On 5 April 2013 the US Internal Revenue Service released a draft form for FATCA registration (Form 8957). The form is to be used by foreign financial institutions to apply for status as a foreign financial institution under FATCA.
A hardcopy form
Whilst a finalised hardcopy form will be available in July 2013, the IRS is encouraging financial institutions to register via the online portal once it is available in July 2013. The questions on the online portal will mirror those in the form.
For most New Zealand financial institutions, the registration process will be a reasonably quick one. Globally this will not be the case as some organisations and groups will have many thousands of registrations to complete.
The IRS estimates it will receive 260,000 registrations on the form which will result in an estimated 2,116,400 hours of processing. At an average 8 hours per registration, this would require over 3,000 people to process the registrations before the October 2013 deadline for inclusion on the first list of participating financial institutions. This raises further questions about the proportionality of FATCA in relation to the expected tax revenue recovered by the IRS.
Who is required to register
Financial institutions caught by FATCA are required to register and will receive a GIIN (global intermediary identification number) for use in reporting and verifying the nature of other financial institutions.
Inland Revenue has indicated that it will issue guidance on which financial institutions are required to register with the IRS. However, such guidance is unlikely to be issued before New Zealand and the US sign the proposed InterGovernmental Agreement to implement FATCA in New Zealand.
A completed IGA is not now expected until the third quarter of this year which means organisations will likely be required to take a position on whether FATCA applies to them without any New Zealand legislation and formal guidance from Inland Revenue. Financial institutions need to be looking at this now so that they have time to design and implement any required process and system changes.
Public submissions invited
Public feedback on the draft form has been requested by the IRS and should be provided by 6 May 2013 to be considered. Please let Michael Wright know if you would like to make a submission.