Wolters Kluwer Financial Services has enhanced its Capital Changes offerings to help financial institutions comply with the cost basis reporting law, which takes effect 1 January 2011.
The cost basis reporting law requires brokers to provide cost basis information to their customers and the IRS when reporting the sale of a security. Specifically, brokers and transferors of securities must adjust the cost basis of covered securities for corporate actions in computing cost basis information reported to the IRS and customers. The IRS has outlined steep penalties for reporting incorrect cost basis information.
The cost basis law also requires issuers of securities to provide the IRS and securities holders with a statement setting forth the quantitative effect of a corporate action on cost basis. These issuer statements must be provided to holders by 15 January of the year following the corporate action.
Capital Changes provides information relating to corporate actions, including those related to foreign securities.
According to Wolters Kluwer, to help ensure financial institutions have access to the information they need when the new cost basis reporting law takes effect 1 January 2011, Capital Changes will include: updated Issuer reports; expanded Tax Guidance;and issuer Statement via Direct Data Feed.
Wolters Kluwer Financial Services senior product manager for Capital Changes Richard Ryndak said in light of the new regulatory requirement that brokers adjust cost basis for corporate actions in a tax accurate manner consistent with issuer statements, it is more important than ever for brokers to have ready access to complete and accurate corporate action tax information.
"Our team is focused on helping them obtain ready access to important tax information provided on issuer statements and understand the cost basis implications of both routine and complex corporate actions when the issuer statement falls short," Ryndak said.
Capital Changes is a product within Wolters Kluwer Financial Services’ Securities Tax Solutions business that provides daily coverage of corporate actions events and 100 years of historical archive data to financial services, accounting and law firms.