FATCA timeline and library
Finalize FATCA Registration in IRS Portal
FFIs finalize registration in IRS Registration Portal to ensure inclusion on IRS FFI list which will be electronically posted on 2 June 2014. (Note: The IRS may allow FFIs that register by 3 June 2014 to be included on the IRS list for 1 July 2014.)
Earliest FFI agreement effective date
The earliest possible effective date for an FFI agreement entered into on or before 30 June 2014 will be 30 June 2014. PFFIs that register and receive a Global Intermediary Identification Number (GIIN) on or before 30 June 2014 will have an effective date of 30 June 2014.
Grandfathered obligation cutoff for USWAs and PFFIs
FATCA withholding is not required on obligations outstanding on 1 July 2014 (unless they are materially modified subsequent to 1 July 2014). Obligations to make a payment with respect to, or to repay, collateral posted to secure obligations under a notional principal contract (NPC) that is a grandfathered obligation are also grandfathered.
Obligations that give rise to a dividend equivalent [pursuant to §871(m)] are grandfathered until the date the obligation is first subject to dividend equivalent treatment plus six months.
Onboarding new accounts
FATCA-compliant onboarding processes/systems for new accounts of both USWAs and PFFIs must be operational. Accounts opened prior to 1 July 2014 will be considered pre-existing accounts for USWAs and PFFIs.
USWAs and FFIs begin due diligence for pre-existing accounts
USWAs & PFFIs must begin account due diligence and start obtaining sufficient documentation for pre-existing account holders.
FATCA withholding begins
USWAs (and other WAs) and PFFIs must withhold on US source Fixed, Determinable, Annual, Periodic (FDAP) payments to new accounts held by documented and presumed NPFFIs and undocumented NFFEs.
PFFIs must withhold on US source FDAP payments to recalcitrant accounts.
USWAs & PFFIs - Expiration delayed until 31 December 2014 for certain tax documentation
For purposes of Chapter 3 withholding, withholding certificates and documentary evidence that would otherwise expire on 31 December 2013, will expire instead on 31 December 2014, unless a change in circumstances occurs that would otherwise render the withholding certificate or documentary evidence incorrect or unreliable.
Complete due diligence for prima facie FFIs
With respect to pre-existing obligations, USWAs and other WAs, other than participating FFIs, will be required to document pre-existing payees that are prima facie FFIs by 31 December 2014. PFFIs will be required to document these prima facie FFI payees by the later of 31 December 2014, or six months after the effective date of their FFI Agreement.
FATCA is signed into law
The FATCA provisions are signed into law as part of the Hiring Incentives to Restore Employment (HIRE) Act.
IRS issues the first round of FATCA guidance
The IRS issues Notice 2010-60, which includes the definition of a foreign financial institution (FFI), certain FATCA exemptions, and account documentation and reporting requirements.
IRS issues the second round of FATCA guidance
The IRS issues Notice 2011-34, which revises certain requirements introduced in Notice 2010-60 and provides further guidance on "priority concerns," including passthru payments.
IRS issues the third round of FATCA guidance
The IRS issues Notice 2011-53, which provides additional time for participating FFIs to enter into FFI agreements and to meet FATCA requirements associated with account identification, information reporting, and withholding.
IRS issues revised Notice 2011-53
The IRS issues revised Notice 2011-53, which clarifies that the revised withholding timeline in Notice 2011-53 applies to payments made by all withholding agents to both FFIs and Non-Financial Foreign Entities (NFFEs).
IRS releases proposed regulations
The IRS issues proposed regulations with significant changes and clarifications
to prior guidance, including updated timelines for grandfathered debt
obligations, reporting, and withholding.
IRS issues draft Model Intergovernmental Agreement (IGA) Model 1
The draft Model 1 IGA reflects the approach whereby FFIs will report information on certain account holders to their national tax authorities, which will in turn provide such information to the US under an automatic exchange of information.
First IGA signed based on Model 1
US and UK sign agreement on international tax compliance and FATCA implementation based largely on the draft Model 1 IGA.
IRS issues Announcement 2012-42
The IRS issues Announcement 2012-42, which revises certain timelines for withholding agents (both USWAs and other WAs) and participating FFIs (PFFIs) to complete due diligence and other requirements related to FATCA, provides extended timelines for gross proceeds withholding, and expands the definition of obligations that will be considered grandfathered for purposes of the FATCA provisions. All changes to be reflected in the final regulations.
IRS issues draft Model Intergovernmental Agreement (IGA) Model 2
The Model 2 IGA addresses potential conflicts of law which would make it difficult for financial institutions in certain countries to comply with FATCA. Model 2 IGA differs from Model 1 IGA in certain ways. Notably, FFIs under Model 2 IGA will report directly to the IRS, and countries that have signed a Model 2 IGA will not benefit from reciprocity.
Final FATCA regulations issued
The final regulations address many of the major items requiring further clarification following the proposed regulations issued in February 2012.
First IGA signed based on Model 2
US and Switzerland sign agreement on international tax compliance and FATCA implementation based largely on the draft Model 2 IGA.
Notice 2013-43 released providing revised timeline and other guidance
Notice 2013-43 generally provided a six month delay for the implementation of new onboarding procedures, due diligence reviews and FATCA withholding. The Notice also provided details for the treatment of FFIs located in jurisdictions which have entered into intergovernmental agreements not yet in force with the US.
FATCA Registration Portal open date
The online process for registering as a PFFI, a registered Deemed Compliant FFI, a limited FFI or a sponsoring entity opened.
Correcting amendments to the final FATCA regulations issued
The correcting amendments correct or clarify provisions contained in the final regulations issued on 17 January 2013.
IRS issues Notice 2013-69
The IRS issued Notice 2013-69, which provides guidance to FFIs entering into FFI agreements with the IRS to be treated as participating FFIs (PFFIs), including FFIs in Model 2 IGA countries. The Notice contains a draft of the FFI agreement.
Withhold on FDAP payments to undocumented pre-existing NPFFIs (prima facie FFIs)
WAs, USWAs and PFFIs must begin treating undocumented pre-existing prima facie FFIs as NPFFIs after the 31 December 2014 due diligence deadline (or, for PFFIs, six months after the effective date of the FFI agreement, if later) passes until the date the withholding agent obtains documentation sufficient to establish a different Chapter 4 status for the payee. Therefore, all withholding agents must withhold on withholdable payments made to these NPFFIs.
PFFIs begin due diligence monitoring by PFFIs for certain de minimis accounts for account balances or values >$1 million
Begin daily monitoring of balance or value of an entity’s or individual’s pre-existing account that was <=$250K or $50K respectively at 30 June 2014 to determine if balance ever exceeded $1 million. If exceeded, then account loses its exception from review as of YE. Daily monitoring of an individual’s depository account that was <=$50K at 30 June 2014 or is a new depository account is not required. Instead a depository account’s balance or value is reviewed at each YE, or at account closure, to see if it is >$50K in which case account loses its exception and must be made FATCA compliant.
1042-S reporting for USWAs, WAs, and PFFIs
Reporting on Forms 1042 and 1042-S regarding US FDAP payments to foreign entity recipients begins.
USWAs and PFFIs begin reporting of owner-documented FFIs
USWAs and PFFIs report owners of documented FFIs.
USWAs begin reporting of US substantial owners of passive NFFEs
USWAs report on NFFEs with substantial US owners.
US account reporting for PFFIs (year-end 2014)
PFFIs begin annual reporting of account balances and identifying information for year-end 2014. Information to be reported includes: name, address, Tax Identification Number (TIN) and account number of either (1) the account holder, who is a specified US person; (2) the NFFE that is US-owned (TIN if available) and of each substantial US owner of such entity; or (3) the owner-documented FFI (ODFFI) and of each specified US person owner of the ODFFI.
Reporting of recalcitrant accounts (year-end 2014)
PFFIs begin annual reporting of the aggregate number and value of year-end recalcitrant accounts broken out by US persons, those with US indicia, those without US indicia, passive NFFEs and dormant accounts for year-end 2014.
FFIs complete due diligence for high-value (HV) individual accounts
PFFIs must complete due diligence on high-value accounts within one year of the effective date of their FFI agreement.
FFIs begin withholding on US FDAP payments to recalcitrant high-value pre-existing accounts
PFFIs begin withholding on high-value pre-existing accounts identified as recalcitrant.
Due diligence for pre-existing accounts
PFFIs perform first annual review of year end balances or values of individual accounts for requirement to perform enhanced review if balance >$1 million.
Limited FFI/limited branch status expire
Members of a PFFI's expanded affiliated group and branches with local law restrictions to compliance will no longer be able to claim the limited FFI or limited branch exemptions from compliance.
USWAs and PFFIs – for pre-existing obligations, begin withholding on payments to certain passive NFFEs
USWAs and PFFIs begin withholding on payments to certain passive NFFEs with respect to pre-existing obligations. This provision applies when a payment is made to a passive NFFE that fails to provide US owner information.
Report source payments
PFFIs: Reporting begins for non-US reportable amounts and US FDAP payments made to NPFFIs for year-end 2015 on Forms 1042 and 1042-S.
Include income information
PFFIs: Annual reporting for US accounts includes payments other than gross proceeds for year-end 2015.
Complete due diligence for all remaining pre-existing accounts
Pre-existing obligations: USWAs and WAs, other than participating FFIs, will be required to document all remaining pre-existing accounts by 30 June 2016. Undocumented entity accounts and payees will be treated as NPFFIs after that date.
Pre-existing obligations: PFFIs will be required to document all remaining accounts by the later of 30 June 2016 or six months after the effective date of their FFI Agreement. Undocumented entity accounts and payees will be treated as NPFFIs, and undocumented individual account holders will be treated as recalcitrant after that date.
PFFIs begin withholding on all recalcitrant individual accounts and undocumented entity accounts that were pre-existing accounts. USWAs and WAs begin withholding on all undocumented entity accounts that were pre-existing accounts.
PFFIs: Responsible officer makes certifications related to due diligence and FATCA anti-avoidance
Responsible officer must certify that:
The high-value pre-existing individual account due diligence is complete, that all account due diligence is complete and that all documentation requirements are complete, or if no documentation is obtained, account is treated as a recalcitrant account;
The PFFI did not have any formal or informal practices or procedures in place at any time from 6 August 2011 through the date of certification to assist account holders in the avoidance of Chapter 4.
Ability to rely on old Forms W-8 expires
USWAs and PFFIs ability to rely on pre-FATCA Forms W-8 from certain payees expires after 31 December 2016.
Withholding on gross proceeds begins for USWAs, WAs and PFFIs
USWAs, WAs and PFFIs are required to withhold on gross proceeds payments made to recalcitrant individual and entity accounts.
PFFI withholding on foreign passthru payments
Finals regulations "reserved" on definition of foreign passthru payments. Any required withholding on such payments will not occur before 1 January 2017.
FFI grandfathered obligation cutoff for passthru payments [Date TBD]
Obligations that produce or could produce a foreign passthru payment (that cannot produce a withholdable payment) are grandfathered until the date final regulations are issued defining the term “foreign passthru payment” plus six months.
Source payment reporting begins
PFFIs: Reporting begins for non-US FDAP payments made to NPFFIs for year-end 2016 on Forms 1042 and 1042-S.
FATCA reporting adds gross proceeds
PFFIs: US account reporting to include gross proceeds on sales or redemption of property in custodial accounts.
Gross proceeds included
PFFIs, WAs and USWAs include US gross proceeds for year-end 2017 subject to withholding on Forms 1042 and 1042-S.
PFFIs: Begin every three-year certification by responsible officer that FFI has effective internal controls
Once every three years, the responsible officer must certify to the IRS that the PFFI is in compliance with the FFI agreement and make a certification on effective internal controls.
Organizing and maintaining documentation required under FATCA can be challenging. Original government regulatory pronouncements are presented here; EY interpretive materials may be found in our Alerts.