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
