U.S.A.: IRS announces revised FATCA implementation timelines

On 12 July 2013, the U.S. Internal Revenue Service (IRS) announced, through Notice 2013-43, that the timelines included in the final Chapter 4 regulations for the implementation of the the Foreign Account Tax Compliance Act (FATCA) have been revised.

The new key dates are summarised as follows:1. Delay in the opening of the FATCA registration website: The new portal is foreseen to be accessible to financial institutions on 19 August 2013, instead of 15 July 2013. From the opening of the website until 31 December 2013, a financial institution will have access to modify the information related to its account. No information submitted before 1 January 2014 will be considered as final submission but will be stored until the information is confirmed as final on or after 1 January 2014. Consequently, the IRS will not issue Global Intermediary Identification Numbers (GIINs) until the registrations are finalised in 2014. The first IRS Foreign Financial Institution (FFI) list will be published on 2 June 2014; to ensure inclusion in this list, FFIs have to finalise their registration by 25 April 2014.

2. FFIs in jurisdictions that have signed an Intergovernmental Agreement (IGA) will be considered as in compliance with FATCA, even if the IGA is not fully ratified or not yet in force. Such an FFI will be allowed to register on the FATCA registration website as a registered deemed-compliant FFI or Participating Foreign Financial Institutions (PFFI).

3. The notice provides the following implementation delays, corresponding to a six-month extension:

• Timeline for withholding: Withholding agents will have to begin withholding on withholdable payments made after 30 June 2014. The extended deadline after 1 July 2014 will allow foreign banks sufficient time to comply with the law. The definition of “Grandfathered obligation” will be revised to include obligations outstanding on 1 July 2014 (and associated collateral) rather than 31 December 2013.
  
• Timeline for implementation of New Account Opening Procedures: Withholding agents will have to implement a new account opening procedure by 1 July 2014. In the case of PFFIs, the deadline is the later of 1 July 2014 or the effective date of the FFI agreement.
  
• Timeline for transition rules for completing due diligence on pre-existing obligations: The definition of “pre-existing obligations” remains the same and still refers to the effective date of the FFI agreement. With Notice 2013-43, the six-month delay postpones the first possible date for an effective FFI agreement from 31 December 2013 to 30 June 2014. This postponement in the effective date of the FFI agreement to 30 June 2014 means a six-month delay for pre-existing obligation remediation. The following remediation deadlines apply:
  

• Prima Facie FFIs: 31 December 2014;
• High-value individual accounts: 30 June 2015;
• Low-value individual accounts and all other pre-existing entity obligations: 30 June 2016.

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• Timeline for first report of a PFFI with respect to U.S. accounts: The current rule of reporting 2013 and 2014 calendar years no later than 31 March 2015 is intended to be modified to require the reporting by the said deadline only of the 2014 calendar year. U.S. account reporting would no longer be required for the 2013 calendar year.
  
• Timeline for treatment of expiring Chapter 3 documentation: Withholding certificates (IRS Forms W-8) and other documentary evidence that would otherwise expire on 31 December 2013 will expire instead on 30 June 2014.
  
• Timeline for automatic extension of expiring QI, WP and WT agreements: Qualified intermediary (QI), withholding foreign partner (WP) and withholding foreign trust (WT) agreements that would otherwise expire on 31 December 2013 will be automatically extended until 30 June 2014.
  
• Timeline for foreign-targeted registered obligation rule: The transition rule for foreign-targeted registration obligations has been extended from 1 January 2014 to 1 July 2014.

Further information

Notice 2013-43 is available at www.irs.gov/pub/irs-drop/n-13-43.pdf and is due to be officially published in the Internal Revenue Bulletin 2013-31 on 29 July 2013.

We continue to monitor the implementation of FATCA and will provide more information as it becomes available.

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

or Clearstream Banking Customer Service or their Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., 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).