NYSBA Tax Section Recommendations as to FATCA

The Tax Section of the New York State Bar Association sent a 63-page report to the Treasury Department and IRS suggesting changes and clarifications that should be made to the final Foreign Financial Institution ("FFI") Agreement and to Intergovernmental Agreements ("IGAs") entered into between the United States and foreign countries. One of the thirty recommendations made by the Tax Section is that an FFI Agreement may only be terminated if there are multiple "material failures" by the FFI to meet its obligations under the Agreement, and that a Participating FFI should only be considered in default under such Agreement if it fails to use "reasonable efforts" to reduce the number of account holders that are recalcitrant account holders or Nonparticipating FFIs. Other recommendations made with respect to IGAs are that the term "branch" be defined by the IRS, that holding companies and financial centers generally be treated as Non-Financial Foreign Entities ("NFFEs"), and that guidance be issued which clarifies that FFIs in Model 1 IGA countries do not have to withhold on payments to NFFEs or to recalcitrant account holders.

See: NYSBA Tax Section Report.See generally: Cabinet FATCA Materials.For more information, please contact Daniel Mulcahy or Mark Howe.