In Notice 2025-06 issued on Aug. 5, 2025 and subsequent updates on its site, the IRS provided critical alerts regarding revised deadlines for entities seeking to enter or maintain agreements with the IRS under Rev. Proc. 2022-43 or Rev. Proc. 2021-17 to act as Qualified Intermediaries (QI), Withholding Foreign Partnerships (WP), or Withholding Foreign Trusts (WT) for U.S. tax withholding and reporting purposes for the 2025 calendar year. These agreements are essential for non-U.S. entities and certain U.S. branches to comply with U.S. tax withholding and reporting obligations through the streamlined documentation and reporting process afforded entities acting as a QI, WP or WT. Refer to our prior alert for a more detailed discussion of the agreements.
RSM U.S. Observation: A QI, WP, or WT is a non-U.S. entity that enters into a formal agreement with the IRS to manage U.S. tax withholding and reporting obligations on U.S.-source income paid to non-U.S. persons. There are several benefits to acting as a QI, WP, or WT, including streamlined reporting and withholding as QIs, WPs, and WTs can certify treaty benefits on behalf of clients and investors and they are not required to disclose their investor or clients’ identities to upstream custodians or the IRS. QIs, WPs, and WTs also have reduced administrative burdens as they can report income collectively and apply pooled rates of withholding on income directly at the source.
Despite these advantages, QIs, WPs, and WTs also incur significantly higher costs associated with maintaining the status as they are required to undergo periodic reviews of their compliance every three years and have significantly more responsibility associated with collecting tax documentation, determining withholding rates, depositing taxes, and filing detailed reports (e.g., Forms 1042, 1042-S). It is therefore important to properly weigh the costs versus the benefits of entering into a QI, WP, or WT agreement carefully.
Application Deadline for 2025 Agreements
Under Notice 2025-06, entities wishing to have a QI, WP, or WT agreement in effect for tax year 2025 were required to submit their applications through the IRS’ Qualified Intermediary, Withholding Foreign Partnership, Withholding Foreign Trust Application & Account Management System (QAAMS) by Sept. 30, 2025. The IRS has advised that applications submitted after this date will not be processed this year. Therefore, entities that were unable to meet the deadline should wait until Jan. 1, 2026, to apply for an agreement that will not be effective until tax year 2026.
RSM U.S. Observation: Withholding agents (U.S. or foreign) collecting tax withholding certificates (such, forms W-8IMY) from entities claiming that their chapter 3 status is QI of 2025 should verify that the designation is valid by cross checking the IRS published list of approved QIs to confirm that the entity is listed to avoid potential exposure for under withholding. The IRS’ QI list is maintained and updated quarterly and can be found at the following link: https://www.irs.gov/businesses/corporations/qualified-intermediary-qi-list. The list includes entities that have approved QI status and were issued QI-EINs 2 months or more before the first week of the quarter.
Note, if required for Chapter 4 (FATCA) purposes, applicants must also obtain a Global Intermediary Identification Number (GIIN) before submitting their application to become a QI, WP, or WT. Similar to the IRS FFI list where GIINs are published, entities approved for QI status are added to the IRS’ Qualified Intermediary List, which is updated quarterly. To be included in a given quarter’s list, an entity must have received its QI-EIN at least two months prior to the first week of that quarter. Entities that applied by the Sept. 30, 2025 deadline will likely appear on the list for the 1st quarter of 2026.
As mentioned above, withholding agents collecting and reviewing W-8 forms from entities indicating that they are QIs, WPs, or WTs, effective in 2025 should be sure to check the IRS published list of QIs to confirm that the payee, investor, or accountholder is included on the list. Otherwise, 30% withholding may be required on payments made to the entity, its right not to disclose information on its underlying beneficial owners may be lost, and a Form 1042-S may be required to be issued in the name of the payee as well.
Extended Deadlines for Certifications, Reviews, and Waivers
The IRS has granted automatic extensions for entities required to submit periodic certifications or apply for waivers of the requirement to perform a periodic review. The periodic certifications and review are part of the compliance obligations under the QI, WP, and WT agreements, which govern withholding and reporting responsibilities for U.S.-source income under Chapters 3 and 4 of the Internal Revenue Code. Entities that fail to complete required periodic reviews or to request waivers of the review requirement timely risk being in default of their agreement which could mean liability for under withholding, penalties, and interest.
Periodic certifications for review years 2022 or 2023, originally due in 2025, must now be submitted by November 1, 2025. Entities that selected 2024 as their periodic review year have until Dec. 31, 2025, to complete their certification. Under the notice, these extensions are automatic and require no application or formal request. The periodic certifications and review are part of the compliance obligations under the QI, WP, and WT agreements, which govern withholding and reporting responsibilities for U.S. source income under Chapters 3 and 4 of the Internal Revenue Code.
RSM Observation: Based on the revised timeline, it is critical that responsible officers of Non-US FIs that have existing QI, WP, or WT agreements in place be prepared to certify their compliance with the agreement by submitting periodic certifications of the effectiveness of their internal controls by either November 2025 or December 2025. If possible, entities should perform readiness assessments to identify any gaps in their systems and processes now before engaging an objective reviewer. Certain entities with less than $5M in reportable income may also be eligible for waivers of the review but will need to take action now to ensure that certifications are made timely.
