FATCA gets a six month extension
FATCA was enacted in 2010 as part of the Hire Act. In simple terms it requires foreign financial institutions and foreign entities that invest in the US to disclose their US account holders and US owners. The law itself comprises only four Internal Revenue Code sections but has evolved into over 500 pages of regulations, complex compliance forms and article upon article by lawyers, accountants, bankers and financial advisors trying to explain to each other what the law means and how it impacts the off-shore market.
The regulations provide, in part, a number of definitions, which, in theory, should assist taxpayers in meeting their obligations under the law. How dividing the concept of a “foreign financial institution” into a sub-set of 28 different classifications, for example, assists taxpayers is not clear.
IRS’ Notice 2013-43 also provides a number of implementation dates/deadlines which the IRS has now extended yet again. While this may be a welcome “reprieve” for most foreign financial institutions it suggests even the IRS is having a hard time meeting its side of the FATCA compliance nightmare.
Below is a short excerpt from IRS Notice 2013-43 “Revised Timeline and Other Guidance Regarding the Implementation of FATCA” below:
“The FATCA registration website is projected to be accessible to financial institutions on August 19, 2013. Other key dates for registration, however, will be extended by six months. Thus, after the FATCA registration website opens, a financial institution will be able to begin the process of registering by creating an account and inputting the required information for itself, for its branch operations, and, if it serves as a “lead” financial institution, for other members of its expanded affiliated group. All input information will be saved automatically in the registration system and associated with the financial institution’s account…..”
Members of the Senate are also raising questions as to the legality of the whole IGA process, arguing that the IGAs are, in effect, treaties, and as such must have the “consent” of Congress to be implemented. This issue has been seized upon by various “anti-FATCA” lobbies who are raising the question of whether FATCA will ever really be enacted.
At this point in the process, the starts, stops, delays and this possibility that the legislation may effectively be blocked by Congress makes us wonder who is driving the train. It also makes me want to scream.