The Internal Revenue Service has updated its online registration system for the Foreign Account Tax Compliance Act to allow foreign financial institutions to renew their agreement with the IRS.

FATCA was included as part of the HIRE Act of 2010, requiring foreign banks and other financial institutions such as hedge funds to report on the holdings of U.S. citizens to the IRS, or else face stiff penalties of up to 30 percent on their income from U.S. sources. The controversial law led to the Treasury Department signing intergovernmental agreements with the tax authorities of other countries, in most cases allowing foreign banks to first send the information to their own country’s tax authorities, who in turn forward it to the IRS. The IRS had to delay the rollout of the initial online registration system in 2013, but now the FATCA FFI Registration system has been updated to allow foreign financial institutions to renew their agreement with the IRS.

From the home page link of “Renew FFI Agreement,” the financial institution will first need to determine whether it must renew its FFI agreement. The IRS is providing a table of guidelines to help them make this determination. Once they decide, the system allows a financial institution to review and edit its registration form. The financial institution will need to verify and update its registration information and submit to renew the FFI agreement.

Those institutions who are required to renew their FFI agreement and don’t do so by July 31, 2017, will be treated as having terminated their FFI agreement as of Jan. 1, 2017, the IRS warned Tuesday, and they may be removed from the FFI List. The IRS said all financial institutions should login to the system for this determination. For help logging in, see the FATCA FFI Registration system FAQ's.

The system update includes several new fields for renewing the FFI agreement, such as the renewal date and submitted date, along with information on account home pages. The IRS said the new system will notify all approved financial institutions of the renewal open period and due date to renew the FFI agreement. The due date for all renewals is July 31, 2017.

The system instructions and online help have been updated for the Renewal of FFI Agreement. The FATCA Registration User Guide has also been updated to include the necessary steps for financial institutions to renew their FFI agreement.

Along with system fixes, the update within the registration application includes the removal of the classification of “limited” for FIs and FI branches, as that classification option won’t be available anymore for new FI applicants or for renewing FIs. Two other changes in the new release are the inclusion of a warning banner, and the number of attempts to unsuccessfully login have now been reduced to three.

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.