Posts Tagged ‘Foreign function interface’

Final FATCA FFI Agreement released by IRS

Posted by William Byrnes on December 27, 2013

On December 26 the IRS released Rev Proc 2014-10: FFI Agreement for Participating FFI and Reporting Model 2 FFI. The final FFI agreement contains a number of changes to provisions of the draft FFI agreement that required correction or clarification. The Rev Proc provides four areas of such changes and clarifications that occur in the final FFI agreement.

First, several of the cross-references in the FFI agreement (notably, in section 2 of the FFI agreement) are modified in anticipation of the publication of two sets of temporary regulations to which the updated cross-references relate. Both sets of temporary regulations are expected to be published in early 2014.

Second, the FFI agreement contains revisions to correct minor technical errors in the draft FFI agreement.

Third, revisions are made to further clarify the FFI agreement and conform it to the temporary chapter 4 regulations. By example, as contemplated in Notice 2013-69, the FFI agreement provides that, with respect to calendar years 2015 and 2016, participating FFIs that are required to report foreign reportable amounts paid to nonparticipating FFIs shall report this information on Form 8966.

Finally, the FFI agreement also provides for a two-year transition period during which a reporting Model 2 FFI may elect to apply the due diligence procedures described in the FFI agreement in lieu of those in Annex I of an applicable Model 2 IGA and the FFI agreement is also revised to reflect that this election is made by the reporting Model 2 FFI and not the reporting Model 2 IGA jurisdiction. Read my previous FATCA coverage > herein <

FATCA Compliance Program and Manual

Fifty contributing authors from the professional and financial industry provide expert analysis within the LexisNexis® Guide to FATCA Compliance (2^nd Edition): many perspectives – one voice crafted by the primary author William Byrnes. The second edition has been expanded from 25 to 34 chapters, with 600 pages of regulatory and compliance analysis.

The previous 25 chapters have been substantially updated, including many more practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. The nine new 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, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters. Chapter 7 has been drafted for a financial institution’s compliance officer, Chapter 9 for the trust department compliance officer, and Chapter 10 for the insurance firm’s compliance officer. Chapter 7 provides a new section analyzing the compliance risks with the IRS’ released FFI agreement.

The LexisNexis® Guide to FATCA Compliance (2^nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems.

See: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327&ORIGINATION_CODE=00247

Posted in FATCA, Uncategorized | Tagged: BRIC, FATCA, FFI, Foreign Account Tax Compliance Act, Foreign function interface, Internal Revenue Service, LexisNexis, Regulation | Leave a Comment »

IRS’ FATCA Registration System Updates

Posted by William Byrnes on December 16, 2013

By Professor William Byrnes, – co-author of LexisNexis® Guide to FATCA Compliance; co-author of Foreign Tax & Trade Briefs

FATCA Registration Portal

FATCA requires that FFIs, through a responsible officer (a.k.a. “FATCA compliance officer”), make regular certifications to the IRS via the FATCA Portal, as well as annually disclose taxpayer and account information for U.S. persons, unless an intergovernmental agreement (“IGA”) allows for indirect reporting to the IRS via a foreign government. On Monday, August 19 the IRS opened its online FATCA registration system for financial institutions that need to register for compliance with the Foreign Account Tax Compliance Act. [See https://sa2.www4.irs.gov/fatca-rup/login/userLogin.do.]

This critical FATCA milestone was supposed to open July 15; however only on July 12 did the IRS issued a postponement, as well as a push back all of the corresponding impacted milestones and deadlines. See Lexis article: FATCA FFI Compliance Extended; FATCA Portal, Other Key Dates Pushed Back.

Participating FFI List to Avoid FATCA Withholding

FFIs will now have four months, until April 25, 2014, to register on this portal to be included on the Participating FFI List that the IRS will publish June 2, 2014. Beginning July 1, 2014, withholding agents will implement the 30 percent FATCA withholding on payments of U.S. source income, including portfolio interest and capital gains, made to FFIs not on the Participating FFI list.

Global Intermediary Identification Number (GIIN)

An FFI will be included on the Participating FFI (“PFFI”) List if the FFI has registered via the FATCA Portal that the FFI agrees to comply with the IRS’ Foreign Financial Institution Agreement (“FFI Agreement”). The IRS will begin issuing each PFFI a Global Intermediary Identification Number (GIIN) as portal registrations are finalized by April 25, 2014. The PFFI will then include on its certification to U.S. withholding agents that GIIN — allowing matching against the PFFI List. [On April 8. 2013 the IRS released a sample of the PFFI List schema with example GIINs. See http://www.irs.gov/Businesses/International-Businesses/IRS-FFI-List-Schema-and-Test-Files.]

The following changes were made to the FATCA Registration System on December 8, 2013. For more detailed information, refer to Appendix A in the updated FATCA Registration Online User Guide.

1. Corrections to reported problems:

(a) Corrects problems with Member PDF file – currently only displays last 50 members in list, times out when there is a large number of members

(b) Corrects problem with deleting PAI contracts in part 3, question 15

2. Wording updates

(a) Minor wording changes to registration screens (Questions 10, 11a, 11b, POC Authorization, Part 4 – Submit)

(b) Wording changes to help text, including “instructions” page and “get help” page

(d) Wording changes on FI home pages

(e) Updates to external content linked to from registration system

(f) Update to country drop down list for questions with countries

3. Enhancements

(a) Additional statuses added

(b) Additional information added on FI home pages, including link to manage branch information

(d) Added notifications to FI’s, including external email notifications to RO for certain status changes

For the period from the opening of the FATCA registration website through December 31, 2013, a financial institution (FI) will be able to access its online account to modify or add registration information.

FIs can use the remainder of 2013 to become familiar with the FATCA registration website, to input preliminary information, and to refine that information. On or after January 1, 2014, each FI will be expected to finalize its registration information by logging into its online account on the FATCA registration website, making any necessary additional changes, and submitting the information as final.

As registrations are finalized and approved in 2014, registering FIs will receive a notice of registration acceptance and will be issued a global intermediary identification number (GIIN).

Below find a link to IRS instructions, user guide and video materials to assist you and your financial institution with FATCA registration:

“How-to” videos to assist financial institutions with FATCA registration:

FATCA Compliance Program and Manual

Fifty contributing authors from the professional and financial industry produced LexisNexis® Guide to FATCA Compliance (2^nd Edition). The second edition has been expanded from 25 to 34 chapters, with 600 pages of regulatory and compliance analysis.

The FATCA compliance officer responsible for an enterprise with multiple lines of business in multiple jurisdictions is particularly at risk of missing this critical registration deadline and other important compliance milestones, especially in jurisdictions that do not have a Model 1 IGA with the U.S. This LexisNexis® Guide to FATCA Compliance contains three chapters written specifically to guide a financial institution’s lead FATCA compliance officer in designing a plan of internal action within the enterprise, interaction with outside FATCA advisors with a view of best leveraging available resources and budget, and systems management [see Chapters 2, 3 and 4].

See: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327&ORIGINATION_CODE=00247

Posted in Compliance, FATCA | Tagged: FATCA, Financial institution, Foreign Account Tax Compliance Act, Foreign function interface, Internal Revenue Service, IRS, LexisNexis | Leave a Comment »

FATCA Foreign Financial Institutions (FFI) Agreement Draft Released

Posted by William Byrnes on October 29, 2013

On October 29, 2013, the IRS released the long awaited FFI draft agreement and an accompanying notice incorporating updates to certain due diligence, withholding, and other reporting requirements released earlier this year (click the FATCA category on the left for previous coverage). The FFI draft agreement provides the proposed guidance for FFIs to comply with the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA).

The IRS is committed to finalizing the FFI agreement by the end of 2013 because client due diligence and withholding requirements begin July 1, 2014. These due diligence and withholding requirements were this summer pushed back 6 months from January 1, 2014. The first FATCA information reports are due by PFFIs to the IRS in March 2015 via IRS Form 8966, FATCA Report, and includes the FATCA Report XML.

The IRS FATCA registration website for FFIs has been open since August 19, but also cast off to a late start of over a month. Since August 19, FFI have begun testing the registration process and entering information. The IRS expects to issue GIINs (Global Intermediary Identification Numbers) in early 2014. A Model 2 Reporting FFI (RFFI) that registers with the IRS to obtain a global intermediary identification number (GIIN) and complies with the terms of the FFI agreement, as modified by the applicable Model 2 IGA, will be treated as complying with the requirements of, and not subject to FATCA withholding.

The draft FFI agreement released today is for participating FFIs (PFFI) that directly engage in an agreement with the IRS and those RFFIs reporting through a Model 2 intergovernmental agreement (IGA). To date, Treasury has signed nine IGAs of which two are based on Model 2, has reached 16 agreements in substance, and is engaged in related conversations with many more jurisdictions. For an in-depth compliance analysis of the elements of these IGAs, see LexisNexis® Guide to FATCA Compliance. The Model 2 IGA framework allows FFIs to report directly to the IRS to the extent that an account holder consents or that such reporting is otherwise legally permitted. Non-consenting account holders information may be obtained via normal information exchange between the governments.

An FFI may register on Form 8957, FATCA registration, via the FATCA registration website available at http://www.irs.gov/fatca to enter into an FFI agreement on behalf of its branches (including its home office) so that each of such branches may be treated as a participating FFI. A reporting Model 2 FFI may also register on the FATCA registration website, on behalf of one or more of its branches (including its home office), to obtain a GIIN and to agree to comply with the terms of an FFI agreement, as modified by an applicable Model 2 IGA. The PFFI must appoint a responsible officer to establish a FATCA compliance program who then periodically reviews the sufficiency of the FATCA compliance program.

“The Agreement and forthcoming guidance have been designed to minimize administrative burdens and related costs for foreign financial institutions and withholding agents,” Deputy Assistant Secretary for International Tax Affairs Robert B. Stack is reported to have said with today’s notice release. “Today’s preview demonstrates the Administration’s commitment to ensuring full global cooperation and a smooth implementation.”

Treasury added comments directed at critics of the compliance costs of FATCA: “The regulations were intentionally designed to appropriately balance the scope of entities and accounts subject to FATCA with due diligence requirements, while also phasing in the related obligations over several years. For example, the final regulations exempt all preexisting accounts held by individuals with $50,000 or less from review. For similar accounts with less than $1,000,000, an FFI is only required to search the account information that is electronically available. In many cases, FFIs are permitted to rely on information that they already must collect for local anti-money laundering and know-your-customer rules.”

“Treasury is releasing necessary pieces of this FATCA puzzle very close to the compliance deadlines, given the necessary systems implementation required by PFFIs and RFFIs – albeit the longer than 2 week government shutdown certainly wasn’t on anybody’s radar screen”, said Professor William Byrnes. “Some firms will simply not be FATCA-compliant by next year’s deadlines, and I don’t think there will be another postponement of due diligence deadlines. Moreover, as it stands now, I don’t foresee the FATCA withholding refund procedures working smoothly either. Congress is making too many commitments for Treasury without giving Treasury the necessary resources to meet those commitments, and the shutdown didn’t help.”

The IRS Notice is available as a PDF at > FATCA October 29 Notice and Draft FFI Agreement <
For 440 pages of detailed FATCA analysis see http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327&ORIGINATION_CODE=00247
20% discount code for book available at https://profwilliambyrnes.com/2013/10/11/2436/

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Posted in Compliance, FATCA | Tagged: FFI, Foreign Account Tax Compliance Act, Foreign function interface, Internal Revenue Service, IRS, LexisNexis, Money Laundering, United States | 1 Comment »

IRS’ Technical Corrections for FATCA Final Regulations

Posted by William Byrnes on September 17, 2013

This document > IRS Link Here < contains the IRS’ corrections to the FATCA final regulations (TD 9610), which were published in the Federal Register on Monday, January 28, 2013 (78 FR 5874). The FATCA regulations relate to information reporting by foreign financial institutions (FFIs) with respect to U.S. accounts and withholding on certain payments to FFIs and other foreign entities.

book cover

The final regulations contained a number of items that needed to be corrected or clarified. Several citations and cross references are thus corrected by this IRS Technical Correction.
The correcting amendments also include the addition, deletion, or modification of regulatory language to clarify the relevant provisions to meet their intended purposes. Additions, deletions, and modifications are also made to ensure that the rules in the final regulations are coordinated with other rules contained in other relevant regulations.
For example in §1.1471-3(c)(3)(iii)(B)(2), the definition of an FFI withholding statement was modified to add an applicable cross reference to the reporting on the statement that is required under chapter 61 (in addition to the reporting required under chapters 3 and 4); to delete an incorrect reference to a pool of payees exempt from chapter 4 withholding; and to add the modified requirements of an FFI withholding statement provided by a Qualified Intermediary that should have been referenced in this paragraph.nd modifications are also made to ensure that the rules in the final regulations are coordinated with other rules contained in other relevant regulations.

> LexisNexis Guide to FATCA Compliance is available here <

Posted in book, Compliance, FATCA | Tagged: FATCA, Federal Register, Financial institution, Foreign Account Tax Compliance Act, Foreign function interface, Internal Revenue Service, United State, Withholding tax | Leave a Comment »

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Posts Tagged ‘Foreign function interface’

Final FATCA FFI Agreement released by IRS

IRS’ FATCA Registration System Updates

FATCA Foreign Financial Institutions (FFI) Agreement Draft Released

IRS’ Technical Corrections for FATCA Final Regulations

William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

William Byrnes

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Posts Tagged ‘Foreign function interface’

Final FATCA FFI Agreement released by IRS

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IRS’ FATCA Registration System Updates

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FATCA Foreign Financial Institutions (FFI) Agreement Draft Released

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IRS’ Technical Corrections for FATCA Final Regulations

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