah L. Crawford,
gettechnical inc