The US Internal Revenue Service (IRS) has given withholding agents and foreign financial institutions additional time to comply with requirements for determining an account holder’s foreign status.
Now, withholding agents, foreign financial institutions and payers have until 1 January 2015, to apply new entity account procedures required by the Foreign Account Tax Compliance Act (FATCA).
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In May, the IRS issued Notice 2014-33, which stated the IRS’s intention to amend the chapter 4 regulations to allow a withholding agent or foreign financial institution (FFI) to treat an obligation held by an entity that is issued, opened, or executed on or after 1 July 2014, and before 1 January 2015, as a preexisting obligation.
The move will allow FFIs, withholding agents and other payers to treat such accounts as pre-existing for purposes of FATCA, and also provides circumstances under which a withholding agent or other payers may rely on documentary evidence other than a withholding certificate to document the foreign status of a payee under FATCA.
Enacted by Congress in 2010, FATCA targets non-compliance by US taxpayers using foreign accounts and establishes a global approach to combating offshore tax evasion.
It requires US financial institutions to withhold a portion of payments made to FFIs who do not agree to identify and report information on US account holders.
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By GlobalData
