I wrote many blog articles and opinion pieces for this specialist fintech company. This one looked at the challenges of 871 M compliance for financial institutions that traded in US equity-linked derivatives.
[Copy extract]
Everyone trading in US equity-linked derivatives is now subject to IRS 871m legislation. Record keeping and the complex tax calculations have been required from 1st January 2017, with first reporting and potential payment due at the end of March. That means it’s already posing serious questions:
The scope, requirements and implications of complying with the legislation are not widely appreciated. Considerable extra resource, increased costs, lost revenue, and potential IRS investigation and fines for non-compliance could all come into the equation.
Because the IRS are making it a two-phase process, there’s also a danger of complacency, and there’s already evidence that banks are storing up problems for later, as has been happening with 305c. Once Phase 2 comes into effect at the beginning of next year, the issue becomes massively more complex.
Meritsoft Tax Manager – the comprehensive answer to 871m and more
Tax Manager from Meritsoft lets you answer the questions above with confidence and provides many other benefits. It’s a single, proven, solution covering multiple trading and static data feeds that takes care of all that 871m involves now and will be upgraded to satisfy all future changes.
The beauty of Tax Manager is that everything is transparent, accessible and actionable. Your tax and compliance teams can see and validate the data, from transaction identification and calculations through to payments, returns and reclaims. There’s also a detailed audit trail for auditors or the IRS.
Regarding operations, decision trees can be easily configured and altered, with all changes captured, stored and fully visible. It’s easy to see why, how and when decisions are made and validated, and by who. It also maximizes straight through processing (STP) while exceptions can be fixed automatically, without the need to allocate human resources.
For your tech team, Tax Manager constitutes a light touch. Easy to install and with real-time processing and quick data normalization, it’s likely to be far faster, more flexible and agile than any in-house solution, yet works seamlessly with legacy software too.
It also ensures there’s not overpayment of tax while maximizing tax reclaims. Your clients don’t end up out of pocket and nor do you.
Best of all, it’s a solution that works. Leading global banks are already using Tax Manager to meet their 871m needs and are seeing at first-hand the efficiencies it’s providing. Similarly, for the financial transaction taxes (FTTs) in France and Italy, we are already offering a similarly effective solution for a Tier 1 global house. Talking of which, Tax Manager can cover FTTs as well, not to mention WHT, 305C and tax reclaims, and is extendable to all asset types.
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