Despite some concessions in the latest updated proposals, FATCA compliance remains a significant challenge.
Download a copy of our Summary of Key Changes in the Draft Regulations
The Foreign Account Taxation Act (FATCA) was enacted in 2010 by Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. FATCA requires Foreign Financial Institutions (FFIs) to provide the IRS with information about financial accounts held by U.S taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
In order to avoid withholding under FATCA, a participating FFI will have to enter into an agreement with the IRS to:
Following enactment of the HIRE Act, a series of Notices were issued providing preliminary guidance as to how the
HIRE provisions would be implemented. These Notices, however, generated as many questions as they answered
and also gave rise to a great deal of feedback and concern from entities likely to be within scope.
On 8 February 2012, the Treasury Department and IRS released their proposed regulations providing guidance with respect to information reporting and withholding. Additionally, the US Treasury also issued a statement jointly with the UK, France, Italy, Spain and Germany expressing a mutual intention to pursue a government-to government framework for implementing FATCA.
For more information on FATCA please get in touch, or download a copy of our Summary of Key Changes in the Draft Regulations
The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, is an important development in U.S. efforts to combat tax evasion by U.S. persons holding investments in offshore accounts.