LoginIRS Issues Guidance on Phased Implementation of FATCA Beginning in 2013
Posted July 14, 2011, 15:04 P.M. ET
The Internal Revenue Service July 14 issued guidance (Notice 2011-53) announcing plans to phase in requirements for the Foreign Account Tax Compliance Act, which targets noncompliance by U.S. taxpayers through foreign accounts.
Under the phased implementation approach of Notice 2011-53, foreign financial institutions and U.S. withholding agents are given "adequate time to build the systems needed to fully comply with FATCA," IRS said in an accompanying news release (IR-2011-76).
IRS said FFIs must enter an agreement with the agency by June 30, 2013, to ensure that it will be identified as a participating FFI "in sufficient time to allow withholding agents to refrain from withholding" beginning Jan. 1, 2014.
Withholding on U.S. source dividends and interest paid to nonparticipating FFIs will begin Jan. 1, 2014, while withholding on all withholdable payments including on gross proceeds will be fully phased in on Jan. 1, 2015, IRS said in the guidance.
In the notice, IRS said "high risk accounts" include private banking accounts with a balance equal to or greater than $500,000.
The notice will be published in Internal Revenue Bulletin 2011-32, dated Aug. 8.
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