U.S.A.: FATCA: IRS provides further guidance and draft forms

Within the last weeks, the U.S. Internal Revenue Service (IRS) has released additional practical guidance regarding the upcoming implementation of FATCA. This new guidance consists of drafts of the new W-8BEN forms and a global overview of the administration process for the registering of a Foreign Financial Institution (FFI) to an FFI Agreement.

Background

In February 2012, the U.S Department of Treasury and the IRS published proposed regulations detailing and supplementing the FATCA prior guidance. It was, however, indicated that further guidance was still to be provided regarding several matters, among them the form of the FFI agreement, the modified withholding certificates (W-8 forms) and the reporting format (1042 forms). These drafts were expected before the final regulations due by the end of summer 2012.

Newly released unofficial draft forms W-8BEN

A few days ago, the IRS released on its website the drafts of the new W-8BEN form.

Two W-8BEN forms have been created: one for individuals (W-8BEN) and one for entities (W-8BEN-E). These forms cover information requirements for both the application of Chapters 3 (QI regime) and 4 (FATCA regime). No instructions have yet been provided but it is expected that these will have to be used as of 1 January 2013.

These forms can be found on the IRS website under Information for Foreign Financial Institutions.

Overview of the FFI Agreement administration processes

We have been informed that, during an International Tax Withholding Conference held on 5-6 June 2012, IRS representatives provided an overview of the FFI Agreement registration procedures. We hereby share this information with you under the following headings.

Responsible Officers (ROs)

As started in the February Proposed Regulations, ROs are responsible for certifying to the IRS that the participating FFI (PFFI) has completed all mandatory due diligence processes at the end of Years 1 and 2 of the FFI Agreement by:

• Confirming that the PFFI has not engaged in assisting clients in the avoidance of FATCA;
• Certifying the PFFI’s compliance with all provisions of the FFI Agreement on a periodic basis; and
• Disclosing material failures of compliance.

In addition, the RO will generally be responsible for initiating the online FFI registration process and signing the FFI Agreement.
From a practical point of view, in order to initiate the FFI registration process, the RO will need to electronically provide its personal data, and if applicable, appropriate documentation in order for the IRS to verify the RO’s identity. Once cleared, the IRS will issue to the RO a FATCA Individual Identification Number (FIIN) that will be used to sign the FFI Agreement. The RO will also have the possibility to be assisted in the process by:

• Up to five Points of Contact, including local or U.S.A.-based third parties who can assist in completing the process and managing ongoing administrative items; or
  
• A designated Authorised Third Party who can complete the entire registration process on the RO’s behalf, including signing the FFI Agreement.

Expanded affiliated groups

For expanded affiliated groups, the Lead FFI will have the responsibility for primary registration and to list all members of the group who will then independently complete their own registration processes. Each registering FFI within the expanded affiliated group must then execute its own agreement. The group as a whole will not be considered registered until all agreements have been executed. Only then will each FFI receive its FFI-EIN. It must be noted that the FFI registration process is not a once-and-for-all action but rather an ongoing process. Data must be maintained by the user, meaning that the Lead FFI is responsible for maintaining the listing of the expanded affiliated group, and each PFFI is responsible for the maintenance of its descriptive information, including the contact information of the RO.

To address privacy concerns regarding the disclosure of the FFI-EIN, an additional FATCA ID will be assigned to each PFFI and included as part of the publically available listing of PFFIs.

The above information is not intended to be exhaustive. We will continue to monitor the IRS and commentator publications and will provide further relevant information in due course.

Further information

For further information, customers may contact the Clearstream Banking¹ Tax Help Desk on:

or Clearstream Banking Customer Service or their Relationship Officer.

1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).