Analysis

Treasury and IRS issued guidance on FATCA

Foreign Account Tax Compliance Act

Below are selected publications from the Internal Revenue Service (IRS) and Treasury department providing guidance regarding Foreign Account Tax Compliance Act (FATCA). Guidance issues are posted as soon as they are made public.

2018 guidance

  • December 14, 2018: The Internal Revenue Service (IRS) and the Department of the Treasury (Treasury) issued proposed regulations reducing the burden under Chapter 4 (FATCA) and Chapter 3 of the Internal Revenue Code (Code). The proposed rules eliminate withholding on payments of gross proceeds and certain insurance premiums, defer withholding on foreign passthru payments, provide additional guidance on certain due diligence requirements of withholding agents, clarify procedures for refunds and credits of amounts withheld, and clarify the definition of investment entities. The full text of the proposed regulations may be found here: Regulations Reducing Burden under FATCA and Chapter 3.
  • December 4, 2018: After November 30, 2018, taxpayers with FATCA filing obligations must download the new IRS public key from IDES to file FATCA reports. Taxpayers intending to purchase a new digital certificate or replacing one should note that IDES only recognizes and accepts digital certificates issued by IRS approved Certificate Authorities. The IRS has also issued a bulletin reminding taxpayers about the FATCA certification deadline. In general, for the certification period ending December 31, 2017, FATCA certifications are due no later than December 15, 2018. For trustees of trustee-documented trusts and sponsoring entities, the certification deadline is March 31, 2019.
  • November 16, 2018: The IRS has recently published a series of new FAQs on its FATCA–FAQs General page and on its FATCA–Registration System FAQs page.
  • October 18, 2018: The IRS issued a Newswire reminding taxpayers that Publication 1281 on Backup Withholding for Missing and Incorrect Name/TIN(s) was updated in September 2018 further to the changes introduced by the Tax Cuts and Jobs Act. One of these changes reflected in the updated Publication 1281 is a reduction of the backup withholding rate from 28 percent to 24 percent, effective January 1, 2018. Revised Publication 1281 also features 34 FAQs that provide useful guidance on the various topics pertinent to backup withholding.
  • October 17, 2018: The IRS released a reminder of the qualified intermediary (QI), withholding foreign partnership (WP) and withholding foreign trust (WT) 2018 application deadline. All applicants that want to have a QI, WP, or WP agreement in effect in 2018 must submit their applications through the Qualified Intermediary/Withholding Foreign Partnership/Withholding Foreign Trust Application & Account Management System by November 16, 2018.
  • September 27, 2018: The IRS draft 2019 Form 1042-S includes new box 7c regarding prior year withholding with respect to a partnership interest and new income code 55 for taxable life insurance benefits. The draft instructions to the 2019 Form 1042-S provide guidance on the use of box 7c and the new income code 55.
  • September 26, 2018: The IRS issued a bulletin stating that the FATCA registration must always be updated with the current name and email address of the responsible officer (RO) and point of contact (POC) immediately upon the occurrence of any change in these details.
  • September 19, 2018: The IRS added a new FAQ 13 to its FATCA General FAQs web page about FATCA certification due dates. This FAQ clarifies that for the certification period ending December 31, 2017, FATCA certifications are generally due no later than December 15, 2018; however, for sponsoring entities and trustees of a trustee-documented trusts, the certifications are due no later than March 31, 2019.
  • September 9, 2018: The IRS released a reminder that taxpayers have until September 28, 2018, to apply to participate in the ‘Offshore Voluntary Disclosure Program’ (OVDP). After September 28, 2018, US taxpayers with undisclosed offshore accounts will no longer be able to disclose them under the OVDP. The IRS has said that the IRS will still hold taxpayers with undisclosed offshore accounts accountable once the program closes and has promised to provide a revised pathway for taxpayers who may have committed criminal acts to voluntarily disclose their past actions and come into compliance with the tax system. The specifics of this ‘revised pathway’ have not been disclosed. The IRS published Revenue Procedure 2018-36 which provides a list of jurisdictions in which the residents are reportable under Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8(a) of the Income Tax Regulations when they receive payments of certain deposit interest on or after January 1, 2019. The revenue procedure also provides an updated list of the jurisdictions with which the IRS will exchange this information.
  • August 31, 2018: The IRS published Revenue Procedure 2018-36 which provides a list of jurisdictions in which the residents are reportable under Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8(a) of the Income Tax Regulations when they receive payments of certain deposit interest on or after January 1, 2019. The revenue procedure also provides an updated list of the jurisdictions with which the IRS will exchange this information.
  • August 21, 2018: The IRS published new FAQ 17 (FAQ) on FATCA–FAQs general page that clarifies the certification requirement under section 10.03 and Appendix I of the QI Agreement, when the QI’s RO establishes that there has been an event of default described in section 11.06 of the QI Agreement or a material failure described in section 10.03(b) of the QI Agreement before the QI’s certification date. The IRS also issued a final reminder about the certification due dates for QIs, withholding foreign partnerships (WPs) and withholding foreign trusts (WTs).
  • August 2, 2018: The IRS published new FAQ (Q4) under subsection Provisions for 2017 QI Agreement of the FATCA FAQs General page and three other FAQs (Q14, Q15, and Q16) under subsection Certifications and Periodic Reviews of the same page.
  • July 31, 2018: The IRS issued an official notice stating that the Foreign Account Tax Compliance Act (FATCA) Registration System has been upgraded to incorporate the COPA and the periodic certifications. The IRS advises all FATCA registered entities to update their FATCA classifications. Even those entities that do not have a certification requirement (e.g., Model I IGA FFIs) should update their FATCA classification to avoid inapplicable certification related notices in the future. Entities should monitor their message board in the FATCA Registration System for certification notifications.
  • July 20, 2018: The IRS added 13 new FAQs to the General FATCA FAQs web-page under the heading “FATCA Certifications.” These questions clarify the various FATCA certifications, who needs to submit them, what information is required for the submission, how the certification submission process works, and the submission deadline. The following is a brief summary of each of these certification FAQs (CQ).
  • July 19, 2018: In the IRS’ July issue of FATCA News and Information, the IRS announced that the FATCA Registration System will be upgraded in the coming weeks. The guidance provides that the following features will be added to the FATCA Registration System: updated FATCA classification choices (see the table below), the certification of pre-existing accounts (COPA), and the periodic certification.
  • July 3, 2018: As stated in an Internal Revenue Service (IRS) transmittal message published on July 3, 2018, the IRS has released a revised IDES User Guide (Publication 5190 (Rev. 06-2018) and updated its related list of approved certificate authorities.
  • June 27, 2018: The Internal Revenue Service (IRS) published new QI FAQ No. 13 (FAQ) clarifying how a qualified intermediary (QI) that is not acting as a qualified derivative dealers (QDD) should apply the good faith standard set forth in Notices 2016-76 and 2017-42 with respect to the QI’s section 871(m) transactions.
  • May 25, 2018: The IRS added question 11 (Q11) and question 12 (Q12) to the Certifications and Periodic Reviews section of its General FATCA FAQs web page. Q11 clarifies the document that a qualified intermediary (QI) may rely on to satisfy their obligation to obtain certification of chapter 4 status from a partnership or trust subject to joint account treatment. Q12 clarifies whether a QI is required to complete Part VI of the certification described in Appendix I of the 2017 QI agreement (Appendix I) if the QI applies for the waiver of the periodic review requirement and the QI has assumed primary withholding responsibility with respect to payments of substitute interest.
  • May 4, 2018: The IRS announced that all QI/WP/WT entities must select the periodic review year that will be used for their certification period before September 1, 2018. This includes entities selecting 2017 as their periodic review year.
  • April 18, 2018: The IRS released updated Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (Requester Instructions). The new release marks the first update to the Requester Instructions since July 2014. Similar to previous versions, the instructions supplement the instructions to the various Forms W-8 and provide notes to assist withholding agents and foreign financial institutions (FFIs) in validating the forms for chapters 3 and 4 purposes. Some key points from the release are summarized below.
  • April 4, 2018: The IRS announced that the QI Portal is open to accept QI periodic certifications and applications for renewal. To accompany the opening of the QI Portal, the IRS has added or updated 10 FAQs with respect to the Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) System Application and Account Management System.
  • March 23, 2018: A new release of the International Compliance Management Model (ICMM) was deployed on Friday, March 23, 2018. This release comes amidst a series of important recent changes and updates to the ICMM including the release of updated ICMM Notification User documents (‘ICMM Notifications User Guide,’ ‘ICMM Notification XML Schema User Guide,’ and ICMM Electronic Field Errors Table) and the addition of new ICMM Frequently Asked Questions.
  • March 16, 2018: The IRS released FATCA certifications in the draft form and announced an extension of the certification submission due date for at least three months.
  • March 15, 2018: The IRS added new question 23 (Q23) to the FATCA FAQ general webpage providing relief for the 2017 calendar year in situations where a Withholding Agent (WA) has failed to withhold and report on certain dividend equivalent payments. Q23 provides that a WA will not be subject to interest, penalties, or additions to tax on a dividend equivalent payment made with respect to a derivative referencing a partnership provided the WA withholds and reports the payment on Form 1042 and Form 1042-S by September 17, 2018.
  • March 14, 2018: The IRS released an Updated - QI/WP/WT Application and Account Management System Certification Opening Announcement, confirming that the QI/WP/WT application and account management system will be available to accept QI/WP/WT certifications beginning in early April. This latest announcement confirms the key details of an earlier IRS release (dated February 22, 2018).
  • March 5, 2018: The IRS released an advanced version of Notice 2018-20 updating the list of jurisdictions that do not issue taxpayer identification numbers (TINs) to their residents (No TIN List), to include Australia and any jurisdictions that subsequently make a request to the U.S. competent authority to be included on the No TIN List, supplementing Notice 2017-46. Notice 2018-20 can be found at https://www.irs.gov/pub/irs-drop/n-18-20.pdf.
  • February 26, 2018: The IRS released Announcement 2018-02 providing new FAQs targeted at Qualified Intermediaries (QIs) and Withholding Foreign Partnerships (WPs) seeking to reduce their compliance burden by utilizing a consolidated compliance program (CCP). The new FAQs can be found in the Certifications and Periodic Reviews subsection (Q4, Q5, Q6, Q7, and Q8) on the FATCA - FAQs General page.
  • February 22, 2018: The IRS released Announcement 2018-01 providing an update with respect to the Qualified Intermediary, Withholding Foreign Partnership and Withholding Foreign Trust certification process. The Announcement indicates that the QI/WP/WT application and account management system will be back on line in April and that QI/WP/WT will have two additional months to complete their certification.
  • January 19, 2018: The IRS added one question to the Qualified Intermediaries (QI), Withholding Foreign Partnerships (WP), and Withholding Foreign Trusts (WT) FAQ webpage about the final certification upon lapse of the QI/WP/WT (Party) status. According to this FAQ, the Party that did not enter into the 2017 QI/WP/WT Agreement (Rev. Proc. 2017-15 or Rev. Proc. 2017-21) does not have a final certification requirement after its QI/WP/WT status lapses.

 

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2017 guidance

  • December 19, 2017: The IRS added three questions to the FATCA FAQs webpage, clarifying whether a qualified intermediary (QI) has reason to know that Form W-8 is unreliable or incorrect if the QI has a current US residence or US mailing address as part of its account information; addressing whether a QI may rely on additional documentation for purposes of treating documentation on the claim of treaty benefits as valid under 2017 QI agreement, when the QI has reason to know that the documentary evidence underlying such claim is unreliable or incorrect; and providing additional guidance about the status of the approved know-your-customer (KYC) attachments to the 2017 QI, foreign withholding partnership (WP) and foreign withholding trust (WT) agreements.
  • December 13, 2017: On December 8, 2017, the IRS added three questions to the FATCA FAQs general webpage, providing additional guidance on the application of a non-financial foreign entity (NFFE) reverse hybrid entity for withholding foreign partnership status (WP) status, waiver of the periodic review of qualified intermediary (QI) activities and application of independence standard for an external reviewer of QI, WP, and withholding foreign trust (WT). On December 13, 2017, the IRS released one more FAQ addressing FATCA FFI registration of direct reporting NFFE.
  • November 29, 2017: The IRS added two questions to the FATCA FAQs general webpage, providing guidance on questions about qualified derivatives dealer (QDD) status application and QDD status effective date. Please download the PDF to see details of the updates.
  • September 25, 2017: The IRS issued Notice 2017-46 addressing financial institutions’ (FIs) obligation to obtain and report taxpayer identification numbers (TINs) and dates of birth (DOB) under chapters 3 and 4 of the Internal Revenue Code. This notice extends many of the deadlines imposed on FIs under Model 1 Intergovernmental Agreements (IGAs) and the recent chapter 3 and 4 final and temporary regulations released January 6, 2017.
  • September 21, 2017: Over the last couple of months, the IRS has made numerous updates to the FATCA FAQs general webpage and IDES Technical webpage, providing additional guidance on registration, reporting, and notifications. Please download the PDF to see details of the numerous updates.
  • September 13, 2017: The DITC released an industry update indicating that the AEOI Portal will reopen after the September 30th exchange of information with the IRS to allow Cayman Financial Institutions (FIs) to complete any outstanding reporting. According to the most recent update, the portal is not expected to reopen until late October or early November at the earliest. The reopening of the Portal will be communicated on the AEOI Portal News and Updates page (hyperlinked above).
  • July 19, 2017: The IRS released a revised version of Form W-8BEN-E, “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)” and its corresponding Instructions. This revision updates the prior version (released on April 16, 2016) to incorporate changes from the final and temporary regulations released by the IRS and Treasury on December 31, 2016.
  • July 19, 2017: The Cayman Islands DITC released a statement on the AEOI News & Updates webpage announcing a final extension of the 2017 reporting deadline for submission of FATCA and CRS reports. The new deadline is 4:00 pm (Cayman Islands local time) on August 31, 2017. Prior to this deadline, all Cayman Islands Reporting Financial Institutions (RFI) must submit reports on all FATCA and CRS reportable account holders as well as CRS filing declarations. The filing declaration certifies that all relevant CRS reportable accounts have been identified in XML or manual reports and is required regardless of whether a RFI has any reportable account holders.
  • July 3, 2017: The Internal Revenue Service issued new FAQs regarding FFI Agreement Renewal under the Registration Update section of its FATCA–FAQs General page. The newly added Questions 8, 9, 10, and 11 clarify that an entity that is not required to renew (i.e., a Financial Institution located in a Model 1 jurisdiction) does not have to take any action with respect to its registration. Specifically, to maintain its FFI status, such an entity is not required to answer “No” in the “Renew FFI Agreement” section that asks whether the entity or its branches are required to renew the agreement.
  • June 30, 2017: The IRS published corrections to final and temporary regulations TD 9808 (82 FR 2046) and TD 9809 (82 FR 2124). The newly issued corrections 4830-01-p and 26 CFR part one (the 9809 Corrections) revise certain portions of TD 9809 adversely affected by prior inaccurate IRS amending instructions. The corrections to TD 9808 revise certain portions of TD 9808 adversely affected by a prior series of inaccurate amendatory instructions. The corrections to TD 9809 are more substantive.
  • June 27, 2017: The IRS recently released revised versions of Form W-8IMY, “Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain US Branches for United States Tax Withholding and Reporting" and its associated instructions. This new version of Form W-8IMY updates the prior version (released on July 6, 2016) to reflect final and temporary IRS regulations published in January 2017 as well as the Qualified Intermediary Agreement published in Rev. Proc. 2017-15.
  • June 26, 2017: The IRS released an early release draft form of revised instructions to Form W-8BEN, “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)." These new instructions contemplate minor updates to Form W-8BEN so that it better conforms with Form W-8BEN-E.
  • June 6, 2017: The IRS announced that the FATCA FFI Registration System has been updated to allow Foreign Financial Institutions (FFIs) to renew their FFI agreements. This renewal is required for FFIs in Model 2 Intergovernmental Agreement (IGA) and non-IGA jurisdictions as well as FFIs in Model 1 IGA jurisdictions that are operating branches outside of Model 1 jurisdictions. These requirements are outlined on a table of guidelines within the “Renew FFI Agreement” portion of the registration. The renewal must occur by July 31, 2017, and those who are required to renew but do not by the deadline “will be treated as having terminated their FFI agreement as of January 1, 2017, and may be removed from the FFI List.”
  • April 28, 2017: The IRS made numerous updates to the FATCA FAQs webpages, providing guidance on registration, reporting, and notifications. On April 11, the IRS added a new FAQ to the IDES Technical FAQs webpage stating that, as of January 2018, all Foreign Financial Institutions (FFIs) will be expected to include US TINs for all FATCA-reportable account holders. On April 25, the IRS added two new FAQs and updated 17 FAQs on the FATCA Registration System FAQs webpage. Between April 11 and April 28, the IRS added two new FAQs and updated seven FAQs on the FATCA Report Notifications webpage.
  • April 6, 2017: On March 31, 2017, the IRS added two new frequently asked questions (FAQs) to the FATCA General FAQs webpage addressing the Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) agreement renewal process.

    On April 6, 2017, the IRS added three additional new FAQs addressing foreign Tax Identification Number (TIN) collection on withholding certificates
  • March 31, 2017: The IRS announced that it is extending the deadline for submitting qualified intermediary (QI), withholding foreign partnership (WP), and withholding foreign trust (WT) agreement renewals to May 31, 2017. The original deadline for agreement renewal was March 31, 2017, for the IRS to grant an effective date of January 1, 2017. The extension also applies to renewals containing a request for qualified derivatives dealer (QDD) status and to new QI applications that contain a request for QDD status. For any other new applicants, the original March 31 deadline is still in effect.
  • March 17, 2017: The IRS posted seven new FAQs on the FATCA General FAQs webpage. These new FAQs relate to the Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) agreements. The first three of these new FAQs provide details on specific sections of the agreements to applicants—how to populate the types of transactions, approximate value of transactions by account holder type, and eligible entity description—assisting with proper completion of the agreements. The other four questions address the QI agreement for Qualified Derivatives Dealers (QDDs), providing guidance on completing the QDD-specific questions of the agreement for applicants and further defining the entities that qualify as “eligible entities.”
  • February 23, 2017: The Internal Revenue Service made additional changes to Form 1042-S and the Instructions for Form 1042-S. To assist withholding agents in the accurate reporting of information with respect to payments to nonresident alien recipients, the IRS has clarified the changes contained in the 2017 Form 1042-S and provided additional guidance surrounding recipient information, joint owners, extensions, amended forms, and substitute Forms 1042-S.
  • February 15, 2017: The IRS added four new FAQs to the FATCA General FAQs webpage. These FAQs address topics relevant to Qualified Intermediaries (QIs), Withholding Foreign Partnerships (WPs), and Withholding Foreign Trusts (WTs).
  • January 23, 2017: In January 2017, the IRS released Notice 2017-09, which clarifies the requirements surrounding the de minimis error safe harbor rule established by section 202 of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). This safe harbor provides that no penalty is imposed and no correction of the error is required where an error on an information return or payee statement relates to an incorrect dollar amount that differs from the correct amount by $100 or less (or $25 if the error relates to the amount of tax withheld). The safe harbor does not apply for a failure to timely file an information return or furnish a payee statement, failure to include all information required, or the inclusion of incorrect information.
  • January 17, 2017: The IRS announced its new Qualified Intermediary (QI), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) Application and Account Management System. This web-based system facilitates secure QI, WP, and WT applications, renewal, and account management. It is intended to be a user-friendly portal, and, to the extent needed, there are instructions on the system navigation available in the QI, WP, and WT Application & Account Management User Guide and FAQs.
  • January 12, 2017: The IRS made an announcement reminding International Data Exchange Service users that the system will be unavailable from January 13 at 12:00 PM EDT to January 15 at 11:59 PM EDT for routine maintenance. IDES will reopen on January 16 at 12:00 AM EDT, at which point the system will only accept FATCA Reports (including new, nil, corrected, void, and amended) created using FATCA XML Schema version 2.0.
  • January 6, 2017: The Department of the Treasury and the IRS published in the Federal Register new final and temporary regulations under chapter 4 of the Internal Revenue Code (IRC) (also known as the Foreign Account Tax Compliance Act (FATCA) regulations). These regulations, effective on the date of publication, contain a substantial number of changes, some of which were described in previously-published Notices 2014-33, 2015-66, and 2016-08.

2016 guidance

  • December 30, 2016: The US Treasury Department and Internal Revenue Service issued proposed regulations (REG-103477-14) setting forth verification and certification requirements for certain entities under Chapter 4. The Proposed Regulations became effective on January 6, 2017 when they were published in the Federal Register.
  • December 30, 2016: The IRS issued final and temporary regulations (Final Coordination Regulations) under chapters 3 and 61 and sections 871, 3406, and 6042 of the Internal Revenue Code of 1986 (Code) regarding withholding of tax on certain US source income paid to foreign persons, information reporting and backup withholding with respect to payments made to certain US persons, and portfolio interest paid to nonresident alien individuals and foreign corporations. The Final Coordination Regulations finalize certain proposed regulations, withdraw corresponding temporary regulations and contain new temporary regulations which provide additional rules under chapter 3.
  • December 30, 2016: The US Treasury Department and Internal Revenue Service issued Revenue Procedure 2017-16, which sets forth an updated FFI Agreement superseding the previous agreement contained in Rev. Proc. 2014-38 that expired on December 31, 2016 (2014 Agreement). Accordingly, the new FFI Agreement will apply to all participating and Model 2FFIs with an FFI Agreement effective on or after January 1, 2017.
  • December 30, 2016: The IRS released a new version of the Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). There are minor changes to the new version of the form, and revised instructions were not released. The revision date listed on the form is January 2017. As such, unless otherwise designated by the IRS, the form will be mandatory for industry use as of January 1, 2018 pursuant to the recently updated rule that prior versions of a form may be accepted until the later of 6 full months after the revision date of the updated form or the end of the calendar year during which the revised version is issued.
  • December 30, 2016: The IRS released a new version of the Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). There are minor changes to the new version of the form, and revised instructions were not released. The revision date listed on the form is January 2017. As such, unless extended by the IRS, the form will be mandatory for industry use as of August 1, 2017 pursuant to the general rule that prior versions of a form may be accepted for 6 months following the release of a new form.
  • December 30, 2016: The US Treasury Department and Internal Revenue Service issued two revenue procedures as well as four sets of regulations scheduled to be published in the Federal Register on January 6, 2017.
  • December 15, 2016: The IRS made multiple follow-up announcements regarding the submission of FATCA reports through IDES using the updated schemas. The new FATCA XML Schema must be used for all FATCA reports beginning on January 16, 2017. As such, IDES will only accept FATCA reports using XML Schema version 1.1 until January 13, 2017 at 12:00 PM EDT. During the interim period (January 13, 2017 at 12:00 PM EDT to January 15, 2017 at 11:59 PM), the system will be unavailable due to maintenance.
  • December 5, 2016: The IRS issued a Guidewire notification announcing the release of Revenue Procedure 2016-56, which will be published in I.R.B. 2016-51 on December 19. Rev. Proc. 2016-56 supplements the listing of countries in Sections 3 and 4 of Rev. Proc. 2014-64 (previously supplemented by Rev. Proc. 2015-50 and Rev. Proc. 2016-18).
  • December 2, 2016: The IRS issued Notice 2016-76 (Notice), providing transitional guidance on the current Final and Temporary section 871(m) regulations and the IRS’s plans for administration of those regulations in 2017 and 2018. In addition, the Notice announces technical changes that the IRS has stated it intends to implement when finalizing Treas. Regs. § 1.871-15T(q) concerning the gross basis tax treatment of dividends and dividend equivalent payments made to Qualified Derivatives Dealers (QDD).
  • December 1, 2016: The IRS updated the IRS FATCA Notification XML Schema v2.3, which is the schema outlining the data elements and data types for FATCA error notifications. Version 2.3 includes error notification codes at the file and record level for FATCA XML Schema v2.0 and for Nil Reports. As with the FATCA XML Schema v2.0, the notification schema will be used starting January 2017.
  • October 28, 2016: The IRS posted IR-2016-143 to remind employers of the new filing deadlines for certain Forms 1099-MISC, as required by Public Law 114-113, Division Q, Section 201 in order to facilitate verification of tax returns by the IRS.
  • October 21, 2016: The IRS issued a statement urging US taxpayers with undisclosed offshore accounts to use the Offshore Voluntary Disclosure Program (OVDP) and Streamlined Filing Compliance Procedures (Streamlined Procedures) to come into full compliance with their federal tax obligations.
  • October 21, 2016: The IRS released an announcement extending the acceptance period for the February 2014 version of Form W-8BEN-E until January 1, 2017.
  • October 21, 2016: The IRS released Publication 1187, “Specifications for Electronic Filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding,” for Tax Year 2016.
  • September 30, 2016: The IRS released a new version of Form W-8EXP, “Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting.” This version does not contain any substantive updates, only formatting adjustments. However, the new form will still be mandatory for industry use as of April 1, 2017
  • September 27, 2016: The IRS released new versions of Form W-8IMY, “Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting" and associated Instructions for Form W-8IMY. Most notably, Part III—Qualified Intermediary—underwent a number of changes related to the release of the Proposed QI Agreement in Notice 2016-42. Additionally, there are several adjustments modeled after the recent changes to Form W-8BEN-E.
  • August 10, 2016: The IRS updated the FATCA IDES Technical FAQs webpage, adding four new FAQs and updating four others. Several of these FAQs address the updated FATCA XML Schema v2.0, a draft of which was released in June. The FAQs clarify that schema v2.0 will not be deployed into production until January 2017, with open testing taking place in Fall 2016.
  • August 5, 2016: The Cayman Islands Tax Information Authority (TIA) announced an extension of the soft enforcement reporting deadlines for FATCA and UK CDOT reporting on the AEOI News & Updates webpage.
  • August 4, 2016: The IRS published Announcement 2016-27 informing financial institutions that on January 1, 2017 Treasury will update the Intergovernmental Agreement (IGA) List to remove certain jurisdictions that have failed to bring an IGA into force.
  • July 6, 2016: The IRS issued an early release draft of Form W-8IMY, “Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting." As a draft version, this form should not be used or relied upon, as the form may undergo additional changes prior to its official release. The draft form updates the current version of the form (released on April 30, 2014) based on recent changes to Form W-8BEN-E as well as the release of the Proposed QI Agreement in Notice 2016-42 (previously discussed).
  • July 1, 2016: The IRS issued a publication reminding IDES users of the upcoming encryption mode conversion, effective July 11, 2016. The Cipher Block Chaining (CBC) mode is the new cipher mode that must be used for data packaging prior to IDES transmission. The last day to submit FATCA files using the current Electronic Code Book (ECB) mode is July 7 at 11:59 pm EDT, after which time IDES will be under maintenance until reopening on July 11 at 12:00 am EDT.
  • July 1, 2016: The IRS added a new FAQ to the FATCA General FAQs webpage addressing the question of what to do if the IRS has not responded to a FATCA filer’s request for an additional 90-day extension to file Form 8966.
  • July 1, 2016: The IRS released Notice 2016-42, providing the Proposed Qualified Intermediary (QI) Agreement that certain foreign persons may enter into with the IRS to simplify their withholding agent and payor obligations under chapters 3, 4, 61, and section 3406.
  • May 27, 2016: IRS updates the International Data Exchange Service (IDES) technical FAQs and announces upcoming IDES testing dates.
  • May 27, 2016: Cayman Islands Department of International Tax Cooperation (DITC) reopens the Automatic Exchange of Information (AEOI) Portal and publishes AEOI Portal User Guide Version 2.0.
  • May 3, 2016: The IRS added a new FAQ to the FATCA General FAQs webpage addressing the registration and GIIN requirements for bulk acquisition and merger events. In addition to pointing to the general guidance provided in the Registration User Guide, the FAQ provides specific guidance in several scenarios, which represent common bulk acquisition and merger events.
  • April 27, 2016: Panama and the United States signed a Model 1 Intergovernmental Agreement (IGA) for the implementation of FATCA. With the signature of this agreement the tax authorities of both countries will exchange the information covered by FATCA on a reciprocal basis.
  • April 25, 2016: The UK HMRC issued a finalized International Exchange of Information Manual, including several updates and additions since the draft guidance released on September 14, 2015. The manual includes guidance for UK Financial Institutions with regard to FATCA, the Crown Dependencies and Overseas Territories (CDOT), the OECD Common Reporting Standard (CRS), and the EU Directive on Administration Cooperation (DAC).
  • April 25, 2016: Three months after releasing the draft version, the IRS released a new Form W-8BEN-E, “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)” and new Instructions for Form W-8BEN-E. As provided in the Treasury Regulations, a withholding agent may continue to accept the prior version of the Form W-8BEN-E for six months after the revision date shown on the form and may rely on it until the period of validity expires.
  • April 8 2016: The Cayman Islands Department of International Tax Compliance (DITC) indicates leniency for FATCA and UK CDOT notification and reporting due dates
  • April 4, 2016: The Cayman Islands Tax Information Authority (TIA) releases an updated Automatic Exchange of Information (AEOI) Portal User Guide for filers to complete notification and reopens AEOI Portal.
  • March 25, 2016: In accordance with Treas. Reg. 1.1471-4T(a)(3) and the 2015 Instructions for Form 8966, all FFIs that are Participating FFIs must, among other things, report annually using Form 8966. This reporting obligation is imposed on all Participating FFIs within both Model 2 Intergovernmental Agreement (IGA) jurisdictions and jurisdictions in which no IGA has been signed (non-IGA jurisdictions). The deadline for Form 8966 FATCA reporting is March 31, 2016.
  • March 25, 2016: Reporting deadlines and other key compliance milestones in the Cayman Islands are approaching. Given the specific notification to the Cayman Tax Authority requirement and the complexity of the key milestones for the three sets of information reporting rules that are applicable in this jurisdiction (i.e. FATCA, UK-CDOT, and CRS), a summary of the key dates should be considered by all the financial institutions that have presence in the Cayman Islands.
  • March 10, 2016: The Luxembourg Tax Authorities recently issued a number of notices to Financial Institutions related to their obligations for 2014 FATCA reporting. Many of the letters issued have a 16th March deadline by which to respond. Given that there is a lead time in registering with the Luxembourg filing gateway, we would recommend that financial institutions address this as soon as possible.
  • February 11, 2016: Inland Revenue Authority of Singapore (IRAS) published a reminder for Reporting Financial Institutions (RFI) that applied the Alternative Procedures for new accounts opened prior to the IGA’s entry into force and modifies FATCA reporting registration process.
  • January 19, 2016: The Swiss State Secretary on International Finances (SFI) released a communication extending the deadline for reporting on non-consenting US accounts in Switzerland for the year 2015.
  • January 19, 2016: The IRS released Notice 2016-08 providing relief with respect to some upcoming deadlines as well as guidance on the ability to accept electronically collected documentation from intermediaries.
  • January 15, 2016: The IRS released a draft Form W-8BEN-E, “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities),” and accompanying Instructions. Although the updates are by no means an overhaul, there are several material updates to highlight compared to the June 2014 version of the form.
  • January 15, 2016: The Treasury Department updated the online FATCA document library, relocating the Intergovernmental Agreements (“IGAs”) from the Additional FATCA Documents page, referred to as the FATCA Archive, to the main FATCA Resource Center page. The IGAs are now reorganized into an alphabetized table with hyperlinks to the agreements.

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2015 guidance

  • December 24, 2015: The IRS released 2015 versions of Form 8966 and Instructions for Form 8966. The new version of the form contains several new lines and checkboxes, as highlighted by the 2015 Instructions.
  • November 16, 2015: The IRS made several updates and improvements to the FATCA Online Registration System, the web-based system on which financial institutions and other entities can register for FATCA purposes.
  • October 13, 2015: The OECD launched the AEOI Portal, a webpage intended to provide a comprehensive overview of the OECD’s progress in implementing the Common Reporting Standard (CRS). The portal content includes a historical timeline and background on information exchange, guidance and materials, details on the international framework for CRS exchange relationships, information on and assistance with implementation, and an explanation on the commitment and monitoring process.
  • October 2, 2015: The IRS released announcement IR-2015-111 affirming that it successfully met the September 30 deadline for reciprocal exchange of financial account information with certain foreign tax administrations. This exchange occurred between the US and foreign tax administrations that signed reciprocal Model 1 Intergovernmental Agreements (IGAs) and met the IRS’s standards for protection of taxpayer privacy. IRS Commissioner John Koskinen stated, “Meeting the Sept. 30 deadline is a major milestone in IRS efforts to combat offshore tax evasion through FATCA and the intergovernmental agreements.”
  • September 29, 2015: The Department for International Tax Cooperation (DITC) sends update on Cayman Automatic Exchange of Information (AEOI) Portal issues.
  • September 29, 2015: The IRS issued Rev. Proc. 2015-50, which supplements the list of the countries contained in Rev. Proc. 2014-64, under which the Treasury and IRS have determined that it is appropriate to have an automatic exchange relationship with respect to the information collected under Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8 of the Regulations.
  • September 29, 2015: The IRS released the Draft Form 8809-I and the Draft Instructions for Form 8809-I to facilitate the application for extension of time to file Form 8966 FATCA Report.
  • September 24, 2015: IRS announces US Competent Authority Arrangements with Australia and the United Kingdom.
  • September 18, 2015: The IRS, in conjunction with the United States Department of the Treasury, published Notice 2015-66 announcing its intent to amend the chapter 4 regulations to extend the timeline for application of certain FATCA transitional rules and to provide guidance to jurisdictions for the exchange of information for tax year 2014.
  • September 18, 2015: IRS publishes Notice 2015-66 announcing extension of certain transitional rules under chapter 4.
  • September 14, 2015: Her Majesty’s Revenue and Customs (HMRC) releases draft Automatic Exchange of Financial Account Information Guidance Notes (draft Guidance).
  • August 27, 2015: IRS announced upcoming FATCA Online Registration System updates and releases new International Compliance Management Model (ICMM).
  • August 19, 2015: IRS posts new and updated FAQs to IDES Technical FAQs and FATCA General FAQs.
  • August 13, 2015: IRS releases updated FATCA International Data Exchange Service (IDES) and FATCA Metadata XML Schema v1.1 User Guides.
  • August 12, 2015: IRS posts information on sponsored entity Global Intermediary Identification Number (GIIN) registrations and adds new FAQ to FATCA General FAQs addressing electronic receipt of Forms W-8.
  • August 10, 2015: IRS updates FATCA IDES web pages, including IDES Technical FAQs and XML Schema Best Practices.
  • August 7, 2015: The Organization for Economic Cooperation and Development (OECD) publishes three new reports to assist with global CRS implementation.
  • August 3, 2015: The IRS announced that it added two new FAQs to the FATCA General FAQs webpage under the “Registration Update” section. These FAQs both address the Office of Foreign Assets Control’s Specially Designated Nationals (SDN) list.
  • August 3, 2015: The Organization for Economic Cooperation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) publishes 12 new peer review reports and releases compliance ratings.
  • July 28, 2015: IRS posts new FATCA IDES Technical FAQs and warns of FATCA XML Schema Best Practices error.
  • July 14, 2015: The IRS announced that it posted several new and numerous updated International Data Exchange Service (IDES) FAQs to the FATCA IDES Technical FAQs website.
  • July 10, 2015: Inland Revenue Authority of Singapore (IRAS) announces commencement of FATCA filing for the 2014 Reporting Year.
  • June 29, 2015: Recent Legislation Increases Information Reporting Penalties. The Trade Preferences Extension Act of 2015, Public Law No: 114-27 (Legislation), which was signed into law on June 29, 2015, amends penalties applicable under IRC section 6721, Failure to file correct information returns, and IRC section 6722, Failure to furnish correct payee statements. The amendments apply to returns and statements required to be filed after December 31, 2015. These increases may impact taxpayers across all industries, not just within financial services.
  • June 25, 2015: Reminder: Form 8966 deadline for Foreign Financial Institutions (FFIs) in jurisdictions without signed or agreed-in-substance Intergovernmental Agreements (IGAs).
  • June 9, 2015: IRS posts new FAQs regarding Form 8966 extension of time to file and electronic filing waiver.
  • June 9, 2015: IRS notifies reporters of error in FATCA XML Schema Best Practices webpage and updates IDES FAQs.
  • June 1, 2015: Update on release of Bahamas guidance notes and FATCA reporting deadline and deadline extension for British Virgin Islands (BVI) Alternative Reporting Regime (ARR) election for Resident Non-Domiciled (RND) Individuals.
  • May 20, 1015: The IRS announced the next IDES testing session, opening June 1, 2015, at 12:00 p.m. EDT and closing June 8, 2015, at 12:00 p.m. EDT. When participating in the session, the IRS noted that only test data should be submitted, and files containing production data or personally identifiable information will not be processed.
  • May 20, 2015: Cayman Islands Department for International Tax Cooperation further extends Automatic Exchange of Information (AEOI) portal notification and reporting enforcement deadlines.
  • May 11, 2015: Cayman Islands Department for International Tax Cooperation provides third update on Automatic Exchange of Information (AEOI) portal notification and reporting.
  • May 8, 2015: International Data Exchange Services (IDES) enrollment process for US Withholding Agents (USWAs), Territory Financial Institutions (TFIs), commercial software vendors, and third party preparers is now available.
  • April 30, 2015: Cayman Islands Department for International Tax Cooperation provides second update on Automatic Exchange of Information (AEOI) portal notification.
  • April 28, 2015: 04-28-15 Notice 2015-10: IRS intends to amend regulations for refund and credit claims for Chapters 3 and 4 overwithholding.
  • April 27, 2015: Cayman Islands Department for International Tax Cooperation provides update on Automatic Exchange of Information (AEOI) portal notification.
  • April 15, 2015: The British Virgin Islands’ International Tax Authority announces the opening of its Financial Account Reporting System to facilitate FATCA reporting.
  • March 24, 2015: The British Virgin Islands releases updated FATCA Guidance Notes.
  • March 24, 2015: IRS clarifies nil reporting requirements and reporting deadline for Form 8966 in two new FATCA FAQs.
  • March 20, 2015: Cayman Islands’ Tax Information Authority (TIA) announces the opening of the Automatic Exchange of Information (AEOI) portal to facilitate FATCA reporting.
  • March 5, 2015: IRS posts updated IDES User Guide and new IDES Sample Enveloping Signature File.
  • March 3, 2015: IRS issues ICMM Notifications User Guide and ICMM Notification XML Schema v1.4 User Guide.
  • March 2, 2015: IRS announces new FATCA IDES test session opening on March 10, at 2:00 a.m. EDT and closing on March 12, at 5:00 p.m. EDT.
  • February 20, 2015: IRS posts a new FAQ to the FATCA webpage clarifying the entities required to submit a Nil report and the procedures for submitting the report.
  • February 2, 2015: IRS posts new FAQ to the FATCA webpage clarifying due diligence procedures
  • January 20, 2015: IRS posted the following Form and Instructions: Instructions 8938; Form 1099-R; Instructions for 1099-R and 5948; and General Instructions for Certain Information Returns.
  • January 14, 2015: IRS issues International Data Exchange Services web application alerts.
  • January 12, 2015: IRS Announces the opening of IDES enrollment, updates IDES FAQs and User Guide, and issues Metadata XML Schema v1.0 User Guide.
  • January 5, 2015: IRS issues updated Forms 1042-S and 8938; revises Publication 515–Withholding of Tax on Nonresident Aliens and Foreign Entities.

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