FATCA: Update on financial institution registration and other matters
In Announcement 2014-1, the IRS provided an update on its FATCA registration website and confirmed key milestones in the FATCA timeline. Highlights:
- 19 August 2013: FATCA registration website was made accessible to financial institutions (FIs) so that they could begin creating accounts and entering registration information. All information entered since 19 August 2013, has been automatically saved in the registration system and associated with the FI’s FATCA account.
- 21 December and 31 December 2013: registration website will undergo end-of-year processing. FIs will continue to have access to the registration website to create accounts or access existing accounts to modify or add registration information.
- 1 January 2014: formal opening of the IRS FATCA registration website. FIs that registered information into the website before 1 January 2104 will be treated as initiated but unsubmitted. Every registering FI must revisit its account, make edits to its information if necessary, sign its FFI agreement if registering as a participating FFI, and submit its registration information as final. Any FI submitting its registration information on or after 1 January 2014 may subsequently choose to revoke its status by revisiting its account and deleting its registration (if its GIIN has not yet been issued) or cancelling its registration (if its GIIN has already been issued).
Other key updates
- The IRS and Treasury anticipate that the final FFI agreement will be published prior to 1 January 2014.
- Final qualified intermediary (QI), withholding foreign partnership (WP), and withholding foreign trust (WT) agreements will be published in early 2014. Any FI seeking to renew its status as a QI, WP, or WT should do so during the registration process. Any QI, WP, or WT that does so prior to the finalization of the QI, WP, and WT agreements will be treated as having accepted the revised terms of the applicable agreement, effective on 30 June 2014, for QIs, WPs, and WTs that receive a GIIN prior to 1 July 2014. A QI, WP, or WT may terminate its status at any time by delivery of a notice of termination in accordance with the terms of the applicable agreement.
- 25 April 2014: Any FI seeking to be included on the first IRS FFI List should finalize its registration by this date.
- 2 June 2014: The IRS will electronically post the first IRS FFI List
Requirements for GIIN verification
Verifying a GIIN against the IRS FFI List is not required for payments made prior to 1 January 2015, with respect to any payee that is a reporting Model 1 FI. Therefore, while reporting Model 1 FIs will be able to register and obtain GIINs on or after 1 January 2014, they will not need to register or obtain GIINs until on or about 22 December 2014, to ensure inclusion on the IRS FFI list by 1 January 2015.
IRS Remarks at Industry Meeting
- IRS officials spoke at a recent forum and provided additional key updates:
- The effective date of FATCA will not be postponed.
- Withholding and new account procedures will begin on 1 July 2014, and there is no consideration of an additional delay.
- Final forms, drafts of which have already been published, should be ready in January or February 2014.
- A guidance package aimed at coordinating chapters 3 and 61 with chapter 4 will be published in early 2014.
The government officials’ recent stance relating to the possibility of an additional delay is unsettling. Notwithstanding numerous industry comments making clear that an 18-24 month lead time was necessary, Treasury and the IRS appear to have been operating on a 6 month lead for the past year. It is clear from today’s Announcement that such a lead has been reduced further. If the government does push forward with the current effective date, it is unclear how affected entities could be compliant in a timely manner.
For your reference
Notice 2014-1 can be accessed by clicking here (PDF, 22KB)
For further information, please do not hesitate to contact us.
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