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FATCA key dates

Foreign Account Tax Compliance Act

Under newly proposed U.S. Treasury Code Sections 1471 through 1474 and Notice 2013-43, effective for payments after June 30, 2014, generally all foreign financial institutions (FFIs) will be required to enter into disclosure compliance agreements with the U.S. Treasury (unless an exemption or FATCA Intergovernmental Agreement applies), and all non-financial foreign entities (NFFEs) that are not excepted under the regulations must report and/or certify their ownership or be subject to the same 30 percent withholding.

This new reporting and withholding regime will ultimately impact current account opening processes, transaction processing systems and “know your customer” procedures utilized by foreign banks. Chief compliance officers, tax reporting heads and other key players within your organization will need to evaluate the potential impact of these regulations and develop a plan for managing and remediating any potential risk associated with Foreign Account Tax Compliance Act (FATCA) non-compliance.

Relevance and impact

FATCA relevance and impact

The legislative intent of FATCA is to ensure there is no gap in the ability of the U.S. government to determine the ownership of U.S. assets in foreign accounts. As such, this revenue raising provision, which was originally enacted as a part of the Hiring Incentives to Restore Employment (HIRE) Act (Pub. L. No. 111-147), is expected to significantly impact the systems and operations of both U.S. and non-U.S. companies. While the FATCA guidance with respect to documentation and reporting has not been finalized to date, companies will likely need to make modifications to their internal systems, control frameworks, processes and procedures for timely compliance with these regulations on or before their effective date of July 1, 2014.

 

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​FATCA 2014 key dates

2014

May 5, 2014
Last day for FFIs to register on FFI Registration Portal to appear on June 2, 2014 IRS FFI List

June 2, 2014
IRS expected to publish first IRS FFI List

June 30, 2014
Effective date of FFI Agreements if signed by June 30, 2014

July 1, 2014
Requirement to implement new individual account onboarding procedures for U.S. Withholding Agents, Participating FFIs, and Registered Deemed-Compliant FFIs

July 1, 2014
FATCA withholding on Fixed, Determinable, Annual, Periodical (FDAP) income payments to non-participating FFIs, non-compliant NFFEs, and recalcitrant account holders begins

July 1, 2014
Last date for obligations to be outstanding to qualify as grandfathered obligations and exempt from FATCA withholding (still subject to reporting)

December 31, 2014
U.S. Withholding Agents, Participating FFIs, and Registered Deemed-Compliant FFIs must document preexisting entity accounts identified as Prima Facie FFIs. If the FFI signed an agreement after July 1, 2014, the deadline is six months from the effective date of the FFI agreement

 

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FATCA 2015 key dates

2015

January 1, 2015
Requirement to implement new entity account onboarding procedures for U.S. Withholding Agents, Participating FFIs, and Registered Deemed-Compliant FFIs ($250k preexisting entity account de-minimis exception does not apply to accounts opened from July 1, 2014 to December 31, 2014)

March 15, 2015
Form 1042-S reporting on withholdable income payments begins (with respect to the 2014 calendar year)

March 31, 2015
USWAs begin Form 8966 U.S. Owner reporting

March 31, 2015
FFIs begin Form 8966 U.S. Account information and balance reporting (with respect to the 2014 calendar year)

March 31, 2015
FFIs begin Form 8966 recalcitrant account reporting (with respect to the 2014 calendar year)

June 30, 2015
Participating FFIs must document preexisting high value individual accounts by June 30, 2015. If the FFI signed an agreement after July 1, 2014, the deadline is one year from the effective date of the FFI agreement.

 

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​FATCA 2016 key dates

2016

January 1, 2016
Deadline for limited FFIs or limited branches (due to local regulations prohibiting FATCA compliance) to become participating FFIs and avoid other participating FFIs within the expanded affiliated group from losing their participating FFI status

March 15, 2016
FFI begin temporary Form 1042-S aggregate reporting on payments made to non-participating FFIs (with respect to 2015 calendar year)

March 31, 2016
Form 8966 reporting on U.S. Account income by participating FFIs begins in addition to account information and balance (with respect to the 2015 calendar year)

June 30, 2016
U.S. Withholding Agents, Participating FFIs, and Registered Deemed-Compliant FFIs must document preexisting entity accounts not identified as Prima Facie FFIs. If the FFI signed an agreement after July 1, 2014, the deadline is two years from the effective date of the FFI agreement

June 30, 2016
Participating FFIs must document all remaining preexisting non-high value individual accounts by June 30, 2016. If the FFI signed an agreement after July 1, 2014, the deadline is two years from the effective date of the FFI agreement

 

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FATCA 2017 key dates

2017-2018

January 1, 2017
FATCA withholding on gross proceeds payments to non-participating FFIs and recalcitrant payees begins

January 1, 2017 (previously January 1, 2015)
Withholding on foreign pass-thru payments begins not before January 1, 2017

March 15, 2017
Last year for FFI temporary Form 1042-S aggregate reporting on payments made to non-participating FFIs (with respect to 2016 calendar year)

March 15, 2017
Form 8966 reporting on U.S. Account gross proceeds by participating FFIs begins in addition to account information, balance, and income (with respect to the 2016 calendar year)

March 15, 2018
Form 1042-S reporting on gross proceed payments begins (with respect to the 2017 calendar year)

 

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FATCA journey from 2010-2013

2010-2013

March 18, 2010
Hire Act passed including FATCA provisions — New rules became applicable to foreign securities lending transactions where the purpose is tax reduction or elimination

August 27, 2010
IRS issues Notice 2010-60 — Provides initial guidance describing the requirements to become a participating Foreign Financial Institution (participating FFI) including documentation due diligence procedures and reporting requirements (official publication in Internal Revenue Bulletin, September 13, 2010)

April 8, 2011
IRS issues Notice 2011-34 — Provides additional and amended guidance on documentation of pre-existing accounts, passthru payments and reporting requirements (official publication in Internal Revenue Bulletin, May 9, 2011)

July 25, 2011
IRS issues revised Notice 2011-53 (originally released July 14, 2011) — Transitional relief for pre-existing account due diligence and FATCA withholding and reporting

February 8, 2012
IRS issues Proposed FATCA regulations

Summer 2012
Treasury and the IRS anticipate issuing draft versions of the FFI agreement and reporting forms

December 2012
Treasury and the IRS anticipate issuing final regulations, final FFI Agreement and FATCA reporting forms

December 31, 2012
Qualified Intermediary and Other Withholding Agreements expiring on this date will be automatically extended until December 31, 2013

January 1, 2013
Effective date of FATCA legislation

Summer 2013 (Expected)
IRS to publish Revenue Procedure

August 19, 2013
IRS expected to open FFI Registration Portal for registration by this date

 

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Will risk intelligence be your asset or non-compliance your liability?

Take action - Don’t wait until these rules become effective to begin assessing your needs and associated costs for compliance. By performing the proper compliance risk assessment now and evaluating necessary modifications to your existing systems, your organization will be armed with the level of risk intelligence required to address compliance with FATCA’s new withholding and reporting regime.

 

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