SIX collects the data, calculates the delta, evaluates index qualification, and delivers a clean, up-to-date list of in-scope instruments.

Why is compliance so critical?

Because it’s the only way to avoid financial penalties and reputational damage from regulatory authorities.

What are the main obligations?

Broadly speaking, institutions must identify in-scope instruments, apply the appropriate withholding tax, and report dividend-equivalent payments in line with IRS rules.

What are the key challenges?

The biggest challenges include correctly classifying instruments, identifying qualified indices, obtaining issuer information, and determining withholding responsibilities .

How can institutions prepare for compliance?

By relying on a trusted source of data that integrates the necessary information directly into operational and tax workflows.

What is IRS Section 871(m), and when did it take effect?

IRS Section 871(m) is a U.S. tax regulation that applies withholding tax to dividend-equivalent payments on instruments linked to U.S . equities. It came into effect on January 1, 2017.

Who is required to comply with the regulation?

Non-U.S. investors and entities dealing in instruments such as derivatives, warrants, and structured products with U.S. underlyings—as well as withholding agents and issuers—must comply.

IRS 871(m) Compliance Data Service for Tax Reporting

IRS 871(m) Compliance and Reporting for Equity-Linked Instruments

IRS regulation 871(m) requires the collection of U.S. withholding tax on dividend-equivalent payments from certain equity-linked derivatives referencing U.S. equities or indices. These may include transactions involving options, swaps, forwards, and other equity-linked instruments. Derivatives referencing non-qualified indices may also fall in-scope for IRS 871(m) withholding and reporting obligations.

Identifying which instruments are in-scope under IRS 871(m) is complex and demands deep expertise in derivative instrument structures, delta calculations, index constituents, and weighting methodologies. SIX combines specialized tax data analytics with continuous monitoring of underlying dividend payments to accurately determine scope and support precise withholding and reporting compliance.

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We will show you how our tax data helps identify in-scope instruments and ensure compliance with IRS regulations

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Benefits

Confident Tax Compliance. Save Time and Minimize Risk

Save Time

SIX automatically identifies in-scope instruments for you, eliminating manual tasks and freeing up internal resources.

Confident Compliance

More than 5.5 million securities classified, with continuous updates and comprehensive coverage aligned with IRS 871(m) requirements.

Reduced Risk

Consistent, auditable data that strengthens your reporting capabilities and reduces the risk of penalties or withholding errors.

About This Product

Comprehensive IRS 871(m) Compliance Data from a Trusted Global Provider

SIX delivers all the critical data elements required to meet IRS Section 871(m) withholding and reporting obligations. Our service combines trusted corporate actions and market data with deep regulatory expertise to help financial institutions ensure full IRS 871(m) compliance across global portfolios.

IRS 871(m) Key Features

In-scope instrument identification: Derivatives such as options, futures, and structured products with U.S. equity underlyings.
Delta tracking: Instruments are classified as “in scope” when delta is ≥ 0.8.
Qualified index classification: Evaluation based on IRS-defined criteria.
Dividend equivalent payment messages: Calculated or contributed data for withholding purposes.
Instrument lifecycle monitoring: Ensures the continuous validity of the data.
Corporate action integration: Timely updates on dividends and other material changes.
Structured data delivery: Compatible with automated workflows.
Flexible interfaces: Delivery formats adapted to various operational environments.
Global coverage: Over 30,000 instruments per day and more than 300 issuers.
Continuous updates: Regular flagging and review to reflect regulatory changes.

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Awards and Recognitions

Best Reference Data Initiative

For IRS 871(m) at the Market Data & Inside Reference Data Awards (IMD/IRD) 2018, by WatersTechnology

Portrait of Jürg Stalder, Head of Tax & Regulatory Products, with a quotation about simplifying the complexity of 871(m) by delivering accurate, timely data that helps institutions identify in-scope instruments, calculate dividend equivalents, and comply with confidence. — Jürg Stalder Head Tax & Regulatory Products

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Learn everything about our solution for IRS 871(m) compliance—including all the technical details behind this legally essential service for your clients.

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Aerial view of a dam, symbolizing the two sides of the CSDR coin: data quality for cash penalty calculation and reconciliation for settlement reporting, highlighted in the "Two Sides of the CSDR Coin" webinar.

How to Simplify IRS 871(m) Compliance

Andrea Dubach, Head Customer Experience, recently sat down with Jürg Stalder, Head of Regulatory Propositions, to discuss:

Why IRS 871(m) is still such a challenge, seven years after it has been enforced?
How this regulation impacts derivatives trading?
How SIX is making a difference with its IRS 871(m) offering?
How delta-one transactions can be screened?
What the main observation is in regards to the IRS 871(m) regulation?

IRS 871(m) Compliance: Your Questions Answered

How To Access Our Data

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