UPDATE: 2020 Year-End Reporting Layouts and Target Delivery Dates

[32892]

November 3, 2020 TO: ICI Members
Accounting/Treasurers Committee
Bank, Trust and Retirement Advisory Committee
Bank-Affiliated Member Advisory Committee
Closed-End Investment Company Committee
Operations Committee
Tax Committee
Transfer Agent Advisory Committee SUBJECTS: Fund Accounting & Financial Reporting
Tax RE: UPDATE: 2020 Year-End Reporting Layouts and Target Delivery Dates

 

The 2020 Primary Instructions have been updated to address the situation in which a fund that pursued tax reclaims based upon European law[1] receives a refund of tax (with an interest adjustment) and utilizes the netting method described in Notice 2016-10.[2] This change is needed because, under the Notice’s netting method, interest on the refund is included in income (box 1a of the 1099-DIV) but not in the foreign tax amount passed through (box 7 of the 1099-DIV). 

Specifically, the instructions for Column 16 and Column 27 now provide the following:

Foreign Tax Paid [Column 16] – Enter the amount of foreign taxes that should be included in “Total Ordinary Dividends,” Box 1a of the Form 1099-DIV.  This amount does not include income dividends (Column 14) or short-term capital gain (Column 15).  The amount entered in this column is the same as the amount entered in Column 27 for Box 7 of Form 1099-DIV unless the fund received a refund of foreign taxes paid (with an interest adjustment) and is utilizing the netting method described in Notice 2016-10, Section 4.04 Effect of Netting (in which case the amount entered in this column may be greater than the amount entered in Column 27). 

Foreign Tax Paid [Column 27] – Enter the amount of foreign taxes that should be included in “Foreign Tax Paid,” Box 7 of the Form 1099-DIV.  The amount entered in this column is the same as the amount entered in Column 16 (Foreign Tax Paid) for Box 1a of Form 1099-DIV unless the fund received a refund of foreign taxes paid (with an interest adjustment) and is utilizing the netting method described in Notice 2016-10, Section 4.04 Effect of Netting (in which case the amount entered in this column may be less than the amount entered in Column 16).

 

Katie Sunderland
Assistant General Counsel

 

Attachment

endnotes

[1] See, e.g., Institute Memoranda No. 32702, dated August 24, 2020 and No. 26165, dated May 18, 2012. 

[2] Institute Memorandum No. 29650, dated January 15, 2016.