QI Audit Waiver
In certain cases a QI may be able to satisfy the QI audit requirement without having an external auditor perform an audit.
Requests for the QI audit waiver regarding the 2011 audit year must be submitted to the IRS by June 30, 2012.
A PAI can not utilize any of the QI audit waivers.
There are three types of audit waivers: Waiver 1, Waiver 2, and Waiver 3.
Waiver 1
Waiver 1 can be utilized by a QI that meets the following requirements:
- Reportable amounts received by the QI in the audit year do not exceed US$1,000,000; and,
- The QI has not been included in a group of QIs that have been authorized by the IRS to carryout a consolidated QI audit.
QI Audit Waiver 1m 2011 (973.77 kB) Download
Waiver Information & Instructions (16.53 kB) Download
Waiver 2
Waiver 2 can be utilized by a QI that meets the following requirements:
- The QI has undergone a QI audit by an external auditor during the first of the two audit cycle years:
- The reportable amounts paid by the QI in the audit year exceed US$1,000,000 but do not exceed US$4,000,000; and,
- The QI has not been included in a group of QIs that have been authorized by the IRS to carryout a consolidated QI audit.
QI Audit Waiver 1-4m 2011 (882.64 kB) Download
Waiver Information & Instructions (16.53 kB) Download
New: if the QI took a credit for withholding effected by another withholding agent (e.g., line 66 of Form 1042 shows an amount other than zero for the audit year) then the QI must include a copy of its Form 1042 and copies of all Forms 1042-S received by the QI.The approval or denial of a QI audit wavier rests solely in the discretion of the IRS. In case the waiver request is denied the QI will be required to have a QI audit performed by an auditor, or in certain circumstances it may be possible to address the IRS’s concerns by performing a QI audit by correspondence with the IRS.
IRS Street Address for Audit Waiver Request Forms
Make sure to write on "WAIVER #1" ($1m limit) or "WAIVER #2" ($1m to $4m limit) on the envelope (below and to the right of the address).
Internal Revenue Service
LMSB:FS:QI
290 Broadway, 12 th floor
New York N.Y. 10007-1867
U.S.A.
Attention: Audit Waiver
Waiver 3
Waiver 3 can be utilized by a QI that has a substantial and independent internal audit department that has reviewed the QI’s compliance under the QI Agreement for each of the three years preceding the year to be audited. The QI must obtain approval from the IRS of the review procedures to be utilized.
