35 thoughts on “Subscribe to the FATCA News and Information List”

1. @just me, apparently just asking citizenship. She said that they are going on the word of the customer, but could be an issue if they find out otherwise. 

2. Yea, that sounds like KYC rules.  Same in NZ with my wife opened our accounts.  They wanted to know her citizenship.  She is Australian, but a US person, however, they weren’t searching that out then, but expect they will be soon, as the Kiwis will go passively along with this, is my bet.  There are a bunch of them that think / want to be part of the TPP (Trans Pacific Pact) and so wouldn’t want to do anything to upset the U.S.  There is a number of lawyers that are protesting, but I am not for sure that will amount to serious obstacles. I have not been following it all that closely.  

3. For those of you that didn’t want to sign up at the IRS for announcements, here is the first that I have received regarding FATCA

   Details on the FATCA Registration Process for Foreign Financial Institutions (FFIs)*
   If you don’t want to wade through it, and you want someone to summarize it for you, here is one…

4. @justme, they make it sound so systematic and easy, don’t they? Like as easy as lining up for the showers.

5. @bubblebustin

   That is one way to put it! LOL

   What strikes me, as someone who had some contract administration work in my back ground, is how, from a practical matter to you manage as many FFI contracts as the IRS seems to think will sign up?  

   How many FFIs are there in total, and how many of those will voluntarily sign up and register? Certainly all the BIG BANKS will, as they have armies of IT workers, lawyers and CPAs to make this happen, but how many smaller and far flung FFIs will there be?

   Then, the IRS has to have contract administrators to deal with each of them, and how many administers will that require, and what will be the ratio of Administrators to compliantly registered FFIs? 

   How much can you really believe this?   “IRS will closely monitor the account creation and FATCA registration process”  

   Given all the complexity and requirements that will lead to lots of confusion and errors, after the creation and registration process, who is going to check for the actual compliance actions that the FFIs have signed up for?  I assume that it will just be a random audit process, as there is no way they could actively manage it, given IRS resources,  it except via another audit lottery regime that will get gamed.  You can bet on it. 

   Think I might apply for a job as an IRS FFI contract Administrator!   Might as well get on the Compliance Complex band wagon, eh? 

6. @ Just Me – my understanding of the reciprocal agreements is that the FFIs won’t have to individually register with the IRS. Instead they will be reporting directly to their own governments so no need for individual FFI agreements. There is some article somewhere about how these reciprocal agreements are actually a HUGE benefit to the IRS just for this reason. It will still require the FFIs to implement large, costly systems to weed out their Americans, and the IRS gets the full benefit with little cost to them.

7. Adding to this – here is a paper by some world-wide firm called PwC where they discuss these issues: http://www.pwc.lu/en/fatca/docs/pwc-global-fs-tax-newflash-120312.pdf

   It definitely states that the reciprocal agreements will keep FFIs from having to sign on directly with the IRS. It’s all quite clever, really. Little cost with all the benefits.

8. @Expat in the UK

   I don’t know. I have heard similar, but then the IRS has not completed the proposed Partnership Agreements, and given how they write regulations for FFIs, how could they be less stringent?  Or, I suppose, they are deliberately making the FFI regulations onerous to force the FFIs to beg their governments to join in the partnership agreements in hopes that it will be easier on them somehow. Frankly, if I were in charge of an FFI, I would be beleaguered and bewildered about which way to go, and where to spend my $$$ resources until I saw some final regulations and agreements.

9. @Just Me

   I think you are exactly right. I think they are deliberately making the FFI regulations onerous to force foreign countries into joining into partnership agreements that will give them the information they want with as little time/money as necessary. Saying that individual FFI filing won’t be required is a carrot that makes joint agreements very attractive.

10. Reading the actual Treasury press release related to Switzerland, I note that we have hybrid model proposed here of Partnership, IE Model II that talks about bi-lateral agreement reporting along with direct reporting to the IRS.  So, does this make is simpler or more complicated?     Humm..

    Now, what if you are a Bank with operations in 3 countries, Switzerland, UK, and Canada…

    So, now you have to have 3 different models of reporting within one organization. (Model I, Model II, and regular direct FATCA reporting! Plus reporting US persons to your governments Revenue department.)  How is that going to be better for the FFI?  I beginning to think they will rue the day they thought the “government to government” exchange was going to be better. 

    Here is the entire thing, with the emphasis which is mine…

    
    

    New Agreement to Strengthen Cooperation in Combating Tax Evasion,

     Reduce Administrative Burden (???)  on Financial Institutions

    
    

    WASHINGTON –

      The U.S. Department of the Treasury today jointly issued a statement with Switzerland ( http://1.usa.gov/MIm4IK ) expressing mutual intent to pursue a framework for intergovernmental cooperation to facilitate the implementation of the Foreign Account Tax Compliance Act (FATCA) and improve international tax compliance based on the bilateral tax treaty between the United States and Switzerland.

    The statement offers a framework for cooperation to facilitate FATCA implementation by supplementing direct reporting under FATCA by Swiss financial institutions with exchange of information on request pursuant to the bilateral income tax treaty with Switzerland. 

    “FATCA is an important part of the U.S. government’s effort to improve tax compliance. The intergovernmental framework announced today provides a second model for implementing FATCA in a way that addresses domestic legal impediments and reduces burdens on financial institutions. We welcome Switzerland’s willingness to strengthen and improve their cooperation with the United States in combating international tax evasion,” said Acting Assistant Secretary for Tax Policy Emily S. McMahon.

    The framework contemplated in the joint statement issued today represents a second model for an intergovernmental approach to improving tax compliance and implementing FATCA (Model II).  Model II establishes a framework of direct reporting by foreign financial institutions to the Internal Revenue Service (IRS), supplemented by information exchanged between the Swiss government and the United States government upon request.  (What the hell does that mean?) 

    Previously, the Treasury Department jointly issued a statement with France, Germany, Italy, Spain and the United Kingdom expressing mutual intent to pursue a government-to-government framework for implementing FATCA.  The model contemplated in the prior joint statement (Model I)  differs from the model announced today in that it contemplates reporting by foreign financial institutions (FFIs) to  their respective governments, followed by the automatic exchange of this information with the United States.  Treasury, in consultation with the jurisdictions participating in the joint statement issued in February, has been developing a model agreement that will serve as the basis for bilateral agreements with countries interested in adopting the intergovernmental framework contemplated in Model I and aims to publish this model soon.

    Both intergovernmental models for implementing FATCA represent an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations. 

    The frameworks contemplated in the joint statements will serve as alternative models for the United States’ work with other countries, as Treasury officials continue to engage in discussions with foreign governments about the effective and efficient implementation of FATCA by their financial institutions. 

    FATCA was enacted in 2010 by Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act.  FATCA requires FFIs to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. In order to avoid withholding under FATCA, a participating FFI will have to enter into an agreement with the IRS to: 

    • Identify U.S. accounts,
    • Report certain information to the IRS regarding U.S. accounts, and
    • Withhold a 30 percent tax on certain U.S.-connected payments to non-participating FFIs and account holders who are unwilling to provide the required information.  

     Registration will take place through an online system that will become available by Jan. 1, 2013. FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to U.S. investments.

    Treasury and the IRS will continue to work closely with businesses and foreign governments to implement FATCA effectively.