Registration as an FFI
The IRS's FATCA registration website is now expected to be accessible for financial institutions to register as an FFI on 19 August 2013, back from the expected date of July 15. Financial Institutions will then have until 1 January 2014 to finalise their registration, and will be able to access their accounts to modify or add registration information, for example if their home country signs an Intergovernmental Agreement (IGA). On or after 1 January 2014 that information needs to be finalised and formally submitted, by logging on to the FATCA registration website.
Other key dates for registration will be extended by six months: the IRS will electronically post the first IRS FFI List by June 2, 2014, (back from 2 December 2013) and will update the list on a monthly basis thereafter. To ensure inclusion in the June 2014 IRS FFI List, FFIs would need to finalize their registration by April 25, 2014 (back from 25 October 2013). After approval of its registration, each Participating FFI (PFFI) and registered deemed-compliant FFI will be assigned a global intermediary identification number (GIIN), which would be used both for reporting purposes and to identify the FFI’s status to withholding agents.
Withholding agents (PFFIs, qualified intermediaries (QIs) that assume withholding responsibility, withholding foreign partnerships (WPs), and withholding foreign trusts (WTs)) begin withholding with respect to withholdable payments on new accounts as of 1 July 2014. All QI, WP, or WT agreements that would otherwise expire on December 31, 2013, will be automatically extended until June 30, 2014.
New account opening procedures, and procedures for withholding tax under FATCA for new accounts, will need to be in place by then, and qualified intermediary / foreign withholding partnership and foreign withholding trust agreements will have expired by 30 June 2014. The relevant date for the exception for “Grandfathered obligations” (and associated collateral) changes from those outstanding on 1 January 2014 to 1 July 2014.
The definition of a pre-existing account is now an account in existence as at 30 June 2014 (and the IRS intends to change that definition in the existing Model IGAs). The due diligence requirements for new high value accounts are moved back 6 months from 31 December 2014 to 1 July 2015, and for other accounts to 1 July 2016. The first reporting date for US accounts will stay as 31 March 2015, but once an IGA containing paragraph 6 of Article 4 is in force reporting will be for the 2014 calendar year only, and not 2013 and 2014.
The IRS website will have a list of jurisdictions that have an IGA in place and those which will be treated as having in effect an IGA, including some where the IGA has still has not entered into force as of 1 July 2014. FFIs registering from these last jurisdictions will be registered as “deemed compliant”.
As anticipated by many, FATCA is proving hard for the IRS to get up and running. Much of this is due to later than expected publication of the details of implementation because, as we all know, “the devil is in the details” . Some delay is attributable to foreign governments requiring reciprocity as the cost of their co-operation with the US strategy, and many doubt that the IRS actually has the authority or ability to share information. In addition there is still opposition to FATCA within the USA. This is the second postponement of the deadlines for compliance and enforcement and it remains to be seen whether the compliance deadlines will shift yet again or, as some still hope, become indefinite or disappear altogether.