FATCA, which was included in the HIRE Act of 2010, has generated controversy for its far-reaching requirements. The law would require foreign financial institutions to report to the Internal Revenue Service on the assets of U.S. citizens. Last month, the IRS and the Treasury Department proposed new regulations for FATCA designed to address some of the concerns they had been hearing from banks, expatriates, and other countries, such as Canada (see IRS and Treasury Propose New FATCA Rules).
However, even with the new proposed regulations and an extended timeline for phasing in the requirements, there is still controversy over the provisions. Deloitte noted that many global financial and non-financial institutions will now likely be forced to comply with FATCA or be subject to punitive withholding measures on U.S. source income.
In order to ensure compliance with the new proposed regulations, financial institutions will now face significant changes in their existing processes and technology, particularly those related to account transactions and reporting. With a little less than a year to ensure full compliance, financial institutions will need to approach the proposed FATCA regulations carefully.
To help its clients analyze and implement the new FATCA rules, Deloitte has prepared a guide exploring the proposed regulations and the potential implications of them. The guide can be downloaded here.