IRS releases 4 new FATCA FAQs three days before registration deadline
Posted by William Byrnes on May 2, 2014
On May 1, the IRS released 4 new FATCA Frequently Asked Questions (FAQs) and Answers. The 4 new FAQs address the topics of Responsible Officers, Branches/Disregarded Entities and Registration Update. 2 of the new FAQs, on Responsible Officer and on Branches, are further divided into multiple sub-questions. The new Q&A are posted below.
The IRS answered important questions such as: How does a branch in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements? How does a branch or a disregarded entity (DE) in a jurisdiction that does not have an IGA, or that is in a Model 2 IGA jurisdiction, satisfy its FATCA registration requirements?
FATCA IRS Q&A has to date been provided on the following topics: (previous FAQ update is available at https://profwilliambyrnes.com/2014/04/24/irs-releases-new-fatca-faqs/)
- Qualified Intermediaries/Withholding Foreign Partnerships/Withholding Foreign Trusts
- IGA Registration
- Expanded Affiliated Groups
- Sponsoring/Sponsored Entities
- Responsible Officers and Points of Contact <- new FAQs
- Financial Institutions
- Exempt Beneficial Owners
- NFFEs
- Registration Update <- new FAQ
- Branch/Disregarded Entity <- new Section with new FAQ
- General Compliance
Responsible Officers and Points of Contact
| # | Questions | Answers |
| Q5. | For each of the following FATCA classifications (i.e. Participating Foreign Financial Institution “PFFI”, PFFI that elects to be part of a consolidated compliance program, Registered Deemed-Compliant Foreign Financial Institution “RDCFFI”, Reporting Model 1 FFI, Limited FFI and US Financial Institution “USFI”) what type of individual may serve as a Responsible Officer for purposes of Part 1, Question 10 of the FATCA Registration? |
With respect to a PFFI, an RO is an officer of the FFI (or an officer of any Member FI that is a PFFI, Reporting Model 1 FFI or Reporting Model 2 FFI) with sufficient authority to fulfill the duties of a Responsible Officer described in a FFI Agreement. With respect to a PFFI that elects to be part of a consolidated compliance program, an RO is an officer of the Compliance FI with sufficient authority to fulfill the duties of a Responsible Officer described in the FFI Agreement on behalf of each FFI in the compliance group (regardless of whether the FFI is a Limited FFI or treated as a Reporting Model 1 FFI or Reporting Model 2 FFI). With respect to a RDCFFI, other than a RDCFFI that is a Reporting Model 1 FFI, an RO is an officer of the FI (or an officer of any Member FFI that is a PFFI, Reporting Model 1 FFI, or Reporting Model 2 FFI) with sufficient authority to ensure that the FFI meets the applicable requirements to be treated as a RDCFFI. With respect to a Reporting Model 1 FFI, an RO is any individual specified under local law to register and obtain a GIIN on behalf of the FFI. If, however, the Reporting Model 1 FFI operates any branches outside of a Model 1 IGA jurisdiction, then the RO identified must be an individual who can satisfy the requirements under the laws of the Model 1 IGA jurisdiction and the requirements relevant to the registration type selected for each of its non-Model 1 IGA branches. With respect to a Limited FFI, an RO is an officer of the Limited FFI (or an officer of any Member FI that is a PFFI, Reporting Model 1 FFI, or Reporting Model 2 FFI) with sufficient authority to ensure that the FI meets the applicable requirements to be treated as a Limited FFI. With respect to a USFI that is registering as a “Lead FI”, an RO is any officer of the FI (or an officer of any Member FI) with sufficient authority to register its Member FIs and to manage the online FATCA accounts for such members. |
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Q6. |
Part 4 of the online registration system* states: By checking this box, I, _________, [(the responsible officer or delegate thereof (herein collectively referred to as the “RO”)], certify that, to the best of my knowledge, the information submitted above is accurate and complete and I am authorized to agree that the Financial Institution (including its branches, if any) will comply with its FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the Financial Institution based on its status in each jurisdiction in which it operates. *Note: Part 4 of Form 8957 contains a substantially similar certification. Can this statement be broken down into two declarations of the RO, as follows? (i) The RO certifies that, to the best of its knowledge, the information submitted above is accurate and complete. (ii) The RO agrees that the FI (including its branches, if any) will comply with its FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the FI based on its status in each jurisdiction in which it operates. |
Yes.
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Does the first declaration above mean that the RO certifies that, to the best of its knowledge, the FI meets the requirements of its claimed status? |
Yes. |
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Does the second declaration above apply to an FI treated as a reporting Model 2 FFI? |
Yes. |
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Does the second declaration above (relating to a Participating FFI) require the signing party to ensure that the FFI and its member FFIs (including its branches, if any) comply with its respective obligations under the terms of its FFI Agreement or any applicable intergovernmental agreement and any such applicable local law? |
The second declaration requires the signing party to be able to certify that, to the best of the signing party’s knowledge at the time the FATCA registration is signed, the FI and its member FFIs intend to comply with their respective FATCA obligations. A Participating FFI will have its certifying responsible officer (as defined in Treasury Regulation §1.1471-1(b)(116)) periodically certify to the IRS regarding the FFI’s compliance with its FFI agreement. As noted in FAQ 1, the RO identified in Part 4 will normally be an individual with sufficient authority to be eligible for RO status under Treas. Reg. § 1.1471-1(b)(116). (See, however, above regarding “Delegation of RO Duties.”) |
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How do the certifications in Part 4 apply to FIs treated as reporting Model 1 FFIs? |
The first declaration above applies to FIs treated as reporting Model 1 FFIs and, as such, the RO of an FI treated as a reporting Model 1 FFI certifies that, to the best of the RO’s knowledge, the information submitted as part of the FATCA Registration process is accurate and complete. The second declaration, however, has limited applicability to FIs treated as reporting Model 1 FFIs because the FI does not have ongoing FATCA compliance obligations directly with the IRS. Instead, the compliance and reporting obligations of an FI treated as a reporting Model 1 FFI are to its local authority. However, a reporting Model 1 FFI that has branches (as identified in Part 1, line 9 of Form 8957) that are located outside of a Model 1 IGA jurisdiction will also agree to the terms applicable to the statuses of such branches. Additionally, an FI (including an FI in a Model 1 IGA jurisdiction) that is also registering to renew its QI, WP, or WT Agreement will agree to the terms of such renewed QI, WP, or WT Agreements by making the second declaration. |
Registration Update
| # | Questions | Answers |
| Q2. |
For each of the following FATCA classifications (i.e. Participating Foreign Financial Institution “PFFI” for Reporting Model 2 FFI, Registered Deemed Compliant Foreign Financial Institutions “RDCFFI” (for both Model 1 and non-Model 1 FFIs), Sponsoring Entity, Limited FFI or Limited Branch, Renewing QI/WP/WT, US Financial Institution “USFI” treated as a Lead FI and Direct Reporting NFFE) what is the impact of completing Part IV of the FATCA Registration?
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PFFI Status for Reporting Model 2 FFI Reporting Model 2 FFIs are registering to obtain a GIIN, provide authorization for individuals named in Part 1, Line 11 of the FATCA Registration to receive information related to FATCA registration, and to confirm that they will comply with the terms of an FFI Agreement in accordance with the FFI agreement, as modified by any applicable Model 2 IGA. Notwithstanding the paragraph above, Reporting Model 2 FFIs operating branches outside of Model 1 or 2 IGA jurisdictions are agreeing to the terms of an FFI Agreement for such branches, unless the branches are treated as Limited Branches or are U.S. branches that are treated as U.S. persons. Additionally, Reporting Model 2 FFIs requesting renewal of a QI, WP or WT Agreement are entering into the renewed Model QI, WP, or WT Agreements, as applicable. RDCFFI Status for Reporting Model 1 FFI Reporting Model 1 FFIs are not entering into FFI Agreements via the FATCA registration process. Reporting Model 1 FFIs are registering to obtain a GIIN and to provide authorization for individuals named in Part 1, Line 11 of the FATCA Registration to receive information related to FATCA registration. Notwithstanding the preceding sentence, Reporting Model 1 FFIs operating branches outside of Model 1 or 2 IGA jurisdictions are agreeing to the terms of an FFI Agreement for such branches, unless the branches are treated as Limited Branches. Additionally, Reporting Model 1FFIs requesting renewal of a QI, WP or WT Agreement are entering into such renewed Model QI, WP, or WT Agreements, as applicable. RDCFFI Status for FFI (other than a Reporting Model 1 FFI) An FFI that is registering as an RDCFFI, other than a Reporting Model 1 FFI, is agreeing that it meets the requirements to be treated as an RDCFFI under relevant Treasury Regulations or is agreeing that it meets the requirements to be treated as a RDCFFI pursuant to an applicable Model 2 IGA. Sponsoring Entity Status An entity that is registering as a Sponsoring Entity is agreeing that it will perform the due diligence, reporting and withholding responsibilities of one or more Sponsored FFIs or Sponsored Direct Reporting NFFEs. Limited FFI or Limited Branch Status An FFI that is registering as a Limited FFI is confirming that it will comply with the terms applicable to a Limited FFI. A branch of a PFFI that is registering as a Limited Branch is confirming that it will comply with the terms applicable to a Limited Branch. GIINs will not be issued to a Limited FFI or Limited Branch. Renewing QI/WP/WT An FFI, including a foreign branch of a USFI, requesting renewal of a QI Agreement is agreeing to comply with the relevant terms of the renewed Model QI Agreement with respect to its branches that are identified as operating as a QI. The obligations under the renewed Model QI Agreement are in addition to any obligations imposed on the FFI to be treated as a PFFI, Reporting Model 2 FFI, RDCFFI, or Reporting Model 1 FFI.
An FFI that is applying to renew its WP or WT Agreement is agreeing to comply with the relevant terms of the renewed Model WP or WT Agreement. The obligations under the renewed Model WP or WT Agreement are in addition to any obligations imposed on the FFI to be treated as PFFI, Reporting Model 2 FFI, RDCFFI, or Reporting Model 1 FFI. Additionally, a QI, WP, or WT is also certifying that it has in place and has implemented written policies, procedures, and processes for documenting, withholding, reporting and depositing tax with respect to its chapters 3 and 61 withholding responsibilities under its QI, WP, or WT Agreement. USFI treated as a Lead FI A USFI that is part of an EAG and registering its Members FIs is agreeing to manage the online FATCA account for each such Member FI. Direct Reporting NFFE A direct reporting NFFE is agreeing to comply with the terms and obligations described under Treas. Reg. § 1.1472-1(c)(3). |
Branch/Disregarded Entity
| # | Questions | Answers |
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Q1. |
How does a disregarded entity (DE) in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements? |
A DE in a Model 1 IGA jurisdiction must register as an entity separate from its owner in order to be treated as a reporting Model 1 FFI, provided that the DE is treated as a separate entity for purposes of its reporting to the applicable Model 1 jurisdiction. Select either a “Single” FFI or “Member” FFI in Part 1, Question 1 of the FATCA Registration (as appropriate). Select “Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA)” in Part 1, Question 4. When the owner of the DE registers on its own behalf, it should not report the DE as a branch. |
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How does a branch in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements? |
In general, a branch (as defined in Treas. Reg. § 1.1471-4(e)(2)(ii)) should be registered as a branch of its owner and not as a separate entity. Thus, the branch will be registered by the FI of which the branch is a part (including an appropriate Lead FI or Sponsoring Entity) when that FI completes Part 1 of its own FATCA registration. The online registration user guide provides further instructions on how to register branches. In general, a branch is a unit, business, or office of an FFI that is treated as a branch under the regulatory regime of a country or is otherwise regulated under the laws of such country as separate from other offices, units, or branches of the FI. |
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How does a branch or a disregarded entity (DE) in a jurisdiction that does not have an IGA, or that is in a Model 2 IGA jurisdiction, satisfy its FATCA registration requirements? |
A branch (including a DE) that is in a Model 2 IGA jurisdiction, or a jurisdiction without an IGA, should be registered as a branch of its owner (rather than as a separate entity). As such, the branch will be registered by the FI of which the branch is a part (including an appropriate Lead FI or Sponsoring Entity) when that FI completes Part 1 of its own FATCA registration. The branch will not have a separate registration account, but will be assigned a separate GIIN, if eligible. When the FI completes its FATCA registration and registers its branches by answering Questions 7, 8, and 9, GIINs will be assigned with respect to the registered branches, where appropriate. The online registration user guide provides further instructions on how to register branches. A separate GIIN will be issued to the FI to identify each jurisdiction where it maintains a branch that is participating or registered deemed-compliant. All branches (and, except in Model 1 IGA jurisdictions, disregarded entities) of an FI located in a single jurisdiction are treated as one branch and, as a result, will share a single GIIN. U.S. branches and limited branches are not eligible to receive their own GIINs. A branch of an FFI located in the FFI’s home country will use the GIIN of the FFI. For example, suppose FI W (located in Country X) has one branch in Country X, two branches in Country Y and owns a DE in Country Z. Country Z is a Model 1 IGA jurisdiction. FI W will receive a Country X GIIN. FI W’s Country X branch will use W’s GIIN. The two branches in Country Y will be treated as a single branch, and so FI W will be issued a single Country Y GIIN for these two branches to share. The Country Z DE will register as an entity separate from its owner, in order to be treated as a reporting Model 1 FFI, and will receive its own GIIN. |
Operational Compliance Guide for FATCA .. a Lexis solution for compliance officers
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries.
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