Treasury Official Says Penalty Grace Period Unlikely for FATCA

The IRS and the Treasury are not considering providing a grace period for penalties for failure to comply with FATCA, which begins on July 1, according to a Treasury official speaking at a recent conference.Quyen Huynh, an attorney-advisor in the Treasury's Office of International Tax Counsel, also repeated prior statements by the Treasury and IRS officials that the July 1 effective date of FATCA will not be delayed further despite the fact that the IRS has still not finalized several tax forms related to FATCA.

At that same conference, the Treasury's International Tax Counsel Danielle Rolfes stated that the Treasury believes that the "Common Reporting Standard" recently published by the OECD and endorsed by the G-20 countries was 99% consistent with FATCA. However, the United States will continue to rely on the Model 1 Intergovernmental Agreements ("IGAs") as the primary U.S. vehicle for implementing FATCA and avoiding withholding taxes. Rolfes acknowledged that the United States currently does not have legislation in place that would permit the U.S. to comply with reciprocal reporting under FATCA or the OECD's Common Reporting Standard, but added that the Administration was committed to pursuing such legislation.

See generally: Cabinet FATCA Materials (accessible to Cabinet subscribers only).Related news: IRS Official Promises New FATCA Guidance "Soon," Denies Rumor of Further Delay to FATCA (January 28, 2014). For more information, please contact Daniel Mulcahy and Mark Howe.