On May 2, 2014, the US Treasury Department (Treasury) and Internal Revenue Service (IRS) announced in Notice 2014-33 (the Notice) that calendar years 2014 and 2015 will be regarded as a transition period for IRS enforcement and administration purposes with respect to the implementation of the Foreign Account Tax Compliance Act (FATCA or Chapter 4).
In addition, the Notice provides that this transition period will apply with respect to certain related due diligence and withholding provisions under Chapters 3 and 61 and Section 3406 of the Internal Revenue Code (Code) that were revised in coordinating regulations issued on February 20, 2014. This relief means that the IRS will take into account the extent to which withholding agents, foreign financial institutions (FFIs), and other entities are making a good faith effort to comply with FATCA and the modifications to existing information reporting and withholding obligations until calendar year 2016.
The PwC Insight attached below provides an overview of the notice and observations regarding:
- the transitional enforcement period
- the treatment of an obligation (including an account) held by an entity that is opened, executed, or issued on or after July 1, 2014 and before January 1, 2015
- the modification to the standards of knowledge for withholding agents under Chapter 3 for accounts documented before July 1, 2014
- a revision to the definition of a reasonable explanation of foreign status under Chapter 4
- additional guidance for limited FFIs and limited branches
For more information, please see the Tax Insights from PwC – Notice 2014-33
The notice may be downloaded by following this link.