FATCA: A New World of Terminology and Compliance

FATCA introduced a new reporting and tax withholding regime, effective July 1, 2014, that is directed at both foreign financial institutions and nonfinancial foreign entities to prevent tax evasion by U.S. citizens and residents through use of offshore accounts.

IRS Opens Secure Portal for FATCA Reporting

Financial institutions and tax administrators that have an obligation under U.S. tax law to report account information to the IRS now have a secure online site where they can transmit that information, the IRS announced.

Certain FATCA Deadlines Are Postponed

The IRS announced its intention to modify the effective dates of the FATCA standards of knowledge that apply to a withholding certificate or documentary evidence to document a payee and other rules.

Two-Year FATCA Enforcement Transition Period Introduced

Foreign financial institutions that make a good-faith effort to comply with the requirements of the Foreign Account Tax Compliance Act will benefit from lighter enforcement during 2014 and 2015, the IRS announced. The IRS is treating those years as a "transition period" for the implementation of FATCA by withholding agents, foreign financial institutions, and other entities with FATCA reporting and withholding responsibilities.

Eight Countries Sign FATCA Agreements

The United States has signed eight more bilateral agreements to implement the reporting and withholding provisions of the Foreign Account Tax Compliance Act.

FATCA Guidance Issued for Foreign Financial Institutions

The IRS has issued more guidance in preparation for the implementation of the Foreign Account Tax Compliance Act reporting and withholding requirements. The guidance applies to foreign financial institutions entering into an FFI agreement with the IRS under Sec. 1471 or to FFIs or branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement.

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