IRS Extends Commencement Date of FATCA Withholding, FATCA Registration and Other FATCA Deadlines for 6 Months

The IRS today issued Notice 2013-43 announcing a 6-month extension for commencement of FATCA withholding and for registration by FFIs with the IRS. The Notice also provides relief for FFIs located in countries currently negotiating FATCA Intergovernmental Agreements ("IGAs") with the IRS. FATCA withholding was to have commenced on January 1, 2014, with registration of foreign financial institutions with the IRS commencing on Monday, July 15. The Notice provides the following extensions:

1. FATCA withholding now begins on July 1, 2014. This is for payments of U.S. source interest, dividends and other fixed and determinable U.S. source income by U.S. issuers. The starting date for withholding on gross proceeds and pass-thru payments remains January 1, 2017.
2. Grandfathered obligations (which are exempt from FATCA withholding) will include all obligations outstanding on June 30, 2014, rather than December 31, 2013.
3. New account opening procedures must be implemented by FFIs by July 1, 2014. The term "pre-existing obligations" is modified generally to mean any account maintained, executed, or issued by the withholding agent that is outstanding on June 30, 2014. The deadline for completing due diligence on pre-existing accounts is generally extended 6 months.
4. The deadline for registration by FFIs with the IRS and getting a Global Intermediary Identification Number ("GIIN") is extended to July 1, 2014.
5. The IRS Registration Portal will be opened on August 19, 2013, rather than July 15. Prior to January 1, 2014, any information entered into the system by FFIs will be regarded as tentative. After January 1, 2014, financial institutions will be expected to finalize their registration. No GIINs will be issued until 2014. The first IRS FFI list will be published by June 2, 2014. To ensure being included on the June 2, 2014 list, FFIs would need to finalize their registration by April 25, 2014.
6. The IRS will publish a list of countries that are treated as having IGAs in effect at www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx. Once a jurisdiction signs an IGA, the IGA will be treated as in effect and added to this list even if it has not yet been brought into force under local law. A financial institution resident in a jurisdiction that is treated as having an IGA in effect will be permitted to register on the FATCA website as a registered-deemed compliant FFI. A jurisdiction may be removed from this list if the jurisdiction fails to perform the steps necessary to bring the IGA into force "within a reasonable period of time." Verification of a GIIN is not required by withholding agents for payees that are Model 1 FFIs until January 1, 2015.
7. W-8s and other withholding certificates issued under normal IRS withholding rules (Chapter 3 of the IRC) that would otherwise expire on December 31, 2013, will instead expire on June 30, 2014 (unless there is a change in circumstances that otherwise renders such certificate incorrect or unreliable).
8. All Qualified Intermediary, Withholding Partnership, or Withholding Trust agreements that otherwise expire on December 31, 2013 will be automatically extended until June 30, 2014.
9. The transition rule for foreign-targeted registered obligation rules will be extended to June 30, 2014.

See: IRS Notice 2013-43.See also: Treasury Press Release.See also: FATCA Chapter of the Guide to Hedge Fund Regulation.