Regulatory Compliance Update
By: Hickman Beckner, Vice President
There are some issues that will impact our systems in this month’s regulatory compliance update.
While the regulatory agencies have slowed down for the summer, the IRS has been updating the tax reporting regulations and forms.
On June 29, the Trade Preference Extension Act (TPEA) was signed into law. The law also includes many tax provisions unrelated to trade including penalties related to filing of information returns and payee statements. The provisions do not impact our solutions directly, but our clients will have to increase their due diligence for customer information such as Social Security and Tax ID numbers. The per- occurrence penalties have been raised from $30 to $50 and the maximum fines doubled to $500,000. There are penalties for not supplying a statement to the borrower and not supplying the statement to the IRS effectively doubling the penalty.
- Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding has been significantly modified. This is direct result of FATCA. This will affect the 1042-S reporting generated for Commercial.
- Form 1098 – Mortgage Interest Statement has been changed to delete Box 4 from the descriptive legend. Note there is no change in the requirements of the form just the legend printed on the form.
- 1099-A and 1099-C are unchanged.
- August 31, 2015 – CFPB begins supervision of larger auto finance companies.
- August 31, 2015 – Comments due on Treasury Department’s request for information on expanding access to credit through on-line marketplace lending.
The information request raised the possibility of new rules for the industry, including Prosper Funding and Lending Club after years of operating relatively untouched by government oversight. Regulations could raise online lenders’ costs, but could also benefit the industry in the long term by encouraging stronger lending standards and consumer protections.
October 3, 2015 – The new effective date for combined Reg. Z and RESPA disclosures for mortgage loans. Bills have been introduced in Congress to further extend the deadline to February 1, 2016.
The Surface Transportation and Veterans Healthcare Choice Improvement Act was signed into law on July 31, 2015. This law includes new requirements to expand the data reported on Form 1098:
- Origination Date of the Loan
- Outstanding Principal Balance of the Loan
- Property Address of the security (collateral) property
The new requirements will go into effect with Tax Year 2016. We will monitor the rules that will enact this new law.