IRS Specifies International FATCA Mandates to be Postponed
As countries everywhere prepare to meet the incoming demands of FATCA, the IRS must also prepare for a global information sharing network. For the IRS, a good portion of preparation is the responsibility of structuring and composing tax guidelines. This is a summary of the most recent IRS update (Notice 2013-43) on the FATCA initiatives coming and the timeline in which they’re expected to begin.
New Procedures for Opening Foreign Financial Accounts
Foreign banks extending accounts to non-citizens will be required to use a different set of procedures than with accounts being opened by citizens with no tax obligations to other countries. Banks in countries in which IGAs (Intergovernmental Agreements) are being formed will be required to implement these new account procedures on July 1, 2014. FFIs (Foreign Financial Institutions) and NFFEs (Non Financial Foreign Entities) that have signed agreements directly with the United States will either be required to implement new procedures on either July 1, 2014, or the date in which the agreement is signed – whichever date is later.
A website specifically designed for international compliance with FATCA regulations. This website’s projected launch date is August 19, 2013. In order to allow FFIs and NFFIs to become familiar with registering on the FATCA site, a type of pre-registration process will begin when the site is active; and financial institutions will be able to begin the registration process and edit specific details if necessary until December 31, 2013. On January 1, 2014, all registrations will be considered final and FFIs and NFFIs will be required to login and verify.
Issuance of GIINs (Global Intermediary Identification Numbers)
Each FFI and NFFI that registers on the FATCA site will be issued a GIIN for identification purposes. The IRS will not begin issuing GIINs until after January 1st. A complete list of participating FFIs and NFFIs will be posted by June 2, 2014, so all registrations must be complete by April 25, 2014, in order to be active on the list.
Becoming Compliant with Current FATCA Obligations
FFIs and NFFIs who have outstanding FATCA obligations will be able to register on the FATCA site and receive a GIIN; however, these institutions will be required to become compliant by December 31, 2014, or 6 months beyond the date of having finalized an agreement with the US and been issued a GIIN – whichever date is later.
The 30% withholding of payments to non participating FFIs and NFFIs will not be scheduled to begin until July 1, 2014.
Institutions in IGA Territories
While FFIs and NFFIs will be able to register on the site whether or not governmental preparations have been made to meet IGA terms (only as ‘registered deemed compliant, though), but countries that have signed IGAs with the United States but have not yet enforced the terms of the IGA locally will be identified on the complete list of countries with active IGAs.
Meeting these deadlines on upcoming FATCA regulations may not be easy for many foreign countries (or the United States, for that matter). For now, though, they are ‘the new law.’