Technical Correction to F.A.T.C.A. Regulations Clarifies Example Regarding Investment Advice

Announcement 2013-41 (the "Announcement”), recently released by the I.R.S., provides correcting amendments to the Foreign Tax Account Compliance Act (“F.A.T.C.A.”) final regulations that were issued on January 17, 2013. One important clarification that we would like to highlight for our clients relates to an example that explains the application of the rules with respect to foreign financial institutions (“F.F.I.'s”) classified as such under the final regulations as foreign “investment entities.” The clarification of the example is helpful in avoiding F.F.I. classification in respect of family owned trusts and other foreign entities that solicit advice or receive fees for providing such services in respect of the entities’ investments.

Read the original Client Alert: Technical Correction to F.A.T.C.A. Regulations Clarifies Example Regarding Investment Advice →

Foreign Account Tax Compliance Act Update: Electronic Registration Portal Opens

Announcement 2013-411 (the Announcement”), recently released by the I.R.S., provides correcting amendments to the Foreign Tax Account Compliance Act (“F.A.T.C.A.”) final regulations that were issued on January 17, 2013. One important clarification that we would like to highlight for our clients relates to an example that explains the application of the rules with respect to foreign financial institutions (“F.F.I.'s”) classified as such under the final regulations as foreign “investment entities.” The clarification of the example is helpful in avoiding F.F.I. classification in respect of family owned trusts and other foreign entities that solicit advice or receive fees for providing such services in respect of the entities’ investments.

Read the original Client Alert: I.R.S. Technical Correction to F.A.T.C.A. Regulations Clarifies Example Regarding Investment Advice →

Notice 2013-43 - Revised Timeline and Other Guidance Regarding the Implementation of the Foreign Account Tax Compliance Act

On July 12, 2013, the Internal Revenue Service (“I.R.S.”) released Notice 2013-43 (the “Notice”), which revises the timelines included in the final F.A.T.C.A. regulations for withholding agents and foreign financial institutions (“F.F.I.'s”) to begin their due diligence, withholding, and information reporting requirements. Specifically, the Notice provides for the following:

• A six-month extension for when withholding will begin (i.e., payments after June 30, 2014).
• A six-month extension for grandfathered obligations.
• A six-month extension for implementing new account opening procedures and certain due diligence obligations.
• A six-month extension for expiring withholding certificates. Thus, withholding certificates and documentary evidence that would otherwise expire on December 31, 2013, will expire instead on June 30, 2014.
• A six-month extension for qualified intermediaries (“Q.I.'s”), withholding foreign partnerships (“W.P.'s”), or withholding foreign trusts (“W.T.'s”) agreements that would otherwise expire on December 31, 2013.

Read the original Client Alert: Notice 2013-43 – Revised Timeline and Other Guidance Regarding the Implementation of The Foreign Account Tax Compliance Act (“F.A.T.C.A.”) →

Foreign Account Tax Compliance Act of 2009

This memorandum is being circulated to provide a topside explanation of tax legislation now being considered in Congress affecting foreign trusts and foreign financial institutions. It is designed to facilitate the provision of bank information to the U.S. Government in order to track offshore investments of U.S. persons and to raise revenue from U.S. person’s who are beneficiaries of foreign trusts.

The bill is the “Foreign Account Tax Compliance Act of 2009.” Identical legislative language has been introduced in both Houses of Congress and it has the full support of the Administration. The bill has its roots in earlier legislative proposals submitted by the Senate Permanent Subcommittee on Investigation, but has pared away certain over-reaching provisions, including the creation of a tax haven country blacklist and certain negative presumptions in tax litigation arising from specified transactions. It is possible that the bill could be enacted in 2009 as a stand-alone legislation or with as a funding offset for estate tax reform or it could be combined with a larger general tax reform effort in 2010. It is also possible that aspects of the bill could be changed before it is enacted.

Read the original Client Alert: Foreign Account Tax Compliance Act of 2009 →