Trade Association Asks IRS to Address Issues Arising under FATCA

The Tax Executives Institute, Inc. ("TEI"), the professional association of in-house tax managers and professionals, provided the IRS with written comments on the Proposed and Temporary Regulations issued by the IRS and Treasury in February that made substantial modifications to the Final FATCA Regulations, as well as comments on the Proposed and Temporary Regulations issued in February that coordinated the FATCA withholding rules with the preexisting income tax and reporting rules. TEI noted that foreign holding companies and treasury centers of an Expanded Affiliated Group ("EAG") can be exempt from treatment as foreign financial institutions ("FFIs") subject to FATCA obligations if they are part of a "nonfinancial group," which requires the group to satisfy a passive income and asset test. TEI asked the IRS to clarify that, in applying such test, assets of foreign pension plans be excluded from the calculation. TEI also asked that EAGs that fail the test for nonfinancial group status in any given year be provided time to become FATCA-compliant. The association also asked for clarification of the due diligence requirements to support the treatment and reporting of certain types of payments to FFIs and to better explain the interaction between the FATCA Regulations and the Intergovernmental Agreements entered into between the United States and more than 60 foreign countries.

See: TEI FATCA Comments.See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.