The IRS has agreed to delay by six months the implementation of the key provisions of the Foreign Account Compliance Act ("FATCA"). Notice 2013-43, which announced the delay, also includes relief for foreign financial institutions ("FFIs") located in countries that have entered into Model 1 type intergovernmental agreements ("IGAs") with the IRS1. Treasury has concluded such IGAs with a number of countries, but the IGAs have not yet come into force due to hold ups in the Senate Foreign Relations Committee. Under the Notice, any FFI that is located in a country that is listed by the IRS as having signed an IGA will be permitted to register and obtain a global intermediary identification number ("GIIN") as a registered deemed compliant FFI even if the IGA is not yet in force. As a reminder, Canada and the United States announced last November that they are in discussions to enter into an IGA by the end of this year, but that has not yet occurred. The Notice also makes the following changes:

  • The FATCA withholding requirements will come into effect for withholdable payments made on or after July 1, 2014 (instead of January 1, 2014).
  • Grandfathering for preexisting obligations will be extended to exempt obligations entered into prior to July 1, 2014.
  • The FATCA online registration portal is now projected to open on August 17, 2013 (previously the IRS had planned to open it by July 15).
  • Registration applications can only be finalized beginning January 1, 2014, and will not be processed by the IRS before then. Any registrations that are submitted before that date can be freely amended until the end of 2013.
  • The IRS will make available a list of registered FFIs and their GIINs on June 2, 2014, and will update the list thereafter on a monthly basis.
  • In order to ensure inclusion on the initial list (which is necessary to avoid withholding on payments received on July 1, 2014), an FFI's registration must be submitted no later than April 25, 2014.
  • Reporting on U.S. accounts will begin March 31, 2015, with respect to the 2014 calendar year (the IRS is eliminating reporting for the 2013 calendar year).

Footnotes

1 Model 1 agreements provide for information to be collected by the foreign government from its FFIs, with the foreign government then exchanging that information with the United States.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.