In a joint letter to the Department of Treasury and Internal Revenue Service, four financial industry associations have requested a further postponement of FATCA milestone dates in order to help ensure a smooth transition to the FATCA regime. IRS Notice 2013-43 postponed certain implementation dates for FATCA (the Foreign Account Tax Compliance Act) from January 1 to July 1, 2014. Now, a joint letter from the American Bankers Association, The Clearing House Association, the Institute of International Bankers and the Securities Industry and Financial Markets Association (SIFMA) asks for a further extension to December 31, 2014.
Specifically, and subject to provision of all final guidance and forms by December 31, 2013, the Associations request the following modifications to the Phased FATCA Timeline:
- FATCA withholding to begin with payments made after December 31, 2014, and the definition of a grandfathered obligation (including associated collateral) extended to obligations outstanding as of January 1, 2015
- Documentation set to expire on June 30, 2014, pursuant to Notice 2013-43 to remain valid an additional six months and expire on December 31, 2014
- FATCA reporting for 2014 (Form 8966) should apply only to accounts designated by a participating FFI as held by a U.S. citizen or resident on December 31, 2014, and identifiable by electronic search; and reporting to be delayed one year so that reporting for calendar years 2014 and 2015 would be due by March 31, 2016 (but voluntary reporting accepted earlier as a test of new reporting systems)
- New account opening procedures implementation extended to January 1, 2015 (though new account on-boarding procedures could be implemented before that date under guidance the IRS is asked to issue)
- For preexisting accounts, due diligence for prima facie FFIs should be required by July 1, 2015.
The associations’ request is based on industry information about the considerable amount of time needed to plan, budget, prepare and implement changes for FATCA, and the fact that not all of the necessary final guidance, forms and instructions have yet been issued.