Final FATCA Regulations Issued by Treasury
The U.S. Department of Treasury and the Internal Revenue Service published comprehensive final regulations implementing the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (“FATCA”). The final regulations build on intergovernmental agreements (“IGAs”) that the Treasury has negotiated with several countries and coordinate definitions, exemptions and due diligence obligations with those set forth in such IGAs. The final regulations also expand and clarify the treatment of certain categories of low-risk institutions, such as governmental entities and retirement funds, and attempt to reduce the potential for duplicative reporting and provide streamlined reporting for groups of financial institutions, including commonly managed investment funds. As previously indicated, the final regulations are exempt from FATCA withholding all obligations outstanding on January 1, 2014 and any agreement requiring a secured party to make payments with respect to collateral securing one or more grandfathered obligations (even if the collateral is not itself a grandfathered obligation). A withholding agent, other than the issuer of the obligation or the issuer’s agent, may (absent actual knowledge) rely on a written statement from the issuer of the obligation to determine whether the obligation is grandfathered.
Registration under FATCA will be done online through a secure FATCA Registration Portal designed to accomplish an entirely paperless registration process. Registered Foreign Financial Institutions (“FFIs”) will be issued a Global Intermediary Identification Number (“GIIN”) which the FFI will use to establish its compliance with FATCA with withholding agents. The IRS anticipates that GIINs may also be used with respect to reporting by FFIs to local governments under Model 1 IGAs. The IRS will electronically publish a list of participating FFIs and registered deemed-compliant FFIs on December 2, 2013 and update the list monthly. An FFI must register by October 25, 2013 to ensure its inclusion on the December 2013 list.
The Final Regulations become effective on the date such regulations are published in the Federal Register (expected to be January 28).
View Final Regulations (Cabinet link).See also: News Release by Treasury.