The US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released on 20 February 2014 two sets of final and temporary regulations. The first set contains changes to the provisions of Chapter 4 of the Internal Revenue Code (Code) commonly referred to as the Foreign Account Tax Compliance Act (FATCA Regulations). The second set of regulations coordinate the documentation standards, reporting and withholding rules relating to payments made to non-US and US persons (Chapters 3 and 61 and Section 3406 of the Code), with the FATCA regulations.
According to the Treasury press release, the new guidance represents the last substantial package of regulations necessary to implement FATCA. As such, the regulations contain numerous changes with the impact varying depending on the products or services and whether your activities are on shore or offshore. This insight looks at the more significant items contained in over 55o pages of regulations and the preambles which provide background on the amendments and regulations. Broadly speaking, the guidance provided is a compilation of many smaller changes and clarifications.
The FATCA regulations contain over 50 discrete amendments and clarifications to the final regulations issued in January 2013. The amendments take into account certain stakeholder suggestions regarding ways to further reduce burdens consistent with FATCA’s compliance objectives. Many of the modifications to the final regulations are intended to harmonize FATCA with the approach taken in the intergovernmental agreements (IGAs).
Further, the regulations coordinate FATCA requirements with pre-FATCA rules under Chapters 3 and 61 and Section 3406 of the Code. According to the Treasury fact sheet, coordinating changes relate to four key areas:
(1) rules for the identification of payees,
(2) withholding requirements,
(3) information reporting with respect to US persons, and
(4) conforming changes to the regulations.
For further information, please see
- The PwC FATCA page (Link)
- The US Treasury FATCA page (Link)
- The IRS FATCA page (Link)
- Tax insight from PwC Tax Insights from PwC – FATCA Four Months to Go
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