Practitioners See Great Benefit, More Work To Be Done From FATCA Compliance Delay
By Lydia Beyoud
The deadline for withholding and reporting requirements under the Foreign Account Tax Compliance Act has been delayed by six months until July 1, 2014, the Treasury Department announced in new guidance issued July 12.
The delay is a result of overwhelming interest from countries to finalize their intergovernmental agreements (IGAs) with Treasury and the Internal Revenue Service, and to gain more time to put information technology systems in place necessary for the reporting before withholding penalties go into effect, a senior Treasury official said during a conference call with reporters.
Many governments, foreign financial institutions (FFIs), and withholding companies interested in or already engaged in implementing the information exchanges under FATCA realized that they would not be able to have their IT systems in place before the Jan. 1 deadline, the official said.
“Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins,” Treasury Deputy Assistant Secretary for International Tax Affairs Robert B. Stack said in a July 12 news release that accompanied the guidance (Notice 2013-43).
Under the rules, failing to perform certain due diligence, including the disclosure of U.S.-owned offshore accounts to IRS, would have subjected foreign financial institutions to a 30 percent withholding tax. The goal of FATCA is to receive information on U.S. tax evaders, not to collect massive withholding taxes, the Treasury official said during the call.
Texts of Notice 2013-43 and the Treasury Department news release are in TaxCore.