Extension of FATCA transitional rules announced
In Notice 2015-66, released on 19 September 2015, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced their intention to extend the period of time that certain transitional rules under the US Foreign Account Tax Compliance Act (FATCA) will apply.
The Notice provides relief to withholding agents and foreign financial institutions (FFIs) by giving them more time to modify their systems to address the phase-out of the FATCA transitional rules.
FATCA was introduced to help prevent tax evasion by US persons. It imposes due diligence and reporting obligations on foreign (non-US) financial institutions, including investment funds, custodians, investment managers and administrators.
Financial institutions, regardless of whether they have US clients or receive US source income, are required to register with the IRS, review customer accounts to identify US citizens or tax residents and report certain account information on to their local tax authority.
What are the FATCA transitional rule amendments?
Specifically, the amendments will:
- Extend the date for when withholding on gross proceeds and foreign passthru payments will begin.
- Extend the use of limited branches and limited FFIs.
- Extend the deadline for a sponsoring entity to register and re-document its sponsored entities.
- Modify the rules for grandfathered obligations with respect to collateral.
Learn more about the steps FundBPO is taking to comply with FATCA by contacting us.
The information in this article is subject to change and is intended for informational purposes only. It is not to be construed as investment advice or guidance. While all efforts have been made to ensure the information contained in this article is accurate, errors may occur.