Notice 2013-10 - FATCA information reporting of foreign financial assets by U.S. entities 

January 23: The IRS today released an advance copy of Notice 2013-10 which states that future final regulations for U.S. domestic entities to report information of their interests in specified foreign financial assets (pursuant to section 6038D as added to the Code by FATCA) will not apply earlier than tax years beginning after December 31, 2012.

Read today’s notice: Notice 2013-10 [PDF 57 KB]

Background

Section 6038D was added to the Code by the Foreign Account Tax Compliance Act (FATCA) and requires any U.S. individual that holds more than $50,000 (in the aggregate) in reportable foreign assets to report information about the accounts and/or assets on the individual’s annual U.S. tax return. Reportable foreign assets include:


  • Foreign financial accounts
  • An interest in a foreign entity
  • Any financial instrument or contract held for investment and issued by a foreign person

    • This reporting requirement does not replace or mitigate the individual’s annual obligation to separately report to the Treasury Department foreign financial accounts aggregating $10,000 or more on Form TD F 90-22.1 (generally referred to as the “FBAR”).

    Regulations

    The FATCA provisions also provided Treasury with authority to issue regulations that apply the provision to certain domestic entities formed or availed of for purposes of holding foreign financial assets.


    Temporary and proposed regulations (issued in December 2011) provided guidance to individuals subject to the reporting requirements for specified foreign financial assets. See TaxNewsFlash-United States 2011-606.


    The 2011 proposed regulations also set out the conditions under which a domestic entity will be considered a specified domestic entity and, therefore, required to report specified foreign financial assets in which the entity holds an interest. These measures were proposed to apply to tax years beginning after December 31, 2011.

    Notice 2013-10

    Today’s notice states that Treasury and the IRS intend to extend the effective date to December 31, 2012, when final regulations are issued.


    Thus, reporting by domestic entities of interests in specified foreign financial assets will not be required before the date specified by final regulations, which will not be earlier than tax years beginning after December 31, 2012.



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