Clarified Terms in FAQs Help you Comply with July 1st DeadlineJune 12, 2014
The IRS recently clarified terms in its FAQs to act in accordance with the Foreign Account Tax Compliance Act (FATCA).
The IRS recently clarified terms in its FAQs to act in accordance with the Foreign Account Tax Compliance Act (FATCA). FATCA deals with withholding on payments of U.S. source income. Withholding agents must hold back 30% of certain payments to foreign financial institutions (FFIs) under FATCA, unless the FFIs have entered into an agreement with the IRS to, among other things, report certain information concerning U.S. accounts.
The IRS added a number of provisions including but not limited to:
- Intergovernmental agreement (IGA) registration- An FFI in a country that hasn't signed an IGA should register as a limited FFI, provided they meet certain qualifications.
- Expanded affiliated groups (EAGs)- An EAG may divide into subgroups for registration purposes, as long as all entities with a registration requirement are registered.
- Responsible Officers (ROs) and Points of Contact (POCs)- The POC does not need to be an employee of the FI.
To learn more about these changes and to see the full list of updates to the FAQs, read our article "IRS Updates and Clarifies FATCA Issues" by Paul Oliveira, CPA.