The Foreign Account Tax Compliance Act (FATCA) imposes an additional 30% withholding tax on certain U.S. source payments made to “foreign financial institutions” (“FFIs”) and “non-financial foreign entities” (“NFFEs”) that refuse to disclose information to the IRS about U.S. investors, even if those investors hold only non-U.S. assets. Due diligence requirements for identifying new and pre-existing U.S. accounts will begin during 2013, whereas reporting requirements will not begin until 2014.
FATCA is outlined in the following IRS Notices:
- Notice 2010-60 (Aug 2010) – Withholdable payments to foreign financial institutions – Preliminary guidance for public comment
- Notice 2011-34 (April 2011) – Updating and revising earlier guidance
- Notice 2011-53 (July 2011) – FATCA transition relief granted through phased-in approach.
The IRS also outlined the following timeline for future guidance in Notice 2011-53:
- § Proposed regulations by Dec 31, 2011
- § Final regulations mid-year 2012
- § Final versions of FFI Agreements and reporting forms mid-year 2012