FATCA: Transitional Relief: Soft Opening for FATCA: 2014 and 2015 Deemed a “Transition Period” and Other Limited Transitional Relief Under FATCA AnnouncedSullivan & Cromwell LLP - May 7, 2014
On May 2, 2014, the IRS and the Treasury Department issued Notice 2014-33 announcing that calendar years 2014 and 2015 will be regarded as a transition period for purposes of IRS enforcement and administration of FATCA. Notice 2014-33 also provides additional transitional relief under FATCA and the other U.S. withholding regimes. In direct response to comments from stakeholders, the IRS and Treasury have—to a limited degree—broadened the application of certain transitional rules:
- The cut-off date for treating an account or other obligation held by an entity as a “preexisting obligation” for FATCA purposes has been moved from July 1, 2014 to January 1, 2015;
- A withholding agent may continue to treat a direct account holder as having been “documented” for nonresident alien and backup withholding purposes prior to July 1, 2014, even if the account documentation is required to be renewed on or after that date; and
- The requirements for treatment as a “limited FFI” or “limited Branch” have been relaxed.