Tax & Accounting Blog

FATCA Final Regulations issued, provide rules for new tax documentation and withholding regime

1042-S, International Reporting & Compliance, ONESOURCE, Tax Information Reporting, Trust Tax, W-8 & W-9 Foreign Reporting, Withholding Management January 23, 2013

The Final Regulations for Chapter 4 of the Internal Revenue Code, sections 1471 through 1474 known as the Foreign Account Tax Compliance Act or “FATCA,” have been issued. The official date of publication in the Federal Register is scheduled to be January 28, 2013. The IRS has made the complete text, TD 9610, available at the government website http://www.irs.gov/PUP/businesses/corporations/TD9610.pdf. An important FATCA compliance date is January 1, 2014, a deadline by which payers must have certain systems and procedures in place for FATCA compliance for both “pre-existing” and new accounts.

Enacted by Congress in 2010, FATCA targets noncompliance by U.S. taxpayers using foreign accounts. The final regulations phase in the timelines for due diligence, reporting and withholding of 30% U.S. federal tax, and align these requirements with intergovernmental agreements (IGAs) which the U.S. Treasury Department is establishing with foreign countries for the implemental of FATCA. To date, IGAs have been signed or initialed with the United Kingdom, Denmark, Mexico, Norway, Ireland, Switzerland and Spain, and Treasury has announced that it is discussing FATCA cooperation with nearly 50 other countries. These agreements do not offer an exemption from FATCA for any jurisdiction but instead offer a framework for information sharing pursuant to existing bilateral income tax treaties.