If the US Foreign Account Tax Compliance Act of 2010 is to have a roll call of financial institutions and other businesses worldwide that express a willingness to obey its far-reaching provisions it will appear in an online device the US Internal Revenue Service unveiled this week commonly called the “FATCA portal.”
On August 19, the IRS announced the inauguration of the ‘FATCA portal’ where foreign financial institutions and other entities can now register with the IRS.
Foreign financial institutions (FFIs) subject to FATCA duties include banks, mutual funds and some insurance companies. They must register with the IRS by April 25, 2014. Although they may mail paper IRS Form 8957 to register beginning on January 1, 2014, instead of using the portal, the IRS discourages paper filings.
Non-exempt FFIs that fail to register by that April date will become subject to a 30% withholding tax on certain US-sourced payments to which they are entitled.
FATCA resources and tools surfacing
Four days before the announcement of the portal, the IRS released draft IRS Form 8966, the ‘FATCA Report.’ Read more about IRS Form 8966 here.
On July 12, the IRS announced a short delay in the opening of the portal and postponed the start of several FATCA withholding and due diligence requirements by six months until July 1, 2014.
With the announcement of the portal, the IRS released a 75-page ‘FATCA Online Registration User Guide’ with detailed instructions on operating the site. The guide includes guidance on accessing the system, posting information on branches and responsible offers, inputting Qualified Intermediary (QI)/Withholding Foreign Partnership (WP)/Withholding Foreign Trust (WT) agreements, and editing registration information.
“This 75-page IRS guide is significant,” Bruce Zagaris, a tax lawyer and partner at Berliner, Corcoran & Rowe, in Washington, DC, told ACFCS. “It shows a lot of thought and attention have gone into making sure this portal is user-friendly.”
Some experts don’t agree with this assessment. “The IRS literature refers to the FATCA registration website as a ‘streamlined environment’ to register in one place, and ultimately that may be the case,” Hugh Campbell, senior vice-president of regulatory reporting at AxiomSL, in New York, told ACFCS.
“But the fact that all input by institutions to the FATCA portal is now manual increases the burden for medium and large financial institutions,” he continued.
With portal’s launch, pace of FATCA milestones quickens
The IRS said the FATCA portal will provide institutions with “secure account management” and “around-the-clock availability” so they may:
- Establish online accounts,
- Customize home pages to manage accounts,
- Designate points of contact to handle registrations,
- Oversee member and/or branch information,
- Receive automatic notifications of status changes.
The IRS is encouraging financial institutions to familiarize themselves with the system and start using it before January 2014, when they will be expected to begin finalizing their registration information. Beginning in January, institutions that finalize their registrations and receive a ‘notice of acceptance’ from the IRS will be awarded their FATCA identification numbers by the IRS. These numbers are called Global Intermediary Identification Numbers (GIINs).
The IRS says it will probably post to IRS.gov the first “IRS Foreign Financial Institution List” of FATCA-compliant institutions in June 2014. It says it will update the list monthly. The first edition of the list will include FFIs that register by April 25, 2014.
The 30% withholding tax also takes effect on that date for institutions that fail to register with the IRS by January 2014.
“The pace of the ‘FATCA regime’ is definitely moving forward,” Zagaris told ACFCS. “The portal is a signal to FFIs that they must begin getting their due diligence and other compliance plans in order. January 1, 2014 is not that far away.”