Treasury Official Says FATCA Effective Date Will Remain July 1

Quen Huynh, attorney advisor for the Treasury Office of International Tax Counsel, spoke at a global information reporting panel in Washington D.C., stating that the July 1, 2014 effective date for withholding and new account procedures will not be postponed. Ms. Huynh said that there will be "no consideration of an additional delay," although "there is some transitional relief with respect to existing accounts." She also noted that final regulations have provisions that give institutions two years to document preexisting accounts.

When asked about relaxing withholding rules in jurisdictions where intergovernmental agreements ("IGAs") are pending, Ms. Huynh stated that the pace of IGA negotiations has quickened, and she expects 17 more to be signed by the July 1 effective date.

Additionally, practitioners raised concerns about the fact that registering by July 1 requires meeting the IRS concepts of "reasonable," which can be difficult for non-U.S. entities with little IRS interactive experiences. John Sweeney, a branch 8 chief, stated that the regulation concepts will "remain as they are," and explained that the IRS expects a high-level FFI official to oversee the compliance program.

With regard to voluntary disclosure programs, IRS program manager Theodore Setzer stated that if withholding agents find tax oversights as they prepare for FATCA, they should come forward. Setzer noted that it is in the "IRS's interest to keep FFIs in the tax net."

Click here for a summary of panel discussion by Tax Analysis.