FATCA - Notice 2014-33 announces 2014, 2015 will be “transition period” and future changes to regulations 

May 2:  The IRS today 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 that 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.

Future regulations

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 July 1, 2014, and before January 1, 2015, as a “preexisting obligation” for purposes of sections 1471 and 1472 (subject to certain modifications)
  • 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 July 1, 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.

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