Reflections from the Summer 2025 Tax Information Reporting Conferences

The summer of 2025 was marked by significant in-person tax information reporting conferences including The Depository Trust & Clearing Corporation (DTCC) Tax Forum and S&P Global Tax Solutions Conference in New York, and The Tax Reporting Group Conference just outside of Washington DC as well as numerous others in and out of the United States.

These events brought together the Internal Revenue Service (IRS) with financial services tax operations, tax advisory, service providers and corporate tax professionals and provided a valuable opportunity for attendees to connect with other industry thought leaders.

From the events, several consistent themes and topics emerged shaping the discussions and providing insights into the current and future state of tax information reporting, including:

New and formally proposed legislation

New tax reporting legislation proposed in “the One Big Beautiful Act” was topic of much discussion at the conferences. Fortunately, not all the legislation was passed into law.

• Section 899 proposed and removed – The source of robust discussions at conferences and was eventually not passed into law was Section 899. Proposed Section 899 would have increased tax on residents of countries that impose unfair taxes in 5% per year increments up to 20% greater than the statutory rate. Unfair foreign tax examples included digital service taxes (DST) and undertaxed profit rules (UTPR).

Section 899 was omitted from the Act following an agreement by the G7 countries on June 27, 2025, not to subject U.S.-parented groups to the Organisation for Economic Co-operation and Development (OECD) Pillar 2 undertaxed profits rule or income inclusion rule.

• New Excise Tax on Remittance Transfers -Discussed at conferences and subsequently passed into law through the One Big Beautiful Bill Act is Section 4475, which imposes a 1% excise tax on remittance transfers made after December 31, 2025,

Section 4475 excise tax is a requirement to withhold on the remittance transfer provider at the time of a remittance transfer. Remittance transfer providers are then required to remit the withheld excise tax to the Secretary of the Treasury on a quarterly basis. Failure to withhold the required tax is to result in a liability for the remittance transfer provider in the amount required to be withheld.

Section 4475 applies only to remittance transfers which the sender provides cash, a money order, a cashier’s check, or other similar physical instrument to the remittance transfer provider. The excise tax is not applicable to transfers of virtual currency including cryptocurrencies or stablecoins.

Withholding, remitting, and reporting, guidance is still needed to direct businesses as to how to withhold, how and when to remit the taxes, and whether any reporting will be required and, if so, where.

Digital Assets

• Digital Assets - IRS finalized Form 1099-DA and instructions.  Final regulations require reporting for sales occurring from January 1, 2025. Brokers are not required to report cost basis information for sales in 2025. Cost basis tracking is required from January 1, 2026, forward. Regulations covering DeFi were also repealed. See IRS TD 10000 for further information

Hot Topics

Every year brings new tax information reporting updates and regulations as was also evident at this year’s tax reporting events. Here are details on some of the new hot topics. Highlighting from the new areas discussed.

• Electronic Form 1042 reporting: Notice 2024-26 (issued Feb 27, 2024)  provided that withholding agents that are foreign persons are exempt from the requirement to file Forms 1042 for tax year 2024, required to be filed in calendar year 2025. The IRS has extended the automatic administrative exemption for U.S. withholding agents with respect to Forms 1042 for tax year 2024, required to be filed in calendar year 2025. This guidance is specifically noted on the IRS website.
• Form 1042-S Updates - Form 1042-S has a number of updates, what’s new for the 1042-S include:
  • New box 7d. A new checkbox has been added to indicate a Form 1042-S is being filed to revise an amount subject to withholding in a withholding rate pool to report to a specific recipient.
  • New chapter 3 status code 40 Partnership QDD. A new chapter 3 status code was added for any partnership that is, or has a branch that is, a qualified derivatives dealer (QDD) for use when reporting allocations to its partners with respect to QDD items. All other allocations by the partnership to its partners should be reported using status code 8, 9, or 38, as applicable. When the partnership is transacting in its QDD capacity, it should use status code 35. In addition, status code 40 should not be used for reporting payments to a QDD.
  • New Chapter 3 status code 41- U.S. government entity or tax-exempt entity (other than 501(c) entities). A new chapter 3 status code was added for a U.S. government entity or tax-exempt entity (other than a section 501(c) entity) such as a college or university. This code is only applicable for providing the chapter 3 status of the withholding agent on box 12b.
  • New income codes 59 Consent Fees, 60 Loan Syndication Fees, and 61 Settlement Payments. These income codes are optional for 2025.
  • New process for requesting extension of time to furnish recipient statements. The instructions have been updated to include a new process for requesting an extension of time to furnish copies of Form 1042-S to recipients using Form 15397, Application for Extension of Time to Furnish Recipient Statements.
  • The IRS released Form 15379 to request an extension of up to 30 days to provide recipient copies including Forms 1099 and 1042-S.
  • Country codes. “US” is now a valid country code entry in box 12f (withholding agent) or 13b (recipient).

• Updates to deposit interest reporting list: Rev. Proc. 2024-42 (December 2024) added Armenia and Uruguay to the list of countries that the United States has in force an information exchange agreement for purposes of reporting payments of deposit interest of $10 or more made by U.S. financial institutions to nonresident alien individuals.  Costa Rica and Thailand were added to the list of jurisdictions with which the Treasury Department and IRS have determined it is appropriate to have an automatic exchange relationship for that information.
• Tax Due Diligence Forms status:  There were no significant changes to Forms W-8 or W-9. The current version of the forms are:
  • W-9 (March 2024)
  • W-8BEN (October 2021)
  • W-8BEN-E (October 2021)
  • W-8ECI (October 2021)
  • W-8EXP (November 2023)
  • W-8IMY (October 2021)

• Qualified Intermediary list - IRS continues to update a public list of entities that have approved QI status and have QI-EINs The list is to be updated quarterly by the QI program. QI list inclusion is required to renew QI status. Withholding Foreign partnerships and Withholding Foreign Trusts are included in the list. There is no current requirement to verify QI status when payee is validating a Form W-8IMY.

• agreements include:
  • U.S.-Chile - Treaty effective February 1, 2024, for taxes withheld at source. Includes Dividends at a 15% standard rate with special rates for 5% and 0%. Interest subject to standard rate of 15% and is lowered to 10% by February 2029, there is a special 4% rate
  • U.S.-Hungary- Expired end of 2023 no treaty rates for 2024 and beyond.
  • U.S.-Russia - Suspended August 2024, withholding should be at 30% for U.S. source income
  • U.S.- Belarus - Suspended from December 17, 2024, until December 31, 2026.
  • Switzerland is to change from a FATCA Model 2 to a Model 1 IGA effective Jan 1, 2027.

For further information regarding tax treaties, see IRS Publication 901, U.S. Tax Treaties and IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities

• Penalties for 2025 - The tax information reporting penalties generally increase annually. The tax penalty rates for 2025 are: