IRS 871(m) Tax Compliance Data

IRS 871(m) Tax Compliance Data

SIX has the completeness and coverage of data to comply with IRS Section 871(m).

The US Internal Revenue Service regulation 871(m) aims to collect tax on dividends related to equity-linked instruments that are linked to US equities. In-scope for withholding and reporting are transactions executed as of 1 January 2017 in equity-linked derivative instruments with underlying US equity or those with “non-qualified indices".

For 2017 and 2018, the IRS has stipulated a phase-in period where only “delta one” products are in-scope for withholding and reporting. While a relaxed enforcement regime will apply during this grace period, firms must nevertheless demonstrate 'good faith’ compliance effort. Full implementation of the regulation is expected in 2019.

Determining which instruments are in-scope is a complex undertaking that requires extensive knowledge of the characteristics of equity-linked derivatives:

  • Delta at issue
  • Constituents, weighting and performance of indices with US equity components
  • Continuous monitoring of dividend payments on the underlying equities

Unsure if you have in-scope securities in your portfolio?

If you aren’t confident that you can analyze the instruments in your database on a regular basis, then you're at risk of non-compliance with the new QI Agreement, which may result in hefty penalties.

Check if you have any in-scope securities in your portfolio

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Our IRS 871(m) data service

We determine which derivatives are in scope in accordance with their underlying instruments and indices, and flag for clear identification. Over time, our award-winning corporate actions monitoring provides data which is critical for tracking changes in the instrument lifecycle and determining the dividend-equivalent payments. 

Key benefits

SIX provides the necessary flags, saving you time and effort

Completeness and coverage data with 30,000 instruments from over 300 issuers opened daily and immediately analyzed

Our service can improve accuracy and timeliness of identifying in-scope securities, resulting in effective withholding and reporting and avoiding potentially difficult consequences

You can trust in data from SIX, given our 85+ years of focus on securities data and multiple awards for regulatory data and corporate actions

IRS 871(m) validation process

IRS 871 m validation process

IRS 871 m validation process

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