IRS Extends FATCA IGA Compliance Deadline
Within its Notice 2015-66, the Internal Revenue Service (IRS) has provided for a delay to the provision of information under Model 1 Foreign Account Tax Compliance Act (FATCA) intergovernmental agreements (IGAs) signed by other jurisdictions with the United States.
FATCA is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients can result in a 30 percent withholding tax on payments of US-sourced income.
To address situations where foreign law would prevent an FFI from complying with the terms of a FFI agreement, and to ease their compliance burden, the United States has developed model IGAs. Under the terms of each Model 1 IGA, FFIs report information on financial accounts held by US persons to their home tax authority, which then exchanges the information with the IRS.
The IRS has said that “for Model 1 IGAs that have not yet entered into force on September 30, 2015, Treasury intends to continue to treat FFIs covered by the IGA as complying with, and not subject to withholding under, FATCA so long as the partner jurisdiction continues to demonstrate firm resolve to bring the IGA into force and any information that would have been reportable under the IGA on September 30, 2015, is exchanged by September 30, 2016, together with any information that is reportable under the IGA on September 30, 2016.”
The Notice does not affect the time frames for when FFIs should report information to their jurisdiction’s tax authority. This is governed by domestic law.
Source: Tax News – IRS Extends FATCA IGA Compliance Deadline
