The U.S. Internal Revenue Services’ (IRS) delay in release of the proposed regulations for the Foreign Accounts Tax Compliance Act (FATCA) may drive up the costs of compliance programmes, warns KPMG.
Adrian Harkin, global FATCA leader at KPMG, commented: “Many banks, insurers and investment management companies are waiting to see the proposed regulations before taking action with regards to FATCA. The Treasury and IRS have repeatedly said if the final regulations are delayed from summer 2012 they will issue additional transitional relief. However, the deadlines, as far as we know, have remained the same. This may result in significantly increased costs for financial services companies because of the increased staff resources and opportunity costs in their rush to meet the FATCA compliance deadlines. Financial services companies are going to be boxed into a corner where their only choice will be to spend their way out of it.”
In its published Notice 2011-53 in July 2011 the IRS stated its intent to issue proposed FATCA regulations by 31 Dec, 2011. With this date passing and no clear indication of when the proposed regulations will be launched, some financial services companies are delaying critical implementation planning. However, many financial services companies will be required to have certain processes and procedures, such as new account opening procedures, in place by 2013. KPMG predicts this could force many financial services companies to rush through the changes required to be compliant with this law at a much greater cost.
“Lower implementation costs, a reduced burden on existing staff resources and minimised impact to overall business operations are just some of the benefits of taking a proactive approach to FATCA compliance. Understanding the areas of business impacted by FATCA and the associated resources required to achieve compliance are actions financial services companies can and should be taking today. This law is not going to go away and the deadlines for compliance are quickly approaching.”
More information about KPMG’s views on FATCA see www.kpmg.com/fatca.
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Monica Fiumara, Senior PR Manager, KPMG
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