FATCA: Recent Developments; IRS and Treasury Department Issue Notice Postponing Certain FATCA Deadlines and Announce Competent Authority Arrangements with Australia and the United Kingdom

Sullivan & Cromwell LLP - October 1, 2015

On September 18, 2015, the IRS and Treasury Department issued Notice 2015-66 (the “Notice”).  Most significantly, the Notice announces that the start of withholding on “foreign passthru payments” and “gross proceeds” will be postponed for at least two years.  In addition, the Notice states the rules applying FATCA withholding to collateral will be modified in ways intended to simplify their application and clarify their scope.  The Notice also extends a number of other FATCA-related deadlines.

Additionally, on September 24, 2015, the IRS announced that it had signed “Competent Authority Agreements” (the “CAAs”) with Australia and the United Kingdom.  The CAAs supplement the intergovernmental agreements (“IGAs”) between these countries and the United States.  Among other guidance, the CAAs provide examples of when a financial institution may be in “significant non-compliance” with an IGA and specify operational protocols for exchanging FATCA information.