The US Internal Revenue Service (IRS) and Treasury Department has released Notice 2013-43, which postpones by six months the start of withholding and account due diligence required by the foreign account tax compliance provisions (FATCA) of the Hiring Incentives to Restore Employment Act of 2010.
In addition, jurisdictions listed on the US Treasury website which have signed, but not yet brought into force, an intergovernmental agreement, will be treated as having an agreement in effect at 1 July 2014. The FATCA registration website is now expected to become available on 19 August 2013, a month later than originally planned.
As Sullivan & Cromwell observe, the revised timeline:
Robert O’Hare, solicitor in the Lexis®PSL Tax team, said the six-month delay to the start of FATCA withholding and due diligence requirements was ‘not really’ expected and noted that FATCA had already been delayed once before, from 1 January 2013 to 1 January 2014. He added: ‘The additional delay is due, according to the US Treasury and IRS, “to overwhelming interest from countries around the world” in negotiating IGAs with the US. However, it will also allow the US authorities to address some areas of the “final” regulations that lack the requisite clarity and certainty demanded by financial institutions and withholding agents’.
‘It seems unlikely the US will successfully conclude IGAs with all of the jurisdictions that have expressed an interest in having one before the end of June 2014’, O’Hare said. ‘To date, only ten IGAs have been “signed” and one more (with Italy) has been “initialled”. The first, with the UK, was signed in September 2012 meaning the rate of IGA agreement is currently running at approximately one per month. It is also assumed that those jurisdictions that have already concluded IGAs will want to amend their agreements to track the six-month delay to the main regime ... The delay will be widely welcomed. But, the value of the delay depends very much on the ability of the US Treasury and IRS to iron out the remaining wrinkles in the detailed arrangements that underpin the regime.’
The US Internal Revenue Service (IRS) and Treasury Department has released Notice 2013-43, which postpones by six months the start of withholding and account due diligence required by the foreign account tax compliance provisions (FATCA) of the Hiring Incentives to Restore Employment Act of 2010.
In addition, jurisdictions listed on the US Treasury website which have signed, but not yet brought into force, an intergovernmental agreement, will be treated as having an agreement in effect at 1 July 2014. The FATCA registration website is now expected to become available on 19 August 2013, a month later than originally planned.
As Sullivan & Cromwell observe, the revised timeline:
Robert O’Hare, solicitor in the Lexis®PSL Tax team, said the six-month delay to the start of FATCA withholding and due diligence requirements was ‘not really’ expected and noted that FATCA had already been delayed once before, from 1 January 2013 to 1 January 2014. He added: ‘The additional delay is due, according to the US Treasury and IRS, “to overwhelming interest from countries around the world” in negotiating IGAs with the US. However, it will also allow the US authorities to address some areas of the “final” regulations that lack the requisite clarity and certainty demanded by financial institutions and withholding agents’.
‘It seems unlikely the US will successfully conclude IGAs with all of the jurisdictions that have expressed an interest in having one before the end of June 2014’, O’Hare said. ‘To date, only ten IGAs have been “signed” and one more (with Italy) has been “initialled”. The first, with the UK, was signed in September 2012 meaning the rate of IGA agreement is currently running at approximately one per month. It is also assumed that those jurisdictions that have already concluded IGAs will want to amend their agreements to track the six-month delay to the main regime ... The delay will be widely welcomed. But, the value of the delay depends very much on the ability of the US Treasury and IRS to iron out the remaining wrinkles in the detailed arrangements that underpin the regime.’