TREASURY DELAYS FATCA WITHHOLDING REQUIREMENT
Washington, D.C. -- The Treasury Department said in early July that, due to overwhelming interest from countries around the world, it will extend by six months the start of the withholding and account due diligence requirements of the Foreign Account Tax Compliance Act, or FATCA, until July 1, 2014, to allow more time to complete agreements with foreign jurisdictions.
The six-month delay will also provide foreign financial institutions with the time necessary to comply with FATCA while helping to ensure efficient implementation of the law.
The first report of information under FATCA continues to be due in 2015, and will include information about accounts maintained during 2014. The FATCA registration Web site was scheduled to open on July 15, but that date has been pushed back until August 19, which will allow financial institutions more time to begin testing the process and entering information.
Other key FATCA deadlines, including expected timelines for the implementation of withholding on gross proceeds from sales of U.S. securities and pass-through payment withholding, will remain unchanged.
Enacted by Congress in 2010 as part of the HIRE Act, FATCA targets noncompliance by U.S. taxpayers using foreign accounts and establishes a global approach to combatting offshore tax evasion. FATCA requires U.S. financial institutions to withhold a portion of payments made to FFIs who do not agree to identify and report information on U.S. account holders.
To make compliance with the reporting requirements of FATCA feasible, particularly for FFIs in jurisdictions where existing laws prohibit this type of reporting, the Treasury Department developed intergovernmental agreements that rely on governmental cooperation to facilitate the exchange of FATCA information. This addresses legal impediments that exist in some foreign countries, and reduces burdens on financial institutions and streamlines the reporting process.
IRS DELAYS EMPLOYER MANDATE FOR HEALTH INSURANCE
Washington, D.C. -- The Internal Revenue Service issued a formal notice in early July that officially delays the employer shared responsibility provisions of the Affordable Care Act, also known as the employer mandate, for a year, and postpones the information reporting requirements.
Before the formal notice, the White House and the Treasury Department posted announcements about the delay on blogs. But the new Notice 2013-45 from the IRS formalizes and further explains the transition relief.
The announcement gives larger employers an additional year to comply with the health care reform law. The requirements will instead begin in January 2015 for employers with 50 or more full-time employees (or the equivalent in full- and part-time employees) to offer quality affordable health insurance to employees or face a $2,000 fine per employee if the employee receives a premium tax credit for purchasing individual coverage on one of the upcoming health insurance exchanges.
The IRS said in the notice that the transition relief will provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law.
The Obama administration emphasized that the delay came in response to demands from businesses to provide more time to adjust to the health care act's new requirements.
The IRS added that the transition relief through 2014 for the information reporting and employer shared responsibility provisions has no effect on the effective date or application of other Affordable Care Act provisions.
The Obama administration still plans to open the health insurance exchanges, or marketplaces, on October 1. It recently shortened the 21-page application for health insurance into a three-page application to make it easier for taxpayers to apply for coverage. House Republicans have introduced legislation once again to try to repeal the Affordable Care Act and have begun pushing the administration to delay the individual mandate for buying health insurance now that the employer mandate has been delayed.
