Foreign Accounts Tax Compliance Act

Foreign Accounts Tax Compliance Act

Who is responsible for reporting foreign accounts?

Entities that don’t comply with FATCA are subject to 30% withholding.

FATCA is about disclosing accounts, not about collecting taxes.

What are the key participants? Who is required to certify?

  • Foreign financial institutions
  • Non-financial foreign entities
  • Withholding agents
  • US taxpayers, form 8938

irs.gov/FATCA is where entities

  • register to obtain FATCA ID and
  • a global ID and
  • receive communications from the IRS.

IRS publication 5118 covers the FATCA question:

  • registration of an entity
  • system requirement
  • account management, etc

Who is required to certify?

The responsible officer is a specific individual responsible for FATCA compliance, establishing compliance programs, managing communication with the IRS, and submitting FATCA certifications.

Two types of compliance certifications:

  • Certification of preexisting accounts (a one-time certification regarding an FFI’s compliance with the identifications and due diligence procedures for preexisting accounts).
  • Periodic certification (identification of accounts, reporting, withholding..etc) (recurring certification, every 3 years).

FATCA Certification Compliance:

  • Material Failures (failure to fulfill the requirements)
  • Event of Default (failure to perform material obligations required: due diligence, verifications, withholding, failure to submit a required FATCA certification, etc)
  • Interim Guidance

tax problems

tax problems

Foreign Taxation Tax

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