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FATCA - the Key Dates

Financial institutions have more time to comply with FATCA as the Internal Revenue Services (IRS) and Treasury Department delay implementation. Below is a revised timeline.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is an anti-tax avoidance measure issued by the US Treasury and aimed at Foreign Financial Institutions (FFI's*) and other financial intermediaries to prevent tax evasion by US citizens and residents through the use of offshore accounts.


From June 2014 and beyond, FFI's and other financial intermediaries are required report to the Internal Revenue Service (IRS) about their US clients.


You can discover more by reading our article FACT'd off with FATCA


Updates

On July 12, 2013, the IRS released Notice 2013-43, which effectively postpones (by six months) various implementation deadlines for FATCA. Below are the key dates/requirements over the next 12 months which are important/relevant to RL360° and the requirements. A full copy of the notice and revised timeline is available at http://www.irs.gov/pub/irs-drop/n-13-43.pdf


2013

August 19, 2013

IRS expected to open FFI Registration Portal for registration.

* FFI is any entity that:


  • Accepts deposits in the ordinary course of a banking or similar business (banks, credit unions),
  • Holds financial assets for the account of others as a substantial portion of its business (brokerages, custodians),or
  • Is engaged (or holding itself out as being engaged) primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, or any interest (including a futures or forward contract or option) in such securities, partnership interests, or commodities (mutual funds, private equity funds, hedge funds).

For the avoidance of doubt, RL360° is an FFI


2014

April 25, 2014

To ensure inclusion in the June 2014 IRS FFI List, FFIs would need to finalise their registration by 25 April 2014.


June 2, 2014

IRS expected to publish first IRS Global Intermediary Identification Number (GIIN**) List. This will be updated on a monthly basis thereafter.


**GIIN's will be 19 character unique identifiers that the FFI will have once registered as FATCA compliant and will need to supply to other financial institutions where they maintain accounts or act as payees.


June 30, 2014

Cut off date for pre-existing accounts exemption. Any individual policy in force at that date with a value of less than $250,000 is exempt from reporting.


June 30, 2014

Withholding certificates and documentary evidence, e.g., IRS Form W-8BEN and other forms W-8, that would otherwise expire on December 31, 2013, will instead expire on June 30, 2014, unless a change in circumstances occurs that would otherwise render the withholding certificate or documentary evidence incorrect or unreliable.


July 1, 2014

Withholding under FATCA on US-source fixed or determinable annual or periodic income (e.g., US-source dividends and interest) was to begin on January 1, 2014. This has now been extended until July 1, 2014, however, Notice 2013-43 does not affect the timeline set forth in the Regulations for withholding on gross proceeds, passthru payments and certain offshore payments.


Withholding agents generally will be required to implement new account opening procedures by July 1, 2014, or, in the case of a Participating Foreign Financial Institution (PFFI***), by the later of July 1, 2014 or the effective date of its FFI agreement.


***PFFI's are FFI's that enters into an FFI agreement with the IRS and are referred to as a "Participating Foreign Financial Institution" (PFFI). An FFI that does not enter into an agreement with the IRS is referred to as a "Non-Participating Foreign Financial Institution" (NPFFI), and is subject to withholding under FATCA.


Treasury and the IRS intend to provide a list of jurisdictions that will be treated as having in effect an IGA, even though that IGA may not have entered into force.


July 1, 2014

FFI's will be required to apply their new account opening procedures. This was due to be January 1, 2014.


2015

March 31, 2015

FATCA first reporting date for 2014 calendar year. Initially, the first year of reporting was to be 2013.


June 30, 2015

Cut off date for reviewing pre-existing high value accounts. Any individual policy in force at that date with a value of more than $1million. RL360° must ascertain if there are any US indicia present in these accounts.