The IRS has released a draft agreement (Notice 2013-69) for foreign financial institutions (FFIs) entering into an FFI agreement under the Foreign Account Tax Compliance Act (FATCA).
FATCA generally requires a withholding agent to deduct and withhold a tax equal to 30% on any withholdable payment made to an FFI, unless the FFI has an agreement requiring the FFI to satisfy the obligations specified in Section 1471(b). Notice 2013-69 provides a draft agreement to satisfy Section 1471(b). An FFI that has an FFI agreement in effect with the IRS is treated as a participating FFI and is not subject to withholding under Section 1471. The FFI agreement is to be finalized by Dec. 31, 2013.
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