FATCA FAQs Updated by IRS

 

FATCA Q&A Updated by IRS – the updates are below.

 New and Updated FAQs have been Posted with Regard to QI Agreements, Financial Institutions, and General Compliance 

Are U.S. Financial Institutions (USFIs) required to register under FATCA? If so, under what circumstances would a USFI register? Does it matter whether the USFI has a branch in an IGA jurisdiction? Date Updated: 7/23/2014

A USFI is generally not required to register under FATCA, regardless of whether it maintains a foreign branch.  However, a USFI must register if the USFI chooses to become a Lead FI and/or a Sponsoring Entity, or if the USFI seeks to maintain QI status with respect to one or more of its foreign branches.  Also, a USFI with a foreign branch that is a reporting Model 1 FFI must register (and identify each such branch when registering). A USFI with a foreign branch that is a non-QI branch and that is a reporting Model 2 FFI is not required to register with the IRS solely because it maintains a branch in the Model 2 jurisdiction. A USFI does not execute an FFI agreement with respect to the chapter 4 requirements of such a branch, but is subject to the withholding and reporting requirements under chapter 4 applicable to a U.S. withholding agent. Notwithstanding that the USFI does not execute an FFI agreement with respect to the chapter 4 requirements of such a branch, the USFI may, for accounts maintained by the branch, use the procedures set forth in Annex I of the applicable Model 2 IGA to determine which of the branch’s account holders are NPFFIs or NFFEs for which withholding or reporting under section 1472 may apply. See Treas. Reg. § 1.6049-5(c) regarding the extent to which the documentation permitted under an IGA (including for identifying U.S. accounts (or U.S reportable accounts maintained by a reporting Model 1 FFI)) may be used to satisfy the documentation rules of chapter 61 for a payor.

 

What should a withholding agent do if an entity account holder indicates that box 9a of Form W–8BEN–E is too small to accommodate the entity’s GIIN? Date posted: 7/23/2014

Box 9a generally accommodates 19 characters, and instructing the entity to use of a smaller font should solve any potential difficulty entering 19 characters.  In addition, please note that a substitute form may be used in place of Form W–8BEN–E if the substitute form is substantially similar to Form W–8BEN–E. See Treas. Reg. § 1.1441-1(e)(4)(vi). Additionally, as provided in the Instructions for the Requester of Forms W–8BEN, W–8BEN–E, W–8ECI, W–8EXP, and W–8IMY, a withholding agent “may accept a GIIN that is indicated and clearly identified on the form rather than provided as required in box 9a or another box permitted in the Instructions for Form W–8BEN–E if the GIIN is clearly identified as being furnished with respect to the box.”  A hand-written GIIN located just outside of box 9a with a corresponding arrow pointing to box 9a is one example of a properly-provided GIIN for purposes of box 9a.

 

Why did my registration status change to Registration Incomplete?  What can I do? Updated:  07-21-2014

If your registration status is Registration Incomplete, it is because the IRS has identified an issue with your registration.  Please review your registration for any of the following errors and update it accordingly.  After you have updated your registration, you must resubmit in order for your registration to be processed. The FFI has identified itself as a Qualified Intermediary with a QI-EIN of which the IRS has no record.  (If you have QI, WP or WT Agreement signed with the IRS, please contact the Financial Intermediaries Team for further assistance.) The RO has been identified with initials only and no specific name has been provided. The RO does not appear to be a natural person. Notice 2013-43 stated that after January 1, 2014 the FI will need to submit a final registration. If an FI submitted a registration prior to this date, the registration status was systemically updated to Registration Incomplete on December 31, 2013. To update and resubmit your registration, login to your FATCA account, and select “Registration – Edit/Complete/Submit” under the Available Account Options on your home page.  You will be asked if you want to change your status to Initiated. Select yes, and review each page of the registration, making any necessary updates, and clicking the “next” button at the bottom of each page to continue.  When you get to Part 4 of the registration, complete the information, and click on the Submit button.   Your registration status will then be updated to Registration Submitted.  You can go back at any time to update information.

 

When will the terms of the revised QI Agreement set forth in Revenue Procedure 2014-39 be effective for: (a) entities seeking QI status, and (b) entities seeking renewal of their QI Agreements? Date Posted: 7/23/2014

On June 27, 2014, Treasury and the IRS published a revised qualified intermediary (QI) agreement in Revenue Procedure 2014-39, 2014-29 I.R.B. 151.  Section 1 of the Revenue Procedure provides that an entity seeking QI status (other than a renewal) that submits an application to the IRS before July 31, 2014 and that is approved by the IRS during the calendar year may, for the period beginning on January 1, 2014 and ending on June 30, 2014, act as a QI in accordance with the QI agreement set forth in Notice 2000-12, 2001-1 C.B. 387, as if the QI agreement were effective during that period.  With respect to an entity that applies the allowance described in the preceding sentence, the entity’s QI agreement set forth in Rev. Proc. 2014-39 will be effective on June 30, 2014, regardless of whether the entity’s QI status is approved later during the calendar year, subject to the allowance provided in the next paragraph for how a QI may apply the QI agreement before August 1, 2014.  Additionally, the IRS will require that the entity register on the FATCA registration website with respect to its chapter 4 status (if applicable) by the date is that is 90 days from the date the entity is approved for QI status. With respect to an entity with a QI agreement in effect before June 30, 2014, the Revenue Procedure provides that its agreement expired on June 30, 2014 and further provides that an entity that has submitted  a renewal  application/request in the manner described in the Revenue Procedure  has a revised QI agreement is effective on June 30, 2014. For purposes of this requirement, the IRS will permit a QI to renew its status as a QI (including on the FATCA registration portal when required) on or before July 31, 2014, to be eligible to act as a QI beginning June 30, 2014.   A QI will not be required to assume the further requirements of the updated agreement in the Revenue Procedure before August 1, 2014 (regardless of whether the QI registered to renew its QI status before June 30, 2014), and may apply  the provisions of the QI agreement set forth in Notice 2000-12 between June 30, 2014 and July 31, 2014.  A renewal of QI status after July 31, 2014, will be effective on the date of renewal (and will not be retroactive).  Therefore, QIs are encouraged to renew their agreement by July 31, 2014. Because a QI is a withholding agent for chapter 4 purposes, a QI that receives a payment for which withholding is required under chapter 4 after June 30, 2014 and before August 1, 2014 with respect to an account holder may apply the procedures referenced section 9.05 of the QI Agreement to satisfy any under withholding.  See the instructions to Form 8957, Foreign Tax Compliance Act (FATCA) Registration, for further information regarding the registration of an entity seeking to renew a QI agreement.

 

free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA).