FATCA — Updates and Draft FFI Agreement: IRS Notice Previews Proposed FATCA Guidance and Provides a Draft Agreement for Participating FFIsSullivan & Cromwell LLP - November 4, 2013
On October 29, 2013, the Internal Revenue Service (the “IRS”) and the Treasury Department (“Treasury”) issued a notice providing additional guidance regarding the Foreign Account Tax Compliance Act (“FATCA”). Notice 2013-69 (the “notice”) previews proposed guidance and provides a draft agreement for participating foreign financial institutions (“FFIs”) directly engaging in agreements with the IRS as provided under FATCA and those operating under a Model 2 intergovernmental agreement (“IGA”).
In addition to providing a draft of the agreement that FFIs operating outside of an IGA jurisdiction will be required to sign (“FFI agreement”), the notice announces the following changes to existing regulations:
- New rules allowing certain nonfinancial foreign entities (“NFFEs”) to report directly to the IRS;
- Changes to rules requiring transitional reporting of foreign reportable amounts paid to FFIs that do not comply with FATCA (“nonparticipating FFIs”);
- Rules coordinating FATCA reporting with existing Form 1099 reporting and backup withholding; and
- Modification of the definition of U.S. person in the FATCA regulations affecting certain foreign insurance companies.