The Internal Revenue Service has released a draft version of a new form for reporting on foreign bank accounts under the Foreign Account Tax Compliance Act.
FATCA, which was enacted as part of the HIRE Act of 2010, requires foreign financial institutions, including banks and hedge funds, to report on the holdings of U.S. taxpayers to the IRS, or face stiff penalties. The controversial law has provoked protest among foreign banks and governments, along with expatriate U.S. taxpayers and dual taxpayers (see Americans Giving up Passports Jump Sixfold as Tougher Tax Rules Loom). That has led to delays in implementation until next July, as well as efforts at repeal in Congress (see Treasury Delays FATCA Withholding Requirement).
Despite the controversy and repeated delays, the IRS and the Treasury Department have been moving forward slowly with implementing FATCA, including the release of draft versions of various form, most recently a draft version of Form 8966, FATCA Report. The draft form asks for the identification of the filer, a Global Intermediary Identification Number that has been developed for FATCA enforcement, in addition to the name of the sponsored foreign financial institution or other intermediary. Part II of the form also requests information on account holder or recipient and their taxpayer information number. A third part of the form asks for the identifying information of U.S. owners who are specified U.S. persons, including their TIN information. Part IV of the form asks for financial information, including the account balance, account number, currency code, interest, dividends, gross proceeds or redemptions, and leaves space for other information.
Separately, the accounting firm Rothstein Kass has released the “FATCA Guide for Alternative Investment Fund Managers.” The guide provides a summary of key points and due dates for FATCA, along with information to help fund managers navigate the FATCA compliance and registration process. It includes guidance on the intergovernmental agreements that the Treasury Department has been negotiating with foreign officials to aid with FATCA compliance, and the timelines for the expected agreements, especially for those funds domiciled in the Cayman Islands. The guide also offers insight into the proper filing forms and expected updates for them.
The guide is available for download here.
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