By Jason Bramwell
Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information. Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.
Enacted by Congress in 2010, FATCA regulations require participating foreign financial institutions (FFIs), other foreign entities, and US withholding agents to report to the IRS information about financial accounts held by US taxpayers or by foreign entities in which US taxpayers hold a substantial ownership interest.
However, the law has drawn criticism from US-born expatriates and individuals with dual citizenship who say that it violates national sovereignty and bank secrecy laws. As a result, the IRS has eased some of the requirements, while extending deadlines for implementation and agreeing to pacts with other countries in reliance on existing tax treaties.
On August 15, the IRS released a draft Form 8966 for FFIs and withholding agents to use for FATCA reporting.
The online registration system, designed to enable secure account management, is a web-based application with around-the-clock availability. Within a secure environment, the new registration system enables financial institutions to do the following:
- Establish online accounts
- Customize home pages to manage accounts
- Designate points of contact to handle registrations
- Oversee member and/or branch information
- Receive automatic notifications of status changes
The IRS is encouraging financial institutions to become familiar with the system, create their online accounts, and begin submitting their information. Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes, and submitting the information as final.
As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.
The IRS will electronically post the first IRS FFI List in June 2014 and will update the list monthly. To ensure inclusion in the IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.
Access to the FATCA registration system and related support information can be found on the FATCA page of the IRS website.