The Internal Revenue Service has updated the Withholding Foreign Partnership and Withholding Foreign Trust agreements as part of the process of implementing the Foreign Account Tax Compliance Act, or FATCA.
FATCA, which was included as part of the HIRE Act of 2010, requires foreign financial institutions to report on the holdings of U.S. citizens to the IRS, or else face stiff withholding penalties of up to 30 percent on their U.S. source income. The law has provoked controversy abroad and in the U.S., but the IRS and the Treasury have nonetheless been rolling it out gradually, with a number of deadlines taking effect this year.
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