Fulfilling reporting obligations is not always easy for regulated companies, but knowing what mistakes to look out for can, at least, lighten the burden ever so slightly.
In a new white paper, RegTech venture TAINA Technology, reveals what could be the eight most common mistakes causing regulated companies to fail to be compliant. TAINA Technology offers a solution that can uplift the validation process, withholding and information reporting functions.
The first error unveiled in the white paper is to put in an incorrect tax identification numbers (TIN) indicator or to mismatch TIN types. A TIN is a unique number that can be used to identify individuals, businesses or other entity in tax returns and other documents filed with the each respective nation’s tax authority.
A second common mistake is to enter an invalid recipient name and address information, TAINA Technology’s managing director Rasheed Khan wrote in the white paper.
A third common error is if a recipient is unknown or withholding rate pool.
Similarly, organisations may falter when providing country codes either by entering an incorrect country code or by leaving it blank. Khan wrote that code must correspond with the US Internal Revenue Service’s Form 1042 Country Codes.
Next, Khan looked at foreign financial institutions (FFI) and non-financial foreign entities (NFFE). He noted that it very common for companies to miss out at entering FFIs’ and NFFEs’ global intermediary identification numbers.
Khan also looked at Form 1042-S, which is used when income and amounts are being withheld. He pointed out that only one recipient can be entered when filing in that form.
The seventh common mistake identified by Khan was incorrect reporting of tax rates in the Q recipient record.
The final error he identified was to enter invalid or incorrect income code and exemption code combinations.
“Most issues with reporting are traced to two main causes,” Khan wrote. “First is incomplete [or] incorrectly recorded data from the ‘W’ series form. Second is from mapping the information captured from client relationship management [CRM systems.
“Multiple operations teams handle most of the process when managed by large organisations. The communications and execution needs to be near perfect to prevent any mistakes.”
He advised that the best we way to avoid making these errors is to expand the companies’ their documentation processing to capture specific elections from Form W-8.
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