On 2 May, the IRS released an advance copy of Notice 2014-33 announcing that calendar years 2014 and 2015 will be regarded as a transition period for purposes of:
- IRS enforcement and administration with respect to the implementation of FATCA by withholding agents, foreign financial institutions (FFIs), and other entities with chapter 4 responsibilities
- With respect to certain related due diligence and withholding provisions under chapters 3 and 61, and section 3406, that were revised in regulations issued earlier this year
Notice 2014-33 [PDF 68 KB] explains that the transition period is being provided and the future regulations will be issued to facilitate an orderly transition for withholding agents and FFIs to comply the FATCA requirements, and responds to comments regarding certain aspects of the regulations under chapters 3 and 4.
Notice 2014-33 also announces that the Treasury Department and IRS intend to amend the regulations under sections 1441, 1442, 1471, and 1472 so as to provide:
- A withholding agent or FFI generally may treat an obligation (including an account) held by an entity that is opened, executed, or issued on or after 1 July 2014, and before 1 January 2015, as a “preexisting obligation” for purposes of sections 1471 and 1472 (subject to certain modifications). The notice also announces that these changes will be incorporated into Annex I of the model IGAs, and that they should thus be available to IGAs that have already been signed under the so-called “most favored national clause”.
- Additional guidance under section 1471 concerning the requirements for an FFI—or a branch of an FFI, including a disregarded entity owned by an FFI—that is a member of an expanded affiliated group of FFIs so as to be treated as a “limited FFI” (or “limited branch”) including the requirement for a limited FFI to register on the FATCA registration website
- A modification to the standards of knowledge for withholding agents under Reg. section 1.1441-7(b) for accounts documented before 1 July 2014
- A revision to the definition of a reasonable explanation of foreign status in Reg. section 1.1471-3(e)(4)(viii)
Before these changes are made to the regulations, taxpayers may rely on the provisions of Notice 2014-33 regarding these proposed amendments to the regulations.
On 2 May, the IRS posted a final version of the instructions for Form W-8EXP which is to be used by foreign governments and foreign entities to claim a reduced rate of (or exemption from) withholding tax.
The instructions [PDF 192 KB] for Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Withholding and Reporting (Rev. April 2014), explain that Form W-8EXP - along with Forms W-8BEN, W-8ECI, and W-8IMY - have been updated to reflect the documentation requirements under Chapter 4 (i.e., the FATCA provisions).
The final version of Form W-8EXP was released in mid-April 2014. Read TaxNewsFlash-United States
On 2 May, the U.S. Treasury Department updated its FATCA webpage to report that Curaçao has “in substance” reached an intergovernmental agreement (IGA) with the United States as of 30 April 2014.
According to a recent posting on Treasury's FATCA webpage, the IGA with Curaçao follows the Model 1 IGA under FATCA.
There is no information as to when the IGA with Curaçao would be signed.
On 28 April, representatives of the governments of the United States and Australia in Canberra signed an intergovernmental agreement (IGA) to implement U.S. legislation known as FATCA.
The FATCA agreement has been posted by the Australian Treasury.
According to the U.S. Treasury webpage on FATCA, the IGA with Australia follows the Model 1 IGA.
For further information, please do not hesitate to contact us.
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