The Internal Revenue Service (IRS) recently posted the final version of Form 8957, Foreign Account Tax Compliance Act (FATCA) Registration along with form instructions at www.irs.gov. The IRS has spent the better part of the year working on drafting these forms and instructions in anticipation of the new rules taking effect as of January 1, 2014 for foreign financial institutions (FFIs).
FATCA was enacted on March 18, 2010 as part of the Hiring Incentives to Restore Employment Act of 2010. Under FATCA, FFIs are generally required to report certain financial information about financial accounts held by U.S. taxpayers, including accounts held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Withholding agents are required to withhold 30% of certain payments unless the FFI has entered into an agreement with the United States to report certain information with respect to the U.S. accounts. In the final regulations issued earlier this year, the IRS provided for a phased-in approach for the implementation of the various requirements imposed on FFIs beginning January 1, 2014 and continuing through 2017, at which time reporting of the full scope of FATCA information will be expected.
For the time being, the IRS requests that FFIs not submit Form 8957 prior to January 1, 2014. Although the IRS has not communicated an actual deadline to file the form, the instructions and IR-2013-69 both indicate that an FFI must finalize its registration by April 25, 2014 in order to ensure proper inclusion in the publication of the June 2014 IRS FFI List. This list will be subsequently updated on a monthly basis to reflect changes as necessary.
Form 8957 contains 4 primary sections that must be completed depending on the applicant’s profile. Part I requests basic identifying information of the FFI. Part II is only completed by certain financial institutions filing on behalf of other financial institutions. Part III is required for certain financial institutions seeking to renew its respective agreement. And finally, Part IV requires certification by the FFI that all of the information provided is accurate and complete.
While an FFI can register by filing paper Form 8957, the IRS promotes the use of its on-line registration system, which opened on August 19. As mentioned, although FFIs cannot finalize the registration process at this time, FFIs can begin reviewing the on-line system, establish accounts and populate certain information now in order to be prepared when registration opens on January 1, 2014.
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