SIFMA Submits Comments to U.S. Treasury and IRS Requesting FATCA Transitional Relief

SIFMA submitted comments to the U.S. Department of Treasury and the IRS requesting transitional relief from FATCA.

SIFMA stated that it understands the challenges that the Treasury and IRS faced in developing the Temporary and Proposed Regulations published on March 6, 2014 ("2014 Regulations"), which substantially revised the obligations of financial institutions with respect to FATCA, as well as Chapters 3 and 61 in Section 3406 of the Internal Revenue Code (the "Harmonization Rules"). However, SIFMA stated, the consensus of its members is that it will not be possible for the global financial services industry to fully implement the FATCA rules and Harmonization Rules by July 1, 2014.

According to SIFMA, the 2014 Regulations include numerous changes that will affect client onboarding and withholding requirements, and it is "simply not feasible in less than three full months for all of the impacted domestic and foreign financial institutions" to complete all of the changes required for compliance with the rule changes.

SIFMA stated that it still believes a six-month extension of the FATCA effective dates is necessary, but with the "understanding that Treasury already may have weighed these considerations," SIFMA offered a proposal for transitional relief targeted only for accounts held by and payments made to foreign entities. Under the proposed transitional relief, full implementation of FATCA for these accounts would be postponed until January 1, 2015.

See: SIFMA Comment Letter. Related news: Treasury Official Says Penalty Grace Period Unlikely for FATCA (March 5, 2014); Treasury Releases Last Substantial FATCA Rules Package (February 20, 2014); IRS Official Promises New FATCA Guidance "Soon," Denies Rumor of Further Delay to FATCA (January 28, 2014).See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.