FATCA: Upcoming Amendments

The Treasury and IRS are poised to amend regulations under Chapters 3 and 4 of the Internal Revenue Code regarding the Foreign Account Tax Compliance Act (“FATCA”).  These changes will ease burdens on Foreign Financial Institutions with respect to:

  • The date for submitting preexisting account certifications and the date and period for submitting periodic certification of compliance.  This amendment will provide that the preexisting account certification must be submitted at the same time as the FFI is required to submit its first periodic certification of compliance.  The time for submitting the first periodic certification of compliance will be changed to on or before July 1st of the calendar year following certification period; and
  • Transitional reporting of nonparticipating Foreign Financial Institutions.  The regulation will be amended to exclude reporting of gross proceeds with respect to the account of a nonparticipating FFI for calendar year 2015.

The amendments will also specify when a withholding agent may rely on W-8 and W-9 forms collected by intermediaries and flow-through entities.  The requirements for this are that (1) the entity is a direct or indirect account holder of the withholding agent; (2) the withholding agent obtains from the entity a written statement confirming that electronic documentation was generated from a system that meet requirements set in Reg. §1.1441-1(e)(4)(iv), Reg. §1.1471-3(c)(6)(iv) or IRS Announcement 98-27; and (3) the withholding agent does not have actual knowledge that the statement is incorrect.

Until these regulations are amended, the IRS issued a notice which may be relied on for guidance. Notice 2016-08