OK. So I see that we're about at the top of the hour. For those of for those of you just joining us on today's webinar, I welcome you. The topic again is Foreign Payments Practice: Financial Intermediary Program. We are extremely happy that you're joining us for today's webinar. My name is Richard Furlong and I will be your moderator for today's webinar, I am a Senior Stakeholder Liaison in the IRS Communications and Liaison Division. Today's webinar is slated for two hours or 120 minutes. Before we begin, if there is anyone in our large audience today that is affiliated with the media, we ask that you please send an email message to the address you see on this slide. Be sure to include your contact information and the news or media publication with which you're associated. Our Media Relations and Stakeholder Liaison staff then can assist you and answer any questions that you may have. Also, be aware that this webinar will be recorded and it will be posted on the IRS Video Portal in a few weeks, and many of you may find that beneficial because there's so much technical content that we're going to be covering. Some of you might want to go back and either review the archived webinar or have staff members view it. The portal for the archive webinar is located on www.irsvideos.gov. However, please note, continuing education credit or certificates of completion are not offered if you view an archive version of our webinars on the IRS video portal. Now we while we hope you won't experience any technology problems today, if you do, this slide shows some helpful tips and reminders. We've also posted a technical help document and you can download that from the Materials section which is on the left side of your screen. This document provides the minimum system requirements for viewing this webinar and it also provides some best practices and quick solutions. Now, if you've completed and passed your system check and you're still having problems, we recommend that you try one of the following, the first option is to simply close the screen where you're viewing the webinar and then re-launch it. The second option is to click on the settings on your browser viewing screen and then select HLS. Now, you should have received a PDF copy of today's PowerPoint along with a resource document and an acronym definition document in a reminder email. If not, no worries, as you can see on the slide, you can download these documents by clicking on the Materials dropdown arrow on the left side of your screen as shown on this slide, and I do recommend saving both the resource document and the acronym definition document because you may be looking at that going forward. We're also offering closed captioning for today's presentation. If you're having trouble hearing any of the audio at any point during the presentation through your computer speakers, please click the closed captioning dropdown arrow which is located on the left side of your screen. This feature will be available for all of you throughout the webinar. Now during the presentation, we're going to take a few breaks to share knowledge-based questions with you, also called polling questions.

At those times, a polling style feature will pop up on your screen with a question and multiple choices, and you see an example on your screen right now. Select the response that you believe is correct by clicking on the radio button next to your selection and then clicking Submit. Now some people might not get the polling question. This may be because you have a your popup blocker on your computer activated. So please take a moment to disable your popup blocker so that you can answer the polling questions. Now very importantly, we have a topics if you have a topic-specific question today as you're going through the webinar and following a subject matter expert presenters, we encourage you to submit that question by using the ask question dropdown arrow to reveal the textbox. I ask that you type your question and please make it succinct and on point to today's topic, enter it in the textbox and then click Send. And very importantly, please, please, please do not send any client-sensitive information or taxpayer specific information. We also call that personally identifiable information and we don't want you to send that in the textbox. Now before we move along to our session, again, let me make sure you're in the right place today. Today's webinar is on the topic of Foreign Payments Practice Financial Intermediary program. This webinar should last approximately 120 minutes. And with that, I'm going to turn the microphone over to Yuan Chen from Large Business and International to introduce our speakers today. It's all yours, Yuen. YUEN CHEN: Thank you, Richard. Hello. My name is Yuen Chen and I'm the senior manager over the Foreign Payment Practice Program Office.

I would like to thank our colleagues from Communication and Liaison in putting together this webinar. We appreciate the opportunity to discuss and provide an overview of the qualified intermediary certification process. During this webinar, we will be providing some backgrounds about our Qualified Intermediary Program and walk you through the certification process. The subject matter experts speaking with you today are Edith Edusei Poku, Senior Revenue Agent and Nicholas Marino, Senior Revenue Agent. Keith Russo unfortunately was not able to join us today.

Before we begin, I want to bring your attention to a recently published QI newsletter in which the IRS announced an extension of due date for periodic certification and application to waive the periodic review requirement from July 1st, 2020 to December 15, 2020. Please refer to the QI webpage for additional details. Also, please subscribe to our QI newsletter if you have not already done so, so you will receive future updates, changes and announcements about the QI program. Without further ado, I will now pass the floor to Nick Marino to begin our presentation today. Nick? NICHOLAS MARINO: Thank you Yuan. Good morning, good afternoon, or good evening depending on where you are participating from today. Thank you for joining. So what is our overall goal today? We want to familiarize you with the certification process including the periodic review and also with the Qualified Intermediary Application and Accounts Management System also known as QAAMS. Now we plan to accomplish this to a combination of lecture, a PowerPoint demo, we ask you to keep in mind that although we may often speak of QIs and our demonstration will use a QI as an example entity, most of what will be covered applies also to Withholding Foreign Partnerships also known as WPs and Withholding Foreign Trusts, also known as WTs. OK. Let's read through some of our topics and objectives. Now at the end of this session, we are hoping that you will be able to describe the major differences between the prior and current QI WP, WT agreements, be able to list the different components of QI WP, WT compliance and major areas of responsibility that must be reviewed during the periodic review.

Be able to describe the certification process. And also, be able to prepare information for completing the certification. Continuing with our objectives, we are hoping you'll be able to navigate the QI WP, WT Certification System within the Application and Account Management System.

Be able to locate resources that will assist you in navigating and responding to the questions within the system and hopefully, we will encourage you to maintain awareness of current QI WP, WT issues. And allow me to repeat myself, while we will often just refer to QIs during this presentation and the entity in our demo is a QI, almost everything covered applies to QIs, WPs and WTs. This slide introduces the current agreements by comparing key compliance aspects from past agreements to the current agreements. You can read the entire slide on your own, but we will concentrate on compliance in the current agreement. The current QI agreement is contained in Revenue Procedure 2017-15 and Withholding Partnership and Withholding Trust Agreements in 2017-21. The key compliance mechanisms under the new regime are covered in both the QI and WP, WT agreements. Under the new agreement, a new concept for QI is introduced. For every three full year calendar period, the RO must submit a certification of internal control. Additionally, within that three-year period, the RO must have a periodic review with its QI operations performed. The basic scope of these reviews are contained in the agreements. You'll see more, all of this later in the presentation. So now we've covered both mechanisms and timing. Let's look at personnel and waivers. Personnel, QIs, WPs, WTs, can now use internal or external reviewers or a combination of both. Now reviewers must meet a basic level of independence, basic reviewer standards are covered in the Section 1004 of the QI agreement and Section 804 of both the QI and WP and WT agreements. You can also refer to FAQ number 2 under certifications and periodic reviews on our FAQ page. Waivers, waivers of the periodic review requirement, a very important issue for entities that do not have a high volume of QI transactions as measured by dollar amounts. Now there are eligibility requirements an entity must meet to be considered for waiver approval. If a Waiver Application is approved, the entity does not have to have a periodic review performed. The most basic eligibility requirement, to be eligible for a waiver of the periodic review, a QI cannot have more than $5 million in reportable amounts received, WPs and WTs cannot have more than $1 million in reportable amounts received. Those thresholds cannot be exceeded for any year within the certification period. So those thresholds are year-by-year and cannot be exceeded in any year. Now let's review some of the other modifications of the QI agreement. Consolidated compliance programs can now include NEFIs and that is also known as Consolidated Compliance Programs, you may hear the term CCTs or CCPs used.

QDD status also known as Qualified Derivatives Dealer status has been added to the QI agreement, please refer to the agreement for more details on that. The transition period for QDD certification and periodic review will be covered later in the presentation. FATCA, financial entities entering into QI, WP or WT agreements are now also required to be in good FATCA standing. Their responsibilities include having to perform FATCA withholding when it's required.

And QIs are now allowed to assume primary withholding on substitute interest payments.

Continuing with some other modifications of the QI agreement, a safe harbor sampling methodology is outlined in appendix two, a Revenue Procedure 2017-15. It's based on the original sampling methodology contained in 2002-55, there are several modifications and one I would like to highlight today is that the minimum sample size and minimum strata size has been increased from 50 to 60. The terms of the agreements and the determination of the effective date of a QI agreement are covered in Section 2.22 and Section 1101 respectively. Effective date of a WP, WT in Section 12 and terms under Section 10 of those agreements. There are also new requirements to be a PAI and new requirements to take advantage of the agency and joint account options for certain partnerships and trusts, see Section 4 of the QI agreement and Section 9 of the WP, WT agreements for those updates. So now, we'd like to start covering compliance procedures and I'm going to turn it over to Edith. Edith, take it away. EDITH EDUSEI POKU: Thank you very much Nick. Good morning everyone. My name is Edith Edusei Poku, I'm an analyst within the financial intermediary team QI program. It's a pleasure to meet everyone virtually, welcome to this session of the presentation and thank you for having us. Nick and I will be presenting different parts of these slides. We have a lot to cover and so we may speak in general terms about some of the slides and skim over others but we'll make time to cover questions at the end of the presentation. Let's transition to QI Compliance Program under the QI agreement. All QIs that are SSI must have good Chapter 4 status either as a PFSI, registered in compliance SSI, registered in compliance Model 1 FSI. Thus a coordination with the FATCA requirement, QI must ensure it has completed its FATC education prior to making a certification on the QI system.

We do verify this requirement as part of the IRS review process. This slide provides the various notices that explain a QDD phase and year. Notice 2016-76 provides for 2017 as a good faith compliancy for QDDs including the elimination of a periodic review requirement of QDD activities.

For the sake of time, we will not go into the specifics of each notice, these are for your information. Within a certain period of the QDD review, Notice 2018-05 was issued and it permitted QSLs to continue applying the transition rules provided in Notice 2010-46 in 2018 and 2019. The most current notice of the QDD phase in period is Notice 2020-02. It extends the certain implementation period for certain other section A71 and provision until the end of 2022.

This means that currently QDDs are not required to perform a periodic review or provide the factual information specified in Appendix 1 as part of the QI certification. However, to the extent that QDD acted as an intermediary for section A71 and transactions, those transactions are to be included in the QI periodic review. An RO must certify for the period that it has made good faith effort to comply with relevant provisions of the agreement. So in effect, on the Notice 2020-02, beginning in calendar year 2017, a QI that is a QDD is now required to perform a periodic review with respect to its QDD activities for a certification period ending in any calendar year prior to 2023. For more information regarding the QDD transition rules for periods covering 2017 through the end of 2022, you may refer to reference notices that were previously provided. So with regards to a QDD's certification requirement whereas it would not have qualified previously to apply for a waiver of the periodic review requirement a QDD may now apply for a waiver of the periodic review for each QI activities if it meets all other eligibility requirements. You can refer to FAQ number 19 on the QI webpage. However, if the QI activities of the QDD is not eligible for a waiver, the QI must complete Part 4 of the certification. Skip Part 5 as it's currently reserved and if applicable complete Part 6of the certification. Let's switch gears now and turn our attention to Consolidated Compliance Program which is also known as CCP. This slide relates all the criteria for applying for a Consolidated Compliance Program. Please note, the program is closed for this certification period. It's usually open from January 1 to April 1. Application to form a CCG can be made through the QI system, however, you may apply before January 1 of the periodic certification due date. For information on how to apply to the Consolidated Compliance Program before January 1, you may refer to FAQ numbers 4-8 under the Section Certifications and Periodic Review on the QI webpage.

Please note that when a CCG is formed, its members must agree to be jointly and severally liable for the obligations and liabilities of any QI in the CCG relating to the QI obligation under the agreement. Continuing with the QI compliance, let's take a look at some of the RO's responsibilities. The RO responsibilities include making a certification of internal controls either under Part 2A, Certification of Effective Internal Controls or under Part 2B, Qualified Certification. If the RO has identified an event of default or material failure that has not been corrected at the date of the certification, it must make a qualified certification. The RO must ensure that its EAI, partnership or trust are included in this periodic review and certification. Let's move on and discuss the certification period and certification due date.

Under the current agreement, if a QI selects the third year as its periodic review year, the due date for the certification is on or before December 31st, following the certification period.

If however, the QI selects the first or second year of the or if the QI is applying for a waiver, the due date for the certification is on or before July 1 subsequent to the certification period. The initial certification period is a period ending on the third full calendar year that the agreement is in effect, including renewals. This means if your agreement effective date, for instance, was made May 5th, 2014, your initial certification period including the three full calendar year will be the period beginning May 5th, 2014 through December 31st, 2017 with a three full calendar year being 2015, 2016, and 2017. Your subsequent certification period will be 2018, 2019, and 2020 with a due date for the certification being on or before July 1, 2021. If you select the third year, that is 2020 as your periodic review year, the system will advance your due date to December 31st, 2021. Richard, before we turn our attention to material failure, how about we pause here for the first polling question.

FURLONG: Well thank you Edith. And before I read the polling question, just a quick reminder to the audience, there are two documents, the resource document which references all of the notices that Edith has referenced and that will be discussed to reference periodically and also the acronym document. When you hear the term RO for today's program, it's Responsible Officer, Consolidated Compliance Group or CCG, Consolidated Compliance Program, CCP, so all of these acronyms are in that document if you're relatively new to this program. So with that, let's go to the polling question or the first of our polling questions. And let me read it to you, if a qualified intermediaries or QI selects last year of the certification period for its periodic review, the certification is due A, on or before July 1st of the year following the certification period. Or is it B, on or before September 1st of the year following the certification period.

C, on or before January 1st of the year following the certification period. Or D, on or before December 31st of the year following the certification period. So, again, if a QI selects the last year of the certification period for its periodic review, then that certification is due is it due A, on or before July 1st of the year following the certification period? B, on or before September 1st of the year following the certification period? C, on or before January 1st of the year following the certification period? Or Is it D, on or before December 31st of the year following the certification period? So take a final moment to make your selection before we show you on the next slide the correct response and that correct response is D, on or before December 31st of the year following the certification period. So, let's take a moment to see what the correct response is. OK. So, Edith, it's 63 percent. So, maybe if you could just take a moment to reinforce why the correct answer is D, on or before December 31st of the year following certification period. EDUSEI POKU: Thank you, Richard. I certainly will. OK. So, I've discussed in the previous slide the certification period spans a three-year period and three-year meaning the three full calendar years. The subsequent year is when the QI will come on to the system to make its certification. So, in the system, when you come in and also in the agreement, the due date would be July 1 so you have six months from the end of the certification period to come in and make your selection and also submit the certification. Now, for the last year which is the third year within this certification period, we do know that some entities do request extension for the time to file their return. And so built in there the extra six months that will allow for those entities to be able to make their required additions or last minute challenges that needs to be made to the certification. So, they have that extra six months built in so that they will be able to submit their certification by 12/31 of the subsequent year. And so, the third year always gets the additional year from the end of the certification period in order to come in and make the certification. FURLONG: Thank you very much, Edith. So, let me turn it back over to you and I think you are going to dive into material failure right now.

EDUSEI POKU: Thank you, Richard. We will now turn our attention to a new topic and that is material failure. Material failure is defined in the QI agreement in Section 10.03(b)(1). You can see the agreement for a list of examples of what constitutes material failure. One such example is failure to establish written policies and procedures or having systems in place to facilitate the responsibilities of the agreement. This constitutes material failure. Let's look at another example, if an RO fails to withhold the required amount under Chapter 3 or 4.

For example, if RO grants reduced rate and does not have the valid documentation to support the reduced rate with withholding, this also constitutes material failure. We will now take a look at Event of Default. Event of default is also defined in the agreement as if QI fails to perform any material duty or obligation required under this agreement and the RO had actual knowledge or should have known of the fact relevant to the failure to perform any material duty, this constitutes Event of Default. For example, if RO fails to obtain documentation from a significant number of direct account holders, this constitutes an Event of Default. Let's look at another example of Event of Default. If QI under withholds a material amount of tax, that QI is required to withhold under Chapter 3 or 4 or backup withholding under Section 3406 and sales to correct the under withholding or to file an amended Form 1042 or 945 reporting and paying the appropriate tax, this constitutes an Event of Default. You can research in FAQ number 17 for more information on certification requirements for Event of Default. Now, let's take a look at what constitutes significant change in circumstance. Significant change in circumstance is defined in the agreement with relevant example. If there's been a significant change in circumstance, you need not wait until you're making a certification before disclosing it to the IRS. Please inform us immediately and attach any supporting documents to your certification when you certify on the QI system. As I mentioned earlier on in the previous slide, inform the IRS immediately as some changes are time sensitive. Please refer to Section 1104 and 1106 of the QI Agreement. OK. So, let's shift gears again and turn to the periodic review structure under the QI agreement. In this section of the presentation, we'll be discussing some of the parts of the periodic review. Let's look at the general areas covered under the periodic review. All QIs that have not obtained a waiver of the periodic review are required to perform a periodic review and respond to the questions set out in Appendix 1. The review may be conducted by, for any calendar year covered by the certification period. However, all results of the review must relate to one calendar year. As mentioned earlier, the review may be conducted by an external or internal reviewer so long as they meet the independent standard discussion Section 1004 of the QI agreement. The required areas of coverage and related steps as previously mentioned are more broadly defined. Other areas covered by agreement include Chapter 4 compliance by the QI for withheld payments. The agreement is silent on formatting. The reviewer is required to follow the broadly defined steps outlined in the QI agreement. In terms of timing, that is the review year, the QI must select one of the three years of the certification period as a periodic review year. At this point, we would turn our attention to the scope of the periodic review. The scope of the review is broken into five main categories, the first one being documentation, withholding rate proof, withholding responsibilities with respect to deposit, return filing, information reporting and also reporting on significant change in circumstance. OK, Richard, how about another polling question? FURLONG: Thank you, Edith. So, let's tee up our second polling question and this is a fairly straightforward question so I'm optimistic that most of you will get it correct. How many years must a Qualified Intermediary or a Withholding Foreign Partnership, WP, or Withholding Foreign Trust, WT, select for its periodic review. Is it A, two full calendar years; B, three full calendar years; C, any six-month period within the certification period; or D, one full calendar year. So, again, the question is how many years or year must a QI, WP or WT select for its periodic review. Is the correct response A, two full calendar years; B, three full calendar years; C, any six- month period within the certification period; or D, one full calendar year. So, I think most of you have entered your response now. So, we'll bring up the response screen to show you the correct response is D, one full calendar year. Let me look at the polling results and OK, poll under 60 percent there, Edith. So, maybe just before we turn it over to Nick, just reinforce again why D, one full calendar year, is what is needed for the periodic review. EDUSEI POKU: Certainly, Richard. So, the current agreement as it's laid out, the terms can be a little confusing. The periodic certification spans a three-year period. And in the example that I provided, let's say for instance the initial certification period spans three full years, it's 2015, 2016, and 2017.

Now, within these three full calendar years, the Responsible Officer can select any one of those years whether it's 2015, 2016 or 2017 to perform the periodic review. So, just keep in mind the periodic review is always for one year within the three-year cycle. So, the periodic cycle is three years or the periodic certification is three years. However, you have to select only one year within which you perform the periodic review. FURLONG: Well, thank you Edith. That seems pretty clear even to a relatively novice in this area such as myself. So, let's turn it over to an expert though and let's bring back in Nick to talk about and walk us through various parts if the periodic review. Nick, it's all yours. MARINO: OK. Thank you, Richard. Now that Edith has covered the scope of the periodic review, I'd like to review the different parts of the certification before we actually view a PowerPoint demo of the system. Now, we really want to take the time to expose you to the certification questions and system so that you can have a heads up on how you should prepare for doing this certification and what information you will need when you actually start completing a cert. There are six parts to a QI certification, four parts to a WP, WT certification. The first four parts General Information; Certification of Internal Controls; Waiver of Periodic Review; and Periodic Review Factual Information are the same general topics for QIs, WPs and WTs although there are some differences with the specific questions. There are also two parts that are only for QIs Part 5, Qualified Derivative Dealer which at this time is suppressed and does not need to be completed and Part 6, Substitute Interest. Keep in mind, these questions are contained in Appendix 1of the QI agreement and the appendix to both the WP and WT agreements. So, let's start with general information. General information, this section contains questions relating to assumption of primary withholding, consolidated compliance programs also known as CCPs or CCGs, private arrangement intermediaries, partnerships and trusts utilizing the joint account or agency options. Let's move on to Part 2.

So, on Part 2, again, Certification of Internal Controls, general information. Here are general topics covered by the questions in Part 2 Certification of Effective Internal Controls, Qualified Certification, Amended Form 1042 Filed, Material Failures or Event of Default, Significant change in Circumstance and Chapter 4 status. Now, we'll go into some more detail of Part 2. Certification of Internal Control. This is where QI or a RO, Responsible Officer, states that they have met the responsibilities under the agreement. There are eight check boxes that have to be checked to confirm compliance with the agreement. If all eight are checked, the RO can make a Certification of Effective Internal Control. If any one of them are not checked, the RO must make a Qualified Certification. The basic rule is if you have any Material Failure that has not been cured at the time of the certification period or has experienced an event of default whether or not cured, the RO cannot make a Certification of Effective Internal Control.

They must make a Qualified Certification. We'll just touch upon the areas of compliance covered. And the first one did the QI establish a compliance program that meets requirements of the agreement. Continuing on, has the QI maintained effective internal controls for which documentation, withholding and reporting obligations under both QI agreements and the FATCA requirements. Let's look at some more of these statements Has the QI had any material failures or events performance default? If yes, have they cured such failure or default? Have they maintained compliance in respect or with respect to PAIs and with partnerships and trusts that utilize a joint account or agency options? Have they applied QI policies, procedures and processes consistently over all branches? Now, I'm not going to read all of them but we'll just look at a few more. Again, Part 2, have they complied with all the applicable FATCA requirements. And the last part, periodic review was conducted as required. This last bullet is simply stating a review has to be conducted meeting the standards in the agreements. And, of course, if you're applying for a waiver, you do not need to have a periodic review performed at this time. The next slide list some of the questions the RO must answer when making a Qualified Certification. And if you cannot check all the boxes to make a Certification of Effective Internal Control, you must make a Qualified Certification. So, let's look at some of the questions relating to a Qualified Certification. RO, Responsible Officer, or designee, identify event of default or as of the date of certification, one or more material failures not corrected as of the date of this certification, assurances from the QI that they will correct any withholding, depositing or reporting failures and we're also looking for assurances that the RO will provide a list of all material failures and a plan to correct them to the extent requested by the IRS. The question here is that you file an amended 1042 to report an additional tax liability based on the results of the periodic review or the findings of any procedure, process or review undertaken by the RO in preparation for his or her certification of internal controls.

Now, keep in mind, the QI has an obligation to pay any on the withholding and must report to the IRS in addition to filing an amended return and paying any additional tax liability, any other the withholding identified as a result of the periodic review process within 30 days since completion of the review. This is contained in Section 3B of Appendix 2to the QI agreement.

This slide has some questions relating to Material Failures and Events of Default. And Edith did touch upon this previously but let's just repeat it anyway. Material Failures are covered in the QI agreement in Section 1003(b) and the WP-WT agreement Section 803(d). And Events of Default are covered in Section 1106 of the QI agreement and Section 1005 of both the WP and WT agreements. The agreements contain specific lists of Material Failures and Events of Default.

Again, keep in mind if at the time of the certification any Material Failure exists that's not been cured or any Event of Default has occurred during the certification period, the RO cannot make a Certification of Effective Internal Control. The RO must make a Qualified Certification.

Now, let's touch on significant changes in circumstance covered in Section 1104 of the QI agreement and Section 1004 of both the WP and WT agreements. Now, in significant change of circumstance, the RO must declare any significant changes in circumstances that have occurred.

That's the basic point here. Chapter 4status. You have to declare your chapter four status for an FFI and, of course, you want to ensure that you are still qualified to be a QI or a WP or a WT. You'll also have to make a statement as to whether an FFI certification was due and if so, did you satisfy that requirement. So, basically, here you will state to us whether you have fulfilled any FFI certification requirements you might have. Part 3, Waiver of Periodic Review.

OK. So, now let's review the basic eligibility requirements for obtaining a waiver of the periodic review. The first is the QI cannot also be acting as a QDD. However, during the QDD transition period, QDDs can apply for a waiver. So, if you are a QDD, you can check this box.

This is covered in FAQ 1 on the certifications and periodic reviews. If you encounter any technical issues in this section, please contact the team. QI also is not part of a CCP or Consolidated Program. If you are, that entity can apply for an exclusion within the group which is somewhat similar, somewhat similar standards but they cannot have a waiver. And also, and we have said this already, reportable amounts received by the QI cannot exceed 5 million, cannot exceed 1 million for a WP or a WT for each calendar year in the certification period. Have you timely filed all tax reports and information reports? Have you made all necessary FATCA certifications? Have you made a certification of internal controls in Part 2A which is a Certification of Effective Internal Control? So, if you made a Qualified Certification, you are not eligible for a waiver. Next, you are required to supply information from the most recent calendar year covered by the certification. This information will be used in evaluating your waiver request once it has been determined you are eligible for a waiver. The questions relate to your account base, the state if your account holder documentation and some payment reconciliation information. Now, please keep in mind, payments received and payments made along with associated withholding should reconcile. If payments cannot be reconciled, an explanation of variances should be attached in Part 7. This is a very big area of concern for us and we spend a lot of time on it. Any significant variance without an adequate explanation will result in your waiver being rejected. OK. Let's move on to Part 4. Part 4, Periodic Review, let's continue. So, Part 4, so either you've been rejected for a waiver or you're not eligible and you had to do Part 4, you've had a Periodic Review performed, in this section you will be asked, firstly, general information, questions concerning the use of internal versus external reviewers, what calendar year did you select the Periodic Review, general information on accounts and review of accounts to assumption primary withholding, accounts reviewed, statistical sampling and also the results of your documentation review. Now, again, and I can't stress this enough, keep in mind payments received by a QI should reconcile to payments made along with associated withholding. There are reconciliation questions here. Information included in such reconciliation can include Forms 1042, 1042S, 1099, 945, 8966. If payments cannot be reconciled, an explanation of any variances should be attached in Part 7. We'd like to say Part 7 is your friend because you can explain anything you think needs explanation. Reconciliation is a big area of concern for us and a significant variance without an adequate explanation would cause a certification to be rejected. Now, we are on Part 5, Qualified Derivatives Dealer.

Presently, Part 5 is suppressed. And at this point of time, you do not have to complete it.

Continuing and we're just touching still upon Part 5. No factual information is required for 2017 to '22. That section is reserved and will be added in subsequent years. Right now, there is a good faith standard that is in effect. Edith touched upon that previously. Let's move on to Part 6, Substitute Interest. Complete this only if you are a QI that has assumed primary withholding responsibility for payments of substitute interest as described in Section 303(a) of the QI agreement. Again, this section is only for QIs. And, by the way, if do you assume primary withholding responsibility for payments of substitute interest, you're required to do so on all such payments. Now, again, these questions while not quite as extensive, are similar to the questions in Part 4 of the certifications. So, we've covered all the parts of the certification. The next part is Part 7 which is what you attach. So now that we've done that, next, we'd like to get at the navigating QI system. So, let's turn it over to my colleague, Edith. Edith, thank you. EDUSEI POKU: Thank you very much, Nick. OK. So, now that we've gone through the various parts of the presentation, let's take a look at how we will navigate through the system. We will be using screenshots and not live data for this presentation. When you log into the QI system and access the QI account, your home page will look similar to this.

I'll be speaking generally to some of the red arrows on the screen or page. On your home page, you will find information regarding the status of your certification and the certification information. See the lower left hand side of your screen for the certification due date. And under activity center at the bottom left hand side of your screen, you will see the link to start the presentation. So, once you click on the link, this page would appear which is the instruction page. The page provides instruction regarding all the parts of the certification to be completed. Read through the instruction to familiarize yourself with the parts and click Next. At the top corner of this page, you will notice that the various parts of the presentation are laid out in part and step. For example, Part 1 through Part 7 and Step 1 of 4 as is currently highlighted. This serves as a guide if at any time of the certification you are unsure of where you are in the certification process. The part and step you are in will be highlighted. You will also notice the small check box beneath that. Check that box if you want the name of the QI/WP/WT published on the public list at a future date to be determined. This is not mandatory, by the way. OK, so under General Information Part 1, that's 1 of 4, you will select the calendar year for the periodic review. Once you select the year, you will click Next.

You will receive this warning letting you know that you cannot change the periodic review year once you confirm it. So make sure that the year selected is the year you intend for the periodic review year. If you are sure, you will click Yes, otherwise, click No to return to the previous page to update the selection. Under this step, you will select yes or no in response to whether you will be assuming primary withholding responsibility for Chapter 3 and 4, and also for 1099 and backup withholding for the certification period. Once you are done, click Next. So again on Part 1, Step 3, which is where you input the information. The red arrow to the left is where you enter information about the number of PAIs you have and the arrow to the right is where you click to add information about the PAI. Once you click the arrow to add PAI information, you will enter the requested information about the PAI. And once you are done, you click Submit. This will take you back to the previous form. If you have additional PAIs, you will repeat the process. Once you are done with adding all the PAIs, the bottom part of your screen will display all the PAIs that are being added. Click Next to advance the page. At the bottom of the screen where the red arrow is pointing is where you will enter the number of PAI partnerships and trusts, pardon me. Click Next to advance the page once you're done. On this page you will respond yes or no as applicable on the screen as to whether you applied joint account or agency options to the partnerships or trusts. Once you're done with this, this will conclude Part 1 of the certification. You will click Next to advance the page. This screen is the beginning of Part 2, where you'll be making a Certification of Internal Controls. You make a Certification of Effective Internal Controls if you are able to confirm or check off all eight boxes listed on this page, or six boxes in the case of the VP or the WP. You will click Next to advance the page. Here, you'll be responding to a question regarding amended Form 1042S. Select yes or no to indicate whether you file amended Form 1042, during the certification period and you click Next to advance the page. Here is where you're going to input information regarding Material Failure. On this page, you make a selection regarding material failures that have occurred during the certification period. You select the first bullet if there are no material failures.

Otherwise, select the second bullet. You will click Next to advance to page. If you selected the second bullet under Material Failure, the system will open up a list to allow you to select the type of failure. Provide a detailed explanation in the space provided or attach a file in Part 7 if additional space is needed, you will then click Next to advance the page. If none of the material failure items on the list applies, select other, and enter the type of failure including a detailed description and explanation in the space provided or again, attach a file in Part 7 if you need additional space. You will click Next to advance the page. If you have Material Failure that has been corrected by the date of the certification, select yes on this page, which is part two, the five of eight and provide your explanation in the space provided or attach a file in Part 7 if you need additional space. You click Next to advance the page. Here we are entering into the area of Events of Default. If there are no events of default, you select the first bullet. Otherwise do select the second bullet. And then when you're done, you click Next to advance the page. If there was an Event of Default, select the second bullet. The system will open up examples of events of default. Make the appropriate selection and provide a detailed description in the space provided. Also, attach your addition plan in Part 7 to include how the issue was identified, the plan of cure and the timeline for completing the cure.

Once you've done with that, you click Next to advance the page. Also, if none of the events of default items on the list apply, select other and enter a detailed description and explanation in the space provided or attach a file in Part 7 if again additional space is needed. Again, detailed explanation is key. This is how you will communicate to the IRS before we reach out to you with our questions. When in doubt, always attach an explanation in Part 7. You'll click Next to advance this page. On this page, you'll be inputting information regarding Significant Change in Circumstance. If there are no significant changes in circumstance, you select the first bullet, otherwise, you select the second bullet and you advance the page. Once you're done with the Significant Change in Circumstance, you'll be responding to questions regarding Chapter 4 status. Select your Chapter 4 status and ensure you've completed your FATCA certification before, again, you come to the QI system to do your certification. Once you are done, this concludes Part 2 of the certification process. You click Next to advance the page to Part 3.

This marks the beginning of part three, the Request for Waiver of the Periodic Review requirement. You select yes if you are applying for a waiver and respond to the 6 eligibility question. Click Next to advance the page. On this page, you will enter information about your account base and also about your account holders for the most recent calendar year within the certification period. And again, in our example, the three full calendar years were 2015, 2016 and 2017. And so if you were requesting a waiver or applying for a waiver during that cycle, you will enter information in this section of the periodic review using 2017 information. Once you are done, you will click Next to advance the page. You will enter information about documentation, reportable amounts, the number of 1042-S's filed, taxes withheld under Chapter 3 and 4, Form 1099 and Section 3406 for the most recent calendar year within the certification period. Once you're done, this concludes the information needed in Part 3. And you will click Next to advance the page. In this case, since you are you selected yes to apply for a waiver, the system will advance you to Part 7, the upload page. So this is the famous Part 7 we've been referring to throughout this presentation. Here you will upload all additional documents to explain and describe information that you want to disclose to the IRS. Please refer to Publication 5262, which is the QAAMS user guide. QAAMS meaning Qualified Intermediaries, Withholding Foreign Partnership, Withholding Foreign Trust, Accounts Management Application and Account Management System. We have a user guide, which is Publication 5262. It provides information regarding the naming conventions, and the file size that can be uploaded at this time. Please pay attention to the red arrows shown on this area. It's kind of self-explanatory, so take a look at it. And then you provide the required information when you get to this page.

You click Next to advance the page and this will take you to the review before submission. On this page, you will review and edit your responses to the certification questionnaire by part, before you submit. The only item you'll be unable to edit is the calendar year reviewed for periodic review. This selection will not be available for edit. You click Next to advance the page. On this page, you will conduct your final review including uploaded files listed under the header, display all items. You click Submit once you are satisfied with the information provided to advance your submission process. Once you click Submit a system generated message which says QI certification has been submitted to the IRS will pop up. Click OK to advance the page and you'll be taken back to the home page. On the homepage, you will notice that a few items have changed since your submission. Your view history will now have a status of submitted. Your message board message will also say certification submission successful and the certification information would have updated to would have updated the certification status to submitted.

Richard, I know that was a lot of material to cover. I'm sure the audience can use a break.

How about stopping here for another polling question? FURLONG: Yes, both you and Nick covered a lot of material on the certification process. And before I tee up the polling question, I just want to remind everybody that the Publication 5262, which is entitled Qualified Intermediary, Withholding Foreign Partnership, and Withholding Foreign Trust Application and Account Management is a web-based publication and it's accessible through your resource document. The latest revision that the service has put out was just released last month in May. So if you have new staff members in your larger firms involved in this program, you'll want to make sure that they have access to the May 2020 revision of Publication 5262. So our third polling question comes back to the area that Nick discussed in walking us through the various parts of the certification process. The question asks, what part of the certification is used for indicating the user is applying for a waiver? Is it A, Part 3, B, Part 4, C, Part 8, or D, all of the above? Again, what part of the certification is used for indicating the user is applying for a waiver? Is it A, Part 3, B, Part 4, C, part eight, or D all of the above. So take a moment and select from those four options. And we'll now pull up the correct response which is B, excuse me, I apologize, A, Part 3 is the correct response of the certification process. Let me take a glance at the spot. OK, so Nick, I may have you just reinforce why Part 3 is correct. You covered this quite a number of slides back, we had explained slightly less than half who got this correct. So, Nick, before I let you proceed with the presentation, just reinforce a couple of points about Part 3 of the certification process. MARINO: Well, the way this kind of works is that if you're applying for a waiver, you have to complete Parts 1, 2 and 3. Now, Part 1is general information, Part 2 is where you make your certification of internal controls. And again, to be eligible for a waiver, you have to make an effective certification, excuse me, a certification of effective internal controls. Part 3 is where you basically check off all your eligibility requirements that you meet all the standards. And in addition to that, you'll also have some information that it asks you about your account base and payments. So Part 3, after you've made that certification of effective internal controls and given us some other information, part three is where you tell us that you're qualified and give us other information that allows us to evaluate whether we should give you the waiver or not. And it's actually where you check a box that says yes, I am applying for a waiver. FURLONG: That's great, Nick. So let me let you proceed with the screenshots of the certification process. MARINO: OK, thank you, Edith again. Thank you, Richard again. So we're moving forward in this process. So let's review the screen. The left side of the screen on certification information, we can see certification status has been updated to rejected. So the IRS has reviewed our application for waiver of the periodic review requirement and rejected it. We are now granted a six-month extension on the certification due date. And you can also see the due date was extended on the left by one of those arrows under extended due date. And the six months coming up, we must now have a periodic review performed and then enter resulting information in Part 4 of the certification and then resubmit our certification. So let's click Edit Certification. Are you applying for a waiver of the periodic review? Well, the answer here is no, right? Our certification was rejected. So now we've had to have our periodic review performed and we're going report that information here. So the RO is going to complete part four by entering factual information resulting from the periodic review. We've logged back onto the QI system and then made our way back to part three versus step one of three. Next to the arrow on the left side of the screen, the system is asking are you applying for waiver of the periodic review? We are now entering information for Part 4, so we say no. So we'll select Next. Looking at the top of the screen, we can see we are starting to make some progress. We are at Part 4, Step 1A of 6. Did you use an external reviewer? Yes, we did, we answer yes. Did we use an internal reviewer?

Yes, we used a combination have internal and external reviewers. Then we click on Next. The system is now asking us to identify the external auditor, which we've entered. Next looking at the arrows at the bottom of the screen. Would you like to add another external auditor? We only use one external auditor, so we will answer no. And then we will click Next to proceed.

Now, since we've indicated we also used an internal auditor, the system is asking us to identify the internal auditor and it's also asking for the department and brief description of the internal auditor's responsibilities, such as their QI responsibilities. These questions help us to determine if this auditor is qualified and if they have the required independence. As previously mentioned, there are basic independence standards in Section 1004 of QI agreement and Section 804 of both the WP and WT agreements. You can also refer to FAQ 2 on the QI certifications, and periodic reviews on our FAQ page. Once we finish entering information on our internal reviewer, the system then asks if we used another internal reviewer. No, we did not.

We click on Next. Looking at the arrow at the top of the page, we can see we are now at Part 4, Step 2 of 6. Firstly, we are asked some questions about assumption of primary withholding.

Did we assume primary Chapter 3 and Chapter 4 withholding responsibilities for any accounts for the calendar year? Yes, we did. There's a similar question for Form 1099. Our answer is no.

Did the QI use a statistical sampling method in conducting the review of accounts? Yes, we did.

If the safe harbor method on the Appendix 2 to the agreement was not used, describe the method used. Now here you may also attach a description of the statistical sampling methodology used.

So, if we use the safe harbor method outlined in Appendix 2, we need not enter any further information or we can just enter safe harbor used in the box. And I actually recommend entering safe harbor used in the box. Now, if you did not use the safe harbor, you should describe the methodology in the box. I recommend attaching your full sampling plan in Part 7. If your sampling methodology is not clear, we will contact you. And following sampling questions are some questions concerning total accounts, receiving reportable amounts and with-holdable payments that are not reportable amounts. After we've answered those questions, we will click on Next. We are now on periodic review, Part 4, Step 3 of 6. Here, there are some questions concerning our account base and state of documentation. I'm not going to read every question, but let's take the time to read some of these sort of to get a flavor of what's required to complete the section. Total accounts reviewed held by direct account holders, reviewed by indirect account holders excuse me review held by indirect account holders, reviewed with valid documentation, reviewed with invalid documentation or no documentation, reviewed with invalid documentation when no documentation for which valid documentation or additional valid documentation was obtained after initial review. So here we are being asked questions about the state of our documentation. And the last question I just read is referring to cured documentation. Let's read part of the statement at the top of the screen. While the curing of inadequate documentation is permissible unless otherwise indicated, the information reported shall be based on the review and not results obtained after curing. These questions as per the text at the top of the screen are asking you the state of documentation before any curing takes place. This gives us an insight into the state of your day-to-day operations. Now the last question I just read, total accounts reviewed with invalid documentation or no documentation for which valid documentation or additional valid documentation was obtained after initial review is asking for the number of accounts for which curative documentation was received after the review. This information will be important if there is a question as to whether sample projection is appropriate as a result of the periodic review findings. There are more questions in your account base that you can read on your own. Remember, these questions are contained in Appendix 1 of the QI agreement and the appendix to both the WP and WT agreements. Let's hit Next. So now, we have some questions concerning withholding. The aggregate amount reported as withheld under chapter three by QI and Form 1042-S number of accounts which amounts were withheld under Chapter 3. Aggregate amount reported as withheld under Chapter 4 by QI on Form 1042-S, number of accounts for which amounts were withheld under Chapter 4, aggregate amount reported as withheld by QI on Forms 1099 and number of accounts which amounts were backup withheld under Section 3406. So now we've been asked questions about the number of accounts we withheld on and the actual amounts of withholding. I want to point your attention in particular to the next three questions, additional withholding required on the chapter four based on results of periodic review, additional withholding on the Chapter 3 based on results of periodic review, additional backup withholding required under Section 3406 based on results of periodic review. So these three questions are asking about under-withholding identified during the periodic review process. The numbers you enter here should be before curing. These numbers again are very important. They give us an insight into the state of your withholding on a day to day basis. Following, we are asked additional questions concerning withholding, including questions regarding withholding on accounts in which joint account treatment was applied. I encourage you to review these to determine if they apply to you. So let's click Next. Now let's look at some reconciliation questions. And we've mentioned reconciliation I believe several times already. These questions attempt to reconcile the payments received by the QI reported Forms 1042-S issued to the QI and Forms 1042-S issued by the QI. Let's read a couple. The aggregate amount reported paid to QI on all Forms 1042-S issued to QI, the aggregate amount repaid excuse me reported paid by QI on Forms 1042-S to QI's chapter four reporting pools. The aggregate amount reported paid by QI on Forms 1042-S to QI's chapter four reporting pool, US paid pool, and the aggregate amount reported paid by QI on Forms 1042-S two QI's Chapter 3 reporting pools. Now, let's look at the last two questions. Number 12, those questions 2 through 11. Number 13 the amount of any unreconciled variances, if question 1 minus question 12 is other than 0. So the first question on the page asks for the total amounts reported paid to the QI on Forms 1042-S. Questions 2 through 11 asks you about total payments paid by the QI and reported on Forms 1042-S issued by the QI. Questions 12 and 13 attempt to reconcile the two. If they do not reconcile, if the amount entered in 2 through 11 do not equal amount in question one, the variance must be explained in detail. You can use the box provided on the space below the questions. If you cannot explain fully the variance in the space provided, you should attach a document explaining the causes of the variance in Part 7. If you do not reconcile these amounts and fully explain any discrepancies in the box provided, better yet in an attachment, we will contact you. The reconciliation is critical. So let's click Next. We are now on Part 4 Step 4 of 6. We are almost done with Part 4. The page is requesting information about total withholdings and primary withholding. You can review these on your own.

Additionally, at the bottom, a question on the collective refund procedure, a process that allows under certain conditions a QI to request a refund for account holders over withheld on, for this procedure and other related procedures, please refer to section nine in the QI agreement or section 702, in both the WP and WT agreements. Let's click Next. We are now on the additional info section, also known as Part 7. We skipped over Part 6 because we didn't assume primary withholding on payment of substitute interest. If the system takes you to Part 6 and you did not have such payments, just enter zeros in responses to all questions. This is where you can attach additional information. This is Part 7 now, where you can attach additional information.

Before uploading, though, you should consult Pub 5262 with the types of files based on files extension that the system will accept. And please be sure to check them because sometimes the system may appear as it accepted. But if you don't use the right file extension, you still will not be able to retrieve it. And one last point here, I cannot stress enough the importance of attaching documents that explain any response on the certification that you feel you cannot adequately explain in the boxes provided in the body of the certification. This section can be used to minimize or eliminate the need for us to contact you for further information. So, if we don't have to contact you, this is truly a win-win for both of us. So let's click Next. We can see here that we uploaded a Form 2848 Power of Attorney. The system list in the table all forms uploaded. Let's click Next. The system at this point allows you to review and edit if necessary, all of your responses. Let's click Next. The last item to review is the list of any documents you have uploaded. If you want to add more here, you can. When done with an additional uploading, and you are satisfied with all your answers, you will click Submit. Let's click Submit. Next, you will receive confirmation that your submission was successful, meaning that the system received it. Let's click OK. Now, let's take a look at our home page after we have resubmitted our certification, but first let's review what steps we have taken to get there. We completed the parts necessary to apply for a waiver to the periodic review requirement, Parts 1, 2 and 3. Our waiver request was rejected and we were given six months to have a periodic review performed and periodic review report produced. And pleading Part 4 and resubmitted our certification. Our certification status, next to the arrow on the left side of the screen is amended. Anytime a certification is rejected and resubmitted, cert status is set to amended. This includes a rejection of a waiver application. Let's click Next. Looking at our home page. It appears the IRS has reviewed that our certification because our certification status had been updated to accepted. This is good. And we could see the right side of the message board, we have waiting for us entitled Message Certification Accepted. Let's click Next.

We click on the link certification accepted, message displays, QI, WP, WT certification has been approved. You can view your certification status in your home page. Our certification has been submitted and accepted by the IRS. You're now in good standing. We are done. The last thing I'd like to mention here, there are four questions that are on, again, the area of effective internal control, the last four of the eight. And I just want to reemphasize here, the bottom four statements have to be checked as true when making a certification. All eight have to be checked as true when making a certification. Two, make a certification to effective internal control. But they may not all apply to you. For example, statement about PAI and agency option compliance, if you have a PAI or agency option partnership or trust and the statement is true for you, you should check the box. If you do not have any such relationships, you should also check the box, have not failed to meet a requirement. If you have such relationships and have not met the standard, you should not check the box. Let's make a qualified certification. The same is also true for the branch statement and for the statement on assumption of primary withholding. Lastly, if you're applying for a waiver, you are not required to have a periodic review performed, the status when you're attempting to get waived out of does not fail the standard then check the box. Time for me to turn it back over to Edith. Edith, take it away.

EDUSEI POKU: Thank you very much there, Nick. Now, that we've completed the presentation process, let's switch to how you give access to the QI account when you lose access. When you lose access to the QI account, either because you forgot your password and/or username, please refer to Publication 5262, which is the function or guide for help. Almost all topics are covered in this publication. Contact the QI team via the email address which is the also in the QI agreement itself, but I will mention it to you, it's lbi.fi - financial intermediary - .qiwpissues with an s @irs.gov (lbi.fi.qiwpissues@irs.gov). Contact us using this email address only when both the RO and contact person have both lost access to the account. Richard, I think it's time for another polling question. FURLONG: Thank you, Edith. Yes it is. But before I discuss this polling question, we are getting a number of comments from some of our viewers that the screenshots of the online system are, in some cases, a bit hard to read. And we recognize that with a worldwide audience, some of you may be watching this on desktop computers, on laptops or perhaps even mobile devices, tablets or mobile phones. So we apologize for the small screenshots. However, Publication 5262, the QAAMS guide, the Qualified Intermediary, Application & Account Management guide, again, revision May of 2020, I have found that there are screenshots in there and a lot of background explanatory material. So, again, I encourage all of you to look at that document and perhaps save it as a PDF file. So here is our fourth polling question. And this is an easy one. So, I have great optimism you're going to get this correct because we just covered this publication. What publication should a user of the Qualified Intermediary Application & Accounts Management System or the acronym is QAAMS refer to when encountering a loss of system access? Is it Publication 5262, Publication 1187, Publication 515 or any of the above? So, again, what publication should a user of the Qualified Intermediary Applications & Accounts Management System or QAAMS referr to when encountering a loss of system access? Is it Publication 5262; B, Publication 1187; C, Publication 1515 or, D, any of the above? So make your selection. And now we will go to the correct response, which is drum roll, please. A, Publication 5262. And, OK, very good. We're up just under 90 percent. So, I think everybody knows the importance of that Publication 5262 to this program. So, Edith, let me turn it back over to you. EDUSEI POKU: Thank you very much, Richard. OK. So, continuing with the presentation. We'll be looking at Form1042 and 1042-S's. As previously mentioned, the RO is required to perform two levels of reconciliation for the gross total gross income, which is a reportable amount and also for taxes withheld. One of the reconciliations in the Form 1042-S reported paid to the QI by the asking withholding agent. You'll be reconciling that to the Form 1042-S reported paid by the QI, again, at all the time the amounts to reconcile if it doesn't, and you have a variance, we would appreciate if you should explain that to us. And also, a reconciliation of the Form 1042-S's issued by the QI that those 1042-S's has to roll back into the Form 1042 return filed by the QI. As I mentioned, variances should be documented and explained. Also, when asking a withholding agent to provide and amended Form 1042-S and the changes affect amounts such as the gross amounts reported or taxes withheld, please amend your Form 1042 and 1042-S accordingly. Secondly, if you amend your own Form 1042-S, you have to see that the changes in the amount you have to see if the changes affect your Form 1042. If it does, we ask that you also amend that accordingly. I would like to bring to your attention that penalties under IRC Section 61 6721 and 6722 apply for incorrectly filing Form 1042-S up to a maximum of $270 per return, per IRC section, the amount of (INAUDIBLE) per year and whether the entity is a large or small business. Again, continue with 1042 return. Let's take a look at some of the key areas when completing the Form 1042. So, we have here an excerpt of the 2018 Form 1042. Box 1 through 60 is where the QI QI that assumes primary withholding responsibilities for chapter three and chapter four, will enter the quarter monthly liability.

Generally, for QIs that do not assume primary withholding responsibility, your liabilities will be entered in box 59, per the instruction to the Form 1042. In this section, you will enter the number of Form 1042-S filed electronically on line 61b. Please note that financial institutions are always required to file Form 1042-S electronically. So you enter the gross amount reported on all Form 1042-S's. It will be broken down by U.S. source FDAP, which will be entered on line 62a and U.S. source substitute payment that will be entered on line 62b(1) or 62b(2). You will also enter the gross amount reported for all of these amounts on line 62e. In box 63, this is where you'll be entering the tax withheld or paid. Enter the appropriate amount on line 63a, which is taxes withheld by withholding agent or 63(b)(1) and/or (b)(2). Taxes withheld by other withholding agents. So for QIs that do not assume primary withholding responsibilities, you'll be entering the information in part 63b(1) or b(2) if the taxes were withheld by other withholding agents. Not shown in this presentation but also equally important are the following line items that I'm going to discuss. You enter on line 64 the total net tax liability, broken down by Chapters 3 and 4. You will also enter on line 65 the total payment by electronic fund transfer as the EFTPS . On line 66 you enter the overpayment applied as the credit from the prior year. On line 67, this is where you input credits for amounts withheld by other withholding agents. Do not leave this line blank if withholding was done by your asking custodian agent, if you do you will most likely receive a notice from the Service Center regarding balance due and associated Failure to Pay and Failure to deposit Penalties and interests. We see a lot of this during this review that we've been conducting. Some of the QIs will leave this line blank. If you want to take a credit for taxes that have already been paid to the IRS by your asking custodian, please make sure that you enter the amount on line you enter the amount on line 67. On line 68, this will be the total payment from line 65 through 67. On line 69, you enter the balance due if line 64, which is your liability is greater than the payment, line 68. On line 60 OK. I can go past 69. On line 70a, this is where you input all the withholding amount and that is if line 64 is less than line 68 but wait a minute, you are not done. If you have an over withholding over withholding, you must tell the IRS how you want the amount the money applied. So please check box 70, 71 if you want the over withheld tax applied to the subsequent year. Make sure you check that box or if you want the refund, amount refunded to you. Make sure you check the appropriate box. OK. So on this miscellaneous page, I would like to mention a few things. Again, if when you're completing this certification and you are not sure or if you wonder whether the IRS might have a question, always attach additional information to explain. Also, please label your attachment by the filename to correspond with the item that you want to bring to the IRS's attention. Again, as mentioned earlier, for collective refund procedure, please refer to Section 9 of the QI agreement. When you will voluntarily terminate your QI agreement, make sure to provide the final certification.

Refer to Section 11 of the QI agreement for more information. Please keep in mind, again, that the application deadline for applying to form a CCG is from January 1 to April 1 of every year.

Refer to FAQ number 4-8 for more information about the CCG application. Also, we would like to mention that before terminating a member of a CCG in a CCG certification that is under review, please contact the QI team before you terminate that member. We would want to know and we provide additional information as to what to do before you go ahead and terminate that member in the CCG. OK. So terminations must be made on the QI system. If the termination is due to a merger, please attach a letter providing information regarding the effective date of the merger, the name and EIN or entity ID of the surviving entity and then complete the final certification on the QI system. So on this slide, I just want to do a quick review of the certification flow.

As we've been mentioning throughout this presentation, again, if you are making a certification with a waiver, that is you're applying for a waiver as part of your certification, you will be responsible for completing Part 1, which is general information, Part 2 where you have you will make your certification of internal controls and Part 3, which is where you input information regarding the most current calendar year within the certification cycle. If your certification is once we will get the certification, it would either be accepted or rejected. If the certification is rejected, you have six months from the date of the rejection to submit your periodic review. If on the other hand, you are making a certification without a waiver, you complete Parts 1 and 2. When you reach Part 3, and it asks whether you're applying for a waiver, you will select No so that the system will advance you to Part 4. Part 4 is where you will input information regarding your periodic review result and then also Part 6 if it's applicable.

Again, the certification will either be accepted or rejected. OK. Richard, do we have time for one more polling question? FURLONG: Thank you, Edith. Yes, we do. As we enter the homestretch of our presentation before the Q&A period, so this question addresses, actually a topic that Edith just discussed. What parts of the certification must be completed when submitting a certification that does not include a request for waiver of the periodic review?

Do A, Parts 1, Part 2, and Part 3 have to be completed when you're submitting a certification that does not include a request for waiver of the periodic review? Or is it, B, only Parts 1 and Part 3; C, Parts 1, Part 2, and Part 3 and Part 4 if applicable or, D, Part 1, Part 2, Part 4, and Part 6, if applicable? Again, what parts of the certification must be completed when submitting a certification that does not include a request for waiver of the periodic review? Is the correct answer, A, Part 1, Part 2, and Part 3; B, Part 1 and Part 3; C, Part 1, Part 2, and Part 3 and Part 4 if applicable or D, Part 1, Part 2, Part 4, and Part 6, if applicable? So, I think most of you have entered your response. So, we'll go to the answer screen, which is the correct response is D, Part 1, Part 2, Part 4, and Part 6, if applicable must be completed when submitting a certification that does not include a request for waiver of the periodic review.

And about 65 percent got that right. So, I think, Edith, if they go back and look at the previous screen, they'll understand that. And, again, Publication 5262. So with that, Edith, let me continue have you continue and close this out before we get to the Q&A session. EDUSEI POKU: Thank you very much, Richard. And so, continuing with the presentation, let's take a look at the effective internal controls that is qualified certification. The RO will make a Qualified Certification if the RO has identified an event of default or a material failure that has not been corrected as of the date of the certification. When that is done, the RO will upload to the remediation plan and the plan should include, of course, the timelines for remediating the failure as part of their certification. Also, we would like to mention here that the RO can also upload the periodic review report. And it's not required under the current agreement.

However, we've realized or noticed that a lot of our questions are answered when we have the periodic review uploaded as part of the certification. And as Nick mentioned, it saves time on both end with the RO and also on the IRS side with the back and forth that ensued when we are asking persons about items that received for which we don't have an explanation. And so if you have the periodic review report, please upload it and that helps tremendously. So, moving right along. On this next page, we'll be looking at some of the resources that we've laid out.

This is for your quick reference. I would like to mention here that if you have not already subscribed to the QI newsletter, please do so. This is how you can, again, keep abreast with future program updates. Again, this next page is also additional resources for your quick reference. As Nick, I'm sorry, as Richard mentioned during the presentation, we have this additional resource page where we've listed all the notices that make reference to the QDD phase in period. You can take a look at it and read it at your own leisure. What I want to draw your attention to here is Publication 515. This is more of a plain English version of all the things in our reporting and so you may take a look at it and familiarize yourself with some of the terms that have been discussed throughout this presentation. Richard, that is all that we have.

I will send it over to you for the question session. FURLONG: Thank you very much, Edith. So, again, it's me Richard Furlong, your moderator. And I will be curating the Q&A session. Now, before we begin the Q&A session, again, I want to thank everyone who has stayed with us for today's very substantive presentation on the foreign payments practice financial intermediary program. Nick, Edith, and Yuen will be staying with us and answering as many of your questions as possible. And if you have not already input your question, there's still time to do that.

Please go ahead and click on the Ask Question drop down arrow. Type in your question and click Send. However, I do want to remind you that you've been a very involved audience. These questions have been coming in fast and furiously, so we're not going to have time to answer all the questions, but we're going to get to as many as possible. And, again, remember, if you are participating to earn a certificate and related continuing education credits that will qualify you for two credits by participating for at least 100 minutes today. That's from the official start time of the webinar, which would mean that would be the top of the first hour, so the few minutes I spent chatting before that top of the hour would not count towards the 100 minutes. And if you been on for at least 50 minutes from the official start time of the webinar, you're qualified for one credit. OK. So, let me get into the Q&A box. My goodness, quite a number of questions here. So let me bring back our senior manager in the Foreign Payments Practice Program, Yuen Chen. And, Yuen, the first question is sort of a big picture question, in your approach as a senior manager in this program, what are some of your observations on the certification that you and your team have reviewed so far? CHEN: Thank you, Richard. And I was looking at the question that's coming in too. I think that a lot of participants has similar questions so I will try to address them, all of them if there's questions. The certification the audience today. When my team reviewed the certification their reconciliation of the payment process worked pretty well I would say. And I do have one observation that I want to share with and the 1042-S going into and coming out of the QI is very, very, very important to my analyst in their review of the certification. So if there are any discrepancies that you cannot reconcile, please provide an adequate explanation. My team does not understand what causes the discrepancy and if they don't understand what causes the discrepancies, it is very likely they will reach out to the responsible officer to find out exactly why. So to help us and to help you, please reconcile the payments and the 1042-S going into and coming out of the QI. And if there's discrepancy please provide an adequate explanation on the Part 7, upload the document and provide the explanation. And as Nick and Edith mentioned many times Part 7 is your friend, the more adequate explanations that you provide on Part 7, the less likelihood that my team has the need to reach out to you to find out what causes the discrepancy. Richard? FURLONG: Thank you, Yuen. So here's another one that came in asking about any changes or significant changes, between the certification used to cover the 2015 through 2017 period are the ones that are being used for the 2018 through 2020. Are there any significant changes, Yuen? CHEN: Richard, thank you for that question. As you guys know the QI agreement has remained the same between the '15, '16, '17 and, or I should correct myself, the certification questions remained the same for the '15, '16, '17 cycle and the '18, '19, '20 cycle. So I don't see any significant changes in the certification between the two certification cycles, however, as I emphasized it before from our observation the reconciliation of the payment is one of their, I would say one of the steps that my team are taking very seriously. So learning from the past for the '18, '19, '20 cycle if we have a QI and their practitioners really focusing on that reconciliation portion of the certification and providing adequate explanation as to what causes the discrepancy I think we will have even a more successful or certification cycle in the '18, '19, '20 certification period. FURLONG: Thank you, Yuen, that is the overarching goal for all of us, a successful program. Nick, a couple of questions related to PAIs and I went back and looked at your acronym document, PAIs stands for Private Arrangement Intermediary. So let me put these together, Nick.

So they are asking, are PAIs required to have their own certification and periodic review? And the follow-up question is, if a PAI is included in a qualified intermediary's periodic review are there accounts, their accounts I guess, referring to the PAIs, just added to the population of accounts for the sample? MARINO: OK. And I think Edith mentioned part of this before. But it certainly bears repeating. Both PAIs and partnerships or trust on which the QI applies the agency option are included when the QI makes a certification. However, the QI can include them in a periodic review or they can have their own independent periodic review conducted. And if they do have their own periodic review I believe the results have to be documented and a written report sent to the RO. And they also have to be made available to the QI, yes, to the QI and to the IRS upon request similar to a periodic review report. Now if the PAI is included in the QI's periodic review, then their accounts are added to the population of the accounts for the sample; however, keep in mind that separate strata have to be created for the PAI accounts and the agency accounts, and those strata should replicate the same three strata, the same strata that are used for the main QI. So, yes, if they are part of the QI periodic review they are added to the QI's sample but they are added in separate strata and that is in Appendix 2 of the QI agreement 2017-50. FURLONG: Thank you, Nick. Alright Edith I have a couple of questions I think I will toss to you. The first one it deals with the acronym QDD which I believe stands for Qualified Derivative Dealer. So if a QDD or Qualified Derivative Dealer no longer wants to act as a QDD, what should that entity do, or what if a qualified intermediary that is not a QDD wants to act as a QDD and does not want to wait until their current agreement expires, is there a place on the online QI system to record this? EDUSEI POKU: Thank you very much, Richard, for that question.

Currently if there is, a QDD that does not want to act as a QDD anymore or a QI that wants to become a QDD the system currently does not have a place for applying or discontinuing your QDD status mid-agreement. You will act as the RO, reach out to us and contact as using our QI email box and we'll provide certain directions. Thank you. FURLONG: OK, great. Another question, Edith, someone is asking, what happens or what's the process if they plan to terminate their qualified intermediary status or agreement I guess, what steps should they take if any? EDUSEI POKU: OK. If a QI plans to terminate their agreement they should use the QI to report that termination. Once the termination is reported, we ask that they contact us using again the email box that we have to provide us the effective date of the termination. Also, if the termination is a result of a merger, we would like for them to again provide us a letter and identifying the entity that they merged into. If the entity is a QI, we ask that it provides the name of the surviving entity including the entity ID. And lastly there has been a name change because we've noted this as well, the entities merge and then there's a subsequent name change. We ask that they let us know the name change. The name change can be updated on the QI system, but we ask that when they send us that email or letter that they include the name change in that letter as well. Thank you. FURLONG: Thank you, Edith. Nick, this one I think is for you. The questioner is asking, if I have additional withholding based on results of the periodic review, aside from recording it, I just had additional withholding in the periodic review, what if anything should I do? MARINO: OK. So if the statistical sample was used and the reviewer determines that under-withholding has occurred then the RO has to report and pay the actual on the withholding tax regardless of projection and they have to pay it at the time that the under-withholding was identified, so you can't wait for the certification to pay the actual tax, you have to pay it when necessary, as soon as you identify it. Now the RO, Responsible Officer should also be notifying the FI or financial intermediary within the 30 days completion of the review of any under-withholding that is identified as a result of the review. But there's another point or two that I think I want to add here, on the certification the RO has to report to the IRS the amount of under-withholding without regard to curing and I had mentioned that before, unless it states something about curing. So, if you want to get a head-start in making clear to us the amount of under-withholding that was identified and what strata they occurred in, I recommend that you attach sample results in your periodic review report when you are doing your certification, that's not required that you attach a periodic review report but that helps us a lot, and again, it goes back to attaching items in Part 7. And just one other thing I wanted to mention, give me one second and I'm taking up time. If you go to Appendix 2 at 2017-15 and look at the back of it, it gives you a list of all the sample results that have to be reported in the periodic review, and something that comes to mind in the last part here is that a reviewer should note a reconciliation of the amounts included in the sample population to payments and withholding of reportable amounts as detailed in Part 4. So, in other words, all the reconciliations mentioned previously, all of that needs to be reconciled to your sample population. I know I've strayed a little from the question, but I think that's a very important point. So when you do your samples your sample population should also be reconciled to all the other items from previously mentioned. Thank you, Richard. FURLONG: And thank you, Nick, for a very detailed answer. Yuen, this question is for you and it regards the periodic review waiver and it claims in the 1042, and Forms 1042-S. So let me read the question, if a qualified intermediary has timely filed its Forms 1042 and Form 1042-S but receives a request for a recipient specific Form 1042-S from one of the account holders after the filing deadline, would the issuance or filing of the new 1042-S to that account holder be considered a late filing and thus disqualify the QI from applying for a waiver? Did I get all of that to you? CHEN: Yes, Richard. Thank you for the question. And I think the question really drives home the point about the Part 7. Here I don't want to answer that particular specific question, however, I do want to use this question to emphasize one very important point is that if there's a reason for some exceptions that you felt that might, should be considered that Part 7 is very, very, come in handy, to report subject or a specific fact, like this fact pattern where the QI has to issue a 1042-S requested by the beneficial owners after the filing due date and does that cause the waivers to be rejected? So, you know I think, I want to emphasize this point that when you have this situation make sure you leverage Part 7 when you submit your waiver request and explain what that 1042-S, why it is filing late. And so, when my team reviews it, and when we track that with our internal record we know there is a very specific reason that causes the late filing of this 1042-S, and we would definitely take into or when we make a determination we would definitely take into that or additional information uploaded in Part 7. Had this not been uploaded into Part 7 then my team is going to be left with no information,, but to assume that there is a 1042-S filed late, so it is very important to utilize that Part 7. FURLONG: Thank you, Yuen. Edith, here is an interesting question. I guess it's a rumor that one of our attendees heard, they are asking, will the independent standards for reviewers be relaxed?

I've heard that the IRS is considering relaxing these standards for independent reviewers?

What are your thoughts on that? EDUSEI POKU: Thank you, Richard. We are not aware of any planned relaxing of the independent standards, but for the person that asked that question I would suggest that they periodically check our FAQ and also subscribe to our newsletter if any type of information comes forth. That is how we are going to communicate it to our QI community. So, we are not aware of any such plans, but if it does something of that nature that's come up we would of course share it with the QI WP WT community. Thank you. FURLONG: Thank you, Edith. And another argument for subscribing if you don't already to the e-news for qualified intermediaries. I'm sorry but that's all the time for questions we have since we have a hard stop at the top of the hour. But before I wrap it up, Nick, I am going to turn it over to you to briefly summarize the key points that you and your team feel the audience should take away from today's presentation. So go ahead, Nick. MARINO: OK. Just give me one second to get to our key points. And let's see, our key points and this is what we want you to take away if nothing else. We hope you take away a lot more but just in case. Certification process and associated periodic review are the most important aspects of monitoring compliance with the QI, WP and WT agreements. Periodic certifications do every three years and generally cover the preceding three years. An initial certification may cover more than three full years of the effective date of the QI, WP, WT agreements not January 1 of the initial year. Also, the scope of the periodic review is covered in the QI, WP, WT agreements and all certifications should be made using the Qualified Intermediary Application and Account Management System. Those are our biggest takeaways. FURLONG: Thank you, Nick. So again, to our audience, I want to let you know that we are planning additional webinars throughout the year and we have some late breaking news possibly relevant to many of you attending today. On September 22nd, which I think is a Tuesday, we are planning with our large business and international colleagues an overview of the FATCA certification process. FATCA of course stands for the Foreign Account Tax Compliance Act.

So you may want to bookmark your calendar if you are interested in attending an overview of the FATCA certification process and we will be sending out more detailed information closer to that date. For any of our webinars please visit irs.gov, use the key word search webinars and select webinars for tax practitioners or webinars for small businesses. And when appropriate we offer certificates and continuing education credit for upcoming webinars. I want to remind you that our video portal at www.irsvideos.gov is available where you can see archived versions of all of our webinars, but remember continuing education credits or certificate of completion are not offered if you view an archived version of any of our webinars on the IRS video portal. I want to extend a big thank, big thank you to Nick, to Edith and to Yuen our subject matter experts for a terrific webinar and for sharing their considerable expertise with our worldwide audience. I also want to thank you the attendees for attending today's webinar on Foreign Payments Practice Financial Intermediary Program. Again, as a reminder if you attended today's webinar for at least 100 minutes after the official start time you will receive a certificate of completion that you can use with your credentialing organization for two possible CTE credits. If you stayed on for at least 50 minutes from the official start time of the webinar you will qualify for one possible CPE credit. Again, the time we spent chatting before the webinar started at the top of the hour, doesn't start count towards the 50 or 100 minutes. And if you are eligible for continuing education from the IRS perhaps if you are an enrolled agent or participant in the annual filing season program and you registered for today's webinar were the valid current PTIN your credit will be posted in your PTIN account. If you are eligible for continuing education from the California Tax Education Council your credit will be posted to your CTEC account as well. And also if you registered through the Florida Institute of CPAs your participation information will be provided directly to the Florida Institute. And if you qualify and had not received your certificate and or your credit by July 16th please email us at the address you see on the screen which is cl.sl.web.conference.team@irs.gov. And again that email address is shown on your screen. And if you are interested in finding out who is your local Stakeholder Liaison you may send an email shown to the address above and we'll send that information on to the local SL.

Now before you exit, we'd greatly appreciate if you take a few minutes to complete a short evaluation. We'd like to have more sessions like this one so let us know what topics you are interested in. And if you have any thoughts on how we can make our webinars better please we are interested in hearing your thoughts on that as well. If you have any requests for future webinar topics or pertinent information in any areas of tax administration or if you'd like to see an IRS fact sheet or perhaps an IRS tax tip or Frequently Asked Questions posted on irs.gov take a moment to include your suggestions in the comment section of the survey. Click the survey button on your screen to begin and if it does not come up, again, make sure you have disabled your pop-up blocker. So it's been a pleasure for me and our speakers to be here with you today. And on behalf of the IRS and our speakers we'd like to thank you for attending today's webinar because you know it's extremely important to IRS that we stay connected with the tax professional community, with individual taxpayers, with industry organizations and also with federal, state and local governmental organizations because it is you who make our job a lot easier by sharing the information that we provide and that allows for proper and correct tax reporting. Again, thank you for your time and attendance and we wish you much success in your business or practice. You may exit the webinar at this time. Thank you.