Treasury Officials Promise More Guidance for Self-Certifications for IGA Countries

At a recent conference sponsored by SIFMA, U.S. Treasury Department ("Treasury") and IRS officials announced that additional guidance will be posted on the IRS website regarding requirements for self-certifications for financial institutions subject to Intergovernmental Agreements ("IGAs") under FATCA.

The due diligence rules set forth under Annex I to the IGAs generally require account holders to "self-certify" their status under FATCA. Several deemed-compliant and exempt kinds of status under FATCA are not reflected on IRS Form W-8BEN-E; therefore, additional or alternative self-certification is required. The anticipated guidance will set "minimum standards" for such self-certification, which, if satisfied, will relieve the IGA partner country from any obligation to pre-clear the form with the IRS and the Treasury. The minimum standard is expected to be based on the commentary to the OECD's common reporting standard for the automatic exchange of information.

At the same conference, Bret York, attorney-advisor at the Treasury Office of International Tax Policy, confirmed that the United States had approved Canada's definition of Investment Entity in its implementation legislation under its IGA with the United States. Canada's definition limits Investment Entities to listed financial institutions under its Income Tax Act because Canada's anti-laundering rules require the identification of all trustees and known beneficiaries and settlors of a trust. York suggested that such a definition might not be acceptable in countries that lack such disclosure policy.

Former Acting IRS Commissioner Stephen Miller told attendees that, in his personal view, it was not clear that the benefits of FATCA outweighed the costs. Mr. Miller said that he could not be sure the revenue raised would outweigh the cost burden that attempting to comply with FATCA would put on financial industry participants. He also stated that the United States had to be careful when providing reciprocal information to certain FATCA IGA partner countries because such information might endanger individuals in such countries.

See generally: FATCA Specialty Page (available to Cabinet subscribers only). For more information, please contact Dan Mulcahy or Mark Howe.