Get ready: new provisions in the Foreign Account Tax Compliance Act (FATCA) are coming, and the government is helping companies prepare for the change.
On Oct. 29, the U.S. Treasury Department and the Internal Revenue Service (IRS) issued a joint notice to foreign financial institutions concerning an upcoming FATCA provision to help those institutions become fully compliant with U.S. law. The notice also includes a draft of the statement that the U.S. seeks to sign with foreign financial institutions concerning compliance.
FATCA, originally passed into law in 2010, features a provision that goes into effect on July 1, 2014. This provision would require foreign financial institutions to report information about their U.S. account holders to the IRS. This includes both U.S. citizens and U.S. green card holders, no matter where they are living.
In the notice, the Treasury says that financial institutions can comply with this new provision in one of two ways. First, the company could report the information to its own national government, which would turn over the information to the IRS. The institution could also report directly to the IRS itself.
According to The Wall Street Journal, the Treasury says that it has signed nine intergovernmental agreements, has “reached 16 agreements in substance,” and is engaged in talks to work with more governments in the future.
In a statement, Robert Stack, deputy assistant secretary of the Treasury for international tax affairs, said, “The agreement and forthcoming guidance have been designed to minimize administrative burdens and related costs for foreign financial institutions and withholding agents.”
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