IRS Outside Advisory Group Calls for Additional Postponement of FATCA

The Information Reporting Program Advisory Committee ("IRPAC"), an outside advisory committee appointed by the IRS which is composed of leading individuals representing various segments of the information reporting community to advise the IRS with respect to information reporting issues, has recommended that FATCA withholding be postponed for another six months until January 1, 2015. The original start date for FATCA, January 1, 2013, was postponed to July 1, 2013, by the IRS in Notice 2013-43.

IRPAC's call to postpone FATCA is based on their concern that final guidance on FATCA has not yet been published, and that withholding agents will not have time to program their systems to deal with this guidance by July 1. IRPAC noted that the IRS intends to issue additional regulations providing more guidance under FATCA. Further, IRS must issue final versions of reporting and certification forms, such as Forms W-8, 1042 and 1042-S. According to IRPAC, while financial institutions within and without the United States have devoted substantial resources to the design of systems to comply with FATCA, substantial work remains which can only be done after final and comprehensive guidance is released. IRPAC also noted that the slow pace of the negotiation of Intergovernmental Agreements ("IGAs") between the United States and foreign governments further complicates the implementation of FATCA, especially its implementation by financial institutions that have branches or affiliates in several potential IGA countries.

In addition to a further six-month delay in FATCA withholding, IRPAC also requested that corresponding delays be made to other effective dates under FATCA.

The IRS has not yet commented on the IRPAC Report.

A copy of the IRPAC Report is linked below.

See: IRPAC Report.Related news: Related news: Treasury Inspector General Report Recommends Improvements to FATCA Registration System (December 6, 2013); FATCA IGAs Signed with Cayman Islands and Costa Rica (December 2, 2013); ISDA Sends Additional Comments to Treasury and IRS Regarding FATCA's Impact on SPVs and Posted Collateral (November 20, 2013); Trade Associations Request Additional Extension of FATCA Phased Timeline (with Lofchie Music Selection) (November 19, 2013); Treasury Revises Model IGAs under FATCA Again (November 11, 2013).Click here to view Cadwalader's Guide to FATCA authored by Daniel Mulcahy, Mark Howe and Steve Lofchie.