Rev. Proc. 2014-10 containing final FFI agreement
On 26 December the IRS released an advance copy of Rev. Proc. 2014-10 providing text of an agreement for foreign financial institutions (FFIs) entering into an FFI agreement with the IRS, so that these FFIs can be treated as “participating FFIs.”
Rev. Proc. 2014-10 (PDF, 381 KB) provides:
- Text of the “final” FFI agreement
- Guidance to FFIs and branches of FFIs treated as “reporting financial institutions” under a Model 2 intergovernmental agreement (IGA) on complying with the terms of the FFI agreement
The final FFI agreement contained in Rev. Proc. 2014-10 finalizes a draft FFI agreement (see our e-Alert 2013-26) and describes changes made to the draft FFI agreement.
Please note that the FFI agreement is not applicable to FFIs subject to Model 1 IGA.
Among the changes made to the draft FFI agreement and finalized in the FFI agreement are measures that:
- Modify several cross-references in the FFI agreement in anticipation of the future publication of temporary regulations (expected to be published in early 2014)
- Contain revisions to correct “minor technical errors” in the draft FFI agreement (for example, the final FFI agreement removes an incorrect reference to an escrow procedure due to a change in circumstance of an account holder, and the 30-day period for this change of circumstances is corrected to a 90-day period)
- Are intended to conform the FFI agreement to the temporary chapter 4 regulations (for example, the withholding rate pool and the reporting rate pool are defined and clarified)
- Provide that for calendar years 2015 and 2016, participating FFIs that are required to report foreign reportable amounts paid to non-participating FFIs are to report this information on Form 8966
- Establish a two-year transition period during which a reporting Model 2 FFI may elect to apply the due diligence procedures that are described in the FFI agreement (instead of those in Annex I of an applicable Model 2 IGA) and state that the FFI agreement is revised to reflect this election is made by reporting the Model 2 FFI (and not the reporting Model 2 IGA jurisdiction)
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