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The FATCA Registration Process -- A Primer on the IRS FFI Net

Posted on September 16, 2013 by Dean Marsan

Dean Marsan Dean Marsan is U.S. tax counsel (consultant) for Lloyds Bank Commercial Banking. He is one of the bank's Foreign Account Tax Compliance Act subject matter experts assisting in the implementation of FATCA for the global bank and its U.S. branches. Marsan has over 25 years of taxation experience in both the private and public sectors. He was a senior tax manager at Deloitte LLP and a first vice president and tax counsel at Lehman Brothers Inc. The views in this report are the author's and do not reflect those of Lloyds.

In this report, Marsan examines the new foreign financial institution registration process created by the IRS and how it will fit into the larger FATCA and tax information global ecosystem. After conducting an in-depth review of the registration process contemplated by the IRS for global financial institutions -- small and large, foreign and U.S. -- Marsan concludes that the newly finalized Form 8957, "Foreign Account Tax Compliance Act (FATCA) Registration," and its electronic brethren on the newly opened FATCA portal funnel into a single registration form more than 700 pages of tax regulations and other administrative guidance, hundreds of pages of newly (and yet to be agreed on) intergovernmental agreements from more than 80 countries, and the domestic laws in each of those countries. This report includes a discussion of the FATCA online registration user guide recently released by the IRS, and the correcting amendments to the FATCA final regulations released on September 10, including current registration planning under those new rules.


Copyright 2013 Dean Marsan.
All rights reserved.


Table of Contents

I. Scope of the Report

II. FATCA Registration Process


    A. Background of FATCA

    B. Scope and Purpose of FFI Registration

    C. Revised Timeline for FATCA

    D. Due Dates for GIINs and FFI Registration

    E. Consequences of Failure to Register


III. FFI Registration Process

    A. Information FFIs Should Collect

    B. Incomplete/Erroneous Information

    C. Parts to Online Registration Process

    D. Consolidated Compliance Program

    E. Parts to Registration Form

    F. Account Creation

    G. FATCA ID and GIIN

    H. Part 1 of Form 8957

    I. Part 2 of Form 8957

    J. QIs, WPs, or WTs -- Part 3 of Form 8957

    K. Signature -- Part 4 of Form 8957

    L. FFI Receipt of GIIN

    M. Ongoing FFI Management


IV. Uses of FFI Registration Information

    A. Verification of GIINs

    B. Use of FATCA Home Page

    C. IRS Use of Portal

    D. Future Uses of the FATCA Portal

    E. Timetable for Registration and Critical Dates

    F. IRS Guidance


Exhibits and Appendices

Exhibit 1

Exhibit 2

Exhibit 3

Exhibit 4

Exhibit 5

Exhibit 6

Exhibit 7

Exhibit 8

Exhibit 9

Exhibit 10

Exhibit 11

Exhibit 12

Exhibit 13

Appendix I

Appendix II


    Somehow I knew that the notional space behind all of the computer screens would be one single universe.

    -- William Gibson

    Be careful what you wish for. That's the lesson of the frog who caused a flood1:

    In Central Australia . . . there are frogs which survive droughts by distending themselves with water until they are round as balls. Then they bury themselves and wait for the rains to come again. In dry weather, the aborigines dig up the frogs and drink the water with which their bodies are filled.

    These little frogs may well be descended from Tiddalick, an enormous frog which lived in the far-off days when men first came to Australia. Who can tell how big it was? Did he tower over the hills, and did the earth shake when he moved his feet?

    There came a day when Tiddalick was thirsty. He drank the water of the nearest river until it was quite dry, and nothing was left but black mud at the bottom of a long trench. He roamed further afield in search of water, for his thirst was not yet quenched. Wherever he went, billabongs, lakes, and streams disappeared in his vast mouth, until there was no more water left in all the land.

    Animals and men gathered together in great distress. Every drop of water was contained in Tiddalick's swollen stomach. By this time he had drunk so much that he was unable to move.

    There was still no sign of rain. The only way that water could possibly be obtained was to get it back from Tiddalick. Spears and boomerangs were useless, because the huge frog would not feel them however hard they were hurled at him.

    "We must make him laugh," said Googoourgahgah the Kookaburra. "If only we can do that, he will have to hold his hands against his sides, and the water will pour out of his mouth." . . . After many tries, Noyany the eel turned himself into a hoop, he wriggled and rolled over and over on the sand. A tiny smile began to creep slowly over Tiddalick's face and a river of water splashed out of the corner of his mouth. . . . Tiddalick started to chuckle. Deep rumbles came up from his belly, and soon he was laughing so helplessly that he put his hands on his sides and rocked to and fro. His mouth opened wide and a great smooth tide of water came gushing out. It swept the men and animals away, and soon Tiddalick was a poor, shrunken little frog, while as far as could be seen a shining lake of water spread over the land.

I. Scope of the Report

This report discusses the evolving Foreign Account Tax Compliance Act registration process in countries with Model 1 or Model 2 intergovernmental agreements and non-IGA countries, how the tax authorities will use a foreign financial institution's registration information, how the lengthy FATCA regulations will be applied in the registration process, and how that registration will fit within the larger tax information global ecosystem.

This report also sequentially addresses each of the questions in Form 8957, "Foreign Account Tax Compliance Act (FATCA) Registration," and can therefore be used to input FFI information on the FATCA portal, which opened one month late on August 19. The opening of the FATCA portal marks another milestone in the U.S. government's efforts to implement FATCA. Intentionally comprehensive, this report examines many of the issues that practitioners involved in the FFI registration process are now facing. It is hoped that FFIs that are global banks, insurance companies, or fund sponsors can also use it as a planning tool.2


II. FATCA Registration Process

A. Background of FATCA

It has been estimated that the United States loses approximately $100 billion in tax revenue each year as a result of offshore abuses, primarily from the use of concealed and undeclared accounts held by U.S. taxpayers or their controlled foreign entities.3 Thus, it is not surprising that the government increased its pressure on taxpayers that structured their activities (with assistance from promoters or facilitators in many cases) to avoid reporting the income from offshore accounts.

Signed into law in March 2010, the Hiring Incentives to Restore Employment (HIRE) Act added an entirely new U.S. withholding and information tax regime.4 The new rules are based on proposals that originally appeared in the Foreign Account Tax Compliance Act of 2009.5 Selected provisions of that bill were passed in modified form as part of the HIRE Act and are commonly known as FATCA.

The stated purpose of the law is "to clamp down on tax evasion and improve taxpayer compliance by giving the IRS new administrative tools to detect, deter and discourage offshore tax abuses."6 FATCA is expected to raise $7.6 billion in tax revenue over a 10-year period.

1. IGAs. FATCA has now gone from a purely U.S.-initiated disclosure and reporting law to a global initiative on tax reporting. To date, seven IGAs have been signed, and the United States is in discussions with more than 75 other countries.7 IGAs address potential legal impediments and will allow FFIs to be in compliance in covered jurisdictions.

The IGAs fall within one of two categories: Model 1 and Model 2. Treasury released the Model 1 IGA (in reciprocal and nonreciprocal versions) in July 2012 for bilateral agreements under which FFIs (Model 1 FFIs) would satisfy their FATCA obligations. The Model 1 IGA contemplates implementation of FATCA reporting through an automatic, government-to-government exchange of information with the United States after the Model 1 FFI provides the information about U.S. accounts to the local country tax authority.

Treasury released the Model 2 IGA in November 2012. Under the Model 2 IGA, FFIs report their U.S. account information directly to the IRS in a manner consistent with the regulations (see II.A.2), as supplemented by government-to-government exchanges of information on request. Treasury updated the model IGAs in May and July of 2013 to incorporate some modifications reached through intergovernmental discussions, as well as improvements to the due diligence procedures, as reflected in the final FATCA regulations. The revised versions reflect the timelines provided by Notice 2013-43, 2013-31 IRB 113 2013 TNT 135-11: Internal Revenue Bulletin.8 See Exhibit 1 for a current FATCA timeline and Exhibit 2 for a FATCA implementation plan consistent with this updated FATCA timeline.

2. FATCA regulations. Regulations implementing FATCA were proposed in February 20129 and published in final form in January 2013.10 The final regulations build on the IGAs, which foster international cooperation. They also phase in the timelines for due diligence, reporting, and withholding; align those timelines with the IGAs; and clarify the compliance and verification obligations of financial institutions. See Exhibit 8 for a comparison of the FATCA regulations to the Model 1 and Model 2 IGAs.


Exhibit 1

FATCA Timeline



Exhibit 2

Roadmap to FATCA Compliance-Implementation Plan







3. The FATCA ecosystem. The global tax information exchange system, nicknamed "the FATCA ecosystem" by IRS officials, is still in a highly fluid state despite the existence of final regulations and signed IGAs.

Several areas make up the evolving FATCA ecosystem, including:

  • registration by FFIs;
  • new reporting responsibilities and IRS-related compliance for U.S. individuals11;
  • new responsibilities for the IRS, including matching the information reported by FFIs12 (and to a lesser extent, by nonfinancial foreign entities (NFFEs)13) with information reported by U.S. individuals, and enforcing withholding agent chapter 4 withholding14 and reporting obligations15; and
  • the exchange of tax reporting information with FATCA partner countries under the reciprocal Model 1 IGAs.

The IRS has suggested that registration by FFIs is the precursor to compliance under FATCA.

According to one commentator,16 "FATCA divides the entire universe of foreign entities into two, and only two, mutually exclusive categories: FFIs and NFFEs. An FFI is a foreign entity that is a financial institution,17 while an NFFE is a foreign entity that is not a financial institution."18

4. FFI obligation to report. The hallmark of FATCA is that it imposes a 30 percent withholding tax on an FFI if it fails to provide the information required under the FFI agreement. The idea is to coerce FFIs to report information such as the name, address, and taxpayer identification number of some U.S. persons with accounts at the FFI, as well as to provide details about the accounts themselves, such as the account balances or values, gross payments, and withdrawals. Further, "to prevent U.S. taxpayers from avoiding detection by hiding behind non-U.S. entities FATCA requires FFIs to identify and report the names, addresses, and TINs of any substantial U.S. owners (under the regs) or U.S. controlling persons (under the IGAs) of offshore entities that hold accounts at the FFI, and to provide the same information regarding those accounts as for directly held accounts (that is, account numbers, account balances, etc.)."19

5. NFFE obligation to disclose. In a companion set of provisions, which are perceived to be much less onerous, a withholding agent will be required to withhold 30 percent tax on any withholdable payment made to an NFFE unless the beneficial owner or payee (1) certifies that it has no substantial U.S. owners or U.S. controlling persons,20 or (2) provides the name, address, and TIN of each such person. The withholding agent must affirm that it does not know, or have reason to know, that the information provided by the beneficial owner is incorrect.21 It is intended that the withholding agent report the beneficial owner information to the IRS once it is obtained from the NFFE.22

Because the government has imposed more rigorous due diligence,23 reporting,24 and withholding obligations25 on FFIs and the members of its expanded affiliated group (EAG),26 it is critical for an organization to distinguish between its foreign entities that are FFIs and those that are NFFEs. The IRS now has an important tool to help it identify an organization's FFIs: FATCA registration.27

FATCA registration and the FATCA portal are initially being used for (1) registering FFIs, including those covered in a Model 1 or Model 2 IGA, and branches located outside the FFI's tax residence; (2) issuing a unique global intermediary identification number (GIIN) for each FFI or branch; (3) establishing the chapter 4 status of entities and identifying FFIs for reporting purposes; (4) obtaining certifications from responsible officers (ROs), as required; and (5) enabling FFIs to interact with the IRS and enabling the IRS to verify that FFIs are FATCA compliant.

B. Scope and Purpose of FFI Registration



1. Scope of global FFI registration. In a comment request to the Office of Management and Budget in April 2013, Treasury estimated that there will be 260,000 registrations by FFIs.28 However, HM Revenue & Customs estimated that FATCA could affect 300,000 entities in the United Kingdom alone. That number was recently reduced to 75,000 as a result of the relaxation of the FATCA compliance rules for some U.K. entities under the U.K. IGA.29 The initial wave of registrations on the FATCA portal may provide a better sense of the true number of FFIs and other entities affected by FATCA.

2. Costs to register. HMRC, in a release accompanying its issuance of draft regulations on FATCA compliance under the U.K. IGA30 and other guidance, estimated a one-time cost to U.K. businesses in the range of £2 billion to £3 billion, and ongoing costs of £100 million to £170 million a year.31 Those figures include the costs of businesses acquiring and running new information technology systems, setting up internal systems for compliance, spending time training staff and becoming familiar with the new rules, and undertaking a detailed risk assessment. When HMRC eased the compliance rules for U.K. businesses, those estimates were reduced to £900 to £1,600 billion for the initial costs, and £50 to £90 million for ongoing annual costs. The U.S. government has not yet provided an estimate of the FATCA compliance costs or the underlying cost of the registration process for FFIs worldwide.

3. Estimated time to register each FFI. In the OMB comment request, Treasury estimated that it will take an aggregate of 2.1 million hours for FFIs to complete their registration. While some commentators have suggested that the registration process per entity will take only 15 minutes, the IRS estimate appears to be just over eight hours per FFI (2.1 million hours/260,000 entities).32

If only one user at a time is permitted to log in and register for an FFI, the registration process for an organization with many FFIs will be more protracted. That situation may be exacerbated by a "penalty box" that precludes the user from logging in again for a fixed period (for example, 24 hours) if it is frozen out of the portal. See II.F.

Another potential glitch may create more delays. See II.D.2. In testing user acceptability on a beta version of the FATCA portal, the IRS determined that the portal would allow only up to 1,000 users at a time. Additional users were completely locked out. Because IRS officials have estimated that there may be close to 400,000 traditional FFIs and 200,000 nontraditional FFIs (such as hedge funds) worldwide, unless the portal's capacity is increased, this could create a significant logjam for the initial wave of FFI registrations.33

With those constraints in mind, a few commentators have suggested that the IRS consider using a phased-in or abbreviated registration process that would require only very general information at first and then give FFIs one or two years to go back and complete the process, rather than requiring registration on a first-come, first-served basis over the initial (now extended) eight-month registration period.34

4. Purpose and description of registration process. By registering, an FFI agrees to comply with the FATCA requirements pertaining to its particular situation. These requirements will vary depending on the FFI's status in the country in which it operates. For example, an FFI may be a resident in a country for which it reports as a Model 1 FFI and have branches in countries covered by applicable Model 2 IGAs and other branches in non-IGA countries.35 (See III.H.3.) In a Model 2 IGA country or in a non-IGA country, an FFI, by registering is agreeing to comply with the terms of its FFI agreement.

Form 8957 is used by an FFI to register itself and its branches, if any, as a participating FFI (PFFI), a registered deemed-compliant FFI (RDCFFI), a limited FFI, a limited branch, or a sponsoring entity, and will also be used to renew its QI, WP, or WT agreement, if applicable. In connection with its FATCA registration, an FFI, other than a limited FFI or limited branch or a U.S. financial institution (USFI) acting as a lead FFI or sponsoring entity, will be identified on the IRS FFI and branch list.

An organization's FFIs can interact with the IRS by using the FATCA portal to complete and maintain their FATCA registration and certifications. By registering, an FFI agrees to comply with its obligations as a lead FFI, as a member of an EAG, as a sponsoring entity on behalf of sponsored FFI, or as a single FFI entity. It can also agree to register as an RDCFFI, including a Model 1 or 2 FFI in an IGA jurisdiction, or to act as a limited FFI or limited branch.

Although FATCA registration by an organization's FFIs is voluntary, the failure to register has consequences. FFIs that fail to register, obtain a GIIN, and report may be subject to the 30 percent withholding tax on withholdable payments.36 See II.E.

The IRS has developed a one-stop FATCA portal for FFI registration.37 The agency envisioned the registration system as a modern, Web-based application with 24/7 accessibility (briefly closing for periodic maintenance, as over the recent Labor Day weekend). The portal allows an FFI to establish an online account, choose a password, and create challenge questions. The portal displays a customized home page for registrants to manage their accounts, and it ensures security for all data provided on behalf of FFIs. It also provides organizations tools to oversee member or branch information, and it establishes a streamlined environment for FFIs to register in one place.

The registration system is intended to provide flexibility for financial institutions to report on and manage information throughout their corporate structure (EAG members and branches). The system (1) generates notifications when a financial institution's status changes (for example, an e-mail to check its FATCA account), (2) issues a GIIN, and (3) allows financial institutions to appoint delegates (points of contact) to perform registration tasks.

The IRS has developed an online FATCA registration system for financial institutions to register and become PFFIs or RDCFFIs. That registration process has been further streamlined by new enhancements. Among the recent changes are a reduction in the number of questions (to a maximum of 15) and the addition of some upgrades, such as dropdown lists, explanatory icons identified with a question mark, and links to help pages. Also, ROs will no longer be proofed as part of the registration process. See III.H.7.

The registration process (paper or electronic) permits an FFI to obtain a GIIN. Once the registration is approved by the IRS, FFIs will receive a notice of acceptance, and a GIIN will be issued to a PFFI or an RDCFFI. An FFI that has registered to be FATCA compliant and has been issued a GIIN will appear on an FFI and branch list published monthly by the IRS.

Withholding agents may rely on an FFI's claim of chapter 4 status after checking the payee's GIIN against the published list.38 Under the regulations, a withholding agent may generally treat a payee as a PFFI or an RDCFFI only if the agent has a withholding certificate identifying the payee as such and the certificate contains a GIIN for the payee that is verified against the FFI and branch list.39

FFIs and branches registered by April 25, 2014, will be included in the first published list on June 2, 2014.40 Some financial institutions have reportedly indicated they will not engage in business with FFIs that do not have a GIIN by June 30, 2014, the date FATCA withholding is scheduled to begin.41

FFIs registering with the IRS to obtain PFFI or RDCFFI status (for example, as a Model 1 FFI) can do so through the secure online portal from anywhere in the world. However, the IRS has said that registration will be in English only.

The IRS will consider an FFI's registration complete once all the required information is submitted and signed, the FFI logs back in to the account on the FATCA portal after 2013 to make any necessary changes, and the information is submitted as final. The registrant will then receive a message notifying it that the FFI's registration is complete, and a GIIN will be released to the FFI's account on the FATCA portal. Subsequent changes to an FFI's status (for example, a change in the classification of an FFI or a branch) can be made through the FATCA portal. See III.M.

5. Registration versus application. The IRS's FATCA web page42 and the instructions to Form 8957 both indicate that an FFI that registers on the FATCA portal will "upon approval" receive a GIIN from the IRS. Thus, even though the process is called a registration on Form 8957, the IRS may view it in some respects as an application. The IRS can reject an application, and an approval process is generally a more conditional, lengthy, and complicated than a registration. In this case, the registration process will likely be easier than an application because it is self-managed. However, the IRS has said that incomplete information or lack of an electronic signature will hold up the registration and that for an FFI (and presumably, its EAG) to continue to be FATCA compliant, the RO must ensure that the registration information is correct and current.

6. Electronic registration. In releasing the final Form 8957, the IRS reiterated its preference for registrations through the online FATCA portal, a paperless resource. The FATCA portal is the primary way for FFIs and withholding agents to interact with the IRS regarding the registration of entities and various other tasks, most notably the issuance of GIINs, and by tax administrators for reporting.

The questions in the online process look similar to the questions shown on Form 8957 but are presented differently to make the electronic process more efficient. For example, there are dropdown responses for some questions.

One challenge in electronic filing may involve the use of required fields. All fields throughout the Form 8957 (electronic or manual) marked by an asterisk (*) should be completed, if applicable. The IRS, in Appendix D to the FATCA online registration user guide 2013 TNT 161-15: Other IRS Documents (see Exhibit 9), has also identified those questions on Form 8957 which are required by country name and by numeric code.

a. Electronic limitations imposed on registrants. For purposes of completing the legal name of a financial institution, mailing address, or the name and address of the RO or POC, the FATCA online portal generally limits the user to a 40-character maximum, while permitting alphanumeric characters (a-z, 0-9). For some users, the 40-character limit may be a significant problem. The registration portal indicates an error message that special characters are not permitted in the first position (Blank & - / . , ' # %), if special characters are included in the name or address. The author tried a test case, and an error message was obtained if the special characters were used in the name or address in other than simply the first position. Also, the zip code is limited to 9 alphanumeric characters. In some countries, this may simply be far too small a field. The RO and POC business telephone number permits four digits for the country code, 20 digits for the telephone number, and four digits for the extension. In some cases, an RO or POC may have a province, canton number, or local telephone number or extension which is longer than permitted in these fields. These glitches the IRS will have to fix.

7. Manual registration. The IRS released draft Form 8957 on April 5, 2013, for review and comment. The final version of Form 8957 and instructions, released August 19, can be used by financial institutions to register for FATCA purposes. However, the instructions below emphasize that the paper forms should not be mailed to the IRS before January 1, 2014, because it will be unable to accept and process the forms before that date.

The IRS strongly recommends that applicants register online. It warns that the paper form will take longer to process (likely because the IRS itself has to electronically input the registrant's information) and that the delays may be significant if any information is missing or incomplete. As a result, financial institutions that register manually may experience a delay in obtaining GIINs.

Importantly, a registrant that begins registering online cannot change its mind and then use the paper form in lieu of electronic registration. It is unclear why that limitation is built into the registration process, since there may be good reasons for a financial institution to use electronic registrations for some FFIs and EAG members and manual registration for others (for example, controlled FFIs).

8. Instructions for completion of Form 8957. The instructions accompanying Form 8957 released on August 19 explain differences in the registration process for different types of FFIs. See III.H.4.c.ii and III.H.4. The registration process can be accessed through http://www.irs.gov/fatca-registration.43

The type of registration chosen (electronic or manual) is likely an EAG determination, and if one FFI in an EAG has started electronic registration, all the entities in the EAG might be required to register electronically. But the IRS needs to clarify this point. See II.B.7.

As noted, entities submitting paper forms might not be included on the first FFI and branch list, which is scheduled to be published June 2, 2014. Practically speaking, submitting a paper form and registering manually rather than through the electronic online portal will not be a viable option for many FFIs that are engaged in the marketplace, which requires having a GIIN no later than June 30, 2014.44 Form 8957 should be mailed to FATCA, Stop 6099, AUSC, 3651 South IH 35, Austin, Texas, 78741. The instructions on the face of Form 8957 indicate that the form will not be processed if it is unsigned.

If a lead FFI submits a paper Form 8957, after the form is processed by the IRS, the IRS will create an online account for the lead FFI and provide it information on how to access its FATCA account, including its FATCA ID and a temporary access code, which are needed for the lead FFI to access its online account and complete part 2 of the registration form for each member. See "Lead FFIs." An FFI that would like to apply to become a first-time QI, WP, or WT cannot do so using the paper Form 8957 or the FATCA portal.45

9. FATCA online registration user guide. On August 19, in conjunction with the portal opening, the IRS released a 75-page FATCA online registration user guide. It provides instructions for completing the registration process online, including what information is required, how registration will vary depending on the type of FFI, and step-by step instructions for each question.46 On August 19, the IRS also released the FATCA online registration system overview (overview) and tips for logging in to the FATCA registration system (registration tips). (See Exhibit 6.)

10. Registration definitions. Both the registration user guide and the instructions to Form 8957 provide definitions to help financial institutions through the registration process, with the caveats that the user should also look to detailed information about definitions that apply for FATCA under reg. section 1.1471-1,47 and that a Model 1 or 2 FFI should also look to its IGA and any domestic law that may apply to its FATCA obligations.

11. IRS processing of registration forms. New Internal Revenue Manual provisions provide guidance to IRS employees in the Austin submission processing campus who will be performing FATCA registration functions -- that is, processing Form 8957 for financial institutions and entering information into the employee user portal (EUP) database of the FATCA system. According to the IRM, the following submission process functions are part of FATCA processing: the receipt and control operation, the document perfection operation, and the input correction operation.48 The receipt and control operation is responsible for the receipt (mailroom), extraction, and batching of Form 8957, as well as quality review.49 The document perfection operation performs pre-screening activities and reviews correspondence through clerical staff, tax examiners, and quality reviewers.50 The input correction operation is responsible for shipping, batching, pulling, and refiling the forms, as well as quality review.

a. FATCA analyst role. The FATCA analyst, who manages the FFI accounts, can search, view, and edit all FFI registration data (Form 8957) and override the status of an account.51

b. FATCA customer service. Under the heading "FATCA Customer Service," the IRM indicates that the IRS intends to follow all e-help desk procedures for case creation, solutions, and authentication as provided in IRM section 3.42.7, "Electronic Tax Administration." If the review of specific registration data is required to address inquiries from the FFI, FATCA customer service will be able to search, view, and reset the access code; however, customer service will have no modification or editing capabilities.52 E-help desk assistors provide technical support for the registration process and system issues, including log-in and access code questions.53 The IRM says that questions about the paper application process should not be referred to the e-help desk.

c. FATCA tax examiner role. The paper registration process cannot be completed until the Form 8957 information is entered into the system and validated. A tax examiner from the Wage and Investment Division (W&I) performs that function. Within the processing operations, only the tax examiner can add an FFI.

Tax examiners will review the paper submission and input the following information, consistent with the criteria in IRM section 3.21.112.2.5.1.2(3):


    1. select only one answer for question 1 of Form 8957, which asks the financial institution type -- for example, lead FFI of an EAG, member of an EAG, or single sponsoring entity;

    2. if "member" is selected in question 1, provide a FATCA identification number that can be matched to an existing lead FFI account;

    3. if "lead" is selected in question 1, the FFI's FATCA classification in its country of tax residence cannot be listed as "limited financial institution" or "none of the above" in question 4; and

    4. ensure there is an "original signature" in the space provided.54


d. Tax examiner pre-screening. Until the EUP is available,55 the document perfection operation will pre-screen and batch applications that meet the above criteria. Those that do not meet the criteria will be returned to the applicant with Letter 5026.56 The tax examiner reviews the application packet for additional correspondence from the applicant to address any questions or instructions regarding the application or process.57 Copies of the Form 8957 and any identified correspondence should be routed to the Large Business and International Division. The document perfection operation does not send basic cover letter correspondence such as "Enclosed Are Forms 8957" when the applicant is stating only that it is applying for a FATCA ID. If Form 8957 has the items set forth in IRM section 3.21.112.2.5.1.2(3), the form is sent to the clerical staff to be batched.58

e. FATCA quality reviewer. The quality reviewer is able to search and view Form 8957 in the system for quality assurance purposes. Some information generic to Form 8957 must be verified and completed for registration. The IRS instructs quality reviewers to review daily each Form 8957 that is entered into the EUP to ensure that all data are input for a completed registration for the FFI.59

f. FFI submits registration form. As noted, paper Form 8957 registration application information must be entered into the database through the EUP. IRS employees also use the EUP to view and search for FFI registration information and to perform quality review checks and edit and update registration status. The IRM notes that the Form 8957 may be incomplete. It says that the form should be input, even with incomplete fields, as long as it has the items set forth in IRM section 3.21.112.2.5.1.2(3). (See II.B.11.c.) If the FATCA ID is an EAG member only, the access code is not available, and the employee is instructed to print the screen with the FATCA ID and attach the printout to the front of the application. If not previously set, the completion date should be input. If the EUP is unavailable, the employee is to hold the Form 8957 and any attachments.

                                    Table 1


 _____________________________________________________________________________

                                                                      FATCA
                                FATCA    FATCA           FATCA        Quality
                                Analyst  Customer        Tax Examiner Review
 Functionality/Features         (LB&I)   Service (LB&I)  (W&I)        (W&I)
 _____________________________________________________________________________

 Input FI registration
 form (parts 1, 3, and 4)                                  x

 Input agreement signed on
 paper checkbox                                            x

 View FI registration form
 (parts 1, 3, and 4)              x          x             x            x

 View FI registration form
 (Part 2)                         x          x

 View branch condition
 (with change reason)             x          x

 View branch condition date       x          x

 View branch GIIN                 x          x

 View agreement signed on
 paper checkbox                   x          x             x            x

 View FATCA ID                    x          x             x            x

 View FI status
 (with change reason)             x          x             x            x

 View IRS received date           x          x             x            x

 View FI GIIN number              x          x

 View SEID                        x                                     x

 View input completion date       x          x             x            x

 View account creation date       x          x             x            x

 View effective date (FI)         x          x

 Edit FI registration form
 (parts 1, 3, and 4)              x                        x

 Edit FI registration form
 (Part 2)                         x

 Input/edit IRS received date     x                        x

 Search for FI registration
 forms                            x          x             x            x

 Search for FI branches           x          x             x            x

 Reset FI access code                        x

 Override status of FI
 (with change reason)             x

 Override condition of branch
 (with change reason)             x

 Maintain current status
 for edit FI                      x

 Navigate to home page            x          x             x            x

 Find reference materials         x          x             x            x

 Close application                x          x             x            x

The FATCA ID for a single, lead, or sponsoring entity has six characters of uppercase letters and numbers (A-Z and 0-9). The member FATCA ID has the first six characters of the lead's FATCA ID and then five characters or digits: XXXXXX.XXXXX.60 See III.G.

g. FFI registration process. The FFI may register online at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA) or mail the paper form. Form 8957 must be completed and the agreement signed. The tax examiner will input/edit (parts 1, 3 (if applicable), and 4). He must check the box in the section noting that the written agreement is signed. If all parts are input, the tax examiner must then indicate that the paper input is finished by hitting the "complete" button.61

h. Incomplete registration. The system will notify the tax examiner if the form has incomplete fields. As noted, it is acceptable for the form not to have all required fields, so long as the items listed in IRM section 3.21.112.2.5.1.2(3) are present. The tax examiner should confirm that he has completed all fields and select "OK" to continue. Once the tax examiner has electronically indicated that the registration form is complete, the system places the registration in quality reviewer hold for three days. If there are any questions, the quality reviewer contacts the tax examiner. If further editing is required, the system will not meet the three-day hold. If the contact meets Taxpayer Advocate Service criteria, the tax examiner is prompted to see IRM section 13.1.7.62

i. Data fields missing or incomplete. Although the IRS has decided to process a registration if the items listed in IRM section 3.21.112.2.5.1.2(3) are present, this does not mean that the other required fields will not be reviewed or questioned by the IRS after the FFI completes its registration and obtains a GIIN. If the information provided by an FFI is corrupted or incomplete, or it has been submitted in an incompatible format, the IRS will contact the RO directly through one of the FFI follow-up letters (see II.B.11.j) so that the FFI can remediate the problem and resubmit or update the registration through the FATCA portal. If there are repeated administrative or minor errors, the IRS may consider this significant noncompliance requiring further questions.

If an organization intentionally omits the other required fields from the registration for its FFIs even though the information is available in its records, the omission will likely have consequences. At the least, it may trigger a follow-up inquiry by the IRS. If warranted, the IRS may revoke the GIINs issued to those FFIs and initiate a larger audit of the organization.

j. FFI follow-up letters. There are six standard follow-up letters. The first is used to return Form 8957 and inform the FFI that there are critical items that prevent the form from being processed. The IRM cross-references to IRM section 3.21.112.2.5.1.2(3) for those items. See II.B.9.c. The other five letters are used to transmit the FATCA ID, transmit the temporary access code, inform the FFI how to log in to the system, and inform the FFI how to correct any wrong or incomplete information on Form 8957.63 Although the FATCA portal is completely electronic, it is unclear whether the follow-up letters will be sent electronically or mailed, or both.

C. Revised Timeline for FATCA



Commentators have complained that FFIs are not yet ready to be FATCA-compliant because of systems, process, and resource challenges associated with having to implement a completely new global tax information reporting regime. Financial groups recently warned the IRS that not only will FFIs suffer, but that there will be "severe consequences" for financial markets and investors if financial institutions have to start withholding under FATCA by the January 2014 deadline.

Despite what I view as herculean efforts by FFIs to comply with the implementation schedule under the regulations, commentators suggested there was a growing realization that the industry would not be ready by January 2014 and that as a result, there would be significant overwithholding.64 They urged for a one-year extension for the start of FATCA withholding, citing the following problems: The FFI agreement and key forms and instructions have not yet been released; many FFIs do not yet know if they will be subject to IGAs or know when they will have local implementing legislation; FFIs are lacking critical guidance on how to coordinate the obligations of U.S. payers; and they are still awaiting technical corrections to the final rules.

Commentators also argued that some elements of the timeline for the implementation of FATCA present practical problems for both U.S. withholding agents and FFIs. While the comments from FFIs overwhelmingly supported the development of IGAs as a solution to the legal conflicts that might otherwise impede compliance with FATCA and as a more effective and efficient way to implement cross-border tax information reporting, some commentators have noted that in the short term, continued uncertainty about whether an IGA will be in effect in a particular jurisdiction hinders the ability of FFIs and withholding agents to complete due diligence and other implementation procedures.

1. Notice 2013-43 -- the response. In consideration of those comments, the IRS on July 12, 2013, released Notice 2013-43 to amend the regulations by once again65 postponing the start of FATCA withholding by six months and to make corresponding adjustments to various other deadlines provided in the regulations. Notice 2013-43 revised timelines for implementation of the FATCA requirements and provides additional guidance on the treatment of FFIs located in countries that have signed IGAs but not yet brought them into force. See III.H.4.g. See "Exhibit 1" for an updated FATCA timeline and "Exhibit 2" for a FATCA implementation plan consistent with this updated FATCA timeline. Notice 2013-43 says that Treasury and the IRS will amend the regulations under sections 1471 through 1474 to adopt the new rules and that before the issuance of those amendments, taxpayers may rely on the notice.

2. Revised FATCA implementation timeline.

a. Timeline for withholding. Withholding agents generally will be required to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs regarding obligations that are not grandfathered, unless the payments can be associated with documentation on which the withholding agent can rely to treat the payments as exempt from withholding.66

The definition of grandfathered obligation will be revised to include obligations outstanding on July 1, 2014 (and associated collateral).67 However, Notice 2013-43 does not affect the timing provided in the regulations for withholding on gross proceeds, passthru payments, and payments of U.S.-source fixed or determinable annual or periodic income for offshore obligations by persons not acting in an intermediary capacity.68

b. Timeline for implementing new account opening procedures and the definition of preexisting obligations. Withholding agents generally will be required to implement new account opening procedures by July 1, 2014, or, for a PFFI, by the later of July 1, 2014, or the effective date of its FFI agreement.69 See exhibits 1 and 2.

The definition of preexisting obligation will be modified to mean:


    1. for a withholding agent other than a PFFI or an RDCFFI: any account, instrument, or contract maintained, executed, or issued by the withholding agent that is outstanding on June 30, 2014;

    2. for a PFFI: any account, instrument, or contract maintained, executed, or issued by the PFFI that is outstanding on the effective date of the FFI agreement; and

    3. for an RDCFFI: any account, instrument, or contract maintained, executed, or issued by the FFI before the later of July 1, 2014, or the date on which the FFI registers as a DCFFI and receives a GIIN.70


Notice 2013-43 also said that Treasury will make a similar change to the definition of preexisting account in both model IGAs. Thus, it is expected that future IGAs will define the term to mean a financial account maintained as of June 30, 2014. For IGAs in force that contain the previous definition of preexisting account, the coordination provision71 of the IGA will allow the IGA country to permit its FFIs to substitute the definition from the amended final regulations. For IGAs concluded before the coordination provision was added, the coordination provision will apply through the operation of the most favored nation provision once an IGA containing the coordination provision is in force.72

c. Transition rules for completing due diligence on preexisting obligations. The FFI agreement for a PFFI that registers and receives a GIIN from the IRS on or before June 30, 2014, will have an effective date of June 30, 2014, resulting in a six-month postponement of the deadlines for completing due diligence on preexisting obligations.73

For withholding agents other than PFFIs, the deadlines for completing due diligence on preexisting obligations will be postponed by six months. Thus, a withholding agent other than a PFFI will be required to document payees that are prima facie FFIs by December 31, 2014, instead of by June 30, 2014.

The account balance or value will be measured initially as of June 30, 2014, for purposes of determining whether an account is exempt from review, subject only to an electronic search for indicia, or subject to enhanced review. An account with a balance or value that was initially $1 million or below, and for which there has been no change in circumstances, will not be subject to enhanced review unless the balance or value exceeds $1 million as of the end of 2015 or any subsequent calendar year. Thus, the obligation to monitor the account balance or value of preexisting accounts to determine whether enhanced review is needed will be deferred by six months.

Notice 2013-43 provides for a similar six-month delay in the due diligence procedures included in Annex I of IGAs concluded after the issuance of the notice, which delay will generally apply automatically to previously signed IGAs through the operation of the most favored nation provision in those IGAs once those later-signed agreements are in force.74

d. Due date for first report of a PFFI for a U.S. account. The regulations provide that a PFFI will be required to file reports on its U.S. accounts (Form 8966, "FATCA Report")75 for the 2013 and 2014 calendar years no later than March 31, 2015. However, Notice 2013-43 provides that Treasury and the IRS will modify those rules to require reporting on March 31, 2015, only for 2014 (for U.S. accounts identified by December 31, 2014).76 Through the operation of paragraph 6 of article 4 of the Model 1 IGAs,77 that modification to the required reporting will apply automatically to Model 1 IGAs. For IGAs concluded before paragraph 6 was added, the rules of paragraph 6 will apply through the operation of the most favored nation provision once an IGA containing paragraph 6 is in force. As a result, once an IGA containing paragraph 6 is in force, partner jurisdictions will not be obligated to obtain and exchange information for 2013. Instead, the information exchanged by partner jurisdictions in 2015 will have to include only information related to 2014.

e. Treatment of expiring chapter 3 documentation. For purposes of chapter 3 withholding, withholding certificates and documentary evidence generally expire on the last day of the third calendar year following the year in which the withholding certificate is signed or the documentary evidence is provided to the withholding agent.78 Withholding certificates and documentary evidence that would otherwise expire on December 31, 2013, will expire instead on June 30, 2014, unless a change in circumstances occurs that would otherwise render the withholding certificate or documentary evidence incorrect or unreliable.79

f. Automatic extension of some expiring agreements. All QI, WP, or WT agreements that would otherwise expire on December 31, 2013, will be automatically extended until June 30, 2014.80 See III.J.

g. Extension of foreign-targeted registered obligation rules. Notice 2012-20, 2012-13 IRB 574 2012 TNT 46-13: Internal Revenue Bulletin, provided as a limited transition rule that a withholding agent paying interest on an obligation issued in registered form after March 18, 2012, and before January 1, 2014, could apply the foreign-targeted registered obligation rules of reg. section 1.871-14(e) if the obligation satisfies the requirements of those rules. The end of that transition period was intended to coincide with the implementation of the chapter 4 rules. As a result, the transition rule has been extended to obligations issued in registered form after March 18, 2012, and before July 1, 2014.81

D. Due Dates for GIINs and FFI Registration



1. Due date to obtain a GIIN. A withholding agent must generally withhold on any withholdable payments made after June 30, 2014,82 to a payee that is an FFI unless the withholding agent can (1) reliably associate the payment with a withholding certificate identifying the payee as an FFI and (2) verify the FFI's GIIN, which is on that withholding certificate, against the FFI and branch list published by the IRS.83 Thus, it is important for PFFIs and RDCFFIs to obtain their GIINs by June 30, 2014, for payments that are not preexisting obligations or offshore obligations.84 See II.D.1.a.

However, a payee that has not yet received a GIIN but whose registration as a PFFI or RDCFFI is in process may provide the withholding agent a Form W-8 claiming the chapter 4 status it applied for, and writing "applied for" in the GIIN box. The FFI will have 90 calendar days from the date of its claim to provide a withholding agent its GIIN, and the withholding agent will have 90 calendar days from the date it receives the GIIN to verify the accuracy of the GIIN against the published FFI and branch list before it has reason to know that the payee is not a PFFI or RDCFFI.85

If an FFI is removed from the FFI and branch list, the withholding agent knows that that FFI is not a PFFI or RDCFFI on the earlier of the date that the withholding agent discovers the FFI has been removed from the list or one year from the date the FFI's GIIN was removed from the list.86 Thus, withholding agents will be required to reconfirm the status of an FFI at least annually.

a. Documentation of PFFIs or RDCFFIs. A withholding agent may generally treat a payee as a PFFI or RDCFFI only if the agent has a withholding certificate identifying the payee as a PFFI or RDCFFI, and the withholding certificate contains a GIIN for the payee that is verified against the published FFI and branch list, except as discussed below.87

b. Exception for payments made before 2017 for preexisting obligations. For payments made before 2017 for a preexisting obligation, a withholding agent may treat a payee as a PFFI or RDCFFI if the payee has provided the agent its GIIN (orally or in writing) and indicated whether it is a PFFI or RDCFFI, and if the withholding agent has verified the GIIN against the published FFI and branch list.88

c. Exception for offshore obligations -- non-U.S.-source FDAP income. A withholding agent that makes a payment, other than a payment of U.S.-source FDAP income, for an offshore obligation may treat the payee as a PFFI or RDCFFI if the payee provides the withholding agent with its GIIN and states whether it is a PFFI or an RDCFFI, and if the withholding agent verifies the GIIN against the published FFI and branch list.89

d. Exception for offshore obligations -- U.S.-source FDAP income. A withholding agent that makes a payment of U.S.-source FDAP income for an offshore obligation may treat the payee as a PFFI or RDCFFI if (1) the payee provides the withholding agent a written statement that contains the payee's GIIN and states that the payee is the beneficial owner of the payment and a PFFI or an RDCFFI, as appropriate, and documentary evidence supporting the payee's claim of foreign status; and (2) the withholding agent verifies the GIIN against the published FFI and branch list.90

2. Due date for an FFI to register. In the preamble to the final FATCA regulations, Treasury and the IRS announced their intent to create a FATCA portal to serve as the primary way for FFIs to interact with the IRS to complete the required registration, agreements, and certifications.91 The preamble said that the FATCA portal would be accessible to FFIs no later than July 15, 2013. After approval of its registration, each PFFI and RDCFFI would be assigned a GIIN, which would be used both for reporting purposes and to identify the FFI's status to withholding agents. The preamble provided that the IRS would electronically post the first list of PFFIs and RDCFFIs (the FFI and branch list) on December 2, 2013, and would update the list monthly. To ensure inclusion on the December 2013 FFI and branch list, FFIs would need to register by October 25, 2013.

Notice 2013-43 changed those registration dates. The FATCA portal became accessible to FFIs on August 19, rather than July 15, and other key deadlines for registration were extended by six months. Thus, now that the portal has opened, an FFI can begin registering by creating an account and entering the required information for itself, for its branch operations, and, if it serves as a lead FFI, for other members of its EAG. See III.H.1.a. All input information will be saved automatically in the registration system and associated with the FFI's account. From the opening of the FATCA portal through December 31, 2013, an FFI can access its account to modify or add registration information, including the appropriate registration status, as that status is established, for example, by the signing of an IGA. Before 2014, however, any information entered into the system, even if submitted as final, will not be regarded as a final submission, but will merely be stored until it is submitted as final after 2013.

According to at least one commentator, the available testing period and new IRS guidance are long awaited and welcome developments for stakeholders.92 The ability to gain a practical understanding of the registration system before the information is formally submitted is intended to enable an orderly registration process. The IRS is encouraging preparedness by suggesting that registrants input and edit information early during the testing period so they are ready to submit the final information starting on January 1, 2014.93 The same commentator suggested that while the form instructions are silent on the issue, it may be possible to submit a paper Form 8957 by April 25, 2014, and still be included in the June list. I have significant doubts whether the IRS will process any paper forms mailed during the initial registration period in time to be included in the June list because each paper form must be inputted separately by the IRS service center.

According to the IRS, FFIs can use the rest of 2013 to learn the registration process, to input preliminary information, and to refine that information. Each FFI will be expected to finalize its registration information by logging in to its account on the FATCA registration website, making any necessary changes, and submitting the information as final on or after January 1, 2014.

Consistent with that six-month extension, the IRS will not issue any GIINs in 2013. Instead, it expects to begin issuing GIINs as registrations are finalized in 2014. The IRS will electronically post the first monthly FFI and branch list by June 2, 2014. To ensure inclusion in the June 2014 list, FFIs will need to finalize their registration by April 25, 2014 (the initial registration period).94

As provided in the regulations, subject to some exceptions for preexisting obligations and offshore obligations, a withholding agent generally may treat a payee as a PFFI or RDCFFI only if the withholding agent has a withholding certificate identifying the payee as a PFFI or RDCFFI and the agent verifies the GIIN on that withholding certificate against the FFI and branch list. See III.D.2.a.

For payments made before 2015, however, verification of a GIIN is not generally required for payees that are Model 1 FFIs. That provision will continue to apply following the changes described in Notice 2013-43. As a result, Model 1 FFIs will be able to register and obtain GIINs beginning on January 1, 2014; however, those FFIs will have additional time beyond July 1, 2014, to register and obtain a GIIN to ensure they are included on the FFI and branch list before 2015. See III.D.2.a.vii.

As yet, the IRS has made no promises about the timing for the release of a GIIN for an FFI that registers after the initial registration period. However, as discussed above, an FFI may indicate on its Form W-8 that it has applied for a GIIN and thereby be granted an additional 180 calendar days before the withholding agent has reason to know that the payee is not a PFFI or RDCFFI and may therefore (under the presumption rules95) be treated as a nonparticipating FFI (NPFFI) subject to chapter 4 withholding. See III.D.1.

Because the eight-month initial registration period is still compressed, many large financial organizations are still considering other alternatives in the regulations and IGAs. While the online registration could be done, the data gathering for many FFIs in an organization may be protracted -- especially in deciding which entities are included in an organization's EAG.

Some organizations hope that additional registration guidance (for example, FAQs) will permit them to register one entity as a sponsoring entity or lead FFI (or both) during the opening of the registration window and then register all their remaining FFIs later as part of phased registration. Other organizations are not as hopeful that this relief, if it comes, will be broad rather than targeted relief based on the regulations. In fact, some organizations are planning on using the relief already provided in the regulations or in the IGAs, which may permit the delay for obtaining a GIIN for FFIs in Model 1 IGAs or for sponsored FFIs. However, as noted below, this relief is limited by the regulations and clearly does not encompass all FFIs that will likely want to register to obtain a GIIN. See III.D.2.a.

a. Regulatory alternatives to delay registration.

i. Sponsored FFIs can provide a sponsoring entity GIIN until January 1, 2016. For payments made before 2016, an RDCFFI that is a sponsored FFI must provide the GIIN of its sponsoring entity on the withholding certificate if the sponsored FFI has not obtained its own GIIN.96 Thus, a sponsoring entity has a choice. It can either begin to register the sponsored FFIs as soon as it registers as a sponsoring entity,97 or it can delay the registration process for the sponsored FFIs until more of the Model 1 IGAs have been signed or local implementing legislation has been released. However, the sponsoring entity must complete the registration process and receive GIINs for each of its sponsored FFIs before 2016 to avoid possible FATCA withholding.

Because Notice 2013-43 does not specifically discuss the sponsoring entity transition rule, it is likely that some sponsored FFIs can generally continue to apply that transition rule and will have until January 1, 2016, rather than June 30, 2014, to obtain their own GIINs and provide those GIINs on their withholding tickets. However, before 2014, any information entered into the FATCA portal by the sponsoring entity (or sponsored FFIs), even if submitted as final, will not be considered a final submission but will merely be stored until the information is submitted as final after 2013.98 See II.D.2.

While the IRS has indicated in the registration user guide that the information on the registration of sponsored FFIs will be provided on the FATCA website (III.H.1.c.x), it has not yet provided registrants with any further guidance on when, or whether, it will simplify (or change) the registration process for literally thousands of sponsored FFIs which themselves may be a part of numerous EAGs (III.H.1.c.viii), or are stand-alone FFIs which must be registered.

Without additional guidance from the government soon, each of those putative sponsored FFIs, including investment entities or CFCs that are not QIs, WPs, or WTs may decide to spend additional resources, and to register those FFIs, either as part of a lead FFI's EAG, or as single registrants (assuming the FFI is not a part of an EAG) during the initial registration period ending on April 25, 2013, in order to avoid any possibility of withholding on any withholdable payments they receive on or after July 1, 2014.

It should be noted the regulations99 as amended by the recently released Technical Corrections100 provide certain sponsored FFIs with a "safe harbor" for payments made before 2016, by providing that an RDCFFI, including a Model 1 FFI that is a sponsored FFI must use the GIIN of its sponsoring entity on the withholding certificate of the sponsored FFI has not yet obtained a GIIN for itself. III.H.1.b.i. However, this safe harbor does not, on its face, apply to PFFIs, including Model 2 FFIs. There does not appear to be any apparent reason why only RDCFFIs are granted this relief, but PFFIs are not.

ii. FFIs do not need to provide GIINs for the receipt of a payment made under a 'grandfathered obligation.' Withholdable payments do not include any payment made under a "grandfathered obligation"101 or any gross proceeds from the disposition or sale of that obligation.102 Thus, FFIs that receive payments under a grandfathered obligation do not need a GIIN unless the obligation is materially modified,103 which causes the obligation to come back into scope for FATCA purposes.104 Under Notice 2013-43, the definition of grandfathered obligation will be revised from January 1, 2014, to include obligations outstanding on July 1, 2014 (and associated collateral).105

iii. Prima facie FFIs do not need to provide GIINs until 2015 for the receipt of payments under preexisting obligations. If the payee is a prima facie FFI, the withholding agent must treat the payee as an NPFFI beginning January 1, 2015,106 until the date the withholding agent obtains documentation sufficient to establish a different chapter 4 status for the payee. A prima facie FFI means any payee if (1) the withholding agent has available, as part of its electronically searchable information, a designation for the payee as a QI or non-qualified intermediary (NQI); or (2) for an account maintained in the United States, the payee is presumed to be a foreign entity107 or is documented as a foreign entity for purposes of chapter 3 or 61, and the withholding agent has recorded as part of its electronically searchable information North American Industry Classification System or Standard Industrial Classification codes indicating that the payee is a financial institution.108 For the receipt of payments under preexisting obligations, if an FFI is a prima facie FFI, it must generally provide a withholding agent a GIIN no later than January 1, 2015.109

iv. FFIs that are not prima facie FFIs do not need to provide GIINs for the receipt of payments under preexisting obligations until July 1, 2016. For any withholdable payment made before July 1, 2016,110 under a preexisting obligation for which a withholding agent does not have documentation indicating the payee's status as an NPFFI, the withholding agent is not required to withhold unless the payee is a prima facie FFI. Thus, a PFFI generally has until July 1, 2016, to provide a GIIN for withholdable payments it receives under preexisting obligations, unless it is a prima facie FFI. See III.D.2.a.iii.

v. FFIs have until 2017 to provide GIINs for offshore payments of U.S.-source FDAP if paid by a person not acting as an intermediary. A payment of U.S.-source FDAP income made before 2017111 will not be withholdable if it is made under an offshore obligation112 and by a person not acting as an intermediary.113 Thus, an FFI that receives an offshore payment of U.S.-source FDAP paid by a person not acting as an intermediary does not need to provide a GIIN until January 1, 2017.114

vi. FFIs do not need to provide GIINs for pre-2017 payments that are gross proceeds or foreign passthru payments. The regulations exempt from withholding foreign passthru payments and gross proceeds from sales or dispositions of property occurring before 2017.115 Further, the term "withholdable payment" will exclude gross proceeds from the sale or other disposition116 of any property that can produce interest or dividends that are U.S.-source FDAP income before 2017. Therefore, an FFI that receives those payments before 2017 does not have to provide a GIIN.117

vii. Model 1 IGA FFIs do not need to provide GIINs until 2015. A Model 1 FFI will be able to register and obtain a GIIN before July 1, 2014, and may find it convenient to do so. Nonetheless, that financial institution generally is not required to provide a GIIN to withholding agents before 2015 and therefore has time beyond July 1, 2014 to register and to obtain a GIIN.118

However, a Model 1 FFI generally must register before July 1, 2014, if (1) it maintains one or more branches (other than a limited branch or a U.S. branch) in countries that are not covered by a Model 1 IGA; (2) it is renewing its QI, WP, or WT agreement; or (3) it intends to be a lead FFI for one or more members that are not established in, and operating exclusively in, other Model 1 countries119 (the clawback rule). But see II.D.2.a.i for transition relief for RDCFFIs, including Model 1 FFIs.

For payments made before 2015, a withholding agent may treat the payee as a Model 1 FFI if it receives a withholding certificate from the payee indicating that it is a Model 1 FFI and identifying the country in which the payee is a Model 1 FFI, regardless of whether the certificate contains a GIIN for the payee (the Model 1 IGA transition rule).120

For payments under a preexisting obligation, a withholding agent may treat a payee as a Model 1 FFI if it obtains a pre-FATCA Form W-8 from the payee, and the payee indicates (orally or in writing) that it is a Model 1 FFI, regardless of whether the certificate contains a GIIN for the payee for payments made before 2015.121

For payments made before 2015 under an offshore obligation, a withholding agent may treat the payee as a Model 1 FFI if the payee informs the withholding agent that it is a Model 1 FFI and identifies the country in which it is a Model 1 FFI. For a payment of U.S.-source FDAP income, the payee must provide a written statement that it is the beneficial owner and documentary evidence supporting the payee's claim of foreign status.122

For payments made on or after January 1, 2015, that do not constitute U.S.-source FDAP income, the withholding agent may continue to treat a payee as a Model 1 FFI if the payee provides the withholding agent its GIIN (orally or in writing) and the withholding agent verifies the GIIN against the published FFI and branch list.123

For purposes of the Model 1 IGA transition rule, Notice 2013-43 also provides some additional relief. For FFIs located in a country that has signed an IGA but has not yet brought it into force (for example, because the country does not yet have implementing legislation), the Model 1 IGA country will be treated as having the IGA in effect, and an FFI located in that country may register as a Model 1 FFI. Thus, some Model 1 FFIs may be able to take advantage of the Model 1 IGA transition rule and wait until January 1, 2015, to obtain a GIIN. The deadline otherwise would have been July 1, 2014, which is the date that an FFI in a non-IGA jurisdiction must generally have a GIIN. See III.H.4.g.

b. IGA alternatives to delay registration.

i. U.K. Model 1 interpretative guidance: Model 1 FFIs do not need to provide GIINs until 2015. In guidance note 11, HMRC provided that each reporting U.K. financial institution (a Model 1 FFI in the United Kingdom) and any FFI that is an RDCFFI will be required to register and obtain a GIIN from the IRS.124

Guidance note 11 also provides relief by extending until January 1, 2015, the date Model 1 FFIs need to provide GIINs.125 The guidance makes it easier for Model 1 FFIs to qualify for this relief, because those financial institutions can now confirm their status without regard to the type of payments (for example, U.S.- or non-U.S.-source FDAP) or whether the payments relate to preexisting obligations or offshore obligations.

Before 2015, a Model 1 FFI can generally confirm its status by (1) providing a withholding certificate; (2) providing a pre-FATCA Form W-8126 with an oral or written confirmation that it is a Model 1 FFI, or (3) informing the withholding agent that it is a Model 1 FFI.

While not completely clear, it is likely the clawback rule will require some Model 1 FFIs to continue to register before July 1, 2014. See "Model I IGA FFIs do not need to provide GIINs until January 1, 2015."

ii. Registration on Saturday, Sunday, or holiday. The IRS has indicated that an FFI will be able to register around the clock on a Saturday, Sunday, or legal holiday because the FATCA portal will be continuously open with the exception of brief closures for periodic maintenance.

E. Consequences of Failure to Register



As noted earlier, FATCA registration by an organization's FFIs is voluntarily, but FFIs that fail to register and obtain a GIIN (other than CDCFFIs127) and meet their reporting obligations will be subject to a 30 percent withholding tax on withholdable payments. However, if an organization gets it wrong, and classifies entities as FFIs, which should be classified as NFFEs, it may provide information about its account holders to the taxing authorities (for example, U.S. account information) which is not required under the IGAs or the regulations and may violate their customer right to privacy under local law (for example, the Data Protection Act in the United Kingdom). However, transitory exceptions to this rule may extend the date when withholding must occur. See III.D.1. Further, if a withholding agent that makes a payment to an FFI can reliably associate it with a valid withholding certificate or documentary evidence to determine its status as a PFFI, DCFFI, excluded FFI, or other compliant chapter 4 status, it will not have to withhold.128 However, if a withholding agent cannot do so, it must presume the entity is an NPFFI and withhold.129

1. Reliance on the GIIN only, and failure to verify on IRS published list. Absent reason to know that the entity is an NPFFI, a withholding agent can rely on the payee's GIIN, as long as the FFI and its GIIN are properly verified on the published FFI and branch list.130

2. Mitigation strategies are limited if withholding agent cannot match name or GIIN on published list. Under the regulations, a withholding agent must reliably associate a withholdable payment with valid documentation.131 Although a withholding agent may still be able to reduce the effect of its failure to get the right name or GIIN from a customer upfront, the more lenient "documentation after payment" rules discussed below are subject to a stringent "reason to know" rule applicable to PFFIs and RDCFFIs. That rule generally provides a withholding agent only 90 calendar days to validate the FFI's GIIN on the published FFI and branch list before it must withhold.132

3. General 'documentation after payment' rules. In general, a withholding agent may establish that withholding on a payment was not required under chapter 4 on the basis of a valid withholding certificate or other appropriate documentation that was furnished after the date of payment but was effective as of the payment date.133

A withholding certificate furnished after the payment will be considered effective as of the date of the payment if it contains a signed affidavit (either at the bottom of the form or on an attached page) stating that the information and representations in the certificate were accurate as of the time of the payment. A certificate obtained within 30 days after the payment date will not be considered unreliable solely because it does not contain an affidavit.

For a withholding certificate received more than a year after the payment, the withholding agent must obtain, in addition to the certificate and affidavit, documentary evidence that supports the claimed chapter 4 status.134 If documentation other than a withholding certificate is submitted from a payee more than a year after the payment, the withholding agent must also obtain from the payee a withholding certificate and affidavit supporting the chapter 4 status claimed as of the payment date.135

However, the regulations provide a specific reason-to-know rule that may severely limit the efficacy of the more liberal documentation rule if a withholding certificate is provided by a FFI after the payment.136 See IV.A.1.


III. FFI Registration Process

A. Information FFIs Should Collect

Financial institutions will need to take important steps before the registration process even begins. An organization must (1) complete a legal entity and branch analysis, including an EAG analysis; (2) determine its registration approach (that is, which entities will be lead FFIs and members of an EAG); (3) determine which entities will be sponsoring FFIs or sponsored FFIs; (4) collect several key pieces of information; (5) address possible delays in registration and planning options; and (6) address specialized planning for funds, intermediaries (such as trusts), and securitization vehicles.

An organization also must collect basic financial institution information for the entity, including (1) the legal name and mailing addresses of the FFI or branch; (2) the FFI's country of tax residence and FATCA classification in its country of tax residence; (3) any branch's FATCA classification outside the FFI's country of tax residence; (4) whether the branch is a limited branch; (5) whether the branch is a QI, WP, or WT; (6) the country of tax residence of the EAG members (to be provided by the lead FFI); (7) the FATCA classification of each member; (8) the employer identification number, if applicable, if the financial institution is a QI, WP, or WT; and (9) the responsible party and any private arrangement intermediary (PAI) contracts, for each QI.

                                   Exhibit 3



                         Form 8957 Checklists of Items
                          Required by FFI Registrants
 _____________________________________________________________________________

 All Registrants   o FFI type (single, lead FFI, member, or sponsoring entity).

                   o The FFI's legal name.

                   o FFI's country of residence for tax purposes.

                   o FFI Classification, (i.e., PFFI; RDCFFI, including a Model
                     1 and Model 2 FFI; limited FFI; or none of the above).

                   o FFI's mailing address.

                   o FFI's QI/WP/WT EIN, if the FFI has in effect one of these
                     agreements. Confirm whether the institution intends to
                     maintain or renew its status as a QI, WP, or WT.

                   o Confirm whether the FFI maintains a branch in a
                     jurisdiction outside of its country of tax residence, and
                     then confirm whether the FFI is a tax resident of the
                     United States or maintains a U.S. branch (other than the
                     U.S. territories).

                   o If the FFI is a tax resident of the United States or
                     maintains a branch in the United States (other than the
                     U.S. territories), the EIN of the FFI or branch.

                   o Each jurisdiction in which the FFI maintains a branch,
                     along with whether the branch is a limited branch and
                     whether the FFI intends to maintain QI, WP, or WT status
                     for that branch (if it is covered by a QI, WP, or WT
                     agreement).

                   o Business title for the FATCA RO for the FFI, along with
                     legal name and contact information.

                   o Confirm whether the FFI's RO will designate one or more
                     Points of Contact (POCs) (a POC will be authorized to
                     receive FATCA registration information and other related
                     FATCA correspondence from the IRS) and, if so, the POC's
                     contact information. Note: FFIs are allowed up to five
                     POCs.

 Lead FFI Only     o In addition to the information required above, the member
                     FFIs' legal names, countries of residence for tax
                     purposes, and member types. Once the lead FFI has
                     established the member's account, the member or its lead
                     FFI will be required to complete the member's
                     registration. Note: The RO for a lead FFI automatically
                     becomes a POC for each of the lead's member FFIs.

 QI, WP, or WT     o Confirm whether the QI/WP/WT's legal name has changed
                     since the effective date of its most recent QI/WP/WT
                     agreement and, if so, the new legal business name and
                     reason for the name change (merger, liquidation,
                     rebranding).

                   o For QI/WP/WTs, the responsible party's name, contact
                     information, and whether or not that is the same person
                     listed as the RO for the FFI.

                   o The list of PAI contracts that are effective, if
                     applicable.
 _____________________________________________________________________________

 Source: FATCA Online Registration User Guide, 2.3, "Figure 5 -- What
 You Will Need," at 16 (Aug. 19, 2013).

The financial institution must designate an RO and obtain his information, including name, business title, business address, business telephone, fax number, and e-mail address. If the RO designates an additional POC, similar information must be obtained for that POC. For a complete list of FFI information required for registration, see Exhibit 3.

One commentator recently suggested that the six-month delay in FATCA implementation provided by the IRS in Notice 2013-43 will provide financial institutions an opportunity to have more time to gather complete and accurate information about their entities, make necessary key business decisions, and conduct the registration process in an orderly manner.137

B. Incomplete/Erroneous Information



Form 8957 requires four pages of detailed information for each entity that wishes to register. The instructions indicate that all registrants must complete parts 1 and 3 if the registrant is a QI, WP, or WT. The form will not be processed if it is not signed in part 4. The lead FFI must complete part 2 of the registration to identify each of its EAG members.

C. Parts to Online Registration Process



The registration system allows an FFI to set up an online account, complete the registration form, and receive a confirmation or approval from the IRS. Under part 1 of the FATCA registration process, the FFI enters http://www.irs.gov/FATCA-registration to create an account and receive an access code by providing general entity information.138 Part 2 of the process is for the FFI to actually complete the registration form.139 The FFI and its EAG members will complete the registration form by providing basic institutional information (address, incorporation details, branch country, POCs, etc.). Part 3 of the registration process is for the IRS to approve the FFI registration. Once approved, an FFI will receive its notice of registration acceptance and its GIIN and be placed on the FFI and branch list, which will be available to the public at http://www.irs.gov/FATCA. See Exhibit 2 for a FATCA implementation plan consistent with the updated FATCA timeline; Exhibit 4 for a flowchart of the FFI registration process; and Exhibit 5 for the key FATCA registration steps for each type of financial institution.

Exhibit 4

FATCA Registration Process



Source: FATCA Online Registration User Guide, 1.3, "Figure 1 -- FATCA FI Registration Process," at 8 (Aug. 19, 2013).

D. Consolidated Compliance Program



The PFFI must appoint an RO to oversee the PFFI's compliance with the requirements of the FFI agreement. The RO must (personally or through a designated person) establish a compliance program that includes policies and processes sufficient for the PFFI to satisfy the requirements of the FFI agreement.140 The RO (or designee) must periodically review the sufficiency of the FFI's compliance program and the FFI's compliance with the requirements of the FFI agreement during the certification period.141 The results of the periodic review must be considered by the RO in making the periodic certifications required under reg. section 1.1471-4(f)(3).

The registration user guide provides more interpretative detail on the consolidated compliance program (CCP). It says that if an EAG has in place a CCP as described in reg. section 1.1471-4(f)(2)(ii), the members that elect to participate in the same CCP should be registered as members by the lead financial institution that is acting as the compliance financial institution (compliance FI) for the compliance group.142 See III.H.1.a.

1. Consolidated compliance program defined. A PFFI that is a member of an EAG that includes one or more FFIs may elect to be part of a CCP (and perform a consolidated periodic review) under the authority of a PFFI, a Model 1 FFI, or U.S. financial institution (a compliance FI) that is a member of the electing FFI's EAG, regardless of whether all those members so elect.143 A sponsoring entity is required to act as the compliance FI for its sponsored FFIs.144 And when an FFI elects to be part of a CCP, each branch that it maintains (including a limited branch) must be subject to periodic review as part of that program.145

Unfortunately, the registration user guide provides no further detail on how a sponsoring entity becomes a compliance FI or whether it is elective. Presumably, future guidance will address sponsoring entities and how they should provide information about their sponsored FFIs.146

i. Definition of compliance FI. A compliance FI is a PFFI, Model 1 FFI, Model 2 FFI, or USFI that agrees to establish and maintain a CCP and to perform a consolidated periodic review on behalf of one or more members that are part of the EAG (the compliance group).147 According to the instructions to Form 8957, a compliance FI must also meet the requirements to register as a lead financial institution, and as part of that registration, it must identify each member financial institution that is included in its compliance group.148

                                    Exhibit 5



                Key FATCA Registration Steps for Each Type of FFI
         The table below summarizes the key steps for each type of FFI:
 _____________________________________________________________________________

 Single FFI                                                   Sponsoring
 Registrant          Lead FFI             FFI Member          Entity
 _____________________________________________________________________________

 Create an           Create an            Enter online        Create an      
 account. Choose     account. Choose      system with the     account. Choose
 an Access Code      an Access Code       FATCA ID and        an Access Code  
 and the system      and the system       Temporary/          and the system  
 will assign a       will assign a        Access Code         will assign a  
 FATCA ID.           FATCA ID.            given to you by     FATCA ID.      
 Record FATCA ID     Record FATCA ID      your Lead.          Record FATCA ID
 and Access Code     and Access Code      Create a new        and Access Code
 for future use.     for future use.      Access Code.        for future use.
 Complete Part 1                          Record FATCA ID                    
 of this online      Complete Part 1      and Access Code     Complete the    
 FATCA               of this on-line      for future use.     relevant        
 Registration        FATCA                                    questions in    
 form (Form          Registration         Complete Part 1     Part 1 of this  
 8957).              form (Form           of this online      online FATCA
                     8957). Complete      FATCA               Registration
 Complete Part 3     Part 2 of this       Registration        form (Form      
 if you have a       on-line FATCA        form (Form          8957) while    
 Qualified           Registration         8957).              completing the  
 Intermediary,       form.                                    FATCA          
 Withholding                              Complete Part 3     Registration,  
 Foreign             Complete Part 3      if you have a       select None of  
 Partnership, or     if you have a        Qualified           the Above for  
 Withholding         Qualified            intermediary,       Question 4, Not
 Foreign Trust       Intermediary,        Withholding         Applicable for  
 agreement in        Withholding          Foreign             Question 6, and
 effect and wish     Foreign              Partnership, or     No for Question
 to renew that       Partnership or       Withholding         7. You will    
 agreement.          Withholding          Foreign Trust       then skip to
                     Foreign Trust        agreement in        Question 10. Do
 On or after         agreement in         effect and wish     not complete    
 January 1,          effect and wish      to renew that       Part 3.        
 2014,               to renew that        agreement.                          
 electronically      agreement.                               On or after    
 sign and submit                          On or after         January 1,      
 your                On or after          January 1,          2014,          
 registration        January 1,           2014,               electronically  
 form. Wait for      2014,                electronically      sign and submit
 registration to     electronically       sign and submit     your            
 be processed.       sign and submit      your                registration
                     your                 registration        form. Wait for
 Upon approval,      registration         form. Wait for      registration to
 the FFI will        form. Give your      registration to     be processed.  
 receive             Members their        be processed.                      
 notification.       FATCA login                              Upon approval,
                     information.         Upon approval,      the Sponsoring
 GIINs will be       Wait for             the FFI Member      Entity will    
 assigned to the     registration to      will receive        receive        
 FFI and any         be processed.        notification.       notification    
 branches that                                                and GIINs will  
 are not Limited     Upon approval,       GIINs will be       be assigned to  
 Branches.           the Lead FFI         assigned to the     the FFI as a    
 Assigned GIINs      will receive         FFI and any of      Sponsoring      
 will be             notification.        its branches        Entity.        
 included in the     GIINs will be        that are not                        
 next published      assigned to the      Limited             The assigned    
 IRS FFI and         FFI and any of       Branches.           GIIN will be    
 Branch List.        its branches                             included in the
                     that are not         Assigned GIINs      next published
                     Limited              will be             IRS FFI and
                     Branches.            included in the     Branch list.
                                          next published      Information
                     Assigned GIINs       IRS FFI and         registration of
                     will be              Branch List.        Sponsored
                     included in the                          Entities will
                     next published                           be provided on
                     IRS FFI and                              the FATCA
                     Branch List.                             website.        
 _____________________________________________________________________________
                                                             
 Source: FATCA Online Registration User Guide, 1.3, "Figure 2 --
 Registration Steps by FI Type," at 11 (Aug. 19, 2013).

2. Requirements of a compliance FI. A PFFI, Model 1 FFI, or USFI that agrees to establish and maintain a CCP and perform a consolidated periodic review on behalf of one or more FFIs (the compliance group) must agree to identify itself as the compliance FI and identify each member financial institution for which it acts (an electing FFI) to the extent required by the IRS as part of the FFI registration process or certification procedures.149

The agreement between the compliance FI and each electing FFI must permit either the compliance FI or the electing FFI to terminate the agreement upon a finding by the IRS or by either party that the other party to the agreement is not fulfilling its obligations under the agreement or is no longer able to fulfill them.150

i. Requirements for registration by compliance FI. If an EAG has a CCP in place,151 member financial institutions that elect to participate in the same CCP should be registered as member financial institutions by the lead FFI that is acting as the compliance FI for the compliance group. According to the registration user guide,152 registration by a compliance FI requires the following steps on the FATCA portal: (1) enter the legal name of the member financial institution; (2) enter the member's country of residence153; (3) if the member is in a U.S. territory or a minor outlying island, select the "United States" option; (4) identify the member financial institution classification in its country of residence154; and (5) if there are multiple member financial institutions, click on the "add another" button and repeat the above process.155

3. Bulk registration or Excel format. The FATCA portal does not allow for bulk registration when the information is downloaded directly to the IRS. Nor does it permit lead FFIs or sponsoring entities to provide the IRS an Excel spreadsheet with the required information for each member or sponsored FFI. The IRS has not changed its views on this issue, based on the registration user guide and supporting documents.

E. Parts to Registration Form



Both Form 8957 and the online registration portal (the electronic version of the form) ask for basic information. Part 1 of Form 8957 asks for basic information on the lead FFI of an EAG, the EAG member (not lead), single entity (not an EAG member), or sponsoring entity. Part 1 also asks for branch details and the name and contact information for the RO and POCs, if applicable. The instructions on the face of Form 8957 indicate that all registering financial institutions must complete part 1. Part 1 must be completed by all registrants to provide the basic identifying information.156 After a financial institution has logged in to the system, the registration process will begin with part 1. Part 1 consists of 11 questions that request identifying information about the financial institution and must be completed for all financial institution types. The lead FFI can complete part 1 for its member financial institutions, but the member financial institution will typically complete part 1 for itself.157 See III.H.

Once part 1 is completed, the registration system will direct the user to the next applicable registration section based on the user's responses. For this purpose, the lead FFI advances to part 2, question 12, and if the user answered "yes" to renewing the financial institution's status as a QI, WP, or WT, the system will advance to part 3, question 13. If the financial institution's classification is a single member financial institution or sponsoring entity that is not a QI, WP, or WT, the system will advance to part 4.

Part 2 of Form 8957 asks for member financial institution details, if applicable. Part 2 should be completed only by a lead FFI, and it must be completed through the FATCA portal. The lead FFI must identify each member financial institution for which it is acting as a lead financial institution. See III.I. Part 3 should be completed only by a financial institution, including a foreign branch of a USFI acting as a QI, WP, or WT that wishes to renew it agreement. See III.J.

The lead FFI will complete parts 1 and 2, and part 3 if it is a QI, WP, or WT. EAG members will only complete part 1 (with the lead FFI's assistance), and possibly part 3 if the member is a QI, WP, or WT.

Part 4 of Form 8957, although simply titled "Signature," includes not only a signature and date line, but a statement that the RO affirms by checking the box. Part 4 must be completed by all registering financial institutions. See III.K.

1. Which entities are eligible to register? The following entities are eligible to register (on behalf of themselves and their branches) for the specific purposes described below, as well as to obtain a GIIN (unless the entity is a limited FFI or limited branch):

  • for an FFI (or foreign branch of an FFI or USFI) that is treated as a Model 1 FFI -- to authorize one or more POCs to receive information concerning registration on the FFI's behalf;
  • for an FFI (or foreign branch of an FFI) that is treated as a Model 2 FFI -- to authorize one or more POCs to receive information concerning registration on the FFI's behalf and to confirm that it will comply with the terms of an FFI agreement, as modified by the applicable Model 2 IGA;
  • for an FFI (or branch of an FFI) other than one covered by an IGA -- to enter into an FFI agreement to be treated as a PFFI, to agree to meet the requirements to be treated as an RDCFFI, or to confirm that it will comply with the terms applicable to a limited FFI or a limited branch;
  • for a financial institution seeking to act as a sponsoring entity -- to agree to perform the due diligence, reporting, and withholding responsibilities on behalf of one or more sponsored FFIs;
  • for a financial institution (including a foreign branch of a USFI) acting as a QI, WP, or WT -- to renew its QI, WP, or WT agreement; and
  • for a USFI wishing to act as a lead financial institution for purposes of registering its member financial institutions -- to identify itself as such. A foreign branch of a USFI located in a Model 2 IGA jurisdiction does have to register unless the foreign branch needs to renew its QI, WP, or WT agreement.158

F. Account Creation

A financial institution using the FATCA portal will be able to create an online FATCA account for itself and for member financial institutions of an EAG for which it is designated as the lead financial institution. However, to gain access to the FATCA portal and create a FATCA account, a financial institution must use a unique access code and FATCA ID.

For this purpose, a user will likely gain access to the FATCA portal only if he (and not an entity, department, business unit, or division) (1) is a properly authorized RO or POC of the financial institution (up to five POCs are allowed per financial institution, including the RO); and (2) has obtained the proper log-in credentials for that financial institution (for example, the financial institution's unique access code and FATCA ID).159

Each registering financial institution will receive a FATCA ID and create its own access code to be used to log in to its online FATCA account. Branches of a financial institution will not have separate accounts but will be assigned separate GIINs.

A user will enter the FATCA portal by going to http://www.irs.gov/fatca-registration, which will direct him to the FATCA log-in page. The user must open an online registration form by clicking on the link titled "Financial Institution Registration Register Now." The user will create a unique access code for the financial institution the first time he logs in to the FATCA portal.

The user then will be prompted to identify the institution type as single, lead FFI, member FFI of an EAG, or sponsoring entity.160 To create an account, the financial institution will be required to create challenge questions and an access code (password). After the single, lead, or sponsoring entity creates its account, it will be provided a FATCA ID. A lead financial institution or a member then will be prompted to enter a new separate unique access code for future log-ins and will also have a unique FATCA ID to be used in completing the registration process and associating FFI group members with the FFI group.161

Member FFIs will have their FATCA accounts created by their lead FFIs. They must receive FATCA IDs and temporary access codes from their lead FFI in order to log in as an existing user to obtain their permanent access codes and complete their online FATCA registration. A member cannot create a new FATCA account.

The FATCA ID used to identify the financial institution is only for purposes of registration and is not the same number as the GIIN. A GIIN is issued after the FATCA registration is submitted and approved.162

According to the registration user guide, the following steps must be followed on the FATCA portal to create an account online.

First, as part of the new account creation process for the financial institution, the user will be required to check a box stating, "I declare that I have been authorized by the FI to create a registration account on their behalf" and then must click the box titled "create account."163 The IRS explained that this statement was necessary to establish that the user has the authority to register or update information on behalf of the financial institution.

It is still unclear if the user must be an RO or POC to log in to the site. The IRS has indicated that although it will not verify or proof the user status, organizations may nonetheless face consequences if the IRS later determines that the organization assisted in facilitating erroneous log-ins or the submission of fraudulent misinformation to the FFI Web portal. This raises the question whether an organization's lack of security over an FFI's access codes or FATCA IDs is sufficient to cause a problem with the IRS.

Second, the user must check the box for the applicable financial institution type as a single, lead, or sponsoring entity.164 It is critical that the user select the correct type of financial institution because it cannot be changed once the account is created. A member financial institution cannot create a new FATCA account, and a member should contact the lead FFI to obtain its FATCA ID and access code.

Third, the user is instructed to click the box "Next" to create two challenge questions from a dropdown menu. The answers to those questions may be needed in the future to recover the financial institution's FATCA ID and access code.165

Fourth, to create a new access code, the authorized user types an access code in the "Create Access Code" box, then confirms the access code chosen by retyping it in a box titled "Confirm Access Code," and then clicks "Next." The registration user guide says that the access code must contain between eight to 20 characters, have at least one uppercase and one lowercase letter, one number, and one of the designated special characters (?! @ # ^ * , ( ) ~ % .).166 The access code is not the FATCA ID or GIIN but essentially a separate unique passcode. See "FATCA ID and GIIN."

The lead FFI/single/sponsor account confirmation screen then displays the FATCA ID and cautions the RO or POC not to forget the FATCA ID and access code because both are required for future access to the account.

Once the financial institution has successfully created the account, the IRS will send an e-mail message to the RO's e-mail address notifying him that the account was created. The registrant's FATCA ID will be on the financial institution's home page under "Account Information." See IV.B.

1. Gaining access to registration portal on subsequent log-ins. After the financial institution has created a FATCA account, it can access that account through the registration log-in page. Singles, lead FFIs, member financial institutions, and sponsoring entities will all be able to log in using this screen. The financial institution registration user log-in screen will allow users with an existing FATCA ID and access code to log in to the system by typing the system-generated FATCA ID or member FATCA ID and access code.

Members will need to contact their lead FFI to get their FATCA ID and temporary access code. They will then need to set up a new permanent access code after logging in the first time using the temporary access code provided by the lead FFI. Each member financial institution will have a unique FATCA ID with an alphanumeric sequence. For example, the single/lead/sponsoring entity FATCA ID could be 123ABC, while the member FATCA ID could be 123ABC.XXXXX (the first six digits identify the lead FFI, and the remaining 5 digits identify the member (sequentially)).167

Both the FATCA ID and the access code will be needed to log back in to the FATCA portal. The IRS anticipates that there may be ROs and POCs at both the lead and member levels who may be given rights to log in to an FFI's account and make changes to it. See III.H.7.

Under the screen titled "Financial Institution Account User Login," after the FATCA ID and access code are entered into the appropriate boxes, the registrant is instructed to log in again.

Only one user at a time may log in and register and access the FATCA account of a specific financial institution, for example to update an account for an FFI. If another user attempts to log in to a FATCA account already in use, an error message will be displayed. That alone may significantly extend the initial registration process for organizations with many FFIs.

Further, if a user fails to enter the correct access code or FATCA ID for the financial institution (the access code and FATCA ID are not user-specific but are FATCA-account-specific for a particular financial institution) after several attempts, the financial institution's account may be locked out or frozen for a fixed period before log-in will again be permitted.168

However, multiple FATCA accounts for the separate member financial institutions of an EAG may be accessed at the same time because they are different specific accounts.

2. Recovering the access code. If the log-in is unsuccessful after several attempts, the user may have to reset the access code. From the log-in screen, the user should click "Forgot FATCA ID or access code," enter the FATCA ID, click "next," and continue to answer the two challenge questions. To reset the financial institution's access code, the challenge questions must be answered correctly.169 After these questions are answered correctly, the user is directed to create a new access code and then reconfirm the code in the next box and click "next." The user is then instructed to notify the other POCs of the new access code.

G. FATCA ID and GIIN



1. FATCA ID. Although the final FATCA regulations do not mention the FATCA ID, the preamble to the proposed regulations said that each FFI member, including a lead FFI, would be assigned a unique FATCA identifier to be used in completing the registration process and associating members with the FFI group. The FATCA ID is issued when each financial institution has created the account, and it can be used to re-log in to the site.

Each registering financial institution will receive a FATCA ID and will create its own access code to be used to log in to the financial institution's online FATCA account. Branches of a financial institution will not have separate accounts but will be assigned separate GIINs. The FATCA ID will be issued when the financial institution has successfully created the FATCA online account. It can be used to re-log in to the site. See III.F.

The FATCA ID is a randomly generated identification number assigned by the FATCA portal when a financial institution establishes its account. For financial institutions that are not an EAG member, such as a lead FFI, sponsoring entity, or single registrant, the FATCA ID is a randomly generated six-character alphanumeric string. These six characters are uppercase letters (excluding "O") or numbers, or a combination of both, and will be the first six digits of the GIIN.170

For member financial institutions, the FATCA ID will be 12 alphanumeric characters: The first six characters will be the lead financial institution's FATCA ID, followed by a period. The last five characters will be numeric and assigned sequentially to each EAG member.171 If a member does not provide or create a member FATCA ID that can be matched against a lead FFI's FATCA ID, the registration will be treated as incomplete.172 The FATCA ID is not the same as the GIIN. See Exhibit 6 for the composition of the FATCA ID.

In addition to reminding ROs not to forget the unique FATCA ID and access code, the IRS has recommended that the RO (or POC) permanently record and secure the identifier and passcode to ensure they are not used by those who lack access rights (for example, by individuals who are not the financial institution's authorized RO or POC).

i. Recovering the FATCA ID. A recently released IRS video173 directs a user who has forgotten the financial institution's FATCA ID to click the "Forgot FATCA ID or Access Code?" box on the log-in page. The user will be brought to the "Forgot Access Code" screen. On that screen, the user is directed to click on the link, "I do not know my FATCA ID." The user will then be brought to a page with information on how to recover a FATCA ID.

On that page, the IRS suggests that if the user does not know the FATCA ID, the user for a single, lead FFI, or sponsoring entity is directed to contact the RO or POC to obtain the FATCA ID for the financial institution and for members to contact the lead's RO or POC to obtain the FATCA ID. If the user still does not know the FATCA ID for the financial institution, further help is available by clicking on the "needed" hyperlink, which directs the user to a system support page for the online FATCA registration, including help with log-in problems, error messages, and other technical issues.

When e-mailing the IRS for assistance with a forgotten FATCA ID, the following information is needed: financial institution legal name, the name and e-mail address of the person sending the e-mail, that person's role in the financial institution, the business e-mail address associated with the sender's role, a description of the problem, and a list of any error messages the user received. Telephone support is also available 6:30 a.m. to 6:30 p.m. (U.S. Central Time), Monday through Friday. From the United States, a user can call toll free at 866-255-0654, or call 512-416-7750 (not toll free) from outside the United States.

2. Format of GIIN. Formerly known as an FFI-EIN in the proposed regulations,174 the GIIN is the identification number that is assigned to a registered FFI.175 An FFI may agree to report specified information about its account holders by registering to be FATCA compliant. An FFI that has registered to be FATCA compliant and has been issued a GIIN will appear on the published FFI and branch list, against which withholding agents check claims of FATCA status.176 Each branch of the FFI that is outside the FFI's country of tax residence (other than limited branches) also will be issued a unique GIIN and will appear on the published list.

A separate GIIN will be issued to a financial institution to identify each jurisdiction in which it maintains a branch that is a PFFI or an RDCFFI. This includes the FFI's jurisdiction of residence, where the FFI maintains a branch that is not treated as a limited branch. It is anticipated that the IRS FFI and branch list will be updated monthly to add or remove FFIs (or their branches). The GIIN may be used by an FFI to identify itself to withholding agents and tax administrators for FATCA reporting. A GIIN will be issued only to FFIs that are not limited FFIs, limited branches, or U.S. branches of an FFI, and it will be issued after an FFI's FATCA registration is submitted and approved.177 In connection with its FATCA registration, a financial institution (other than a limited FFI or limited branch) or a USFI acting as a lead FFI or a sponsoring entity will be issued a GIIN and identified on the FFI and branch list.

Each branch of the FFI that is outside the FFI's country of tax residence and is not a limited branch will also be issued a unique GIIN and will appear on the published list. Withholding agents may rely on an FFI or branch's claim of FATCA account status based on checking the payee's GIIN against the published FFI and branch list.178

The GIIN also includes the number assigned to a Model 1 FFI for purposes of identifying that entity to withholding agents.179 A separate and unique GIIN is issued to each lead FFI (including a USFI used as the lead), EAG member, single FFI, sponsoring entity, and sponsored FFI.

An FFI will use its GIIN to establish its chapter 4 status180 for withholding purposes and to identify the institution for reporting purposes under the regulations.181 According to the preamble to the final regulations, the IRS may use the GIIN for Model 1 FFIs to satisfy reporting requirements under local law, a possibility that Treasury is discussing with Model 1 IGA partners.182

The IRS has informally indicated that it anticipates GIINs will be used not only by the Service to identify and verify FFIs, but also by other countries in and outside the EU and the OECD that seek to enact their own versions of FATCA (sometimes referred to as "son of FATCA") to identify offshore assets or accounts held by their citizens. Thus, the GIIN may become a common global identification number for purposes of identifying FFIs in the United States or other countries. See "IRS Use of Account Information for Audits and Administration of Web Portal."

The GIIN is a 19-character identification number that is a composite of several other identifiers. Those identifiers include the following183:

  • the FATCA ID;
  • the financial institution type (single, lead of EAG, EAG member, or sponsoring entity) -- provided by the financial institution when creating its account;
  • the category code -- a two-character abbreviation identifying the financial institution as either one of the previously described types or as a branch; and
  • the country identifier -- the ISO 3166-1 numeric standard country code for the financial institution's country of residence for tax purposes (identified by the financial institution in question 3 of the registration form, or, if the GIIN is for a branch, the branch country identified in question 9A of the registration form).

                                  Exhibit 6

                  FATCA Registration GIIN Composition Table
 ______________________________________________________________________________

 Character                Number of
 Representation           Characters  Position  Description/Rules
 ______________________________________________________________________________

 XXXXXX                       6         1-6     o Alphanumeric uppercase only
 FATCA ID (first six
 characters)                                    o For all financial
                                                  institutions, this is the
                                                  same as the first 6
                                                  characters of the FATCA ID.
                                                  For leads and singles, this
                                                  is your FATCA ID, for
                                                  members; this is just the
                                                  first 6 characters.

                                                o First 6 characters of any
                                                  financial institution's FATCA
                                                  ID are randomly generated and
                                                  will never use the letter "O"

 Separator 1                  1          7      Period = .

 XXXXX                        5         8-12    o Alphanumeric upper case only
 Financial institution
 type                                           o Lead = 00000

                                                o Sponsoring entity = 00000

                                                o Single = 99999

                                                o Member = Same as last 5
                                                  characters of the FI's FATCA
                                                  ID (sequential, starting from
                                                  00001 to 99998, then A0000 --
                                                  ZZZZZ; will never use the
                                                  letter "O")

 Separator 2                  1          13     Period =.

 XX                           2        14-15    o Alpha upper case only
 Status code
                                                o Based on financial
                                                  institution type or branch
                                                  status

                                                o LE = Lead

                                                o ME = Member

                                                o SL = Single

                                                o SP = Sponsoring entity

                                                o BR = Branch (the first 13
                                                  characters of a branch's GIIN
                                                  will match the first 13
                                                  characters of the GIIN of the
                                                  financial institution with
                                                  which the branch is
                                                  associated.

 Separator 3                  1          16     Period= .

 XXX                          3        17-19    o Numeric
 Country identifier
                                                o ISO 3166-1 numeric standard
                                                  country code of the branch or
                                                  financial institution or
                                                  branch

                                                Note:

                                                  Use 999 for country code
                                                  "Other"
 ______________________________________________________________________________

 GIIN means a global intermediary identification number assigned to a PFFI or
 an RDCFFI. A separate GIIN will be issued to the FFI to identify each
 jurisdiction, including the FFI's jurisdiction of residence, in which the FFI
 maintains a branch that is not treated as a limited branch. It is anticipated
 that the IRS FFI and branch list will be updated on a monthly basis to add or
 remove FFIs (or their branches). The GIIN may be used by an FFI to identify
 itself to withholding agents and tax administrations for FATCA reporting. A
 GIIN will be issued to only those FFIs that are not limited FFIs, limited
 branches, or U.S. branches of an FFI, and will be issued after an FFI's FATCA
 registration is submitted and approved.

 Format: XXXXXX.XXXXX.XX.XXX

 The GIIN is a 19-character identification number that is a composite of
 several other identifiers. These identifiers include the following:

      o Each registering FFI will be given a FATCA ID that will be used for
        purposes of establishing and accessing the FFI's online FATCA account.
        For all FFIs other than Member FFIs, the FATCA ID is a randomly
        generated six character alphanumeric string. These six characters are
        uppercase letters excluding the letter O, or numbers, or a combination
        of both. For member FFIs, the FATCA ID will be comprised of 12
        characters: the first six characters will be the lead FFI's FATCA ID,
        followed by a period, and the last five characters will be alphanumeric
        and assigned sequentially to each member. The FATCA ID is not the same
        as the GIIN.

      o The financial institution type can be single, lead of an EAG, member
        (not lead) of an EAG, or sponsoring entity. The financial institution
        type is provided by the financial institution when creating its FATCA
        account.

      o The category code is a two-character abbreviation identifying either
        the financial institution type as previously described or a branch of
        the financial institution.

      o The country identifier will be the ISO 3166-1 numeric standard country
        code for the financial institution's country of residence for tax
        purposes that the financial institution identified in question 3 on the
        registration form, or, if the GIIN is for a branch, the branch country
        identified in question 9A on the registration form.

 Source: IRS FATCA Online Registration User Guide, 7.3, "Appendix B -- GIIN
 Composition Table," at 67 (Aug. 19, 2013).

3. Below are examples of GIINs:
  • lead in Spain: 12K4U6.00000.LE.724
  • member of lead in Togo: 12K4U6.00239.ME.768
  • branch of member in Palau: 12K4U6.00239.BR.585
  • single in Spain: 12T7P7.99999.SL.724
  • sponsor in the United States: 2P34N6.00000.SP.840

Based on the information thus far, there does not appear to be a unique designation within the GIIN for a QI, WP, or WT.

4. Tax forms using the GIIN. Form 1042-S, "Foreign Person's U.S. Source Income Subject to Withholding," asks for the withholding agent and intermediary or flow-through entity's GIIN, but not for a recipient FFI's GIIN. The final version of Form 1042-S may require a GIIN for an FFI recipient as well. Form 8966, which is used by an FFI in a non-IGA jurisdiction to report accounts held by specified U.S. persons184 and accounts held by U.S.-owned foreign entities185 and to report chapter 4 reportable amounts186 paid to recalcitrant account holders187 and, to a limited extent, withholding agents, will also require the FFI's or withholding agent's GIIN. Moreover, the final W-8 withholding certificates for entities (for example, forms W-8BEN-E, W-8EXP, W-8ECI, and W-8IMY) may require a GIIN for the beneficial owner or payee.

5. Multiple GIINs for same entity. The IRS will permit the same financial institution to have multiple GIINs. For example, an FFI may be both a lead FFI (or EAG member) and a sponsoring entity. It would be required to have separate GIINs for its role as a lead FFI (or member) and as a sponsoring entity. According to the IRS, the GIIN will be able to relate the lead FFI to a member and a sponsoring entity to a sponsored FFI. It is still unclear if the GIIN can be used to identify the compliance FI as well.

6. Updates of GIINs. An FFI that switches from one EAG to another, or changes its type (for example, from a single registrant to a lead FFI or member) likely will be issued a new GIIN. Similarly, changes in the FFI or branch's country of tax residence for tax purposes likely will trigger the release of a new GIIN. However, unless future guidance provides otherwise, changes to the following may not trigger the release of a new GIIN: the FFI's name; the FFI's mailing address within the country of tax residence; the FFI's FATCA classification in the country of tax residence; QI, WP, or WT status (unless identified in the GIIN); or a change in the FFI's RO or POC. See III.M. Presumably, to avoid FFI identification errors, a GIIN that has been retired or canceled by the IRS will not be reused.

7. Changes in GIINs, EIN, or FATCA IDs. Any change to an FFI's FATCA ID (account log-in, question 1), GIIN (FFI home page), QI-EIN, WP-EIN, or WT-EIN (questions 6a-6d) or the EIN of a USFI or U.S. branch (question 8) will likely need to be updated in the FFI's information on the FATCA portal.188 See III.M.1.

H. Part 1 of Form 8957



1. Type of financial institution that must register. In general, all FFIs (other than exempt beneficial owners189or CDCFFIs190) that are part of the same EAG must be registered.191 For registration purposes, an EAG may have more than one lead FFI and may organize itself into subgroups under different lead FFIs. For example, an EAG of 20 FFIs may decide to select two different lead FFIs, lead FFI 1 and lead FFI 2. Lead FFI 1 can carry out FATCA registration on behalf of four of its members, and lead FFI 2 can carry out FATCA registration on behalf of its other 16 members. All 20 FFIs with the same EAG will be registered, even though they are registered under two different lead FFIs.

Form 8957 asks in part 1, question 1 for the registrant to check a box and identify the financial institution as (1) the lead of an EAG (2) single (not a member of an EAG); (3) member (not lead) of an EAG; or (4) a sponsoring entity. If the financial institution is identified as a member, it must provide its own FATCA ID that is linked by the first five alphanumeric characters to its lead FFI's FATCA ID. The FI type is established when the FATCA account was created. If the FI type needs to be changed, the user will need to create a new FATCA account.

a. Lead FFIs. Although the concept of lead FFI is not even mentioned in the final regulations, the preamble to the proposed regulations provides a description of the lead FFI and its role in the registration process by providing:


    Each member of an FFI group must designate a lead FFI to initiate and manage the online registration process for the FFI group. The lead FFI that assumes this role must enter the system to register itself and, as part of that process, identify each FFI that is a member of the FFI group (member) that will register for participating, limited, or RDCFFI status. Each member, including the lead FFI, will be assigned a unique FATCA identifier (FATCA ID) to be used in completing the registration process and associating FFI group members with the FFI group. Each member must enter the online registration system to complete its registration as a PFFI, RDCFFI or limited FFI. The lead FFI will be responsible for managing the FFI group information and will be able to add or remove members from the FFI group to reflect updated information. For the registration of any FFI member to be complete, and for its chapter 4 status as a PFFI, RDCFFI or limited FFI to be obtained, each member must have completed its registration process.192

An organization needs to determine which entity (or entities) will take on the role(s) of the lead FFI in an EAG. It does not necessarily have to be the home office or headquarters entity. In fact, any member193 of an EAG can be a lead FFI, as well as an organization's USFI.194 For this purpose, the same entity can be a lead FFI, as well as a sponsoring entity, but that status would require the entity to register twice and obtain two separate GIINs -- one for each role that permits the IRS to relate the entity either as a lead FFI to the members of its EAG or as a sponsoring entity to the sponsored FFIs.

The lead FFI can be a Model 1 or Model 2 FFI, as well as a USFI in the United States or in a non-IGA country,195 or a foreign branch of a USFI in a Model 1 or Model 2 IGA country,196 or a branch of a PFFI or Model 1 or 2 FFI outside its country of tax residence. A territory financial institution is also permitted to be a lead FFI.197 A USFI that is registering as the lead FFI on behalf of its member financial institutions will register as a lead FFI and be issued a GIIN. A member that is a limited FFI cannot be a lead FFI.198

In fact, the registration user guide confirms that any financial institution (other than a limited FFI) may be a lead FFI that will initiate the FATCA registration process for each of its members that is a PFFI, an RDCFFI, or a limited FFI, and be authorized to carry out most aspects for its member FATCA registrations.199

The user registration guide defines a lead FFI as a USFI, an FFI, or a compliance FI that (1) will initiate the FATCA registration process for each of its member financial institutions that is a PFFI, RDCFFI, or a limited FFI; and (2) is authorized to carry out most aspects of its members' FATCA registrations.200 By the inclusion of the term "FFI" in this definition, presumably a DCFFI can be a lead FFI, but an NFFE201 or exempt beneficial owner202 may not be a lead FFI. An FFI seeking to act as a lead FFI cannot have limited FFI status in its country of residence.203 See H.1.b.ii.

According to the IRS, the lead status of an FFI will be quite difficult to change because the lead's GIIN relates to the other designated members of the lead's EAG. However, if a lead FFI is de-registered because it is dissolved or otherwise disposed of, the FATCA portal must permit the change of the lead FFI's status and allow the organization to register a new lead FFI once the old lead FFI leaves the EAG. However, this may require the de-registration of the other EAG members and a completely new registration for not only the new lead FFI but all the designated EAG members as well. See III.M.c.

b. Possible multiple lead FFIs for an EAG. A lead FFI is not required to act as a lead FFI for all members within a single EAG. Thus, an EAG may include more than one lead FFI that will carry out FATCA registration for a group of its member financial institutions. A lead FFI will be provided the rights to manage the online account for its members. See H.1.a.

i. Role of lead FFIs and overview of lead/member registration process. The lead FFI will complete the required information about itself as part of its online registration on the FATCA portal, and it must also identify the members of its EAG as part of its registration. A lead FFI will be able to create an online FATCA account for itself and for the members of an EAG for which it is designated as the lead FFI. See III.I.1.

For this purpose, a POC, once authorized to act as a POC by the lead FFI and each designated member of the EAG, may go onto the FATCA portal and provide the required information about the lead FFI and EAG members. The same person may be a POC for the lead FFI and each of its members, and a lead RO may be a POC for each member. The lead FFI and each member may have up to five POCs. To make the registration process more efficient, it may be desirable for the same person to be a POC for the lead FFI and its members. If there are multiple lead FFIs for an EAG, that fact alone will not add to the number of allowable POCs for the organization.

A lead FFI will be able to log in to see where each member is in the registration process. For that purpose, a lead FFI or member may stop or pause the registration process and save the entered information at any point.204

The lead FFI will complete parts 1 and 2, and it will complete part 3 if it is acting as a QI, WP, or WT. Generally, the lead FFI and each member of the EAG will complete the online registration on the FATCA portal by providing basic institutional information (lead and member address, incorporation details, branch country, RO, POCs, etc.), and once the registration is approved, the lead FFI and its members (including branches located outside the FFI's country of tax residence)205 will each receive unique GIINs, which will be reflected on each member's home page. Those GIINs also will be placed on the published FFI and branch list, updated monthly, which will be available to the public at http://www.irs.gov/FATCA to verify the FFIs' chapter 4 status of the financial institution.

Use of a lead FFI may be mandatory for an EAG, and single registration by individual member financial institutions will not be allowed. This is suggested by the Form 8957 itself in question 1 of the registration, which asks an FFI to identify itself as either "single (not a member of an EAG)," "lead of an EAG," "member (not lead) of an EAG," or a "sponsoring entity." Also, if the FFI is registering as a member, it must provide the lead FFI's FATCA ID in question 1. (Emphasis added.)

ii. Lead and member registration process in detail. The lead FFI will initially go to http://www.irs.gov/FATCA-registration, open the online registration form, and initiate the registration process for itself by checking the box declaring that the user is authorized by the financial institution to create a FATCA registration account and clicking the "Create Account" box. To create an account, the lead FFI will be required to select the box identifying it as the "Lead of an Expanded Affiliated Group" and then click the "Next" button and set up its own challenge questions. Thereafter, the lead FFI should create its own access code by typing an access code in the "Create Access Code" box, retyping it in the "Confirm Access Code" box, and then clicking "Next." The lead FFI will have created its account and then be provided a unique six-digit FATCA ID. The registration system will send the lead FFI RO an e-mail notification that the account was created and provide the FATCA ID on the lead FFI's home page in the account information section. The lead FFI should save and record its access code and FATCA ID for future use to log in again on the FATCA portal.

The lead FFI will complete its online registration by completing part 1 -- providing its legal name, financial institution type, FATCA classification in its country of tax residence, and mailing address. The lead FFI indicates whether the lead FFI has a withholding agreement with the IRS, and if so, it provides its EIN. If the lead FFI indicates that it maintains a branch in a jurisdiction outside its country of tax residence, it answers questions 8 and 9. Finally, the lead FFI identifies its RO and POCs in questions 10 and 11.

After completing part 1 of the registration for itself, the lead FFI will be prompted in part 2 to identify each member by providing the legal name, country of residence for tax purposes, and the member's FATCA classification in its country of tax residence. That requirement applies only to entities that are a part of the lead FFI's EAG for which it is designated as the lead FFI (the lead FFI's designated group) and not controlled entities that do not meet the more than 50 percent test under the regulations. See III.I.

Part 2 should be completed only by a lead FFI, and it must be completed only through the FATCA portal. A lead FFI will identify in part 2 each member financial institution for which it is acting as a lead FFI and that is treated as a PFFI (including a Model 2 FFI), an RDCFFI (including a Model 1 FFI), or a limited FFI. Also, for purposes of registration, a member financial institution may include a foreign branch of a USFI that is registering to obtain a GIIN or renew its QI agreement.

The lead FFI must complete part 3 of the registration if it is acting as a QI, WP, or WT and wishes to renew its agreement.

After the lead FFI completes its registration in parts 1 through 3, the RO for the lead FFI must certify the lead FFI's FATCA-compliant status by checking the box and entering his name as the RO for the lead FFI. The RO must then electronically sign and date the registration on or after January 1, 2014. It is unclear whether this certification extends to the member's FATCA obligations as well.206 See III.I.

The lead FFI must then provide its member financial institutions their FATCA log-in information, which will include a unique FATCA ID and a temporary access code for each member financial institution in the lead FFI's designated group.

Once the lead FFI's registration is submitted, the IRS begins processing it (reportedly within 24 hours as part of a batch process), and an electronic status notice is sent to the designated e-mail address of the lead FFI's RO, announcing that each designated member of the lead's EAG may now create a new access code and register on the FATCA portal. GIINs will be assigned to the lead FFI and any of its branches that are not limited branches. The assigned GIINs will be included in the next published FFI and branch list.

Each member financial institution will first need to obtain its temporary access code and FATCA ID from its lead FFI. After the member financial institution has these log-in credentials, it can enter the online system to create a new access code in much the same manner as the lead FFI.

For this purpose, the user for the member financial institution would type in its FATCA ID and temporary access code provided by the lead FFI and click "Login." On the next screen, the user should select the box "Member (not Lead) of an Expanded Affiliated Group" and click "Next" to set up challenge questions. After the user's response to the two challenge questions are answered, the user again clicks "Next" and enters a new access code in the "Create Access Code" box and confirms this code in the "Confirm Access Code" box and clicks "Next."

Each member financial institution can initially log in to the FATCA portal with the FATCA ID and temporary access code provided by the lead FFI so that it can create its own new unique access code for future use. However, the registration user guide also suggests that once the lead FFI has established the member financial institution's account, the member financial institution or lead FFI will be required to complete the member financial institution's registration. It also notes that the RO for a lead FFI automatically becomes a POC for each of the lead member financial institutions.207

The user must complete part 1 of the online FATCA registration form and complete part 3 if the member financial institution has a QI, WP, or WT agreement in effect and wishes to renew that agreement.

A member creates an account in the same manner as the lead FFI by initially logging in to the FATCA portal and being granted a temporary access code. It is prompted to create a new access code for future log-ins. Once the member creates its own account, the registration system sends a notification to the designated e-mail address of the member's RO, and a FATCA ID is provided on the member's home page in the account information section. The member's access code and the FATCA ID will be needed for the member's RO or properly authorized POC to log in again to the FATCA portal. That also applies to the lead FFI's RO or common POC.

The member's RO or POC can then enter the member registration data in parts 1 and 3, including the FATCA ID for the lead FFI in question 1. However, the member's RO will always be required to log in to the account and complete part 1, questions 11a and 11b, if the member wants to designate one or more additional authorized POCs. Part 2 should never be completed by any member financial institution unless it is itself a lead FFI. Members must identify whether they are QIs, WPs, or WTs as part of their FATCA registration in part 3. See III.J.

After the member's RO or its authorized POC(s) complete parts 1 and 3 for the member, the RO may log in to the member's account (if it has not already done so) and complete part 4 on or after January 1, 2014. For this purpose, the RO must certify the member's FATCA-compliant status by checking the box, entering his name as the RO for the member, and electronically signing and dating the registration. To complete the registration, the RO or POC clicks the "submit" button. The RO for a member can, but need not be, the same as the RO for the lead FFI or for the other EAG members.

A member's registration is then processed by the IRS, and a message is sent to the designated e-mail address of the member's RO notifying him that a GIIN has been issued for the member and any branches that are not limited branches. This information can be found as part of the account information on the member's home page.

Once all lead and member information has been entered or submitted, the lead FFI is sent an e-mail message confirming that the registration process is complete.

All input information is saved automatically in the registration system and associated with the FFI's account. From the opening of the FATCA portal through December 31, 2013, a lead FFI or member financial institution will be able to access its account to modify or add registration information, including indicating the appropriate registration status as that status is established, for example, by the signing of an IGA. Before 2014, however, any information entered into the system, even if submitted as final, will merely be stored until it is submitted as final on or after January 1, 2014.208 See II.D.2.

The separate GIINs for the lead FFI and each EAG member will appear on the monthly updated FFI and branch list. The IRS will electronically post the first list June 2, 2014, for FFIs that registered during the initial registration period ending April 25, 2014.

Under FATCA, withholding agents must withhold tax on withholdable payments to FFIs, such as the lead FFI or a member, that do not agree to report to the IRS information about their U.S. accounts or accounts of some foreign entities with substantial U.S. owners. By registering to be FATCA compliant, the lead FFI and each member have agreed to report the required information about their account holders to the IRS, and they have each been issued a GIIN to support their agreement with the IRS. Thus, withholding agents may rely on a lead FFI or member's claim of FATCA-compliant status based on checking the payee's GIIN against the published FFI and branch list.

iii. Multiple lead FFIs. IRS officials have indicated that the system will permit the use of multiple lead FFIs to register the members of an EAG. Only a lead FFI can complete part 2 of draft Form 8957, which identifies the members of the EAG. Separate registration by each member as a single registrant will not be permissible, since the "Single" box includes a parenthetical ("not a member of an EAG").

iv. Multiple EAGs. If there are multiple EAGs within the same organization, each EAG could have one or more of its own lead FFIs for the designated member financial institutions within the EAG. These lead FFIs may or may not be the same lead FFIs for other member financial institutions within other EAGs. See III.I.

v. Registration along business or division lines. An organization can register along business or division lines and have a separate lead FFI for each business or division within its EAG.

vi. Line of sight rule. Under the so-called line of sight rule, the lead FFI can view the home page of all designated member FFIs of its EAG, but a member (or branch) will be permitted to review only its own account information and cannot look at other members' account information. In other words, the lead FFI can look downward, but the EAG members cannot look upward or sideways.

c. Sponsoring entity and sponsored FFIs. The IRS received comments saying it may be preferable for a trustee or fund manager to perform due diligence and reporting on a consolidated basis for all the FFIs it manages. The comments noted that several USFIs have systems in place to perform all the due diligence, withholding, and reporting obligations of its controlled foreign corporation subsidiaries for U.S. tax purposes. In response to these comments, the regulations created a registered deemed-compliant category for sponsored FFIs for which a sponsoring entity agrees to perform all the due diligence, withholding, reporting, and other requirements the sponsored FFI would have been required to perform if it were a PFFI.209

i. Timing to get sponsored entity GIINs. A sponsoring entity is an entity that agrees to register with the IRS and undertake all the chapter 4 obligations of a PFFI on behalf of one or more sponsored FFIs.210 According to the preamble to the regulations, beginning no later than August 19, 2013,211 a financial institution can begin its registration process as a sponsoring entity, but it will not at that time be required to provide information regarding its sponsored FFIs.212 A sponsoring entity, at its option, will be able to provide sponsored FFI information and obtain GIINs for each sponsored FFI beginning on that same date.213 However, as noted earlier, before 2014, any information entered into the FATCA portal, even if submitted as final, will be stored until the information is submitted as final on or after January 1, 2014.214 See II.D.2.

The regulations provide that for payments made before 2016, an RDCFFI, including a Model 1 FFI that is a sponsored FFI must provide the GIIN of its sponsoring entity on the withholding certificate if the sponsored FFI has not obtained a GIIN.215 Thus, a sponsoring entity has a choice. It can either register its sponsored FFIs as soon as it registers as a sponsoring entity,216 or it can delay the registration process for the sponsored FFIs until more of the Model 1 FFIs have been signed or local implementing legislation has been released (but not Model 2 FFIs, because those entities are treated as PFFIs). However, it must complete the registration process and receive GIINs for each of its sponsored FFIs by January 1, 2016, to avoid possible FATCA withholding.217 Although unclear, it is likely that the sponsoring entity can make this choice on an entity-by-entity basis rather than for all the sponsored FFIs for which it is responsible.

ii. Sponsoring entity. The regulations permit an organization to choose from several entities to be a sponsoring entity, as long as the entity meets the other requirements. A sponsoring entity can be a USFI, a U.S. branch (whether or not treated as a U.S. person) or foreign branch of a USFI, a PFFI, a Model 1 or 2 FFI, or any other FFI, including a QI, WP, or WT or limited financial institution.218 However, a sponsoring entity must be a financial institution and not an NFFE.219

In any case, a sponsoring entity must meet the following requirements: (1) It must be authorized to act on behalf of the FFI (such as a fund manager, trustee, corporate director, or managing partner to fulfill the requirements of the FFI agreement); (2) it must have registered with the IRS as a sponsoring entity; (3) it must have registered the FFI with the IRS by the later of January 1, 2016, or the date that the FFI identifies itself as a sponsored FFI; (4) it must agree to perform, on behalf of the FFI, all due diligence, withholding, reporting, and other requirements that the FFI would have been required to perform if it were a PFFI; (5) it must identify the FFI in all reporting completed on the FFI's behalf to the extent required by the regulations; and (6) it must not have had its sponsor status revoked by the IRS.220

A sponsored FFI will remain liable for any failure of its sponsoring entity to comply with any of the above obligations that the sponsoring entity has agreed to undertake on behalf of the sponsored FFI.221 The IRS may revoke a sponsoring entity's status as sponsor for all sponsored FFIs if there is a material failure by the sponsoring entity to comply with its obligations noted above.222

iii. Sponsoring entities and sponsored closely held investment vehicles. Although a sponsored, closely held investment vehicle need not itself register to obtain a GIIN to be FATCA compliant, the sponsored FFI still needs to obtain the sponsoring entity's GIIN and include it on the withholding certificate that it provides to a withholding agent. Thus, a sponsoring entity needs to register and obtain its own GIIN. See III.H.4.f.iv.

iv. Sponsoring entities and Model 1 FFIs. An FFI that also will act as a sponsoring entity for one or more sponsored FFIs is required to submit a second registration form to act as a sponsoring entity. The sponsoring entity will receive a separate sponsoring entity GIIN and should use that GIIN only when it is fulfilling its obligations as a sponsoring entity. If a sponsoring entity must also become a PFFI or an RDCFFI that is a Model 1 FFI, it must do so separately from its registration as a sponsoring entity. That FFI will obtain a separate GIIN to be used for its own chapter 4 or FATCA partner reporting requirements and to establish its own chapter 4 status for withholding agents.223

v. Sponsoring entities and lead FFIs. Similarly, an FFI can also be a lead FFI (or member) of an EAG and a sponsoring entity for a group of sponsored FFIs. It would register twice, once as a lead FFI (or member) and once as a sponsoring entity, and it would have a GIIN for each role. The IRS has informally indicated it will be able to associate each of those GIINs with each other.

vi. Multiple sponsoring entities. There appears to be no limit to the number of sponsoring entities an organization may use. Thus, an organization may decide to use a separate sponsoring entity for groups of its investment entities or funds that are segregated by asset class (real estate, private equity, venture capital, opportunity funds, hedge funds, etc.), or for a group or subgroup of its CFCs that are related geographically or by business or division lines.

vii. Sponsored FFI. The types of sponsored FFI the IRS permits under the regulations are far more limited. Two types of entities may be sponsored FFIs. First, a sponsored FFI includes an entity that is an investment entity224 that is not a QI, WP, or WT and for which another entity has agreed to act as the sponsoring entity.225 Second, a sponsored FFI may also include a CFC226 (that is not a QI, WP, or WT) that is directly or indirectly wholly owned by a USFI that agrees with the sponsored FFI to act as its sponsoring entity. In the latter case, the sponsored FFI must also share a common electronic account system227 with the sponsoring entity that enables the sponsoring entity to identify all the sponsored FFI's account holders and payees and to access all account and customer information maintained by the sponsored FFI, including customer identification information, customer documentation, account balances, and all payments made to account holders or payees.228

viii. Sponsored FFIs and members of EAG. In contrast, an FFI that is a sponsored FFI and also a member of an EAG will not register twice and obtain two GIINs. If the FFI registers as a member of the EAG and obtains its own GIIN, its registration is complete. The IRS had informally indicated that it favors registration by a lead FFI and the members of its EAG. If this rule is adopted by the IRS, a member, once registered as part of an EAG, will not likely be permitted to again register as a sponsored FFI and obtain a separate GIIN. See III.I.1. However, the registration user guide says that a financial institution that is a sponsored FFI will be registered by its sponsoring entity. This suggests that the IRS may have changed its view on this aspect of the registration and now prefers for a FFI that is both a sponsored FFI and a member of an EAG to be registered by the sponsoring entity rather than lead FFI.229 See II.D.2.a.i and III.I.1.f for transition relief and possible registration planning for Model 1 FFIs in an EAG that may be able to register as sponsored FFIs.

ix. Investment entity that owns seed capital fund can be a sponsored FFI. While an investment entity that holds an interest in a seed capital fund is excluded from an EAG, it likely can be a sponsored FFI.230

x. Registration process for sponsoring entity and sponsored FFI. A sponsoring entity will have to create a FATCA account and choose an access code, and the system will assign a FATCA ID for the sponsoring entity. The sponsoring entity will complete the relevant questions in part 1 of the online registration (Form 8957).

While completing the FATCA registration, the sponsoring entity should (1) select "none of the above" for question 4, which asks for the financial institution's FATCA classification in its country of tax residence231; (2) check "not applicable" for question 6, which asks whether the financial institution as in effect a withholding agreement with the IRS to be treated as a QI, WP, or WT232; (3) answer "no" to question 7, which asks whether the financial institution maintains a branch in a jurisdiction outside its country of tax residence233; and (4) skip to question 10, which asks the financial institution to identify its RO.

On or after January 1, 2014, the sponsoring entity's RO should electronically sign and submit the sponsored entity's registration form and wait for the registration to be processed. The sponsoring entity will receive a notification upon approval and be assigned a GIIN. The assigned GIIN will be included in the next published FFI and branch list.234 For now, the sponsoring entity will not complete part 2, which must be completed only by the lead FFI to identify the member financial institutions of its EAG.

The IRS has indicated in the registration user guide that information on the registration of sponsored FFIs will be provided on the FATCA website.

A sponsoring entity, through its ROs or POCs, can also complete part 1 for each sponsored FFI but will not complete part 2 (unless it is also a lead FFI), or part 3 (because the sponsored FFI cannot be a QI, WP, or WT by definition). Although not entirely clear, the sponsoring entity RO may likely certify that the sponsored FFI is FATCA compliant and electronically sign the registration on behalf of the sponsored FFI.

d. Single registration status. One of the financial institution types includes single registration status. The registration user guide defines a single financial institution as a financial institution that does not have any member financial institutions and is registering for PFFI or RDCFFI status for itself or one or more of its branches.235 A single financial institution may also include a foreign branch of a USFI that is treated as a Model 1 FFI or has a QI agreement in effect.236 A financial institution that is a single registrant is not a lead FFI of an EAG and is not a member of an EAG, because the member must register as part of a lead FFI's EAG. See III.H.1.a. A single registrant probably cannot also be a sponsored FFI that is part of a sponsoring entity's group. While likely, it is still unclear whether a single registrant may also be a sponsoring entity. See III.H.1.b.

e. Registration process for single registrant. A single registrant will also have to create a FATCA account. For this purpose, it must choose an access code and the system will assign it a FATCA ID. The user should record both the access code and FATCA ID for future log-in to the FATCA portal. The user should complete part 1 of the online FATCA registration form and complete part 3 if the financial institution has a QI, WP, or WT agreement in effect and wishes to renew that agreement. On or after January 1, 2014 (but not part 2, because it is not a lead FFI). The financial institution's RO should electronically sign and submit the registration form and wait for the registration to be processed. The financial institution will receive notification upon approval and be assigned GIINs for itself and any branches that are not limited branches. The assigned GIINs will be included in the next published FFI and branch list.237

f. Member. See III.I.1.

2. Legal name of registrant. To complete question 2, the financial institution or branch must provide the legal name it uses to conduct business in its country of tax residence. According to the registration user guide, the legal name is the name of the financial institution used in official incorporation or organization documents, or the name otherwise recognized by the residence country government as the financial institution's official name. Typically, the legal name is the name used by the FFI in legal documents.238 For a branch registrant that has an office outside the FFI's country of tax residence, the name is the legal name of the financial institution in its country of residence.239 See III.H.3.c. It is unclear whether an FFI can register separate legal entities with the same legal name -- presumably it can. It is quite likely that the portal has logic built-in logic that will generate an error message to prevent a user from typing in special characters (such as a @, ?,!, or #) as part of a name or address field.

a. Organization name. Informal discussions with the IRS indicate that the organization associated with a lead FFI and its members, or with the sponsoring entity and the sponsored FFIs, will not be separately identified as part of the registration or be able to be related as part of the GIIN. This is unfortunate because if there was a problem identifying a financial institution with its GIIN or FATCA ID, the underlying organization that owns, controls, sponsors, or manages the financial institution would be helpful in solving the problem.

b. Changes in legal name of financial institution. Any change of a financial institution's legal name (question 2) will likely need to be updated on the FFI's registration information on the FATCA portal.240 See III.M.1.

3. Financial institution country of residence. Part 1, question 3 asks for the financial institution country of residence for tax purposes. What does that term mean? Is the entity status based on a local law determination even though the final regulations say that the entity's tax status is based on federal tax principles?

a. FFI country of residence -- in general. The determination of a financial institution (or branch) country of residence in question 3 of part 1 may sometimes be difficult. It requires not only an initial analysis of the type of entity for U.S. tax purposes, but also an analysis of which jurisdiction's rules apply to determine the financial institution's country of residence. Presumably, the type of entity should be consistent with the chapter 3 and chapter 4 status listed on the financial institution's (or branch's) withholding certificates.

According to the registration user guide, the country of residence means the jurisdiction where the financial institution is treated as a resident for income tax purposes (for example, the place of incorporation or place of principal management and control).241 If the financial institution is a dual resident, the user is instructed to identify one of the countries where it is a tax resident in question 3 and identify the second country of tax residence in questions 8 or 9, as appropriate, by treating the second tax residence country as a branch jurisdiction. If the financial institution is resident in a U.S. territory242 or minor outlying island, the user should select the United States (even if the financial institution is a dual resident).

b. Partnerships and other flow-through entities. For a partnership or other flow-through entity, the financial institution's country of residence means the jurisdiction under the laws of which the entity is organized or established or, if not organized or established under the laws of any jurisdiction, the jurisdiction where it maintains its principal office.243 See Exhibit 9 for an FFI country of tax residence table.

A sponsoring entity, a USFI that is registering as lead FFI, a U.S. territory financial institution, or a USFI with a foreign branch that is renewing its QI agreement or is treated as a reporting financial institution244 under a Model 1 IGA or is Model 1 FFI must select "none of the above."245

c. Financial institutions with branches in multiple jurisdictions. A financial institution (other than a sponsoring entity, USFIs, or a foreign branch of a USFI) that maintains branch operations in multiple jurisdictions must answer question 3 by treating the operations within its country of tax residence as if it were a branch (home office) and then classify whether that home office is a PFFI, an RDCFFI, or limited FFI. In question 9a, the financial institution must identify the jurisdictions where it maintains branches outside its country of tax residence and indicate which of its branches, if any, will be treated as limited branches.246

Example: Bank A is a resident of Country X. In addition to banking activities that it conducts within Country X, Bank A also conducts banking activities through branches in countries Y and Z. Under Country X laws, Bank A cannot satisfy the obligations that would allow its operations within Country X (home office) to be effectively a PFFI or an RDCFFI. However, Bank A's branches in countries Y and Z would be able to comply with the obligations imposed on a PFFI or an RDCFFI. For purposes of registering itself and obtaining a GIIN for its branch operations in countries Y and Z, Bank A should answer that it is classified as a limited FFI in its country of tax residence.247

A lead FFI must be an entity that is able to select in question 4 that its FATCA classification in its country of tax residence is a PFFI not covered by an IGA or a reporting financial institution under a Model 2 IGA or a Model 2 FFI, an RDCFFI or a reporting financial institution under a Model 1 IGA or Model 1 FFI, or none of the above because the financial institution is either a sponsoring entity, a USFI that is registering as a lead FFI, as U.S. territory financial institution, or a USFI with a foreign branch that is renewing its QI agreement or is treated as a Model 1 FFI.248

As noted, the determination of a financial institution (or branch) country of residence in question 3 requires not only an analysis of the type of entity for U.S. tax purposes, but also a further analysis of which jurisdiction's rules apply to determine the financial institution's country of residence.

d. Determination of entity type. As a preliminary matter, under FATCA, the entity's classification for U.S. tax purposes must be determined (not to be confused with the entity's FATCA classification). See III.H.4.

A withholding agent may rely on a person's entity classification on a valid Form W-8 or Form W-9 if the withholding agent has no reason to know that the entity classification is incorrect.249

For this purpose, draft Form W-8BEN-E, "Certificate of Status of Beneficial Owner for United States Withholding and Reporting (Entities)," identifies the following types of entities: corporation, partnership, simple trust, grantor trust, complex trust, estate, disregarded entity, tax-exempt organization, private foundation, central bank of issue, and government. See III.H.3.c.

Draft Form W-8IMY, "Certificate of Foreign Intermediary, Foreign Flow-Through Entity or Certain U.S. Branches for United States Withholding," adds to the list of entities by including QI, WP, WT, NQI, U.S. branch, non-withholding foreign partnership, non-withholding foreign simple trust, non-withholding foreign grantor trust, and territory financial institution.

Draft Form W-8EXP, "Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting," further adds to the list of entities and includes foreign government, international organization, foreign tax-exempt organization, foreign private foundation, government of a U.S. possession, and foreign central bank of issue (not wholly owned by the foreign sovereign).

e. Disregarded entity or branch. An entity that is disregarded as a legal entity in its country of organization or that under an arrangement has no legal personality and is not a juridical person in the country in which it was organized will be treated as an entity for FATCA purposes if it is an entity for U.S. tax purposes.250

Further, if an entity is disregarded for U.S. tax purposes under reg. section 301.7701-2(c)(i) as an entity separate from its single owner, the single owner generally will be treated as the payee.251 However, a withholding agent that makes a payment to a limited branch will be required to treat the payment as made to an NPFFI.252 In another exception to this general rule, reg. section 1.1471-3(a)(3)(vi) provides that a withholdable payment to a U.S. branch of either a PFFI or an RDCFFI is a payment to a U.S. person if the U.S. branch is treated as a U.S. person for purposes of reg. section 1.1441-1(b)(2)(iv). In that case, the U.S. branch is treated as the payee.

As an example of the general rule, if a single-member entity (U.S. or foreign) is disregarded under U.S. tax law and is wholly owned by a U.S. entity253 (for example, a U.S. corporation or U.S. partnership), it will generally not have to register with the IRS and obtain a GIIN, because the single-member entity is disregarded for U.S. tax purposes and the single-member owner is a U.S. entity and not an FFI.254

However, if this same single-member entity was wholly owned by an FFI, its status as a branch of that FFI must be tested based on the IGAs (if in a FATCA partner country) or a local law determination in the jurisdiction where the branch has an office or is doing business, even though the single-member entity is disregarded for U.S. tax purposes.

f. Determination of financial institution's country of residence. The determination of a financial institution's country of residence is based on the IGAs (if in a FATCA partner country) or is a local law determination, and it is not based on the test for residence in the United States (unless the branch is a U.S. branch), which is based on where the legal entity is created or organized (for example, the country of incorporation or organization).255 However, because the test for corporate residence is not defined in the IGAs, its meaning will be determined under local law, with tax law prevailing over nontax law.256

g. U.S. tax rules. If neither the Model 1 IGA nor a Model 2 IGA's implementing legislation or local law prevails, the rules under the U.S. tax law would apply to determine the FFI's country of residence.257 If an entity is a disregarded entity or a branch of an NPFFI, a PFFI, or an RDCFFI in a country other than the FFI's country of residence, Part II of draft Form W-8BEN-E requires that the chapter 4 status of that branch or disregarded entity be identified by checking the box as an NPFFI, a PFFI, Model 1 FFI, or Model 2 FFI, and by providing its address and any GIIN.

h. Model 1 IGA. The Model 1 IGA258 defines a financial institution to which it applies (known as a FATCA partner financial institution) as a financial institution "resident in" the FATCA partner country.259 It also defines the term "partner jurisdiction financial institution" to mean (1) any financial institution resident in a partner jurisdiction, but excluding any branches of that financial institution that are located outside the partner jurisdiction, and (2) any branch of a financial institution not resident in the partner jurisdiction, if that branch is located in the partner jurisdiction.260

i. U.K. guidance notes. The U.K. guidance notes261 provide perhaps the best guidance to date on what it means to be resident in an IGA partner country:


    Under the agreement a U.K. Financial Institution is resident in the U.K., as well as any branch of a non-resident Financial Institution located in the U.K.

    In many cases, whether or not a Financial Institution is resident in or located in the U.K. will be clear, but there may be situations where this is less obvious. In these cases, HMRC will look to determine the entity's status under the Agreement from the tax residence of the entity. If the Financial Institution is resident for tax purposes in the U.K., then HMRC will regard the Financial Institution as within the scope of the U.K. Agreement. For these purposes, resident for tax purposes in the United Kingdom means the following:

    • For a company or professional trust company -- if the company is incorporated in the U.K. or centrally managed and controlled in the U.K.;
    • For a company not resident in the U.K. -- where it is within the charge to corporation tax if, and only if, it carries on a trade in the U.K. through a permanent establishment in the U.K.;
    • For Trusts -- if all the trustees are resident in the U.K. for tax purposes then the Trust is U.K. resident. Where some of the trustees but not all are U.K. tax resident, then the Trust is to be treated as U.K. resident if the settlor is both resident and domiciled in the U.K. for tax purposes; and
    • For partnerships -- if control and management of the business of the partnership takes place in the U.K.

    If the entity is a dual resident, such that it is a resident in the U.K. and also in another country, it will still need to apply the U.K. legislation in respect of reportable accounts maintained in the U.K.

    Entity Classification Elections (known as check the box elections) made to the IRS are irrelevant for determining whether an entity is in scope for the Agreement.

    Subsidiaries and branches of U.K. tax resident Financial Institutions that are not located in the U.K. are excluded from the scope of the U.K. Agreement and will not be regarded as U.K. Financial Institutions.

    These entities will be covered by the relevant rules in the jurisdiction in which they are located. Those rules will either be the U.S. Regulations or the legislation introduced to bring effect to an Agreement between that jurisdiction and the U.S.

    However, where such subsidiaries and branches act as introducers with regard to a Financial Account and the relevant account is held and maintained in the U.K. by a U.K. Financial Institution and is subject to U.K. regulatory requirements, the account will be within the scope of the U.K. Agreement. The U.K. Financial Institution maintaining the account(s) will be required to undertake the appropriate due diligence and report the appropriate details to the HMRC.262


Guidance note 11 makes clear that each reporting U.K. financial institution and any entity that is an RDCFFI will be required to register and obtain a GIIN from the IRS.263

Guidance note 2.2 provides the following two examples to illustrate the rules of residence status in the United Kingdom. In my view, this guidance will likely be used in other Model 1 IGA FATCA partner countries.


    Example 1. Albion Bank PLC, located in London, has within its group the following entities:
  • a subsidiary (S) located in Edinburgh;
  • a foreign subsidiary (D) located in partner Jurisdiction 1;
  • a foreign branch (F) located in partner Jurisdiction 2;
  • a foreign branch (X) located in Eurasia; and
  • a foreign branch (Y) located in New York.

Under the terms of the agreement:
  • Albion Bank in London and its subsidiary S will be U.K. financial institutions and report to HMRC.
  • D and F will be classified under the Agreement as partner jurisdiction financial institutions and will report to their respective jurisdictions.
  • X will be a limited FFI and will have to identify itself as an NPFFI for withholding/reporting purposes if Eurasia does not have an Agreement with the United States and if X cannot enter into an FFI agreement directly with the IRS due to legal or other impediments. However, X will have to undertake the obligations required under the U.S. regulations as far as it is legally able to do so.
  • Y will report on U.K. persons who hold accounts to the IRS.
  • Example 2 -- where an overseas bank has a branch located in the United Kingdom. Oceania Bank of Australia has a branch Z located in London. Z will be a U.K. financial institution and will therefore fall under the U.K. Agreement and will need to comply with the U.K. regulations and the legislation and report information on any reportable financial accounts to HMRC.264


j. Model 2 IGA. In contrast, the Model 2 IGA265 defines the term "FATCA partner financial institution" to mean (1) any financial institution resident in or organized under the laws of the FATCA partner jurisdiction, but excluding any branch or head office of that financial institution that is located outside the FATCA partner jurisdiction; and (2) any branch or head office of a financial institution not resident in or organized under the laws of the FATCA partner jurisdiction, if that branch or head office is located in the FATCA partner jurisdiction.266 Similarly, the Model 2 IGA defines the term "partner jurisdiction financial institution" to mean (1) any financial institution resident in or organized under the laws of a partner jurisdiction, but excluding any branch or head office of that financial institution that is located outside the partner jurisdiction, and (2) any branch or head office of a financial institution not resident in or organized under the laws of the partner jurisdiction, if that branch or head office is located in the partner jurisdiction.267

Peter Cotorceanu, in his recent article, provided another illustration of how one determines the FFI country of residence when a corporation has operations in more than one IGA country:


    One of the tests for corporate tax residence in the United Kingdom is "central management and control." Thus, under the U.K. law, a company incorporated under the laws of another country is resident in the United Kingdom if it is centrally managed and controlled from the United Kingdom. Which IGA would govern if that company were a financial institution and were incorporated in a Model 2 IGA country that chose the 'organized under the laws of' standard, as Switzerland has done in its IGA? The answer is that the U.K. IGA would govern the U.K. operations and the Swiss IGA would govern the Swiss operations. The IGAs apply on a branch level, thus avoiding the "dueling IGAs" problem that would otherwise arise because of the different test for corporate residency. More specifically, the IGAs exclude from their coverage any branches of a domestic financial institution that are located abroad, and they include branches of other countries' financial institutions that operate domestically.268

k. Online registration for FFI country of residence. After the above analysis is completed, the financial institution selects its country of residence for tax purposes on the screen titled "My information (Part I)" in question 3 from a dropdown menu, and in question 4 it selects its FATCA classification in its country of tax residence. See III.H.4. Both are required fields.

l. Countries not listed or there is limited tax information exchange or inappropriate use of tax information. The IRS has suggested that the FATCA portal is a continuing project and that as new countries are created (for example, South Sudan), they will be added to the dropdown menu.

The IRS has not yet addressed whether it will add to the dropdown menu countries that have misused tax information or do not abide by strict confidentiality rules (for example, Venezuela) or countries with which the exchange of tax information would be inappropriate because of other factors (for example, Cuba).

m. Changes in financial institution's country of tax residence. Any change of a financial institution's country of tax residence (question 3) will likely need to be updated on the FFI's registration information on the FATCA portal.269 See III.M.1.

4. Who must register.

a. FFI registration is voluntary, but failure to register has consequences. FATCA registration by an organization's FFIs is entirely voluntarily. However, failure of an FFI or a member of its EAG to register has consequences. Put simply, FFIs that register and obtain a GIIN, which is published on the monthly FFI and branch list, will avoid a 30 percent withholding tax on withholdable payments they receive, while FFIs that fail to register and obtain a GIIN will be subject to the withholding tax. See II.E. However, some DCFFIs and entities that are excluded from FFI status do not have to register and obtain a GIIN to avoid this withholding tax.270

b. FFI FATCA classification. The financial institution will be asked in part 1, question 4 of Form 8957 to select its FATCA classification in its country of tax residence. See III.H.3. Question 4 asks the financial institution to choose its FATCA classification in its country of tax residence from one of the following categories: (1) a participating financial institution that is not covered by an IGA (PFFI); (2) an RDCFFI; (3) a reporting financial institution under a Model 1 IGA (Model 1 FFI); (4) a reporting Model 2 financial institution under a Model 2 IGA (Model 2 FFI); (5) a limited FFI; or (6) none of the above. Each of those categories is detailed below. See Exhibit 7 for a diagram identifying the different categories of FFIs.


Exhibit 7

FATCA Classification of Entities



Sponsoring entities, U.S. or U.S. territory organized financial institutions that maintain a QI branch or a branch in a Model 1 IGA must select "none of the above," irrespective of how it is otherwise classified in the country of tax residence. An FI that is tax resident in a Model 1 IGA and that is treated as a Model 1 FFI must select RDCFFI.

c. PFFI. Under the regulations, a PFFI is an FFI that has agreed to comply with the requirements of an FFI agreement, including an FFI described in a Model 2 IGA (see III.H.4.i) that has agreed to comply with the requirements of an FFI agreement.271 The term PFFI also includes a QI branch of a USFI, unless that branch is a Model 1 FFI.272 See III.H.6.e.

i. FFI. The term "foreign financial institution" means any financial institution that is any foreign entity not formed under the laws of the United States, even if the investment managers for the foreign entity are in the United States.273 The term"foreign entity" means any entity that is not a U.S. person.274

The regulations split the world of financial institutions into two parts and provide that a FFI is any entity that is (1) a financial institution (as defined under the regulations) that is not resident in a country that has in effect a Model 1 IGA or Model 2 IGA; or (2) treated as a financial institution under a Model 1 IGA or Model 2 IGA.275 See III.H.4.h and III.H.4.i.

Because a USFI276 means a financial institution that is a U.S. person rather than a foreign entity, by definition it cannot be an FFI.277 However, USFIs will register their foreign branches through the FATCA portal in some circumstances. A USFI that has a Model 1 FFI branch must register on behalf of the branch and obtain a GIIN to comply with its FATCA partner reporting obligations for that branch. Similarly, a USFI with a foreign branch that is a QI and seeks to maintain QI status must register through the FATCA portal to renew its QI status for the branch regardless of whether the branch is a Model 1 FFI. A USFI with non-QI branch operations in a Model 2 IGA jurisdiction or in a non-IGA jurisdiction is not required to register with the IRS.278 A territory financial institution also is not an FFI.279

The application of these rules can be illustrated with the following examples:


    1. Foreign entity not residing in a Model 1 IGA or Model 2 IGA country. If foreign company XYZ is a tax resident of Hong Kong (based on Hong Kong's tax law), and assuming Hong Kong has decided not to enter into a Model 1 IGA or Model 2 IGA and XYZ is treated as a financial institution under the regulations, XYZ will be an FFI and should register to obtain a GIIN to avoid FATCA withholding.

    2. Foreign entity resident in a Model 1 IGA and Model 2 IGA country. If foreign company ABC is resident in the United Kingdom, a Model 1 IGA country, because it is centrally managed or controlled in the United Kingdom280 and is treated as a financial institution under the U.K. Model 1 IGA, ABC will be treated as an FFI in the United Kingdom. If ABC is also a resident in Switzerland because it is organized in Switzerland and is treated as a financial institution under the Swiss Model 2 IGA, it will also be an FFI in Switzerland.281 Since ABC is a resident in both the United Kingdom and in Switzerland, to avoid FATCA withholding, ABC should register and obtain a separate GIIN for payments to its location(s) in the United Kingdom, and another GIIN for payments to its location(s) in Switzerland.

    3. U.S. entity and global branches. X Co. is a domestic entity and is treated as a financial institution under the regulations. X has several hundred branches, which are located and managed in Model 1 IGA, Model 2 IGA, and non-IGA jurisdictions throughout the world. Because X is a USFI, it will not have to register or obtain a GIIN to avoid FATCA withholding for its foreign branches, unless it has a foreign branch located in a Model 1 jurisdiction or a QI that is acting as an intermediary that seeks to renew its QI status on the FATCA portal.282 A USFI with non-QI branch operations in a Model 2 jurisdiction or a foreign branch in a non-IGA jurisdiction is not required to register with the IRS and obtain a GIIN.283

    4. U.S. entity and its CFCs. Same facts as Example 3. Assume X Co. owned several hundred CFCs, which are treated as financial institutions in the Model 1 IGA countries, Model 2 IGA countries, and non-IGA jurisdictions in which the CFCs are tax resident. X, as a sponsoring entity, or the CFCs individually, would register the CFCs as FFIs and obtain separate GIINs to avoid FATCA withholding on payments to them. Presumably, if any CFC had one or more foreign branches, GIINs would have to be obtained if those foreign branches were located or maintained outside the CFC's country of tax residence.

    5. Foreign entity branch maintained in a Model 1 IGA country. If foreign entity DEF is a U.K.-incorporated company and has several hundred branches located and maintained throughout the United Kingdom, all of which are treated as financial institutions under the U.K. Model 1 IGA, to avoid FATCA withholding, DEF would register only once and obtain a GIIN that could be used for payments to its branches located within the United Kingdom.

    6. Foreign entity branch maintained in a Model 1 IGA and Model 2 IGA country. If foreign entity GHI is organized in Switzerland, a Model 2 IGA country, and is a financial institution under the Model 2 IGA and also has a Branch J located and maintained in the United Kingdom, and Branch J is a financial institution under the Model 1 IGA, both GHI and its Branch J would each have to obtain GIINs for their respective jurisdictions to avoid FATCA withholding in each jurisdiction.284

    7. Foreign entity branch maintained in a Model 1 IGA and non-IGA country. Assume foreign entity KLM is a U.K.-incorporated company and is a financial institution under the U.K. Model 1 IGA. Also assume KLM has Branch N, which is located and maintained in Hong Kong, a non-IGA jurisdiction, where it is treated as a tax resident under local tax law and is a financial institution under the regulations. Both KLM and Branch N would have to obtain GIINs for payments to the U.K. or Hong Kong to avoid FATCA withholding in each jurisdiction.

    8. Foreign entity resident in a Model 1 IGA country with a branch maintained in the United States (not treated as a U.S. person). Assume foreign entity OPQ is a U.K.-incorporated company and is a financial institution under the U.K. Model 1 IGA, with its home office located in the United Kingdom. Assume also that it has Branch R, located and maintained in the United States, and that Branch R is treated as a financial institution under the regulations. Further assume the U.S. branch has not agreed to be treated as a U.S. person on its Form W-8IMY. OPQ and Branch R should obtain a GIIN for their home office as a Model 1 FFI in the United Kingdom and establish that the U.S. branch is a branch of a Model 1 IGA to avoid FATCA withholding for payments to OPQ in the United Kingdom. Because the U.S. branch of OPQ will have a tax residence where OPQ is incorporated under U.S. tax law, it will not be treated as tax resident in the United States for purposes of FATCA registration.285

    9. Foreign entity resident in a Model 1 IGA country with a branch maintained in the United States (treated as a U.S. person). Same facts as Example 8, except that Branch R has agreed to be treated as a U.S. person on its Form W-8IMY. A withholding agent is not required to withhold under section 1471(a) on any payment to a U.S. branch that is treated as a U.S. person for purposes of reg. section 1.1441-1(b)(2)(iv), based on the rationale that the U.S. branch has agreed to accept primary withholding responsibility for a payment for purposes of chapters 3 and 4. Branch R will therefore not have to obtain its own GIIN. For this purpose, a U.S. branch and the withholding agent may agree for the U.S. branch to be treated as a U.S. person through the use of a Form W-8IMY rather than Form W-9, and the withholding agent obtains a U.S. EIN and valid GIIN from the U.S. branch's home office.286 OPQ still will have to register and obtain its own GIIN, which can be used by both OPQ and Branch R.


ii. Types of financial institutions. The final regulations list five categories of financial institutions: depository institutions, custodial institutions, investment entities, specified insurance companies, and holding companies or treasury centers.287

iii. Depository institution. A depository institution is a financial institution that accepts deposits in the ordinary course of banking or a similar business.288 An entity is considered to be engaged in banking or a similar business if, in the ordinary course of its business with customers, the entity accepts deposits289 or other similar investments of funds and regularly engages in one or more of the following activities: (1) makes personal, mortgage, industrial, or other loans or provides other extensions of credit; (2) purchases, sells, discounts, or negotiates accounts receivable, installment obligations, notes, drafts, checks, bills of exchange, acceptances, or other evidence of indebtedness; (3) issues letters of credit and negotiates drafts drawn thereunder; (4) provides trust or fiduciary services; (5) finances foreign exchange transactions; or (6) enters into, purchases, or disposes of finance leases or leased assets.290

The regulations clarify that accepting deposits is necessary but not alone sufficient to create depository entity status. An entity that accepts deposits must also engage in one or more of the enumerated banking or financing activities (adapted from the rules of sections 864 and 954(f) regarding active banking, financing, and similar business). The regulations also provide that to be treated as a depository institution, an entity must regularly engage in one or more of those activities. The regulations clarify that an entity that completes money transfers by instructing agents to transmit funds is not in banking or a similar business because it does not accept deposits or other similar temporary investments of funds. The regulations also clarify that an entity that accepts deposits from persons solely as collateral or security under a lease, loan, or similar financing arrangement is not a depository institution. That exception is intended to exclude from FFI status entities such as finance companies that do not fund their operations through deposits and entities acting as networks for credit card banks that hold cash collateral from those banks.291

iv. Custodial institution. A custodial institution holds, as a substantial portion of its business, financial assets for the benefit of one or more other persons.292 A custodial institution holds financial assets for the account of others293 as a substantial portion of its business "if the entity's gross income attributable to holding financial assets and related financial services" equals or exceeds 20 percent of the entity's gross income during the shorter of (1) the three-year period ending on December 31 of the year preceding the year in which the determination is made; or (2) the period during which the entity has been in existence before the determination is made.294

Under the regulations, the phrase "income attributable to holding financial assets and related financial services" means (1) custody, account maintenance, and transfer fees; commissions and fees earned from executing and pricing securities transactions; income earned from extending credit to customers for financial assets held in custody (or acquired through that extension of credit); (2) income earned on the bid-ask spread of financial assets; and (3) fees for providing financial advice and clearance and settlement services.295

The regulations define the term "financial assets" to mean a security (as defined in section 475(c)(2) without regard to the last sentence thereof), partnership interest, commodity (as defined in section 475(e)(2)), notional principal contract (NPC) (as defined in reg. section 1.446-3(c)), insurance contract or annuity contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, NPC, insurance contract, or annuity contract.296

v. Specified insurance company. Included in the definition of financial institution is a specified insurance company or holding company that is a member of an EAG that includes an insurance company, and that issues, or is obligated to make payments on, a cash value insurance or annuity contract. An entity is a holding company if its primary activity consists of holding (directly or indirectly) all or part of the outstanding stock of one or more members of its EAG.297

A cash value insurance contract or annuity is a contract issued or maintained by an insurance company, a holding company of an insurance company, or a depository institution, custodial institution, investment entity, or a holding company or treasury center, if the contract is a cash value insurance contract or an annuity contract.298

vi. Investment entity. Section 1471(d)(5)(C) provides that an FFI includes a foreign entity "engaged (or holding itself out as being engaged) primarily in the business of investing, reinvesting or trading in stock, debt, partnership interests, notional principal contracts, insurance contracts or other specific types of financial assets" (an investment entity).

According to the preamble to the regulations, commentators requested that the definition of financial institution be clarified and narrowed to exclude passive, noncommercial investment vehicles, including trusts. The IGAs adopt that approach by requiring an investment entity to undertake activity on behalf of customers. The IGAs also expand the definition of an investment entity to include an entity that provides specified financial services to customers, such as individual or collective portfolio management or otherwise investing, administering, or managing funds or money on behalf of other persons, regardless of whether the entity holds financial assets.299

According to Treasury, taking into consideration comments that the provisions of the final regulations should conform as closely as possible to the provisions of the IGAs, the final regulations generally incorporate the definition of investment entity in the IGAs by providing that an investment entity includes any entity that primarily conducts as a business on behalf of customers (1) trading in an enumerated list of financial instruments; (2) individual or collective portfolio management; or (3) otherwise investing, administering, or managing funds, money, or specified financial assets on behalf of other persons. See III.H.4.c.vii.

The regulations also limit the scope of the proposed regulations' definition of investment entity by treating an entity whose gross income is primarily attributable to investing, reinvesting, or trading (other than an entity that primarily conducts as a business on behalf of customers one of the activities enumerated in the preceding sentence) as an investment entity only if it is managed by a depository institution, a custodial institution, another investment entity, or an insurance company that qualifies as a financial institution. Accordingly, passive entities that are not professionally managed are generally treated as passive NFFEs rather than as FFIs. However, entities that function or hold themselves out as mutual funds, hedge funds, or any similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets are investment entities. Consistent with the approach of the proposed regulations, the final regulations provide that an entity primarily conducts an activity as a business if gross income attributable to that activity equals or exceeds 50 percent of the entity's gross income.300

At a session of the New York State Bar Association Tax Section annual meeting in January 2013, Philip Wagman, Stephen Land, Andrew Braiterman, and government panelists analyzed the FFI definition of investment entity:


    Does the "business of investing" just mean that the entity invests in stock, debt or other listed financial assets, or does this mean the entity holds itself out to customers as a vehicle for them to invest in financial assets?

    The proposed regulations are not entirely clear, but appear to adopt the former approach [the entity invests for itself]. The IGAs use the latter approach, that is an entity that has customers, or that is an entity managed by a professional manager. [See III.H.4.h.]

    The final regulations generally appear to follow the approach adopted in the IGAs, by largely adopting the IGA's definition of "investment entity." An entity that primarily invests in financial assets, but does not hold itself out as (or function as) a fund or similar investment vehicle, and is not managed by a professional asset manager, generally appears not to be a FFI under the final regulations.


However, that reading of the regulations may be too narrow for the IRS.301 Reg. section 1.1471-5(e)(4) distinguishes between three separate types of investment entities and provides that the term "investment entity" means any entity that is described in paragraph (e)(4), which includes a so-called Type A, Type B, or Type C investment entity.

vii. Type A investment services entity. A Type A investment entity primarily conducts as a business for or on behalf of a customer, one or more of the following activities or operations: (1) trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.), foreign currency, foreign exchanges, interest rates, and index instruments; transferable securities; or commodity futures302; (2) individual or collective portfolio management303; or (3) otherwise investing, administering, or managing funds, money, or financial assets on behalf of other persons.304 Note that in each of these identified activities, the Type A investment services entity is providing trading, portfolio management or investment, or administrative services for or on behalf of one or more customers (and is not a Type A investment services entity because it is trading or investing in financial assets for its own account).

viii. Primarily conducts as a business. As a condition to being treated as a Type A investment services entity, the entity must primarily conduct as a business one or more of the enumerated activities or operations for or on behalf of a customer. An entity is treated as primarily conducting one or more of those activities as a business if its gross income attributable to those activities equals or exceeds 50 percent of its gross income during the shorter of (1) the three-year period ending on December 31 of the year preceding the year in which the determination is made or (2) the period during which the entity has been in existence.305

ix. Special rule for start-up entities. An entity with no operating history as of the date of the determination is treated as primarily conducting as a business one or more of the identified activities if the entity expects to meet the gross income threshold based on its anticipated functions, assets, and employees, with due consideration given to any purpose or functions for which the entity is licensed or regulated (including those of any predecessor).306

x. Type B managed investment entity. The Type B managed investment entity is an entity (1) whose gross income is primarily attributable to investing, reinvesting, or trading in financial assets; and (2) that is managed by another entity that is a qualifying FFI.

xi. Primarily attributable to investing, reinvesting, or trading in financial assets. An entity's gross income is primarily attributable to investing, reinvesting, or trading in financial assets if its gross income attributable to those activities equals or exceeds 50 percent of the entity's gross income during the shorter of (1) the three-year period ending on December 31 of the year preceding the year in which the determination is made or (2) the period during which the entity has been in existence (the 50 percent gross income test).307

For purposes of determining whether an entity is a Type B managed investment entity, an entity is managed by another qualifying FFI if the qualifying FFI performs, either directly or through another third-party service provider, any of the investment service activities provided by a Type A investment entity on behalf of the managed entity.308 See III.H.4.c.vii.

xii. Qualifying FFI. The Type B investment entity must be managed by an entity (and not an individual) that is a depository institution, a custodial institution, a specified insurance company, or a Type A investment services entity (qualifying FFI).309 See III.H.4.h.iii, III.H.4.h.iv, III.H.4.h.v, or III.H.4.h.vii.

xiii. Special rule for start-up entities. An entity with no operating history as of the date of the determination will be considered to have income that is primarily attributable to investing, reinvesting, or trading in financial assets if the entity expects to meet the income threshold based on its anticipated functions, assets, and employees, with due consideration given to any purpose or functions for which the entity is licensed or regulated (including those of any predecessor).310

xiv. Amount of managed financial assets. Although the regulations include a test that excludes an entity from classification as a Type B managed investment entity if it does not have sufficient gross income from investing in financial assets, there is no similar metric for the amount or quantum of assets or income that must be managed by an entity before it becomes a Type B managed investment entity. Thus, if an entity holds financial assets that generate gross income sufficient to exceed the 50 percent gross income test but only 1 percent of its financial assets are managed by a qualifying FFI and 99 percent by an individual investment adviser, the entity will still apparently be treated as a Type B managed investment entity.

xv. Type C investment vehicle or entity. A Type C investment entity functions or holds itself out as a collective investment vehicle, mutual fund, exchange-traded fund, private equity fund, hedge fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets.311

xvi. Financial asset. The term "financial assets" is included in the definitional language for all three types of investment entities. For a Type A investment entity, the financial assets are not owned by the entity, while in a Type B or Type C investment entity, the financial assets are owned by the entity. The term "financial assets" means a security,312 partnership interest, commodity,313 NPC,314 insurance contract, annuity contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, NPC, insurance contract, or annuity contract.315

A noteworthy exclusion from that list is real estate, although interests in a partnership or other entity that owns an interest in real estate may be a financial asset. Also, an interest in some notes, bonds, debentures, or other indebtedness, derivative contracts, financed receivables, or synthetic or financial leases in real estate or other personal property (for example, railroad stock, containers, airplanes, and vessels) could be considered a financial asset under this broad definition, unless the IRS provides further guidance otherwise. However, cash, currency or bullion, or other direct ownership in personalty, such as aircraft, vessels, or railroad stock would not be a financial asset.

xvii. Holding out as an investment vehicle for customers. While a Type A investment services entity requires the entity to primarily conduct as a business specified activities or operations for or on behalf of a customer, and a Type C investment vehicle or entity requires the entity to function or hold itself out as an investment vehicle, such as a hedge fund or mutual fund, the Type B managed investment entity does not appear to require that the entity hold itself out as an investment vehicle on behalf of customers.

Under the regulations, if a foreign entity is not a Type C investment vehicle and is itself not an investment services entity (for example, a Type A investment services entity), it should not be treated as an investment entity unless it is managed by a qualifying FFI. At least one commentator has suggested that the IRS has clarified what it means to be managed by an FFI by distinguishing between a family trust that is managed by an individual manager and one that is managed by a firm that also manages other families' assets. In the former case, the family trust would be a passive NFFE only required to report the substantial U.S. owners to withholding agents. In the latter case, the family trust would be an entity whose gross income is primarily attributable to investing in financial assets and is managed by another investment entity and thus would be an investment entity or FFI itself.316

The literal language of reg. section 1.1471-5(e)(4)(i)(B) does not require that the managed entity hold itself out to customers as a vehicle for them to invest in financial assets. However, section 1471(d)(5)(C) requires a foreign entity to be engaged (or holding itself out as being engaged) primarily in the business of investing, reinvesting, or trading in securities in order to be treated as an investment entity. Perhaps this language is broad enough to read in a requirement that even the Type B managed entity also must hold itself out to customers as a vehicle for them to invest in financial assets before it will be treated as an investment entity.

Until the IRS clarifies the issue, it would be prudent for organizations with foreign entities or branches that (1) are resident in non-IGA jurisdictions, (2) primarily invest in financial assets, and (3) are managed by a qualifying FFI, to treat those foreign entities as FFIs under the regulations and register and obtain a GIIN to protect themselves, rather than take the position that those entities are passive or excepted NFFEs, even if the foreign entities do not hold themselves out as (or function as) funds or similar investment vehicles.317

For example, one can envisage that a large global bank, asset manager, or fund sponsor may have several SPVs or holding companies that have been set up to facilitate trading or the investment in financial assets for its own account. Since many of their foreign entities or branches are managed by employees of a depository institution, custodial institution, specified insurance company, or Type A investment service, these foreign entities or branches may be Type B investment entities and FFIs that are required to register and obtain a GIIN.

The examples in the regulations elaborate on when foreign entity activities rise to the level of an investment entity and therefore make the entity an FFI.

Example 1 (investment adviser): Fund Manager is an investment entity under reg. section 1.1471-5(e)(4)(i)(A).318 Fund Manager organizes and manages a variety of funds, including Fund A, a fund that invests primarily in equities. Fund Manager hires Investment Adviser, a foreign entity, to provide advice and discretionary management of a portion of the financial assets held by Fund A. Investment Adviser earned more than 50 percent of its gross income for the last three years from providing similar services. Because Investment Adviser primarily conducts as a business of managing financial assets on behalf of clients, Investment Adviser is an investment entity under reg. section 1.1471-4(e)(4)(i)(A).

In a major change to the final regulations, the Technical Corrections now provide that in order for an investment adviser to be a Type A investment services entity (and therefore an FFI which must register and obtain a GIIN), it must now provide advice and discretionay management of a portion of the financial assets on behalf of customers. Just giving investment advice alone will no longer be sufficient. However, apparently providing advice and discretionary management over even a small portion of assets will be enough (see Technical Corrections at p. 26).

Example 2 (entity that is managed by an FFI): The facts are the same as Example 1. Also, in every year since it was organized, Fund A has earned more than 50 percent of its gross income from investing in financial assets. Accordingly, Fund A is an investment entity under reg. section 1.1471-4(e)(4)(i)(B) because it is managed by Fund Manager and Investment Adviser and its gross income is primarily attributable to investing, reinvesting, or trading in financial assets. Apparently, even a de minimis management of the financial assets (based on assets under management, time spent, or some other metric) of the managed entity by a professional fund manager or other qualifying FFI may be sufficient.

Example 3 (investment manager): Investment Manager, a U.S. entity, is an investment entity. Investment Manager organizes and registers Fund A in Country A. Investment Manager is authorized to facilitate purchases and sales of financial assets held by Fund A in accordance with Fund A's investment strategy. In every year since it was organized, Fund A has earned more than 50 percent of its gross income from investing, reinvesting, or trading in financial assets. Accordingly, Fund A is an investment entity under reg. section 1.1471-4(e)(i)(B).

Example 4 (foreign real estate investment fund that is managed by an FFI): The facts are the same as in Example 3, except that Fund A's assets consist solely of non-debt, direct interests in real property located within and without the United States. Fund A is not an investment entity, even though it is managed by Investment Manager, because less than 50 percent of its gross income is attributable to investing, reinvesting, or trading in financial assets.

Example 5 (trust managed by an individual): X, an individual, establishes Trust A, a non-grantor foreign trust for the benefit of X's children, Y and Z. X appoints Trustee A, an individual, to act as the trustee. Trust A's assets consist solely of financial assets, and its income consists solely of income from those financial assets. Under the terms of the trust instrument, Trustee A manages and administers the assets of the trust. Trustee A does not hire an entity as a third-party service provider to perform any of the activities described in reg. section 1.1471-4(e)(4)(i)(A). Trust A is not an investment entity under reg. section 1.1471-4(e)(4)(i)(B) because it is managed solely by Trustee A, an individual.

Example 6 (trust managed by a trust company): The facts are the same as in Example 5, except that X hires Trust Co., an FFI, to act as trustee on behalf of Trust A. As trustee, Trust Co. manages and administers the assets of Trust A in accordance with the terms of the trust agreement for the benefit of Y and Z. Because Trust A is managed by an FFI, Trust A is an investment entity under reg. section 1.1471-4(e)(4)(i)(B) and an FFI under reg. section 1.1471-5(e)(1)(iii).

Example 7 (individual introducing broker): IB, an individual introducing broker, provides investing advice to her clients and uses the services of a foreign entity to conduct and execute trades on behalf of her clients. IB has earned 50 percent or more of her gross income for the past three years from her services as an investment adviser. Because IB is an individual, she is not an investment entity under reg. section 1.1471-4(e)(4).

Example 8 (entity introducing broker): The facts are the same as in Example 7, except that IB is a foreign entity and not an individual. Because IB is an entity that conducts investment activities and its gross income is primarily attributable to those investment activities, IB is an investment entity under reg. section 1.1471-4(e)(4)(i)(A) and reg. section 1.1471-5(e)(1)(iii).

xviii. Holding company or treasury center. A holding company319 or treasury center is an entity that (1) is part of an EAG that includes a depository institution, custodial institution, insurance company, or investment entity; or (2) is formed in connection with or engaged by a collective investment vehicle, mutual fund, exchange-traded fund, private equity fund, hedge fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets.320 See III.H.4.h.v for a definition of the term "holding company."

An entity is a treasury center if its primary activity is to enter into investment, hedging, and financing transactions with or for members of its EAG for purposes of (1) managing the risk of price changes or currency fluctuations for property that is held or to be held by the EAG (or any EAG member); (2) managing the risk of interest rate changes, price changes, or currency fluctuations for borrowings made or to be made by the EAG (or any EAG member); (3) managing the risk of interest rate changes, price changes, or currency fluctuations for assets or liabilities to be reflected in financial statements of the EAG (or any EAG member); (4) managing the working capital of the EAG (or any EAG member) by investing or trading in financial assets solely for the account and risk of that entity or any member of its EAG; or (5) acting as a financing vehicle for borrowing funds for use by the EAG (or any EAG member).321

An entity is not a treasury center if any equity or debt interest in it is held by a person that is not a member of the entity's EAG and the redemption or retirement amount or return earned on that interest is determined primarily by reference to (1) the investment, hedging, and financing activities of the treasury center with members outside its EAG; or (2) any member of the group that is an investment entity or passive NFFE (as described in reg. section 1.1471-5(b)(3)(vi) for either entity).322

The regulations limit the circumstances under which a holding company or treasury center is treated as a financial institution. Under the regulations, those entities are FFIs in two situations. First, subject to limited exceptions for nonfinancial groups (see III.H.4.e), holding companies or treasury centers are FFIs if they are part of an EAG that includes a depository institution, custodial institution, insurance company, or investment entity described in reg. section 1.1471-5(e)(4)(i)(B) and (C) (not exclusively a financial service provider).

Second, they are FFIs regardless of whether they are a member of a nonfinancial group if they are formed in connection with or engaged by a collective investment vehicle, mutual fund, exchange-traded fund, private equity fund, hedge fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets. These rules help ensure that holding companies and treasury centers cannot be used by financial groups with NPFFIs or limited FFIs to shelter payments from chapter 4 withholding.323

d. Registered deemed-compliant financial institution. An RDCFFI is specifically included as one of the FATCA classifications in Question 4 of Form 8957 and thus must register and obtain a GIIN to be FATCA compliant and generally avoid withholding under sections 1471(a) and 1472(a).324 It includes the following types of FFIs that meet specified requirements: local FFIs, non-reporting members of PFFI groups, qualified collective investment vehicles, restricted funds, qualified credit card issuers, and sponsored investment entities and CFCs. See III.H.1.b. It also includes any FFI or branch that is a Model 1 FFI that complies with the registration requirements or a Model 2 FFI. See III.H.4.h and III.H.4.i.

i. Procedural requirements for RDCFFIs. An RDCFFI may use one or more agents to perform the necessary due diligence to identify its account holders and to take any required action associated with obtaining and maintaining its deemed-compliant status. The FFI, however, remains responsible for ensuring that the requirements for its deemed-compliant status are met. An RDCFFI, including an FFI in a Model 2 IGA,325 is required to (1) register with the IRS and agree to comply with the terms of its registered deemed-compliant status; (2) have its RO certify every three years to the IRS, either individually or collectively for the FFI's EAG, that all the requirements for the deemed-compliant category claimed by the FFI have been satisfied since the later of the date the FFI registers as a deemed-compliant FFI or June 30, 2014326; (3) maintain in its records the confirmation information the IRS specifies in forms or other guidance; and (4) agree to notify the IRS if there is a change in circumstances that would make the FFI ineligible for the deemed-compliant status for which it has registered, and to do so within six months of the change in circumstances unless the FFI can resume its eligibility for the specified period.327

ii. Local FFIs. A local FFI is an FFI that meets all of the following requirements:


    1. The FFI is licensed and regulated as a financial institution under the laws of its country of incorporation or organization (which must be a jurisdiction compliant with the Financial Action Task Force (FATF) when the FFI registers for deemed-compliant status).

    2. The FFI does not have a fixed place of business outside its country of business. A fixed place of business does not include a location that is not advertised to the public and from which the FFI performs only administrative support functions.

    3. The FFI does not solicit customers or account holders outside its country of incorporation or organization.328

    4. The FFI is required under the laws of its country of incorporation or organization to identify resident account holders for purposes of either information reporting or withholding of tax for accounts held by residents, or it is required to identify resident accounts for purposes of satisfying that country's anti-money-laundering (AML) due diligence requirements.

    5. At least 98 percent of the accounts by value maintained by the FFI as of the last day of the preceding calendar year are held by residents (including entities) of the country in which the FFI is incorporated or organized.329

    6. By the later of June 30, 2014,330 or the date it registers as a deemed-compliant FFI, the FFI implements policies and procedures, consistent with those set forth for a PFFI, to monitor whether the FFI opens or maintains an account for a specified U.S. person that is not a resident of the country in which the FFI is incorporated or organized (including a U.S. person that was a resident when the account was opened but later ceases to be a resident), an entity controlled or beneficially owned (as determined under the FFI's AML due diligence) by one or more specified U.S. persons that are not residents of the country in which the FFI is incorporated or organized, or an NPFFI. Those policies and procedures must provide that if any such account is discovered, the FFI will close it; transfer it to a PFFI, Model 1 FFI, or USFI; or withhold and report on it if the FFI were a PFFI.

    7. For each preexisting account held by a nonresident of the country in which the FFI is organized or held by an entity, the FFI (1) reviews those accounts in accordance with the procedures described in reg. section 1.1471-4(c) to identify any U.S. account or account held by an NPFFI; and (2) certifies to the IRS that it did not identify any such account as a result of its review; that it has closed any such accounts that were identified or has transferred them to a PFFI, Model 1 FFI, or USFI; or that it agrees to withhold and report on those accounts as would be required if it were a PFFI.

    8. For an FFI that is a member of an EAG, each FFI in the group is incorporated or organized in the same country and, with the exception of any member that is a retirement plan described in reg. section 1.1471-6(f), meets the requirements set forth in reg. section 1471-5(f)(1)(i)(A) and the procedural requirements for an RDCFFI.

    9. The FFI does not have policies or practices that discriminate against opening or maintaining accounts for individuals who are specified U.S. persons and who are residents of the FFI's country of incorporation or organization.331


iii. Non-reporting members of PFFI groups. An FFI is a non-reporting member of a PFFI group if it meets all the following requirements:

    1. By the later of June 30, 2014,332 or the date it registers with the IRS, the FFI implements policies and procedures to ensure that within six months of opening a U.S. account or an account held by a recalcitrant account holder or an NPFFI, the FFI either transfers that account to an affiliate that is a PFFI, Model 1 FFI, or USFI; closes the account; or becomes a PFFI.

    2. Using the procedures applicable to preexisting accounts of PFFIs, the FFI reviews its accounts that were opened before it implements the above policies and procedures (including time frames) to identify any U.S. account or account held by an NPFFI. Within six months of identifying any such account, the FFI transfers the account to an affiliate that is a PFFI, Model 1 FFI, or USFI; closes the account; or becomes a PFFI.

    3. By the later of June 30, 2014,333 or the date it registers with the IRS, the FFI implements policies and procedures to ensure that it identifies any account that becomes a U.S. account or an account held by a recalcitrant account holder or an NPFFI as the result of a change in circumstances. Within six months of the date on which the FFI first has knowledge or reason to know of the change in the account holder's chapter 4 status, the FFI transfers that account to an affiliate that is a PFFI, a Model 1 FFI, or a USFI; closes the account; or becomes a PFFI.334


iv. Qualified collective investment vehicles. A qualified collective investment vehicle is an FFI that meets all the following requirements:

    1. The FFI is an FFI solely because it is an investment entity, and it is regulated as an investment fund either in its country of incorporation or organization or in all the countries in which it is registered and all the countries in which it operates.335

    2. Each holder of record of direct debt interests in the FFI exceeding $50,000, direct equity interests in the FFI (for example, the holders of its units or global certificates), and any other account holder of the FFI is a PFFI, an RDCFFI, a retirement plan described in reg. section 1.1471-6(f), a nonprofit organization described in reg. section 1.1471-5(e)(5)(vi), a U.S. person that is not a specified U.S. person, a non-reporting IGA FFI, or an exempt beneficial owner.336

    3. For an FFI that is part of an EAG, all other FFIs in the EAG are PFFIs, RDCFFIs, sponsored FFIs, non-reporting IGA FFIs, or exempt beneficial owners.337


v. Restricted funds. A restricted fund is an FFI that meets all the following requirements:

    1. The FFI is an FFI solely because it is an investment entity, and it is regulated as an investment fund under the laws of its country of incorporation or organization (which must be an FATF-compliant jurisdiction when the FFI registers for deemed-compliant status) or in all the countries in which it is registered and in all the countries in which it operates.338

    2. Interests issued directly by the fund are redeemed or transferred by the fund rather than sold by investors on any secondary market.339

    3. Interests that are not issued directly by the fund are sold only through distributors that are PFFIs, RDCFFIs, nonregistering local banks, or restricted distributors.340

    4. The FFI ensures that by the later of June 30, 2014,341 or six months after the date the FFI registers as a DCFFI, each agreement that governs the distribution of its debt or equity interests prohibits sales and other transfers of debt or equity interests in the FFI (other than interests that are both distributed by and held through a PFFI) to specified U.S. persons, NPFFIs, or passive NFFEs with one or more substantial U.S. owners.342

    5. The FFI ensures that by the later of June 30, 2014,343 or six months after the date the FFI registers as a DCFFI, each agreement entered into by the FFI that governs the distribution of its debt or equity interests requires the distributor to notify the FFI of a change in the distributor's chapter 4 status within 90 days.344

    6. For any of the FFI's preexisting direct accounts that are held by the beneficial owner of the interest in the FFI, the FFI reviews those accounts in accordance with the procedures (and time frames) described in reg. section 1.1471-4(c) applicable to preexisting accounts to identify any U.S. account or account held by an NPFFI.345

    7. By the later of June 30, 2014,346 or the date that it registers as a DCFFI, the FFI implements the policies and procedures described in reg. section 1.1471-4(c) to ensure that it either (1) does not open or maintain an account for, or make a withholdable payment to, any specified U.S. person, NPFFI, or passive NFFE with one or more substantial U.S. owners and, if it discovers any such accounts, it closes them for that person within six months of the date that the FFI had reason to know the person became an account holder; or (2) withholds and reports on any account held by, or any withholdable payment made to, any specified U.S. person, NPFFI, or passive NFFE with one or more substantial U.S. owners to the extent and in the manner that would be required under reg. section 1.1471-4(b) and (d) if the FFI were a PFFI.

    8. For an FFI that is part of an EAG, all other FFIs in the EAG are PFFIs, RDCFFIs, sponsored FFIs, non-reporting IGA FFIs, or exempt beneficial owners.347


vi. Qualified credit card issuers. An FFI is a qualified credit card issuer if it meets all the following requirements:

    1. The FFI is an FFI solely because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of a balance due on the card and the overpayment is not immediately returned to the customer.

    2. By the later of June 30, 2014,348 or the date it registers as a DCFFI, the FFI implements policies and procedures to either prevent a customer deposit exceeding $50,000 or ensure that any customer deposit more than $50,000 is refunded to the customer within 60 days.349


e. Entities excluded from FFI status. The final regulations, in a comprehensive expansion of the proposed regulations, identify several entities that are excluded from the definition of financial institution if they are not a specified insurance company or holding company that is a member of an EAG that includes an insurance company. If an FFI is excluded from FFI status, it does not have to register or obtain a GIIN, and it will be treated as an excepted nonfinancial entity, which will not be subject to withholding under section 1471(a) or 1472(a).350 The list of entities includes excepted nonfinancial group entities, excepted nonfinancial start-up companies or companies entering a new line of business, excepted nonfinancial entities in liquidation or bankruptcy, excepted interaffiliate FFIs, section 501(c) entities, and nonprofit organizations. An entity excluded from FFI status in a non-IGA jurisdiction does not have to register or obtain a GIIN, because it is not an FFI.

i. Excepted nonfinancial group entities. The regulations provide an exception to FFI status (and passive NFFE status for section 1472 purposes) for holding companies, treasury centers, and captive finance companies that are part of a nonfinancial group. Excepted holding companies may be part of nonfinancial group structures that include tiers of holding companies. Nonfinancial groups may include FFI members to a limited extent when all those members are PFFIs or DCFFIs. The regulations also provide that an excepted entity can provide a mixture of holding company, treasury center, and captive finance company functions if those are substantially all its activities. This excepted status does not apply to entities formed in connection with or availed of by private equity funds and similar arrangements.351

A foreign entity is a member of a nonfinancial group if:


    1. the entity is not a depository institution or custodial institution (other than for members of its EAG);

    2. the entity is a holding company, treasury center, or captive finance company, and substantially all its activities are to perform one or more of the functions of those entities352; and

    3. the entity does not hold itself out as (and was not formed in connection with or availed of by) an arrangement or investment vehicle that is a private equity fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle established with an investment strategy to acquire or fund companies and to treat the interests in those companies as capital assets held for investment purposes.


ii. Nonfinancial group. An EAG is a nonfinancial group if:

    1. for the three-year period preceding the year for which the determination is made, no more than 25 percent of the gross income of the EAG353 consists of passive income354;

    2. no more than 5 percent of the EAG's gross income is derived by EAG members that are FFIs (excluding income derived from transactions between members of the EAG or by any member of the EAG that is a CDCFFI)355;

    3. no more than 25 percent of the fair market value of assets held by the EAG356 are assets that produce or are held for the production of passive income; and

    4. any member of the EAG that is an FFI is either a PFFI or a DCFFI.357


An entity is a captive finance company if its primary activity is to enter into financing (including the extension of credit) or leasing transactions with or for suppliers, distributors, dealers, franchisees, or customers of the entity or of any member of the entity's EAG that is an active NFFE.358

iii. Excepted nonfinancial start-up companies or companies entering a new line of business. An excepted nonfinancial start-up company or a company entering a new line of business includes a foreign entity that is investing capital in assets with the intent to operate a new business or line of business other than that of a financial institution or passive NFFE for a specified period. For an entity intending to operate a new business, that period is 24 months from the entity's initial organization. If the entity intends to operate a new business, the period is 24 months from the date of the board resolution (or its equivalent) approving the new line of business, as long as the entity qualified as an active NFFE for the 24 months preceding the date of that approval. An entity is not included in the exclusion if it functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and hold interests in those companies as capital assets for investment purposes.359

iv. Excepted nonfinancial entities in liquidation or bankruptcy. An excepted nonfinancial entity in liquidation or bankruptcy is a foreign entity that was not a financial institution or passive NFFE at any time during the past five years and that is liquidating its assets or reorganizing with the intent to continue or recommence operations as a nonfinancial entity.360

v. Excepted interaffiliate FFI. An excepted interaffiliate FFI includes a foreign entity that is a member of a PFFI group if (1) the entity does not maintain financial accounts (other than accounts maintained for members of its EAG); (2) the entity does not hold an account with or receive payments from any withholding agent other than a member of its EAG; (3) the entity does not make withholdable payments to any person other than to members of its EAG that are not limited FFIs or limited branches; and (4) the entity has not agreed to report or otherwise act as an agent for chapter 4 purposes on behalf of any financial institution, including a member of its EAG.361

vi. Section 501(c) entities. A section 501(c) entity is a foreign entity that is described in section 501(c) other than an insurance company described in section 501(c)(15).362

vii. Nonprofit organizations. A nonprofit organization is a foreign entity that is established and maintained in its country of residence exclusively for religious, charitable, scientific, artistic, cultural, or educational purposes if:


    1. the entity is exempt from income tax in its country of residence;

    2. the entity has no shareholders or members that have a proprietary or beneficial interest in its income or assets;

    3. neither the laws of the entity's country of residence nor the entity's formation documents permit any of the entity's income or assets to be distributed to, or applied for the benefit of, an individual or non-charitable entity other than in the conduct of the entity's charitable activities, as payment of reasonable compensation for services rendered or the use of property, or as payment representing the FMV of property that the entity has purchased; and

    4. the laws of the entity's country of residence or the entity's formation documents require that upon the entity's liquidation or dissolution, all its assets be distributed to an entity that meets the requirements of reg. section 1.1471-6(b) or another organization that is a nonprofit organization, or that they escheat to the government of the entity's country of residence or to any political subdivision thereof.363


f. Exceptions for some CDCFFIs to register and obtain a GIIN. A CDCFFI364 or an owner-documented FFI (ODFFI)365 does not need to register or obtain a GIIN to become FATCA compliant and avoid withholding under section 1471(a) or 1472(a).366 Rather, those FFIs (other than a sponsored, closely held investment vehicle) can be identified as CDCFFIs if they provide a withholding agent with a withholding certificate that identifies them as a particular type of CDCFFI, or as an ODFFI.367

i. CDCFFIs, other than sponsored closely held investment vehicles. CDCFFIs include nonregistering local banks, FFIs with only low-value accounts, sponsored closely held investment vehicles, and limited life debt investment entities.368 CDCFFIs also include non-reporting IGA FFIs.369 According to the regulations, the term "non-reporting IGA FFI" means an FFI that is identified as a non-reporting financial institution under a Model 1 IGA or Model 2 IGA that is not an RDCFFI.370 See III.H.4.h and III.H.4.i.

With the exception of a CDCFFI that is a sponsored closely held investment vehicle, each CDCFFI must provide a withholding agent a withholding certificate identifying the payee as a CDCFFI, and the certificate must contain a certification by the payee that it meets the requirements to qualify as the identified type of CDCFFI.371 See III.H.1.b.iii.

ii. Nonregistering local bank. A nonregistering local bank is an FFI that meets the following requirements:


    1. the FFI operates solely as a bank or credit union and is licensed and regulated under the laws of its country of incorporation or organization as a bank or credit union or similar cooperative credit organization that is operated without profit;

    2. the FFI's business consists primarily of receiving deposits from, and making loans to, unrelated retail customers;

    3. the FFI does not have a fixed place of business outside its country of incorporation or organization372;

    4. the FFI does not solicit customers or account holders outside its country of incorporation or organization373;

    5. the FFI does not have more than $175 million in assets on its balance sheet and, if the FFI is a member of an EAG, the group does not have more than $500 million in total assets on its consolidated or combined balance sheets; and

    6. for an FFI that is part of an EAG, each member of the EAG is incorporated or organized in the same country and does not have a fixed place of business outside that country.374


iii. FFI with only low-value accounts. An FFI with only low-value accounts is an FFI that meets all the following requirements:

    1. The FFI is not an investment entity.

    2. No financial account maintained by the FFI (or, for an FFI that is a member of an EAG, by any EAG member) has a balance or value more than $50,000.375

    3. The FFI does not have more than $50 million in assets on its balance sheet as of the end of its most recent accounting year. For an FFI that is a member of an EAG, the entire EAG does not have more than $50 million in assets on its consolidated or combined balance sheet as of the end of its most recent accounting year.376


iv. Sponsored closely held investment vehicles. A withholding agent generally may treat a payee as a sponsored closely held investment vehicle if the agent can reliably associate the payment with a withholding certificate that identifies the payee as a sponsored closely held investment vehicle and includes the sponsor entity's GIIN, which the withholding agent has verified against the published FFI and branch list. In general, a withholding agent will have reason to know that the payee is not a sponsored closely held investment vehicle if its AML due diligence indicates that the payee has more than 20 individual investors who own direct or indirect interests in the payee.377

v. Sponsored closely held investment vehicle -- defined. An FFI is a sponsored closely held investment vehicle if:


    1. the FFI is an FFI solely because it is an investment entity and is not a QI, WP, or WT;

    2. A PFFI Model 1 FFI, or USFI, agrees to fulfill all due diligence, withholding, and reporting responsibilities that the FFI would have assumed if it were a PFFI;

    3. the FFI does not hold itself out as an investment vehicle for unrelated parties; and

    4. 20 or fewer individuals own all of the debt and equity interests in the FFI (disregarding debt interests owned by PFFIs, RDCFFIs, and CDCFFIs, and equity interests owned by an entity if that entity owns 100 percent of the equity interests in the FFI and is itself a sponsored closely held investment vehicle).


In another major change to the final regulations, the Technical Corrections now provide that the sponsor needs to only fulfill the requirements in the FFI agreement. Under the old rules, the FFI was required to have a contractual arrangement with the sponsoring entity and it was unclear exactly what type of contractual arrangement was necessary to meet that test (see Technical Corrections at p. 27).

vi. Sponsoring entity. The sponsoring entity must comply with the following requirements:


    1. the sponsoring entity has registered with the IRS as a sponsoring entity;

    2. the sponsoring entity agrees to perform, on behalf of the FFI, all due diligence, withholding, reporting, and other responsibilities that the FFI would have been required to perform if it were a PFFI and retains documentation collected regarding the FFI for a period of six years;

    3. the sponsoring entity identifies the FFI in all reporting completed on the FFI's behalf to the extent required under the regulations378; and

    4. the sponsoring entity has not had its status as a sponsor revoked.379


A sponsored FFI will remain liable for any failure of its sponsoring entity to comply with the obligations that the sponsoring entity has agreed to undertake on behalf of the FFI.380

vii. Registration requirements for a sponsored closely held investment vehicle and its sponsoring entity. Although a sponsored closely held investment vehicle does not itself need to register to obtain a GIIN to be FATCA-compliant, the sponsored FFI will still need to obtain the sponsoring entity's GIIN and include it on the withholding certificate that it provides to the withholding agent. Thus, a sponsoring entity will need to register and obtain its own GIIN. See III.H.1.b.

viii. Limited life debt investment entity. An FFI that is a limited life debt investment entity will be treated as a CDCFFI only before 2017. Thus, after 2016, the deemed-compliant status of this entity terminates and it will be required to register and obtain a GIIN as a PFFI.381

A limited life debt investment entity will be treated as a CDCFFI before 2017 if it is an FFI that is the beneficial owner of the payment (or of payments made on the account) and the FFI meets the following requirements:


    1. the FFI is a collective investment vehicle formed under a trust indenture or similar fiduciary arrangement that is an FFI solely because it is an investment entity that offers interests primarily to unrelated investors;

    2. the FFI was in existence as of December 31, 2011, and its organizational documents require that it liquidate on or before a set date, and no amendments to the organizational documents (including the trust indenture) are permitted without the agreement of all the FFI's investors;

    3. the FFI was formed for the purpose of purchasing (and did purchase) specific types of indebtedness and holding those assets (subject to reinvestment only under prescribed circumstances) until the termination of the asset or the vehicle;

    4. all payments made to the FFI's investors are cleared through a clearing organization that is a PFFI, Model 1 FFI, or USFI, or are made through a trustee that is a PFFI, Model 1 FFI, or USFI; and

    5. the FFI's trust indenture or similar fiduciary arrangement only authorizes the trustee or fiduciary to engage in activities specifically designated in the trust indenture, and the trustee or fiduciary is not authorized through a fiduciary duty or otherwise to fulfill the obligations that a PFFI is subject to absent a legal requirement to fulfill them, even if the consequence of the trustee failing to fulfill those obligations is to cause the FFI to be withheld upon.382


ix. ODFFIs. An ODFFI is not an RDCFFI, but an entirely separate deemed-compliant FFI category.383 An FFI may be treated as an ODFFI only for payments received from and accounts held with a designated withholding agent (or for payments received from and accounts held with another FFI that is also treated as an ODFFI by the designated withholding agent). A designated withholding agent is a USFI, PFFI, or Model 1 FFI that agrees to undertake the additional due diligence and reporting required under the regulations384 to treat the FFI as an ODFFI. An FFI will be treated as an ODFFI only for a payment or account for which it does not act as an intermediary.385

As mentioned, an ODFFI does not need to obtain a GIIN or register. Also, it does not appear that a designated withholding agent that is a USFI must register and obtain a GIIN solely because it is identified as the ODFFI's designated withholding agent, unless the IRS provides otherwise in future guidance.

g. Treatment of FFIs operating in countries that have signed an IGA to implement FATCA.

i. Model IGAs. On February 8, 2012, Treasury released a joint statement with France, Germany, Italy, Spain, and the United Kingdom in which the parties broadly agreed to an intergovernmental approach to implement FATCA -- the so-called Model 1 IGA approach.386 Under that framework, the United States and those European countries would agree to domestic reporting and the reciprocal automatic exchange of information. The FATCA partner would enter into an agreement to pursue the necessary implementing legislation to require FFIs in its jurisdiction to collect and report the required information to the authorities of the FATCA partner, to enable FFIs established in the FATCA partner to apply the necessary diligence to identify the U.S. accounts, and to automatically transfer to the United States the information reported by the FFIs. In exchange for that information, the United States would agree to commit to reciprocity in automatically collecting and reporting to the authorities of the FATCA partner information on the U.S. accounts of residents of the FATCA partner.

On July 26, 2012, Treasury released reciprocal and nonreciprocal versions of the Model 1 IGA, a bilateral agreement under which an FFI satisfies its chapter 4 requirements by reporting information about U.S. accounts to its tax authorities, followed by the automatic exchange of that information with the United States. The Model 1 IGA will remove some of the implementation problems faced by FFIs in FATCA partner countries, such as complying without breaching data protection restrictions in the United Kingdom.

On November 14, 2012, Treasury released the Model 2 IGA, under which an FFI reports specified information directly to the IRS in a manner consistent with the final regulations, supplemented by government-to-government exchange of information on request.

Treasury has entered into several bilateral IGAs based on the Model 1 IGA or Model 2 IGA. It has also periodically updated the model IGAs, including an update to both models on May 9, 2013, to incorporate modifications reached through intergovernmental discussions, as well as modifications to the due diligence procedures to reflect improvements made in the final regulations since the initial release of the model IGAs.

The model IGAs outline time frames for FFIs in jurisdictions with IGAs that are in force in partner countries to complete the necessary due diligence to identify U.S. accounts and perform reporting on those accounts. The timelines and other provisions in the model IGAs interact with the final regulations in various ways. The model IGAs, and all IGAs that have been concluded to date, contain a most favored nation provision providing that for some of the IGA's terms, including the due diligence rules applicable to reporting Model 1 FFIs and Model 2 FFIs, a partner country is entitled to the benefit of any more favorable provision agreed to in a comparable IGA with another partner country, subject to conditions.

Model 1 IGAs and Model 2 IGAs also contain a coordination provision providing that a partner country may permit its FFIs to use a definition in the relevant Treasury regulations in lieu of a corresponding definition in the IGA if that application would not frustrate the purposes of the IGA. Model 1 IGAs and Model 2 IGAs provide that a partner country may permit its FFIs to apply the due diligence procedures described in the regulations in lieu of the due diligence procedures in the IGA to establish the status of account holders and payees. Further, paragraph 6 of article 4 of the Model 1 IGA coordinates the time by which the parties must obtain and exchange information with the time by which FFIs must report similar information to the IRS under the relevant regulations.

On May 9, 2013, Treasury released a new Annex 2, which standardizes the list of exempt entities and products, eliminating the need to separately negotiate with FATCA partner countries what entities or products are exempt on a jurisdiction-by-jurisdiction basis. On July 12, 2013, Treasury released revised versions of the Model 1 and Model 2 IGAs and annexes that reflect the updated FATCA timeline provided in Notice 2013-43. See Exhibit 1 for the updated FATCA timeline.

An FFI in a Model 1 or Model 2 jurisdiction will be required to register, be approved, and obtain a GIIN or be withheld upon.387 A FATCA-compliant FFI in a Model 1 or 2 jurisdiction should not be subject to a 30 percent withholding tax on U.S.-source income unless it fails to meet the requirements in the Model 1 IGA and local implementing legislation, or the Model 2 IGA, as applicable. Model 1 and Model 2 IGAs can both be implemented without having in effect a double tax convention or tax information exchange agreement with the United States.388

Denmark, Germany, Ireland, Mexico, Norway, Spain, and the United Kingdom have signed a Model 1 IGA. More countries are expected to sign in 2013. Switzerland signed the first Model 2 IGA February 14, 2013, and Japan has announced its intention to enter into a Model 2 IGA.

ii. IRS list of countries treated as having an IGA in effect. The preamble to the regulations indicates that the IRS will permit the registration of FFIs that are Model 1 FFIs as long as the associated jurisdiction is identified on the IRS's list of countries treated as having an IGA in effect, even if any necessary ratification of the IGA in the jurisdiction has not yet been completed.389 Similarly, under Notice 2013-43,390 a country will be treated as having an IGA in effect if the jurisdiction is listed on the Treasury website as such.391 In general, the government intends to include on that list jurisdictions that have signed an IGA, but not yet brought it into force.

The treatment of an FFI established in a jurisdiction with an IGA treated as in effect may differ from the treatment of an FFI in non-IGA countries.392 An FFI resident in such a jurisdiction should refer to its applicable IGA.393 An FFI resident in a jurisdiction that is treated as having an IGA in effect will be permitted to register on the FATCA portal as an RDCFFI (which would include all Model 1 FFIs) or a PFFI (which would include all Model 2 FFIs). Also, an FFI may designate a branch located in that jurisdiction as a limited branch. See III.H.4.j.

Under Notice 2013-43,394 a country will be "treated as having in effect an IGA" if the jurisdiction is listed on the Treasury website as a jurisdiction that is treated as having an IGA in effect. In general, the government intends to include on this list jurisdictions that have signed, but have not yet brought into force an IGA.

The list of jurisdictions that are treated as having an IGA in effect is available at http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx.395

However, a country may be removed from the list of countries that are treated as having an IGA in effect if it fails to perform the steps necessary to bring the IGA into force within a reasonable time. If a country is removed from the list, FFIs that are residents of that country, and branches that are located there, will no longer be entitled to the status that would be provided under the IGA, and they must update their status on the FATCA portal. See III.M.1.

As noted above, Notice 2013-43 provides guidance for FFIs in countries that have signed an IGA but not yet brought it into force. For example, implementing legislation -- such as the parliamentary action396 required under Germany's Model 1 IGA -- or regulatory action397 conferred by statutory action398 may not yet been drafted or finalized.399

Thus, Model 1 FFIs or Model 2 FFIs in countries with signed IGAs, such as Germany, the United Kingdom, or Switzerland, can input their information as RDCFFIs now that the FATCA portal has opened (as of August 19) and finalize their registration on or after January 1, 2014. See II.D.2. However, a Model 1 FFI must register before July 1, 2014, if (1) it maintains one or more branches (other than a limited branch or a U.S. branch) in countries that are not covered by a Model 1 IGA; (2) it is renewing its QI, WP, or WT agreement; or (3) it intends to be a lead FFI for one or more members that are not established in, and operating exclusively in, other Model 1 countries

However, the IRS has not yet provided guidance about countries that are in various stages of negotiation with their IGAs. These would include countries that are merely in talks or preliminary negotiations with Treasury; countries, like Japan,400 that have only provided a press release indicating their intention to enter into an IGA in the future; or countries that have entered into a memorandum of understanding or other agreement (which is not itself an IGA) with Treasury to enter into an IGA. Presumably, an FFI in those countries should register as a PFFI as a prophylactic measure and then update its registration information when an IGA is signed.

The IRS has said it is aware of the problem faced by an FFI that resides in a country that is negotiating an IGA but has not yet signed one. For the FFI to certify that it is FATCA compliant under the registration process, the challenge is twofold. First, the RO (or equivalent authorized or delegated officer in an expected IGA country) does not yet know what it is agreeing to by checking the box and signing Form 8957 because the IGA has not yet been signed or implementing legislation has not yet been drafted or finalized. Second, if a country has not yet provided guidance permitting an FFI to use an RO or equivalent authorized or delegated officer to register, it is unclear who will be permitted to electronically sign part 4 of the FFI registration for that FFI. See III.K.

h. Reporting financial institution under a Model 1 IGA (Model 1 FFI). According to the registration user guide, a reporting financial institution under a Model 1 IGA or a Model 1 FFI is registering only to obtain a GIIN and to authorize one or more POCs to receive information related to FATCA registration on behalf of the Model 1 FFI.401 Importantly, however, a Model 1 FFI operating one or more branches in a non-IGA country is also agreeing to the terms of an FFI agreement for any such branch, unless the branch is treated as a limited branch.402 A Model 1 FFI requesting renewal of a QI, WP, or WT agreement is agreeing to the terms applicable to renewed 2014 model QI, WP, or WT agreements.403

                                    Exhibit 8



     Comparison of the FATCA Regulations to the Model 1 and Model 2 IGAs
 ______________________________________________________________________________

                                    Model 1
                                    IGA (U.K.,
                                    Germany,
                                    Spain,         Model 2
                       FATCA        France,        IGA            Model 2
                       Regulations  Italy)         (Switzerland)  IGA (Japan)
 ______________________________________________________________________________

 Registration obligations:
 ______________________________________________________________________________

 1. Registration       Yes          Yes            Yes            Yes

 2. Due date to        7/1/14       7/1/14         7/1/14         7/1/14
 obtain GIINs

 3. Start date for     8/19/13      8/19/13        8/19/13        8/19/13
 registration

 4. End date for       4/25/14      4/25/14        4/25/14        4/25/14
 initial registration

 5. Required to        Yes          Yes            Yes            Yes
 finalize
 registration on or
 after 1/1/14

 6. FFIs on first      6/2/14       6/2/14         6/2/14         6/2/14
 published List

 7. FFI agreement      Yes          No             Yes            No

 8. Sponsored FFI      Yes          Likely Yes     Yes            Yes
 transition rule
 1/1/16

 9. Model 1 FFI        No           Yes, for       No             No
 transition rule                    certain Model
 1/1/15                             1 FFIs

 10. Prima facie FFI   Yes          Likely Yes     Yes            Yes
 transition rule
 1/1/15

 11. Preexisting       Yes          Likely Yes     Yes            Yes
 obligations which
 are not paid to
 prima facie FFI
 transition rule
 7/1/16

 12. Offshore          Yes          Likely Yes     Yes            Yes
 payments of U.S.-
 source FDAP if not
 paid by intermediary
 transition rule
 1/1/17
 ______________________________________________________________________________

 Registration obligations:
 ______________________________________________________________________________

 13. Payments which    Yes          Likely Yes     Yes            Yes
 are gross proceeds
 or passthru payments
 transition rule
 1/1/17

 14. Grandfather       Yes, unless  Likely Yes,    Yes, unless    Yes, unless
 exclusion             modified     unless         modified       modified
                                    modified

 15. FFI agreement     Yes          No             Yes            No, for FFIs
 with IRS                                                         resident in
                                                                  Japan

 16. Use of lead FFIs  Yes          Likely Yes     Yes            Yes

 17. FFI country of    Yes, based   Yes, based on  Yes, based on  Yes, based on
 tax residence         on a local   IGA and/or     IGA and/or     IGA and/or
                       law deter-   FATCA partner  FATCA partner  FATCA partner
                       mination     law            law            law

 18. Classification    Yes          Yes            Yes            Yes
 of FFIs

 19. Depository        Defined in   Generally      Generally      Generally
 institution           regulations  conforms to    conforms to    conforms to
                                    regulations    regulations    regulations

 20. Custodian         Defined in   Generally      Generally      Generally
 institution           regulations  conforms to    conforms to    conforms to
                                    regulations    regulations    regulations

 21. Investment        Defined in   Defined in     Defined in     Defined in
 entity                regulations  Model 1 IGA    Model 2 IGA    Model 2 IGA
                                    -- differs     -- differs     -- differs
                                    from           from           from
                                    regulations    regulations    regulations

 22. Limited FFIs and  Yes,         Yes --         Yes --         Yes --
 limited branches      through      permanent      permanent      permanent
                       12/31/15     safe harbor    safe harbor    safe harbor
                                    rule           rule           rule

 23. Branch            Yes, if      Yes, if        Yes, if        Yes, if
 registration          resident in  resident in    resident in    resident in
                       non-IGA      FATCA partner  FATCA partner  FATCA partner
                       country

 24. U.S. FFI with     No           Yes            No             No
 non-QI branch

 25. U.S. FFI with QI  Yes          Yes            Yes            Yes
 branch

 26. ROs/POC           Yes          Likely Yes,    Likely Yes,    Likely Yes,
                                    by authorized  by authorized  by authorized
                                    or delegated   or delegated   or delegated
                                    officer        officer        officer
 ______________________________________________________________________________

 Withholding Responsibilities:
 ______________________________________________________________________________

 1. Withholding by     Yes,         No, generally  No, generally  No, generally
 FFIs on U.S. source   starting     if resident    if resident    if resident
 FDAP                  7/1/14       in FATCA       in FATCA       in FATCA
                                    partner it is  partner it is  partner it is
                                    possible to    possible to    possible to
                                    pass with-     pass with-     pass with-
                                    holding up     holding up     holding up
                                    the payment    the payment    the payment
                                    chain          chain          chain

 2. Withholding by     Yes,         No, if         No, if         No, if
 FFIs on gross         starting     resident in    resident in    resident in
 proceeds              1/1/17       FATCA partner  FATCA partner  FATCA partner

 3. Withholding by     Possible     No, if         No, if         No, if
 FFIs foreign          withholding  resident in    resident in    resident in
 passthru payments     commencing   FATCA partner  FATCA partner  FATCA partner
                       1/1/17 if
                       rules
                       provide

 4. Withholding by     Yes,         No, generally  No, generally  No, generally
 FFIs on NPFFIs or     starting     if resident    if resident    if resident
 recalcitrant account  7/1/14       in FATCA       in FATCA       in FATCA
 holders               for U.S.-    partner it is  partner it is  partner it is
                       source FDAP  possible to    possible to    possible to
                                    pass with-     pass with-     pass with-
                                    holding up     holding up     holding up
                                    the payment    the payment    the payment
                                    chain          chain          chain.
 ______________________________________________________________________________

 Reporting Responsibilities:
 ______________________________________________________________________________

 1. Reporting of U.S.  Directly     To local       Directly to    Directly to
 accounts              to IRS       taxing auth-   IRS            IRS
                                    ority; if
                                    U.S.-source
                                    FDAP must
                                    also pass
                                    information
                                    to upstream
                                    payer

 2. Reporting of       Directly     To local       Directly to    Directly to
 recalcitrant account  to IRS       taxing         IRS            IRS
 holders and NPFFIs                 authority

 3. Delivery of        No           Yes            No             No
 information to U.S.
 by FATCA partner

 4. Delivery of        No           Yes, with      No             Yes, under
 information by U.S.                reciprocity                   existing
 to FATCA partner --                                              income tax
 reciprocity                                                      convention
 ______________________________________________________________________________

 Due Diligence Responsibilities:
 ______________________________________________________________________________

 1. Install due        Yes          Yes            Yes            Yes
 diligence procedures
 for new and
 preexisting accounts

 2. Closure of         Yes          No             No             No
 accounts

An analysis of the U.K. IGA may be useful as an example of how an organization identifies its FFIs under a Model 1 IGA because the United Kingdom is the first Model 1 IGA country to release implementing legislation. This implementing legislation may become a model for other Model 1 IGA countries.404 See Exhibit 8 for a comparison of the FATCA regulations to the Model 1 and Model 2 IGAs.

Guidance note 2.1 provides that the first step to be taken by an organization to determine the extent of its obligations is to determine whether it is an FFI under the U.K. IGA or agreement. Under the U.K. IGA, a U.K. financial institution will be classified as a reporting U.K. financial institution (a Model 1 FFI) or a non-reporting institution.405 As long as U.K. financial institutions are in compliance with the U.K. legislation, they will not be subject to withholding tax for FATCA purposes.406

i. U.K. financial institution obtaining a GIIN. Each reporting U.K. financial institution or Model 1 FFI and any entity that is an RDCFFI407 will be required to register and obtain a GIIN from the IRS, while non-reporting financial institutions other than RDCFFIs will not be required to do so.408

However, according to the U.K. guidance notes, the U.K. regulations, and the U.S. regulations, FFIs in a Model 1 jurisdiction are generally not required to provide a GIIN before 2015 to establish their FATCA status.409 Before 2015, a Model 1 FFI can generally confirm its status by providing a withholding certificate, providing a pre-FATCA Form W-8 with an oral or written confirmation that it is a Model 1 FFI, or informing the withholding agent that it is a Model I FFI.410 See II.D.

ii. U.K. financial institution. The term "U.K. financial institution or Model 1 FFI" applies to non-U.S. entities that meet the definition of a U.K. Model 1 FFI. Under the U.K. agreement, U.K. entities (including U.K. branches of non-U.K. entities) are considered U.K. financial institutions or Model 1 FFIs if they fall into any of the following six categories: depository institution, custodial institution, investment entity, specified insurance company, relevant holding company, or treasury company.411

Each category of FFI is determined by set criteria. When an entity does not meet the definition of a financial institution or FFI, it will be regarded as an NFFE and it will not have to register and obtain a GIIN.412

iii. Depository institution. According to guidance note 2.26, to be classified as a depository institution,413 an entity must accept deposits in the ordinary course of banking or a similar business even though that action is not enough on its own. HMRC indicated that it will regard a person carrying out an activity that is a regulated activity414 as a depository institution. Entities within this definition will include entities regulated in the United Kingdom as a savings or commercial bank, a credit union, industrial and provident societies, and building societies. Insurance brokers and solicitors would be excluded.

In considering whether an entity is conducting a banking or similar business, the activities that the entity carries out will be determinative. Entities that issue payment cards that can be preloaded with funds exceeding $50,000 to be spent later, such as prepaid credit cards or "e-money," also will be considered depository institutions, even though those entities are exempt from the definition of a depository provider for the purposes of the Electronic Money Issuers Regulations of 2011.

Entities that provide only asset-based financial services or that accept deposits only from persons as collateral or security under a sale or lease of property, a loan secured by property, or a similar financing arrangement between the entity and the person making the deposit will not be depository institutions. This might, for instance, apply to a factoring or invoice discounting business. Entities that complete money transfers by instructing agents to transmit funds will not be considered engaged in a banking or similar business because that activity is not seen as accepting deposits.

iv. Custodial institution. Under guidance note 2.27, a custodial institution is an institution that holds financial assets for the account of others as a substantial portion of its business. A substantial proportion means that 20 percent or more of the entity's gross income from either its last three accounting periods, or because it commenced business, arises from the holding of assets for the benefit of others and from related financial services.

An entity with no operating history as of the date of the determination is considered to hold financial assets for the account of others as a substantial portion of its business if the entity expects to meet the gross income threshold based on its anticipated functions, assets, and employees, with due consideration given to any purpose or functions for which the entity is licensed or regulated (including those of any predecessor). Related services are any ancillary services directly related to the holding of assets by the institution on behalf of others, including (1) custody, account maintenance, and transfer fees; (2) execution and pricing commissions and fees from securities transactions; (3) income earned from extending credit to customers; (4) income earned from contracts for differences and on the bid-ask spread of financial assets; and (5) fees for providing financial advice, and clearance and settlement services. Those institutions could include brokers, custodial banks, trust companies, clearing organizations, and nominees. Insurance brokers do not hold assets on behalf of clients and thus should not fall under this provision.

The definition of depository institution and custodial institution in the U.K. guidance appears to generally conform to the definition of depository institution and custodial institution in the U.S. regulations in all material respects.

v. Investment entity. The U.K. regulations define an investment entity as an investment entity within the meaning of the U.K. IGA, or an entity that is managed by a financial institution and meets the financial assets test.415 Under the U.K. IGA, an investment entity is any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer: (1) trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); (2) foreign exchange; (3) interest rate and index instruments; (4) transferable securities and commodity futures trading; (5) individual and collective portfolio management; or (6) otherwise investing, administering, or managing funds or money on behalf of other persons.416 The U.K. guidance notes follow the same definition, except that they refer to an investment entity as an entity that primarily conducts as a business the stated activities.417

vi. Primarily conducts as a business. An investment entity primarily conducts specified activities as a business if its gross income attributable to those activities is equal to or exceeds 50 percent of the entity's gross income during the shorter of (1) the three-year period ending on December 31 of the year preceding the year in which the determination is made or (2) the period during which the entity has been in existence.418

vii. Managed entity. When a managed entity has gross income that is primarily attributable to investing, reinvesting, or trading in financial assets, and the income is managed by a financial institution that performs any of those activities, either directly or through another third-party service provider, the managed entity will be an investment entity.419

viii. Managed by an individual. When an entity is managed by an individual who performs the activities described above, the managed entity will not be an investment entity because an individual is not an investment entity and does not have to register as an FFI and obtain a GIIN.420

ix. Managed entity primarily attributable to investing or reinvesting. The entity's gross income must be primarily attributable to investing, reinvesting, or trading in financial assets. As defined in the U.K. regulations, financial assets include (1) any asset capable of being the subject matter of a specified transaction for purposes of the Investment Manager (Specified Transactions) Regulations 2009,421 (2) an insurance contract or annuity contract, (3) a commodity, or (4) a derivative contract within the meaning of part 7 of the Corporation Tax Act 2009.422 Therefore, an investment entity whose assets consist of non-debt direct interests in real property, even if managed by another investment entity, would not be an investment entity.423

x. Investment entity definition need no longer be consistent with FATF recommendations. The earlier draft guidance note 2.28 provided that the definition of investment entity should be interpreted in a manner consistent with similar language in the definition of financial institution in the FATF recommendations.424 Several commentators have seized upon this difference to indicate that the definition of investment entity under the regulations and under a Model 1 IGA are not intended to be the same. Clarity was needed on this point, since the interpretative language regarding FATF recommendations is clearly not in the regulations. The final U.K. guidance notes delete the reference to the FATF recommendations for this purpose.

xi. Other differences between regulations and the U.K. definition of investment entity. While the regulations break out the definition of investment entity into three parts -- Type A investment services entity, Type B managed investment entity, and Type C investment vehicle or entity -- the U.K. definition of investment entity is only one category of investment entity, although the U.K. guidance also separately discusses collective investment schemes425 and trusts426 as investment entities.

The U.K. definition and the Type A definition of an investment services entity are nearly identical; however, the U.K. definition adds "or is managed by an entity that conducts as a business." That phrase does not appear in the Type A definition in the regulations. HMRC, in an effort to simplify the investment entity definition, may have decided to include this phase into the U.K. regulation in order to bring the Type B managed investment entity into its singular investment entity definition.

xii. Trusts that are investment entities. A trust will be an investment entity, and therefore a financial institution, when a trustee is a financial institution, the trustee (on behalf of the trust) engages a financial institution to manage the trust, or the trustee (on behalf of the trust) engages a financial institution to manage the financial assets for the trust. A trust that does not meet these conditions will not be an investment entity if, for example, it simply holds a depository account and the financial institution does not manage the account or participate in the management of the trust or financial assets on its behalf.427 A trust that is a charitable organization will be treated as a non-reporting U.K. financial institution.428

xiii. Trusts that are not investment entities. When a trust is not an investment entity, it will be a NFFE. When the trust is a passive NFFE, the financial institutions where the trust holds financial accounts will be required to perform the necessary due diligence procedures to determine if any of those accounts are reportable.429

xiv. Registration -- trustee-documented trust. For trusts that are investment entities when the trustee is a reporting Model 1 FFI, PFFI, or USFI, and the trustee reports all information required for all the trust's U.S. reportable accounts, the trust itself will be treated as a non-reporting U.K. financial institution and will not be required to register with the IRS. When the trust is an investment entity because it is managed by a financial institution but the financial institution is not the trustee, the trust will be required to register as an investment entity unless it can take advantage of the sponsored investment entity, owner-documented financial institution categories.430

xv. Collective investment scheme. Under the U.K. regulations, if a collective investment scheme is "constituted" by a person (other than a trustee) who carries on the business in the United Kingdom, that person (and only that person) is a reporting financial institution in the case of the scheme and is to be regarded as an investment entity. If a collective investment scheme is constituted other than as described above, and the manager, operator, or trustee of the scheme is a person who carries on business in the United Kingdom, that person (and only that person) is a reporting financial institution for the scheme and is to be regarded as an investment entity.431

A collective investment scheme is an investment trust for the purposes of the Corporation Tax Acts432; a venture capital trust433; or any arrangements that meet the definition of a collective investment scheme.434 For purposes of the U.K. IGA, an investment entity includes the following types of entities: (1) collective investment schemes within the meaning of the Financial Services and Markets Act of 2000; (2) closed-ended investment companies; (3) fund managers; (4) investment managers; (5) fund administrators; (6) transfer agents; (7) depositories; and (8) trustees of unit trusts.435

xvi. Dormant funds. Unlike the regulations, which provide no exclusion for dormant FFIs,436 the U.K. guidance provides that a fund will not be an investment entity if it is considered a dormant fund. For this purpose, a fund is dormant if it is closed but debtors remain and recovery actions are being pursued.437 It does not appear that the U.K. guidance permits a similar exclusion for other types of FFIs besides a fund entity.438

xvii. Specified insurance company and relevant holding company. A specified insurance company is a company in which the products written are classified as cash value insurance or as annuity contracts if payments are made for those contracts. Insurance companies that provide only general insurance or term life insurance should not be financial institutions under this definition, and neither will reinsurance companies that provide only indemnity reinsurance contracts. A specified insurance company can include both an insurance company and its holding company. However, the holding company itself will be a specified insurance company only if it issues or is obligated to make payments for cash value insurance contracts or annuity contracts.439

Because only specified persons are permitted to provide insurance contracts or annuity contracts, it is unlikely that an insurance holding company will itself issue, or be obligated to make payments on, cash value insurance or annuity contracts. Insurance brokers are part of the payment chain and should not be classified as specified insurance companies, because they are not obligated to make payments under the terms of the insurance or annuity contract.440

xviii. Holding company or treasury company. A holding company or treasury company441 that meets the following criteria will be a financial institution and have to register and obtain a GIIN.442 A holding company is a company whose primary activity includes the (direct or indirect) holding of all or part of the outstanding stock of one or more related entities that are financial institutions.443

A treasury center is a company whose primary activity includes entering into hedging and financing transactions with related entities that are financial institutions for one or more of the following reasons: (1) managing the risk of price changes or currency fluctuations for property that is held or to be held by related entities; (2) managing the risk of interest rate changes, price changes, or currency fluctuations for borrowings made or to be made by related entities; (3) managing the risk of interest rate changes, price changes, or currency fluctuations for assets or liabilities to be reflected in the financial statements of related entities; (4) managing the working capital held by related entities by investing or trading in financial assets solely for the account and risk of those related entities; or (5) acting as a financing vehicle for borrowing funds for use by related entities.444

xix. Non-reporting U.K. financial institution. A non-reporting U.K. financial institution is any financial institution specifically identified in Annex II of the agreement, or one that otherwise qualifies under article 1.1.q of the agreement as a DCFFI, an ODFFI, an exempt beneficial owner,445 or an exempt financial institution. A non-reporting financial institution will not need to register, obtain a GIIN, or carry out due diligence and reporting obligations under the U.K. agreement.446

Guidance note 11 goes further and provides that the following types of entities should not register: non-reporting U.K. financial institutions, deemed-compliant U.K. financial institutions (unless they are RDCFFIs), and active and passive NFFEs.

For a financial institution in the United Kingdom with a local client base, a GIIN will be required if the entity has a reporting obligation because it has some U.S. reportable accounts.447 Entities that are reporting financial institutions and act as a sponsor for other entities will need to register separately for each of those roles.448

i. Reporting financial institution under a Model 2 IGA (Model 2 FFI). Although FFIs in a Model 1 jurisdiction agree to report their U.S. account information to the partner country, which will then exchange that information with the IRS, FFIs covered by a Model 2 IGA will report their U.S. account information directly to the IRS.

A reporting financial institution under a Model 2 IGA is registering only to obtain a GIIN, authorize one or more POCs to receive information related to FATCA registration on behalf of the FFI, and to confirm that it will comply with the terms of an FFI agreement as modified by the applicable Model 2 IGA.449 A Model 2 FFI operating one or more branches in a non-IGA country is also agreeing to the terms of an FFI agreement for any such branch, unless the branch is treated as a limited branch.450 A Model 2 FFI requesting renewal of a QI, WP, or WT agreement is agreeing to the terms applicable to renewed 2014 model QI, WP, or WT agreements.451

To date, two countries have announced their intention to enter into a Model 2 IGA: Japan and Switzerland. On February 14, 2013, Switzerland signed the first Model 2 IGA, and on June 7, 2013, it signed a memorandum of understanding confirming that Swiss financial institutions may apply definitions in the regulations in lieu of corresponding definitions in the Swiss Model 2 IGA. See Exhibit 8 for a comparison of the FATCA regulations with Model 1 or Model 2 IGAs.

An analysis of the Model 2 IGA may be useful as an example of how an organization identifies its FFIs in a Model 2 jurisdiction. Under the Model 2 IGA, a reporting FATCA partner financial institution or Model 2 FFI must register with the IRS by July 1, 2014.452 A reporting FATCA partner financial institution is any FATCA partner financial institution that is not a non-reporting FATCA partner financial institution.453 The term "FATCA partner financial institution" means (1) any financial institution resident in or organized under the laws of the FATCA partner, but excluding any branch of the financial institution that is located outside the FATCA partner jurisdiction, and (2) any branch of a financial institution not resident in or organized under the laws of the FATCA partner jurisdiction, if that branch is located in the FATCA partner jurisdiction.454

Under the regulations, a PFFI includes an FFI described in a Model 2 IGA that has agreed to comply with the requirements of an FFI agreement.455 Under the Model 2 IGA, the term "financial institution" means a depository institution, a custodial institution, an investment entity, or a specified insurance company.456

The term "depository institution" means any entity that accepts deposits in the ordinary course of a banking or similar business.457

The term "custodial institution" means any entity that holds, as a substantial portion of its business, financial assets for the account of others. An entity holds financial assets for the account of others as a substantial portion of its business if the entity's gross income attributable to the holding of financial assets and related financial services equals or exceeds 20 percent of the entity's gross income during the shorter of (1) the three-year period that ends on December 31 (or the final day of a non-calendar-year accounting period) before the year in which the determination is being made or (2) the period during which the entity has been in existence.458

An investment entity is any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer: (1) trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); (2) foreign exchange, interest rate and index instruments, transferable securities, or commodity futures trading; (3) individual and collective portfolio management; or (4) otherwise investing, administering, or managing funds or money on behalf of other persons. This provision of the Model 2 IGA should be interpreted in a manner consistent with similar language in the definition of financial institution in the FATF recommendation.459

The term "specified insurance company" means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments under, a cash value insurance contract or an annuity contract.460

A non-reporting financial institution is any FATCA partner financial institution, or other entity resident in the FATCA partner jurisdiction, that is described in Annex II as a non-reporting FATCA partner financial institution or that otherwise qualifies as a DCFFI or an exempt beneficial owner under regulations in effect on the date the Model 2 IGA is signed.461

j. Limited FFIs and limited branches. Unfortunately, the regulations did not adopt commentators' suggestion to eliminate or relax the requirement that all members of an EAG be compliant FFIs (for example, FFIs and RDCFFIs but not CDCFFIs). Thus, under the regulations, if an EAG has in its EAG even one FFI that is an NPFFI, that may cause the other members of the EAG to be treated as NPFFIs unless otherwise permitted under a Model 1 or Model 2 IGA.462

i. Regulatory transition rule. However, the regulations provide a transition rule under which an FFI that cannot meet the FATCA compliance requirements under the laws of the applicable jurisdiction may become a limited FFI to avoid causing the FFIs in the EAG to become NPFFIs. The rule applies until December 31, 2015, and the FFI must satisfy the other conditions to become a limited FFI.463 In a similar transition rule -- and again, only until December 31, 2015 -- if an FFI has a branch that would prevent it from becoming a PFFI because of the laws in the applicable jurisdiction, the regulations permit the branch to become a limited branch and the FFI can be treated as a PFFI if the other conditions for limited branch status are met.464 Because Notice 2013-43 does not specifically discuss the limited FFI or limited branch transition rules, it is likely that limited FFIs and limited branches can continue to apply those rules and will have until December 31, 2015, to become compliant FFIs that are a part of an EAG. An FFI that is treated as a limited FFI will not receive a GIIN from the IRS.465

ii. IGA permanent safe harbor rule. Although those two transition rules will be effective only until the end of 2015, the model IGAs provide a similar exception that is permanent. Model 1 or Model 2 FFIs can continue to remain FATCA-compliant even though they may have FFIs that are treated as NPFFIs in non-IGA jurisdictions.466 Members of an EAG in non-IGA jurisdictions will not be FATCA-compliant if there is at least one limited FFI or limited branch that fails to become a PFFI or DCFFI by 2016.

More specifically, if a Model 1 or 2 FFI otherwise meets its FATCA compliance requirements but has a related entity or branch that is an NPFFI and that operates in a jurisdiction that prevents that related entity or branch from becoming a PFFI or a DCFFI, the Model 1 or 2 FFI will continue to be in compliance with the applicable IGA and will continue to be treated as a DCFFI or exempt beneficial owner if:


    1. the Model 1 or 2 FFI treats each related entity or branch as a separate NPFFI for purposes of the IGA's reporting and withholding requirements, and each branch or related entity identifies itself to withholding agents as an NPFFI;

    2. each related entity or branch identifies its U.S. accounts and reports the information under section 1471 to the extent permitted under the laws pertaining to the related entity or branch;

    3. the related entity or branch does not specifically solicit U.S. accounts held by persons who are not resident in the jurisdiction where the branch or related entity is located or solicit accounts held by NPFFIs that are established in the jurisdiction where the branch or related entity is located; and

    4. the branch or related entity is not used by the Model 1 or 2 FFI or any related entity to circumvent the obligations under the IGA or under section 1471.467


iii. Limited FFI defined. An FFI may become a PFFI or an RDCFFI even though not all of the FFIs in its EAG can comply with all the requirements of a PFFI if each of those FFIs is a limited FFI.468 A limited FFI is a member of an EAG that includes one or more PFFIs that agrees to follow the requirements to become a limited FFI, and if under the laws of each jurisdiction that apply to the accounts maintained by the affiliate, the affiliate cannot satisfy the two following conditions: (1) report U.S. accounts to the IRS, close those accounts within a reasonable time, or transfer them to a USFI, PFFI, or Model 1 FFI; and (2) withhold on accounts held by recalcitrant account holders and NPFFIs, block each of those accounts, close each of them within a reasonable time, or transfer each of them to a USFI, PFFI, or Model 1 FFI.469

iv. Conditions for limited FFI status. An FFI that seeks to become a limited FFI must:


    1. register for limited FFI status as part of its EAG's FFI agreement process;

    2. agree as part of the registration to identify its account holders under the PFFI's due diligence requirements, retain account holder and payee documentation concerning those identification requirements for the longer of six years from the effective date of its registration as a limited FFI or for as long as the branch maintains the account or obligation, and report on accounts it is required to treat as U.S. accounts to the extent permitted under the laws pertaining to the FFI470;

    3. agree as part of the registration that it will not open accounts that it is required to treat as U.S. accounts or accounts held by NPFFIs, including accounts transferred from any member of its EAG; and

    4. agree as part of the registration that it will identify itself to withholding agents as an NPFFI.471


v. Period for limited FFI status. A limited FFI will cease to be a limited FFI after 2015.472 An FFI will also cease to be a limited FFI when it becomes a PFFI or a DCFFI, or as of the beginning of the third calendar quarter following the date on which the FFI is no longer prohibited from complying with the requirements of a PFFI. In that case, PFFIs and DCFFIs that are members of the same EAG will retain their status if, by the date that an FFI ceases to be a limited FFI, that FFI enters into an FFI agreement or becomes an RDCFFI, unless otherwise provided under an applicable Model 1 or Model 2 IGA.473

vi. Special rule for QIs. An FFI that has a QI agreement currently in effect with the IRS will be allowed to become a limited FFI even though none of the FFIs in its EAG can comply with the requirements of a PFFI, if the FFI that is a QI meets the conditions of a limited FFI.474 See III.H.4.j.iii and III.J.

vii. Limited branch defined. A limited branch is a branch of an FFI that under the laws of the jurisdiction that apply to the accounts maintained by the branch, cannot satisfy the two following conditions:


    1. For accounts the PFFI is required to treat as U.S. accounts, either report those accounts to the IRS, close them within a reasonable time, or transfer them to a USFI, a branch of the FFI that will report them, a PFFI, or a Model 1 FFI; and

    2. For accounts held by recalcitrant account holders or by NPFFIs, withhold, block the account, close each account within a reasonable time, or transfer each account to a USFI, a branch of the FFI that will report the accounts, a PFFI, or a Model 1 FFI.475 An account is blocked if the FFI prohibits the account holder from effecting any transactions for the account until it is closed or transferred, or the account holder provides the documentation required for the FFI to determine the U.S. or non-U.S. status of the account and report the account if required.476


viii. Conditions for limited branch status. An FFI with one or more limited branches must satisfy the following requirements when applying for PFFI status with the IRS:

    1. identify the jurisdiction of each branch for which it seeks limited branch status;

    2. agree that each of those branches will identify its account holders under the due diligence requirements applicable to PFFIs, retain account holder and payee documentation relating to the identification requirements for the longer of six years from the effective date of the FFI agreement or for as long as the branch maintains the account or obligation, and report to the IRS regarding accounts that it is required to treat as U.S. accounts to the extent permitted under the laws pertaining to the branch477;

    3. agree to treat each of those branches as an entity separate from its other branches for purposes of the withholding requirements;

    4. agree that each of those branches will not open accounts that it is required to treat as U.S. accounts or accounts held by NPFFIs, including accounts transferred from any branch of the FFI or from any member of its EAG; and

    5. agree that each limited branch will identify itself to withholding agents as an NPFFI (including withholding agents that are affiliates of the FFI in the same EAG).478


ix. Term of limited branch status. An FFI that becomes a PFFI with one or more limited branches will cease to be a PFFI after 2015 unless otherwise provided under the Model 1 or Model 2 IGA. A branch will cease to be a limited branch as of the beginning of the third calendar quarter following the date on which the branch is no longer prohibited from complying with the requirements of a PFFI. In that case, a PFFI will retain its status as a PFFI if it notifies the IRS by the date the branch ceases to be a limited branch that will comply with the relevant requirements of an FFI agreement, or if otherwise provided under a Model 1 or Model 2 IGA.479

x. Registration process for a limited FFI or a limited branch. Two questions are relevant if a limited FFI or a limited branch is completing the registration. Question 4 of part 1 asks for the FFI's FATCA classification in its country of tax residence and requires the FFI to identify itself as a limited FFI by checking a box for that classification. If a branch is a limited branch, question 9b of part 1 (a yes/no question) asks whether the financial institution maintains a branch in a jurisdiction outside the country of tax residence. Registration does not require an FFI to describe why it is a limited FFI or a limited branch. It is also possible that an FFI that is a limited FFI or limited branch will be identified on an FFI's home page in the future. See IV.B. A lead FFI cannot be a limited FFI or limited branch and should not choose this box when answering question 4.480 The IRS has indicated that if a lead FFI checks a limited FFI box, the registration will not be processed.481

xi. Failure to register or provide a withholding certificate claiming limited FFI or limited branch status. If an FFI does not register as a limited FFI or limited branch, or does not provide a withholding agent a valid withholding certificate that certifies its status as an NPFFI (the draft Form W-8BEN-E includes a box for an NPFFI, which includes a limited FFI or limited branch in a parenthetical) and is otherwise required to do so under the regulations or an IGA, an unanswered question is whether such a footfall may cause the other members of the EAG to be NPFFIs. In my view, unless those mistakes are intentional, the members of the EAG should be able to continue to be classified as PFFIs or RDCFFIs.

Contrast that situation with one in which an organization intentionally misclassifies several of its entities as NFFEs even though (1) the gross income of each of those entities is primarily attributable to investing, reinvesting, or trading in financial assets; (2) each of those entities is managed by a qualifying FFI; and (3) no other DCFFI or other exemption applies. Arguably, the organization has classified those entities as NFFEs to avoid its FATCA responsibilities under an FFI agreement or IGA. In that case, the U.S. government may treat the FFIs or RDCFFIs in the EAG as NPFFIs subject to withholding under section 1471(a). This may hold true in a non-IGA country as well as an IGA country since the special exemption for related entities that are NPFFIs likely will not apply.482

k. USFI registration. USFIs are also eligible to submit a FATCA registration application through the FATCA portal for the following reasons: (1) a USFI with a foreign branch in a Model 1 IGA country -- to obtain a GIIN for the branch (see "USFI with a branch in a Model 1 jurisdiction"); (2) a USFI with a foreign branch that is currently a QI -- to renew the branch's QI agreement; and (3) a USFI may register as a sponsoring entity for sponsored FFIs, and agree to perform on behalf of the FFI, all the FATCA activities that the FFI that would otherwise have to do. (See III.H.1.c.ii.) A USFI may register as a lead FFI to manage the FATCA registration process for the designated members of its EAG.483 (See III.H.1.a.)

USFIs and other types of U.S. withholding agents are required to withhold 30 percent on withholdable payments to some foreign entities if they are unable to document those entities for FATCA purposes. USFIs and other U.S. withholding agents must also report to the IRS information about some NFFEs with substantial U.S. owners.

l. Other registrants. According to the instructions to Form 8957,484 a sponsoring entity, USFI registering as a lead FFI, a U.S. territory FI, or a USFI with a foreign branch that is renewing its QI agreement or that is treated as a reporting FI in a Model 1 IGA jurisdiction or Model 1 FFI must select in question 4, "none of the above."

i. Changes in financial institution's FATCA classification in its country of tax residence. Any change of a financial institution's FATCA classification in its country of tax residence (question 4) will need to be updated in the FFI's registration information on the FATCA portal.485 See III.M.1.

5. Mailing address. In question 5 of part 1, the FFI should provide its postal mailing address. The paper form provides another line for a second mailing address. In an earlier proposal for the registration, the IRS had asked for the physical address of the FFI (where the bricks and mortar are located), which may be different from the postal mailing address.486 The address provided will be used by the IRS for all mail correspondence related to a user's FATCA registration FATCA account, and any other related matters.

It is still unclear whether other possible FFI addresses may be acceptable in some cases, including when the headquarters office or principal trade address is located in a country and there are multiple locations or branches within the country (assuming these branches or cells have the same chapter 4 status).

In some countries, the post office does not deliver mail to a street address, and the FFI may have only a P.O. box. This should be acceptable in that situation.487 Presumably, an FFI's "registered address" could also be used if that is where the FFI normally receives its mail. However, it is far from clear whether an FFI can use an address of another financial institution, an "in care of" address, or a "hold mail address" as its sole mailing address for purposes of registration.

For this purpose, a dropdown menu will ask the financial institution to identify the country of the mailing address. The user is directed to select the country from the dropdown list and if the user selects the United States, a U.S.-specific page will appear. If the financial institution is in a U.S. territory, the user is directed to select the United States option, and select the territory from the state/U.S. territory drop down list.

a. Multiple mailing addresses. If there are additional mailing addresses the Form 8957 provides an additional line for a second mailing address. Each of the fields under question 5 including the country and address line 1, city, state, province or region, and zip or postal code are required fields. The second mailing address is optional. It is unclear if additional mailing addresses can be added if desired by the registrant or whether a separate attachment sheet can be added to the Form 8957.

b. Changes in financial institution's country of tax residence. Any change of a financial institution's mailing address (question 5) will likely need to be updated in the FFI's registration information on the FATCA portal.488 See III.M.1.

6. FFI branch registration process. The FATCA registration is used by a financial institution to register not only itself, but also its branches, as a PFFI, an RDCFFI, a limited FFI, a limited branch, or a sponsoring entity.

As part of the branch registration, the financial institution will need to confirm whether it maintains a branch in a jurisdiction outside its country of tax residence, or a U.S. branch (other than in U.S. territories), and if so, provide the branch's EIN. The financial institution must also determine each jurisdiction in which it maintains a branch, along with whether the branch is a limited branch, and whether the financial institution intends to maintain QI, WP, or WT status for that branch if it is covered by a QI, WP, or WT agreement.

Branches of a financial institution will not have separate FATCA accounts but will be assigned separate GIINs to identify each jurisdiction in which the financial institution maintains a branch that is a PFFI or an RDCFFI.

i. Financial institutions required to register on behalf of their branch. The following entities are eligible to register on behalf of their branches for the specific purposes described below, as well as to obtain a GIIN (unless the entity is a limited FFI or limited branch):


    1. for an FFI or USFI's foreign branch that is treated as a Model 1 FFI -- to authorize one or more POCs to receive information related to registration on the financial institution's behalf;

    2. for an FFI's foreign branch that is treated as a Model 2 FFI -- to authorize one or more POCs to receive information related to registration on the FI's behalf, and to confirm that it will comply with the terms of an FFI agreement, as modified by the applicable Model 2 IGA;

    3. for a branch of an FFI, other than one covered by an IGA -- to enter into an FFI agreement to be treated as a PFFI, to agree to meet the requirements to be treated as an RDCFFI, or to confirm that it will comply with the terms applicable to a limited branch;

    4. for a branch of a financial institution seeking to act as a sponsoring entity -- to agree to perform the due diligence, reporting, and withholding responsibilities on behalf of the sponsored FFIs;

    5. for a branch, including a foreign branch of a USFI, currently acting as a QI, WP, or WT, to renew its QI, WP, or WT agreement; and

    6. for a U.S. branch of an FFI wishing to act as a lead FFI for purposes of registering its designated member financial institutions, to identify itself as such.


ii. Financial institution with branches in multiple countries. The IRS has indicated that it expects there to be one branch registration per country. Presumably, that means if an FFI has multiple branches resident in the same country where the FFI maintains its tax residence, the FFI's branch registration should also apply to those branches as part of the FFI entity's registration, and only one GIIN need be obtained for the FFI's branches in its country of tax residence.

However, if the FFI has multiple branches outside its country of tax residence, branches that are located in the same non-FFI-residence country should register together as one FFI branch, assuming each of those branches has the same FATCA classification. That composite FFI branch should obtain its own unique GIIN. See III.H.6.c.

Financial institutions should treat all units, businesses, and offices within any one jurisdiction as a single branch. If the FFI has multiple branches that are located outside the FFI's country of tax residence, branches located within the same non-FFI-residence country will need to be registered together as one single FFI branch, assuming each of those branches has the same FATCA classification. That composite FFI branch will need to have its own unique GIIN, although it will not have its own FATCA account.489 See III.H.4.j.6.ii.c.

A financial institution (other than a sponsoring entity, USFI, or foreign branch of a USFI) that maintains branch operations in multiple jurisdictions must answer question 4 (identifying the financial institution's country of residence for tax purposes) by treating the operations within its country of tax residence as if they were a branch (home office) and then classifying whether that home office is a PFFI, an RDCFFI, or a limited FFI. Further, in question 8 or 9 of the registration form, the financial institution must identify the countries in which it maintains branches outside its country of tax residence, and which of its branches, if any, will be treated as limited branches.

Example: Bank A is a resident of Country X. In addition to banking activities that it conducts within Country X, Bank A also conducts banking activities through branches in countries Y and Z. Under Country X laws, Bank A cannot satisfy the obligations that would allow its operations within Country X (home office) to be effectively a PFFI or an RDCFFI. However, Bank A's branches in countries Y and Z would be able to comply with the obligations imposed on a PFFI or an RDCFFI. For purposes of registering itself and obtaining a GIIN for its branch operations in countries Y and Z, Bank A should indicate that it is classified as a limited FFI in its country of tax residence.

The IRS has said it expects there to be one branch registration per country. Presumably, this means that if an FFI has multiple branches resident in the same country where the FFI maintains its country of tax residence, the FFI's branch registration should also apply to those branches as part of the FFI entity's registration and only one GIIN need be obtained for the FFI's branches in its country of tax residence.

Importantly, a reporting financial institution, or a Model 1 or Model 2 FFI operating one or more branches that are not in an IGA jurisdiction is also agreeing to the terms of an FFI agreement for any such branch, unless the branch is treated as a limited branch.

a. Definition of branch. Under the regulations, a branch is defined to mean a unit, business, or office of an FFI that is treated as a branch under the regulatory regime of a country or is otherwise regulated under the laws of that country as separate from other FFI offices, units, or branches.490

A branch includes FFI units, businesses, and offices located in the country where the FFI is created or organized. All FFI units, businesses, or offices in a single country will be treated as a single branch, and an account will be treated as maintained by a branch if the rights and obligations of the account holder and the FFI regarding that account (including any assets held in the account) are governed by the laws of the country of the branch.491

It is unclear whether a mailing address outside the FFI's country of tax residence alone is sufficient to create a branch based on this definition. This raises the question: If a withholding agent sends payment to a branch mailing address outside the FFI's country of tax residence, doesn't the withholding agent need a GIIN for that branch to avoid its withholding obligation? See III.H.6.b.

b. Branch 'reason to know' rules. A withholding agent that has received a payee's claim of PFFI or RDCFFI status and is required under reg. section 1.1471-3(d)(4) to confirm that the branch of the FFI claiming PFFI or RDCFFI status has a GIIN that appears on the FFI and branch list, has reason to know that the payee is not a financial institution if the payee's name (including a name reasonably similar to the name the withholding agent has on file for the payee) and GIIN do not appear on the most recently published list within 90 calendar days of the date that the claim is made.492

The withholding agent will have reason to know that the FFI is either a limited branch or a limited FFI (and thus not a PFFI or RDCFFI) if the withholding agent has a permanent address or mailing address for the FFI that is in a country other than the country in which the FFI claims to be a PFFI or an RDCFFI, or if the withholding agent makes a payment to the FFI at an address outside the country in which the FFI claims to be a PFFI or an RDCFFI.493 Although not addressed in the regulations, presumably, for a branch to avoid withholding on a payment made to the branch at a address outside the FFI's country of tax residence where it claims to be a PFFI or an RDCFFI, the branch will have to provide the withholding agent a withholding certificate that includes a GIIN based on the branch's country of tax residence (and not the FFI's country of tax residence).494

c. Separate registration for branch outside country of residence -- detailed analysis. If a branch is located outside the PFFI or RDCFFI's country of tax residence, the branch itself must obtain a GIIN to avoid withholding under the regulations.495 See III.H.3.a. However, a branch resident in a Model 1 IGA jurisdiction is generally not required to provide a GIIN in order to establish its FATCA status before 2015.496 See II.D and III.H.c.i.

i. Branch registration timing issues. A Model 1 FFI will be able to register and obtain a GIIN before July 1, 2014, and may generally find it convenient to do so. But that financial institution is not required to provide a GIIN to withholding agents before 2015 and therefore has time beyond July 1, 2104, to register to obtain a GIIN. However, a Model 1 FFI must generally register before July 1, 2014, if (1) it maintains one or more branches (other than a limited branch or U.S. branch) in countries that are not covered by a Model 1 IGA; (2) it is renewing its QI, WP, or WT agreement; or (3) it intends to be a lead FFI for one or more member financial institutions that are not established in, and operating exclusively in, other Model 1 IGA countries.497

ii. Branch information on IRS list. The published FFI and branch list provides a withholding agent the following information about a branch: (1) the entity's identity as a branch under the lead FFI's name (the branch's legal name, or the name under which it does business in the jurisdiction in which the branch maintains a business or office, is not identified); (2) the branch's country of tax residence; and (3) a unique GIIN for the branch. The first 12 characters of the branch's GIIN are the six-digit FATCA ID, followed by a period (.), and the next five numeric characters will be assigned sequentially to identify the FFI as either a lead or a member, thus allowing the IRS and withholding agents to relate the branch to a particular FFI.

The home-country FFI's registration asks for specific information about each branch, including the branch's country of tax residence, whether it is a limited branch, and whether it maintains status as a QI. There is a blank space in the table after question 9c for the branch's GIIN.

The country of tax residence and FATCA classification of a branch are determined at the branch level (not the entity level),498 and GIINs will have to be obtained on a branch-by-branch basis, even though the financial institution that owns the branch will have to register on its behalf and obtain a unique GIIN for the branch. Similarly, that financial institution will have to reflect any branch changes on the FATCA portal. For example, changes in a branch name, mailing address, ownership, country of tax residence, or FATCA classification should be done at the branch level. See III.M.

More specifically, the financial institution that owns each branch will be required to register and complete Form 8957 either electronically through the FATCA portal or manually. In addition to the other information requested as part of the registration process, the FFI for each branch must identify its country of tax residence and the branch's FATCA classification in its country of tax residence. Thereafter, the financial institution for each branch will be expected to log back in to keep its registration updated. See III.M.

If a separate branch registration is required for a branch that is resident in a jurisdiction outside the FFI's country of tax residence, the financial institution that owns that branch must complete its registration through the FATCA portal by completing part 1 and part 3 (if applicable) of the registration form, but not part 2 because it relates only to members of an EAG. See III.I.1.a and III.H.h.

d. Branch country of tax residence. The determination of a branch's country of tax residence is based on the IGAs (if the FFI branch is a resident in a FATCA partner jurisdiction) or on local law. It is not based on the test for domestic entities in the United States, which hinges on where the entity is created or organized.499 If neither the implementing legislation for an IGA nor local law prevails, the rules under U.S. tax law would apply to determine the resident status of the branch.500 See III.H.3.a.

e. Branch FATCA classification. The determination of the branch FATCA classification will be based on its FATCA classification in its country of tax residence. This determination is again based on the IGAs if the branch is resident in a FATCA partner country, and if not, on the branch's FATCA classification under the regulations.

f. Financial institution registration questions about branches (or financial institutions resident in the United States for tax purposes). To answer question 7, an FFI must determine its country of tax residence (see III.H.3.a) and then indicate whether it has a branch outside that country. The registration user guide provides that in response to Question 7 (Does the financial institution maintain a branch in jurisdiction outside of its country of tax residence?), the user should select "yes" if the financial institution maintains a branch outside its country of tax residence.

If the answer is yes, the instructions on Form 8957 direct the registrant to also complete questions 8, 9a, 9b, and 9c. If the answer is no, the registrant should go to question 10. Question 7 is mandatory and must be completed. Sponsoring entities: If the FI is applying as a sponsoring entity, it does not need to answer questions about its branches and should select "no" for Question 7.

g. U.S. branch. A financial institution is a tax resident of the United States if it is created or organized in the United States (for example, incorporated or created under U.S. law or any state law).501 A financial institution is treated as maintaining a branch in the United States if it has a business or office of an FFI that is treated as a branch under a U.S. regulatory regime such as under the regulatory supervision of the Federal Reserve Board.502

If an FFI has an office or a branch located in the United States or conducts its banking business through a disregarded entity (such as a Delaware limited liability company) that is wholly owned by the FFI, the branch will likely be treated as maintaining a U.S. branch but may still be able to rely on the GIIN for its home office, establishing that the U.S. branch is a branch of a PFFI or an RDCFFI.503 See III.H.3.a.

If a financial institution maintains a branch in a jurisdiction outside its country of tax residence (question 7), the financial institution must answer question 8.

Under question 8, the financial institution must answer yes or no to whether it is a tax resident of the United States504 or maintains a branch in the United States (other than the U.S. territories). If the answer is yes, the FFI must provide the U.S. EIN of the USFI or U.S. branch. The registration user guide directs the user to select "yes" if the financial institution is either a U.S. resident or maintains a branch within the United States, and to list the EIN for the USFI or U.S. branch as appropriate in the field provided. Unless otherwise indicated by the question in the registration, "United States" or "U.S." means the United States of America, including the states thereof, and the District of Columbia, but does not include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands. The user should select "no" if the financial institution does not maintain a branch within the United States, and the system will take the user to question 9.

h. Branch located outside the financial institution's country of tax residence. If the financial institution maintains a branch in a jurisdiction outside its country of residence (question 7), the financial institution must complete all three parts of question 9 by listing each jurisdiction (other than the United States) in which the financial institution maintains a branch. If the answer to question 7 is yes, questions 9a through 9c must be completed. A lead FFI or a member may add branches, using additional sheets if necessary.

Question 9a asks the financial institution to list each country (other than the United States) in which the financial institution maintains a branch. The registration user guide directs the user to separately identify each country where the financial institution maintains a branch outside the United States, including if the financial institution maintains a branch in a U.S. territory (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands). Second, the user should select the country in which the branch is located. If the financial institution does not maintain a branch outside the United States, the user should click the "next" button to continue to question 10. See Exhibit 9 for a list of available countries of tax residence in the country look-up table.

If the FFI answered yes to question 7, the financial institution must also answer yes or no to whether the branch is a limited branch under question 9b and identify the country where the branch has this status. The registration user guide directs the user to indicate whether the listed branch is a limited branch. A limited branch is a branch that under the laws of the jurisdiction where it is located is unable to (1) report, close, or transfer its U.S. accounts to a USFI, to a branch of the FFI that will report the U.S. account, to a PFFI, or to a Model 1 FFI; or (2) withhold, block, or close an account held by a recalcitrant account holder or NPFFI or otherwise transfer the account to a USFI, to a branch of the FFI that will report the account to the IRS, to a PFFI, or to a Model 1 FFI. A limited branch also includes a related branch under a Model 1 or 2 IGA that is treated as an NPFFI branch because it operates in a jurisdiction that prevents the branch from fulfilling the requirements of a PFFI or a DCFFI. See III.H.4.j.

Question 9c asks if the branch is currently covered by a QI agreement, and if so, whether the financial institution intends to maintain QI status. The registration user guide directs the financial institution to select "yes" if the branch operates under an attachment to the financial institution's QI agreement and intends to renew its status as such, and to select "no" if the branch operates under an attachment to the financial institution's QI agreement and does not intend to renew its status as such. The financial institution is directed to select "not applicable" if the branch is not part of a financial institution that is a QI. The registration prompts the user to use additional sheets to add branches, if necessary.

On the FATCA registration form, a QI can delete branches previously listed in its QI agreement that will no longer act as a QI, but it cannot add branches. If the QI wishes to add branches that were not included in its prior QI agreement, it must complete Form 14345 in accordance with the instructions therein. The financial institution should record each country only once.

                                  Exhibit 9



                FFI Country of Tax Residence Country Lookup Table
 ______________________________________________________________________________

                                             Numeric    Questions 3, 5, 9A, 10,
 Country Name                                Code       11B, 12, 15
 ______________________________________________________________________________

 Afghanistan                                   004      all questions
 Aland Islands                                 248      all questions
 Albania                                       008      all questions
 Algeria                                       012      all questions
 American Samoa                                016      9A
 Andorra                                       020      all questions
 Angola                                        024      all questions
 Anguilla                                      660      all questions
 Antarctica                                    010      all questions
 Antigua and Barbuda                           028      all questions
 Argentina                                     032      all questions
 Armenia                                       051      all questions
 Aruba                                         533      all questions
 Australia                                     036      all questions
 Austria                                       040      all questions
 Azerbaijan                                    031      all questions
 Bahamas                                       044      all questions
 Bahrain                                       048      all questions
 Bangladesh                                    050      all questions
 Barbados                                      052      all questions
 Belarus                                       112      all questions
 Belgium                                       056      all questions
 Belize                                        084      all questions
 Benin                                         204      all questions
 Bermuda                                       060      all questions
 Bhutan                                        064      all questions
 Bolivia, Plurinational State of               068      all questions
 Bonaire, Sint Eustatius and Saba              535      all questions
 Bosnia and Herzegovina                        070      all questions
 Botswana                                      072      all questions
 Bouvet Island                                 074      all questions
 Brazil                                        076      all questions
 British Indian Ocean Territory                086      all questions
 Brunei Darussalam                             096      all questions
 Bulgaria                                      100      all questions
 Burkina Faso                                  854      all questions
 Burundi                                       108      all questions
 Cambodia                                      116      all questions
 Cameroon                                      120      all questions
 Canada                                        124      all questions
 Cape Verde                                    132      all questions
 Cayman Islands                                136      all questions
 Central African Republic                      140      all questions
 Chad                                          148      all questions
 Chile                                         152      all questions
 China                                         156      all questions
 Christmas Island                              162      all questions
 Cocos (Keeling) Islands                       166      all questions
 Colombia                                      170      all questions
 Comoros                                       174      all questions
 Congo                                         178      all questions
 Congo, Democratic Republic of the             180      all questions
 Cook Islands                                  184      all questions
 Costa Rica                                    188      all questions
 Croatia                                       191      all questions
 Cote d'Ivoire                                 384      all questions
 Cuba                                          192      all questions
 Curacao                                       531      all questions
 Cyprus                                        196      all questions
 Czech Republic                                203      all questions
 Denmark                                       208      all questions
 Djibouti                                      262      all questions
 Dominica                                      212      all questions
 Dominican Republic                            214      all questions
 Ecuador                                       218      all questions
 Egypt                                         818      all questions
 El Salvador                                   222      all questions
 Equatorial Guinea                             226      all questions
 Eritrea                                       232      all questions
 Estonia                                       233      all questions
 Ethiopia                                      231      all questions
 Falkland Islands (Malvinas)                   238      all questions
 Faroe Islands                                 234      all questions
 Fiji                                          242      all questions
 Finland                                       246      all questions
 France                                        250      all questions
 French Guiana                                 254      all questions
 French Polynesia                              258      all questions
 French Southern Territories                   260      all questions
 Gabon                                         266      all questions
 Gambia                                        270      all questions
 Georgia                                       268      all questions
 Germany                                       276      all questions
 Ghana                                         288      all questions
 Gibraltar                                     292      all questions
 Greece                                        300      all questions
 Greenland                                     304      all questions
 Grenada                                       308      all questions
 Guadeloupe                                    312      all questions
 Guam                                          316      9A
 Guatemala                                     320      all questions
 Guernsey                                      831      all questions
 Guinea                                        324      all questions
 Guinea-Bissau                                 624      all questions
 Guyana                                        328      all questions
 Haiti                                         332      all questions
 Heard Island and Mcdonald Islands             334      all questions
 Holy See (Vatican City State)                 336      all questions
 Honduras                                      340      all questions
 Hong Kong                                     344      all questions
 Hungary                                       348      all questions
 Iceland                                       352      all questions
 India                                         356      all questions
 Indonesia                                     360      all questions
 Iran, Islamic Republic of                     364      all questions
 Iraq                                          368      all questions
 Ireland                                       372      all questions
 Isle of Man                                   833      all questions
 Israel                                        376      all questions
 Italy                                         380      all questions
 Jamaica                                       388      all questions
 Japan                                         392      all questions
 Jersey                                        832      all questions
 Jordan                                        400      all questions
 Kazakhstan                                    398      all questions
 Kenya                                         404      all questions
 Kiribati                                      296      all questions
 Korea, Democratic People's Republic of        408      all questions
 Korea, Republic of                            410      all questions
 Kuwait                                        414      all questions
 Kyrgyzstan                                    417      all questions
 Lao People's Democratic Republic              418      all questions
 Latvia                                        428      all questions
 Lebanon                                       422      all questions
 Lesotho                                       426      all questions
 Liberia                                       430      all questions
 Libya                                         434      all questions
 Liechtenstein                                 438      all questions
 Lithuania                                     440      all questions
 Luxembourg                                    442      all questions
 Macao                                         446      all questions
 Macedonia, the Former Yugoslav Republic of    807      all questions
 Madagascar                                    450      all questions
 Malawi                                        454      all questions
 Malaysia                                      458      all questions
 Maldives                                      462      all questions
 Mali                                          466      all questions
 Malta                                         470      all questions
 Marshall Islands                              584      all questions
 Martinique                                    474      all questions
 Mauritania                                    478      all questions
 Mauritius                                     480      all questions
 Mayotte                                       175      all questions
 Mexico                                        484      all questions
 Micronesia, Federated States of               583      all questions
 Moldova, Republic of                          498      all questions
 Monaco                                        492      all questions
 Mongolia                                      496      all questions
 Montenegro                                    499      all questions
 Montserrat                                    500      all questions
 Morocco                                       504      all questions
 Mozambique                                    508      all questions
 Myanmar                                       104      all questions
 Namibia                                       516      all questions
 Nauru                                         520      all questions
 Nepal                                         524      all questions
 Netherlands                                   528      all questions
 New Caledonia                                 540      all questions
 New Zealand                                   554      all questions
 Nicaragua                                     558      all questions
 Niger                                         562      all questions
 Nigeria                                       566      all questions
 Niue                                          570      all questions
 Norfolk Island                                574      all questions
 Northern Mariana Islands                      580      9A
 Norway                                        578      all questions
 Oman                                          512      all questions
 Pakistan                                      586      all questions
 Palau                                         585      all questions
 Palestine, State of                           275      all questions
 Panama                                        591      all questions
 Papua New Guinea                              598      all questions
 Paraguay                                      600      all questions
 Peru                                          604      all questions
 Philippines                                   608      all questions
 Pitcairn                                      612      all questions
 Poland                                        616      all questions
 Portugal                                      620      all questions
 Puerto Rico                                   630      9A
 Qatar                                         634      all questions
 Reunion                                       638      all questions
 Romania                                       642      all questions
 Russian Federation                            643      all questions
 Rwanda                                        646      all questions
 Saint Barthélemy                              652      all questions
 Saint Helena, Ascension and Tristan Da Cunha  654      all questions
 Saint Kitts and Nevis                         659      all questions
 Saint Lucia                                   662      all questions
 Saint Martin (French Part)                    663      all questions
 Saint Pierre and Miquelon                     666      all questions
 Saint Vincent and the Grenadines              670      all questions
 Samoa                                         882      all questions
 San Marino                                    674      all questions
 Sao Tome and Principe                         678      all questions
 Saudi Arabia                                  682      all questions
 Senegal                                       686      all questions
 Serbia                                        688      all questions
 Seychelles                                    690      all questions
 Sierra Leone                                  694      all questions
 Singapore                                     702      all questions
 Sint Maarten (Dutch Part)                     534      all questions
 Slovakia                                      703      all questions
 Slovenia                                      705      all questions
 Solomon Islands                               090      all questions
 Somalia                                       706      all questions
 South Africa                                  710      all questions
 South Georgia and the South Sandwich Islands  239      all questions
 South Sudan                                   728      all questions
 Spain                                         724      all questions
 Sri Lanka                                     144      all questions
 Sudan                                         729      all questions
 Suriname                                      740      all questions
 Svalbard and Jan Mayen                        744      all questions
 Swaziland                                     748      all questions
 Sweden                                        752      all questions
 Switzerland                                   756      all questions
 Syrian Arab Republic                          760      all questions
 Taiwan, Province of China                     158      all questions
 Tajikistan                                    762      all questions
 Tanzania, United Republic of                  834      all questions
 Thailand                                      764      all questions
 Timor-Leste                                   626      all questions
 Togo                                          768      all questions
 Tokelau                                       772      all questions
 Tonga                                         776      all questions
 Trinidad and Tobago                           780      all questions
 Tunisia                                       788      all questions
 Turkey                                        792      all questions
 Turkmenistan                                  795      all questions
 Turks and Caicos Islands                      796      all questions
 Tuvalu                                        798      all questions
 Uganda                                        800      all questions
 Ukraine                                       804      all questions
 United Arab Emirates                          784      all questions
 United Kingdom                                826      all questions
 United States                                 840      3, 5, 10, 11B, 12, 15
 United States Minor Outlying Islands          581      5, 9A, 10, 11B, 15
 Uruguay                                       858      all questions
 Uzbekistan                                    860      all questions
 Vanuatu                                       548      all questions
 Venezuela, Bolivarian Republic of             862      all questions
 Viet Nam                                      704      all questions
 Virgin Islands (British)                      092      all questions
 Virgin Islands (U.S.)                         850      9A
 Wallis and Futuna                             876      all questions
 Western Sahara                                732      all questions
 Yemen                                         887      all questions
 Zambia                                        894      all questions
 Zimbabwe                                      716      all questions
 Other                                         999      all questions
 ______________________________________________________________________________

 Source: FATCA Online Registration User Guide, 7.5, "Appendix D -- Country
 Lookup Table," at 70-74 (Aug. 19, 2013). (See Question 9A -- p. 36 of the
 guide.)

The branch table information lists all of the branch jurisdictions identified by the FI. The branch table is available after 9c on the registration web page and contains the following information for each branch: country of tax residence, whether the branch is limited, whether the branch will maintain its QI status and branch GIIN. Limited branches will not be issued a GIIN.

i. USFI with a branch in Model 1 jurisdiction. If a USFI has a branch in a Model 1 IGA jurisdiction, the branch must register as a Model 1 FFI and obtain a separate GIIN. As part of its required information, the branch must answer the questions in part 1 of Form 8957, including questions 7, 8, and 9.

j. USFI with a non-QI branch. A USFI with a non-QI branch resident in a Model 2 IGA jurisdiction or in a non-IGA jurisdiction is not required to register with the IRS. A payment to a foreign branch of a U.S. person is generally a payment to a U.S. payee.505

k. USFI with a branch that is a QI. A payment to a foreign branch of a USFI will be treated as a payment to an FFI if (1) the foreign branch is a QI that is acting as an intermediary for the payment, (2) the foreign branch provides the withholding agent an intermediary withholding certificate, and (3) the withholding agent reports the payment as having been made to the foreign branch on Form 1042-S.506 See III.H.4.k.

A USFI with a foreign branch that is a QI and seeks to maintain its current QI status must register through the FATCA portal to renew its QI status for the foreign branch regardless of whether the branch is resident in a Model 1 FFI. If the branch is itself a QI, WP, or WT, it would also have to complete part 1, questions 6a through 6c, and part 3 of Form 8957.

l. Changes in branch's tax residence or FATCA classification. Any change of a branch's tax residence or FATCA classification (questions 7, 8, 9a-9c) likely will need to be updated in the FFI's registration information on the FATCA portal.507 See III.M.1.

7. ROs and POCs. The regulations include specific verification and certification requirements for FFIs. These verification procedures rely on the RO (or designee) to establish a compliance program that includes policies and procedures sufficient for the PFFI to satisfy the requirements of the FFI agreement. The PFFI must subject its compliance program to periodic review. The RO may be any officer of any PFFI or Model 1 FFI in the FFI's EAG with sufficient authority to fulfill the duties of an RO. The RO may designate others to implement and oversee the compliance with the verification requirements, but he must make any required certifications to the IRS.508 The regulations require the RO, on behalf of the PFFI, to periodically certify to the IRS that the FFI is in compliance with the requirements of the FFI agreement.509

Each registering FFI must select an RO. Part 1 of draft Form 8957 requires the identification of the RO as a part of the registration process. The RO will also be identified by the IRS on the FFI's home page. The RO may be the same for the lead FFI or for other members of the EAG. The address provided should be the business address of the RO. The RO for the lead FFI will automatically be treated as a POC for the FI and any member FFI of the FFI group. As a result, the RO for a lead FFI may receive correspondence from the IRS related to each member.

By my count, the IRS has provided at least four definitions for the term "responsible officer" in the regulations, the instructions to Form 8957, and the registration user guide. It would be helpful if the IRS provides further guidance on whether the same or different individuals may fulfill each of these roles and how each role is different.

Under the regulations, the term "responsible officer" means an officer of any PFFI or Model 1 FFI in the FFI's EAG with sufficient authority to fulfill the duties of an RO as required by reg. section 1.1471-4 (for example, the FFI agreement).510

The instructions to Form 8957 provide a second definition of an RO to mean the person authorized under applicable local law to establish the statuses of the financial institution home office and branches as indicated on Form 8957.511

The registration user guide provides a third definition of RO: an individual designated by the financial institution in the FATCA registration system to complete the registration form. A financial institution's RO will be a POC for the financial institution. Further, the RO of a financial institution registering as a lead FFI of all or part of an EAG will be a POC for each member financial institution of that group. Further information on RO selection choices is available in the instructions to the Form 8957.512

The RO has three different functions in the registration process. First, the RO is the only person who is allowed to add or remove POCs. The RO (or equivalent officer) is also the person who certifies that the FFI is FATCA-compliant513 and electronically signs the registration form.514 It is still unclear whether an RO is the only person who can electronically sign the form. See III.K.

A fourth definition of RO is provided for purposes of Question 11B: an individual who is authorized under local law to consent on behalf of the FI (authorizing individual) to the disclosure of tax information to third parties. This individual may be the same as the individual identified as the RO in Question 10. By checking the "yes" box in Question 11B, the authorizing individual identified in the checkbox to Question 11B is providing the IRS with written authorization to release the FFI's FATCA information to the POC, once the authorization is granted it is effective until revoked by either the POC or an authorizing individual of the financial institution.

Form 8957 gives an FFI a choice of whether to have the RO serve as its only POC. The alternative is for the RO to add others as POCs, including the RO of the lead FFI, who could automatically be allowed to complete Form 8957, take other FATCA-related actions, and obtain access to the FFI's information on the FATCA portal.

The RO can select up to five POCs, including himself, to assist in all aspects of the registration process, except adding or removing POCs and possibly certifying or signing the registration. As noted, POCs may include not only the RO for a member or lead FFI, but also third-party individuals located in the United States or elsewhere. For example, the POC can include employees of an affiliate (whether or not in the EAG) or a service provider. Thus, if the ROs for a lead FFI and a member are both included as POCs, the lead or member may each have three other POCs (who may be the same individuals). Presumably, the RO (or equivalent authorized or delegated officer) of an FFI in an IGA jurisdiction becomes the POC, but this will remain unclear until the IRS issues guidance concerning FFIs in IGA jurisdictions.

a. Proofing of RO. The good news is that positive identification verification no longer will be required for an RO or POC.515 The elimination of the proofing process also means that the authorized third-party (ATP) concept, which formerly had required verification of the ATP's status, has been eliminated.516

b. Information about the RO. Form 8957 requests the following information in Question 10 for the RO to become a POC for the FFI: the RO's business title, full legal name, business addresses, business telephone and fax numbers, and business e-mail address. The legal last name, legal first name, country, business address 1 (of two), city, state, province or region, and business telephone and business e-mail are all required fields. Optional fields include the RO's business title, legal middle name, ZIP or postal code, and business fax number.

The address provided should be the business address of the RO. The business address is defined as the address where the RO maintains his principal office. The individual identified as the RO in Question 10 will be the only individual who will receive e-mails from the IRS related to the FI's FATCA account. In all cases, the RO designated in Question 10 must be authorized under applicable local law to establish the statuses of the FFI's home office and branches as indicated on the registration form. If a financial institution is a lead FFI, the financial institution's RO will automatically be treated as a POC for the financial institution and any member financial institution. As a result, the RO for a lead FFI may receive correspondence related to its member financial institution's FATCA information. Only the RO, and not the POCs, will receive the notifications regarding the financial institution's account status.

Question 11a provides that the financial institution RO will be a POC for the financial institution. Further, the RO of a financial institution registering as a lead FFI of all or part of an EAG will be a POC for each member financial institution of that group. The registration user guide directs the financial institution to answer "yes" and complete question 11b if it wants to appoint one or more POCs other than the RO identified in Question 10. A POC is an individual authorized to receive from the IRS FATCA-related information regarding the financial institution and to take other FATCA-related actions on behalf of the financial institution upon the request by the IRS. Thus, by listing one or more POCs in Question 11b and selecting "yes" in Question 11a, the financial institution is giving the IRS written authorization to release FATCA information to the POC(s). The financial institution is directed to select "no" if it wants the IRS to send correspondence only to the individual RO identified in question 10. If the answer is "no," the system will take the user to a preview of part 1.

c. POCs. The instructions on Form 8957 provide that an RO of an FFI registering as a lead FFI of all or part of the EAG will be a POC for each member of that group. The term "point of contact" means an individual authorized by the financial institution to receive FATCA-related information regarding the financial institution and to take other FATCA-related actions on behalf of the financial institution. Clearly, an individual may be a POC, and that person does not have to be a U.S. citizen or U.S. resident. What is unclear is whether an organization or legal entity may be a POC. The form, by asking for the POC's last, first, and middle name, strongly implies that only an individual may be a POC. The address provided shall be the business address of the POC.

d. Information to be provided by the POC. Line 11a asks whether the RO wishes to designate one or more additional POCs for the FFI. If so, the RO must complete line 11b by providing the POC's full name, the POC's business title, the POC's business addresses, the POC's business telephone and fax numbers, and the e-mail address of the RO (not the POC, based on draft Form 8957). While no limit is specified on Form 8957, the IRS has indicated that up to five POCs are allowed per FFI. ROs and POCs will not have their own separate access codes, and those access codes will be assigned to each financial institution that registers through the FATCA portal.

The legal first and last name, country, business address 1 (of two), city, state, province or region, business telephone, and business e-mail of the RO are required fields. Optional fields are the business title (it is not clear whether a POC can provide either his corporate or functional title or whether this matters to the IRS), the legal middle name, ZIP or postal code, and business fax number.

e. E-mail notifications by the IRS. The RO will receive e-mail notifications of changes made to the FFI's account (or if a lead FFI, any changes made to a designated EAG member's account). However, the RO may enter any e-mail address, including a generic or centralized mail address (for example, IRSFATCACompliance@xyz.com) in the RO box, thereby allowing for multiple recipients of any electronic IRS notifications concerning a registering FFI. Thus, an RO can delegate its e-mail permissions to people inside and outside the organization. However, that e-mail permission also entails some risk, because persons with inappropriate access (for example, access code and FATCA ID) will be able to log in to the FATCA portal and view the account history. If those persons leave their employer or if the service provider is no longer retained as a POC, they could continue to receive the IRS e-mails absent a system for the FFI's RO to take them off the recipient list.

f. Permission to complete registration information and for the IRS to release information to the POC. Upon entering the POC information, the RO checks the box in line 11b stating that as RO for the financial institution, he is providing the specified authorization regarding the identified POCs. The instructions on the form indicate that by checking that box and submitting the registration, the RO is providing the IRS written authorization to release FATCA information to the POC and providing authorization for the POC to complete Form 8957, take other FATCA-related actions, and obtain access to the financial institution's tax information.

g. FATCA-related actions. The IRS has not yet specified the scope of the term "FATCA-related actions." Does it include filing any reports or returns required by FATCA, acting as a withholding agent on behalf of the financial institution, or representing the financial institution on FATCA-related audits?

h. Grant of POC authority effective until revoked by financial institution or POC. Once the POC's authorization is granted, it is effective until it is revoked by either the financial institution or POC.

i. Changing ROs or POCs. If an RO or POC must be changed, the existing RO can log in to the member's account information and, on the FATCA home page, go to the link "My Information" to make the change. If the RO is changed, the new RO must certify his status in part 4.

j. Changes in ROs or POCs. Any change of the FFI's ROs or POCs (questions 10 and 11) likely must be updated in the FFI's registration information on the FATCA portal.517 See III.M.1.

I. Part 2 of Form 8957



1. Member information and EAG. Part 2 of the online registration must be completed if the financial institution is registering as a lead FFI. Part 2 should be completed only by a lead FFI, and it must be completed through the FATCA portal only. In part 2, the lead FFI will create the online FATCA account for its member financial institutions.

                                   Exhibit 10



             FFI Registration -- Member Information (Part 2) -- Question
 ______________________________________________________________________________

 Legal Name of
 Member                                                               Temporary
 Financial                                                            Access
 Institution       Country     Member Type              FATCA ID      Code
 ______________________________________________________________________________

 Member Financial  Country 1   Participating            123ABC.00001  1AbcdefI
 Institution 1                 Financial Institution
                               not covered by an IGA,
                               or a Reporting
                               Financial Institution
                               under a Model 2 IGA

 Member Financial  Country 2   Limited Financial        123ABC.00002  2Bcdefg
 Institution 2                 Institution

 Member Financial  Country 3   Participating Financial  123ABC.00003  3Cdefgh?
 Institution 3                 Institution not covered
                               by an IGA, or a
                               Reporting Financial
                               Institution under a
                               Model 2 IGA

 Member Financial  Country 4   Registered Deemed-       123ABC.00004  4Defghi(
 Institution 4                 Compliant Financial
                               Institution (including
                               a Reporting Financial
                               Institution under a
                               Model 1 IGA)

 Member Financial  Country 5   Registered Deemed-       123ABC.00004  5Efghij**
 Institution 5                 Compliant Financial
                               Institution (including
                               a Reporting Financial
                               Institution under a
                               Model 1 IGA)
 ______________________________________________________________________________

 Source: FATCA Online Registration User Guide, 4.2, "Figure 29 -- FI
 Registration -- Member Information (Part 2) -- Question 12," at 43 (Aug. 19,
 2013).

Question 12 requests the lead FFI to provide the legal name of the designated member financial institution, its member type, and its country of residence. See Exhibit 10 for the screenshot of the member financial institution information created as part of the creation of an online account by the lead FFI for its member financial institutions. A lead FFI will be required to provide identifying information about its designated member financial institutions, other than exempt beneficial owners or CDCFFIs. The information in this question is required to establish the members' accounts and for the registration system to generate the member FATCA IDs and temporary access codes. The lead FFI must distribute both the FATCA IDs and temporary access codes to its members to be used in the members' registration processes.

A lead FFI will identify in part 2 each designated member financial institution for which it is acting as a lead FFI and that is treated as a PFFI, including a Model 2 FFI, RDCFFI (including a Model 1 FFI), or limited FFI. Also, for purposes of registration, a member financial institution may include a foreign branch of a USFI that is registering to obtain a GIIN or renew its QI agreement.

An EAG may have more than one lead FFI and may organize itself for purposes of registration into subgroups under different lead FFIs. For example, an EAG of 10 FFIs may decide to select two different lead FIs: lead FFI 1 and lead FFI 2. Lead FFI 1 can carry out FATCA registration on behalf of four of its member financial institutions, and lead FFI 2 can carry out FATCA registration on behalf of six of its other member financial institutions. All 10 FFIs within the same EAG will be registered even though they are registered under two different lead FFIs.

A member will need to obtain its FATCA ID and temporary access code from its lead FFI and provide that information on its online registration form. The FATCA ID, which will be used to identify the member financial institution for purposes of its registration, is not the same as the GIIN. A GIIN is issued to financial institutions (including members) other than limited FFIs or limited branches after the FATCA registration is submitted and approved by the IRS.518

To register, a member must enter the online system with the FATCA ID and temporary access code provided by the lead FFI and must create a new access code and record the FATCA ID and new access code for future log-ins to the FATCA portal. A user for the member financial institution should complete part 1 of the online FATCA registration form and complete part 3 if the member financial institution has a QI, WP, or WT agreement currently in effect and wishes to renew that agreement. On or after January 1, 2014, the member's RO must electronically sign and submit the registration form and wait for the registration to be processed. The member will receive notification upon approval, and GIINs will be assigned to the member and any branches that are not limited branches. The assigned GIINs will be included in the next published FFI and branch list.519

Part 2 should be completed only by the lead FFI and must be completed through the FATCA portal. A lead FFI will identify in part 2 each member for which it is acting as a lead FFI and that is treated as a PFFI, a Model 1 or Model 2 FFI, or a limited FFI. Further, for purposes of registration, a member financial institution may include a foreign branch of a USFI that is registering to obtain a GIIN (for example, as a lead FFI or sponsoring entity) or to renew its QI agreement.520

After completing part 1 of the registration, a lead FFI will be prompted to identify the name and type of each financial institution member of its EAG. For purposes of Question 12, the lead FFI must provide the legal name of the member FFI, select from a dropdown menu the country of residence for tax purposes (see III.H.3), and member type (for example, the financial institution's FATCA classification in its country of tax residence). See III.H.4.b. A lead FFI will be allowed to download a complete member list in a .PDF file.

Thus, a lead FFI must identify the FFIs in its EAG that are (1) a PFFI not covered by an IGA; (2) a Model 2 FFI under a Model 2 IGA; (3) a RDCFFI, including a Model 1 FFI under a Model 1 IGA; or (4) a limited financial institution. See III.H.4.b.

The IRS has indicated that a lead FFI should provide its unique FATCA ID to each member of its EAG to be used in the member's registration.

a. FFI members of an EAG. A member is an FFI that is registering as an EAG member, is not acting as a lead FFI, and is registering as a PFFI, RDCFFI, or limited FFI. For purposes of registration, a member may also include a foreign branch of a USFI that is treated as a Model 1 FFI or renewing its QI agreement.521

As a general rule, an FFI will be part of a lead FFI's EAG if it is affiliated with a common parent that directly or indirectly owns more than 50 percent of the stock and value of that corporation (or for a partnership or noncorporate FFI, owns more than 50 percent by value of the beneficial ownership of that entity).522 See Exhibit 11 for an example illustrating the identification of entities that may be in or outside an FFI's EAG.

More specifically, an FFI will be part of an FFI EAG if (1) one FFI controls the other FFI directly or through a chain of controlled entities, or (2) they are both under common control (directly or through a chain of controlled entities) of a single corporation (whether or not that corporation is itself an FFI itself).523 The regulations provide separate rules for determining whether FFIs are to be included in the EAG based on whether the FFI is a corporation or a noncorporate entity. Presumably, the determination of the type of entity is based on the entity classification for U.S. tax purposes and not on foreign law.524

b. FFIs that are corporations. Reg. section 1.1471-5(i) defines EAG to mean an affiliated group as defined in section 1504(a) and determined:


    1. by substituting "more than 50 percent" for "at least 80 percent" each place it appears;

    2. without regard to section 1504(b)(2) (prohibition on including insurance companies in an affiliated group) and section 1504(b)(3) (prohibition on including foreign corporations in an affiliated group);

    3. without application of section 1504(a)(3) (the rule generally requiring that five years must elapse before reconsolidation with the same common parent); and

    4. without application of reg. section 1.1504-4(b)(2)(i)(A) (options treated as stock or as exercised).


Thus, an FFI will be included in the EAG of another FFI if the common parent or an includable corporation (after application of the above modifications) owns more than 50 percent of the total voting power of the stock of that corporation and has a value equal to more than 50 percent of the total value of the corporation's stock.

Exhibit 11

FATCA Classification of Entities -- EAGs



Section 1504(a)(5) directs Treasury to prescribe regulations as necessary or appropriate to carry out the purposes of that provision. Reg. section 1.1502-1(g)(2) provides that the term "stock" means all shares except nonvoting stock that are limited and preferred as to dividends, and it specifies that section 318 applies in determining the ownership of stock, except that section 318(a)(2)(C) and (3)(C) are to be applied without regard to the 50 percent limitation contained therein.

c. FFIs that are partnerships and other noncorporate entities. Reg. section 1.1471-5(i)(2)(ii) provides that a partnership or any other noncorporate entity will be treated as a member of an EAG if the entity is controlled (within the meaning of section 954(d)(3), without regard to whether the entity is foreign or domestic) by members of that group (including any entity treated as a member of the group because of reg. section 1.1471-5(i)(2)(ii)). For this purpose, a branch will not itself be treated as a member of an EAG.

Under section 954(d)(3), a person is a related person if it is an individual, corporation, partnership, trust, or estate that controls or is controlled by the CFC. For a corporation, control means direct or indirect ownership of stock possessing more than 50 percent of the total voting power of all classes of stock entitled to vote or of the total value of the corporation's stock. For a partnership, trust, or estate, control means the direct or indirect ownership of more than 50 percent (by value) of the beneficial interests in that entity. The flush language of section 954(d)(3) says that the rules similar to section 958 titled "Rules for determining stock ownership" shall apply. Reg. section 1.958-2 provides that for purposes of section 958(d)(3), the rules of section 318(a) will apply to treat a person as a related person with the meaning of section 954(d)(3).525

d. Exception for FFIs holding specified capital investments -- seed capital. The regulations provide an exception to the above rules for an FFI holding specified capital investments. An investment entity will not be considered a member of an EAG as a result of a contribution of seed capital by an EAG member if:


    1. the member that owns the investment entity is an FFI that is in the business of providing seed capital to form investment entities;

    2. the member intends to sell that interest to unrelated investors;

    3. the investment entity is created in the ordinary course of the member's business;

    4. the member intends to retain no more than 50 percent of the value of the investment (including ownership by other members in the EAG) within three years of making the investment; and

    5. for an equity interest that has been held by the member owning the investment entity, the aggregate value of the equity interest held by that entity and other members of the EAG is 50 percent or less than the value of the investment entity.526


The regulations included this exemption in light of the burden a fund sponsor would face in constantly monitoring ownership changes in the investment entity because of ongoing sales of interests to investors.527

e. Antiabuse rule. The regulations also provide an antiabuse rule that claws back into the EAG FFIs that would not otherwise be included. In determining whether an entity is a member of an EAG, a change in the entity's ownership, voting rights, or form is disregarded if the change is under a plan whose principal purpose is to avoid withholding or reporting obligations under chapter 4.528

f. EAG overlap issues -- IRS bias toward inclusion. If an FFI is a member of a lead FFI's EAG and also a sponsoring entity, the FFI must register twice -- once as a member of the lead FFI's EAG and once as a sponsoring entity. However, if the FFI is a member of a lead FFI's EAG and a sponsored FFI, it will have to register only once.

According to the IRS, there is a bias toward inclusion of an FFI in an EAG, and a member of an EAG may be required to register through the lead FFI of the EAG rather than as a single registrant or as a sponsored FFI. That rule, if adopted by the IRS, may have an unfortunate result, since a lead FFI and the members of its EAG are not as a group given transition relief to defer their registration and therefore must generally register over the initial registration period, whereas a sponsored FFI generally would not need to obtain a GIIN before 2016.529 See III.H.1.b.viii.

Subject to guidance by the IRS on its website (see II.H.1.b), the lead FFI and members of its EAG may want to consider an alternative delayed registration process. That is, a lead FFI (who is also acting as sponsoring entity on behalf ot its sponsored FFIs) and the designated members of its EAG can take advantage of the regulations that permit Model FFIs that are sponsored FFIs until January 1, 2016, to obtain their own GIINs. Thus, for payments made before 2016, a Model 1 FFI (or other RDCFFI) that is a sponsored FFI must provide the GIIN of its sponsoring entity on its withholding certificate. See III.D.2.i.530

g. EAG within an EAG will be possible. The IRS has informally indicated that an organization with an EAG can have multiple lead FFIs if necessary for easier administration or other reasons. The EAG can be divided based on different groupings, including division, geographic region, Model 1 FFIs, Model 2 FFIs, or asset class. However, an organization with more than one EAG cannot group FFIs from more than one EAG into a separate group of FFIs that has its own lead FFI. There does not seem to be the same limitation for a sponsored entity and its sponsoring FFIs if the sponsored FFI is an investment entity that is not a QI, WP, or WT, or if it is a CFC that is directly or indirectly wholly owned by a USFI and satisfies the other requirements.531 See III.H.c.

h. Controlled foreign entities. An organization cannot register an entity as a member of its EAG if its ownership interest in it does not meet more than 50 percent vote and value tests. See III.I.1. However, if an organization has foreign entities that (1) fall outside the definition of EAG because their ownership is less than or equal to 50 percent in terms of vote or value or (2) has investments in those entities below that threshold, the organization, as a withholding agent, should still identify those entities regardless of the level of ownership to confirm they will register with the IRS as an FFI (either as part of another EAG or as a single registrant), and if not, whether the foreign entity intends to otherwise be FATCA compliant (for example, be an NFFE or exempt beneficial owner).

i. Future IRS guidance and possible additions to part 2 for sponsored FFIs or branches. Pending further guidance from the IRS, a sponsoring entity might also be required to identify its sponsored FFIs in part 2 when the sponsoring entity registers, even though some of the sponsored FFIs may not be in the same EAG. Similarly, in the future the IRS may want a lead FFI to identify not only each FFI of its EAG, but also each branch in a jurisdiction outside its country of tax residence in part 2, even though a branch may not be a separate juridical entity.

j. Changes in member legal name, country of tax residence, type, or change in EAG. Any change to the lead FFI's EAG (Question 12) will likely need to be updated in the FFI's registration information on the FATCA portal.532 See III.M.1.

J. QIs, WPs, or WTs -- Part 3 of Form 8957



Part 3 should be completed only by a single FFI, lead FFI, or member financial institution, including a foreign branch of a USFI, that has in effect a QI, WP, or WT agreement and wishes to renew its agreement. Part 3 should be completed only by an FFI currently acting as QI, WP, or WT and currently using an issued EIN to establish its applicable status. An FFI that would like to apply to become a first-time QI, WP, or WT cannot do so using the paper Form 8957 or the FATCA portal. Instead, the FFI must complete Form 14345, "Qualified Intermediary Application,"533 in accordance with the instructions. It is advisable, but not required, for an FFI applying for first-time QI, WP, or WT status to do so before it submits its FATCA registration form.534

Under reg. section 1.1441-1(e)(5), entities meeting specified requirements may apply to enter into a QI agreement with the IRS. Those agreements generally apply only to foreign (non-U.S.) banks, brokers, nominees, or other agents. There are two types of QIs535: a full withholding QI that signed an agreement with the IRS to perform U.S. withholding on U.S.-source payments paid to non-U.S. persons and a non-withholding QI that signed an agreement with the IRS but has not agreed to perform U.S. withholding.536

For an entity to become a QI, it must be (1) an FFI or foreign clearing organization, other than a U.S. branch or U.S office of that institution; (2) a foreign branch or U.S. office of a USFI or a foreign branch of a U.S. clearing organization; (3) a foreign corporation for purposes of presenting a claim of benefits under an income tax treaty on behalf of shareholders; or (4) any other person acceptable to the IRS.537 A WT or WP generally means a foreign grantor trust, foreign simple trust, or foreign partnership that has signed an agreement with the IRS similar to the QI agreement and agreed to perform U.S. withholding.538

The IRS has informally indicated that the QI regime will continue independently at least for now, even though the QI and FATCA regimes are clearly related. For example, while all QIs generally must become FFIs (or limited FFIs) and register on the FATCA portal,539 the registration process for an FFI that is a QI, WP, or WT will not extend the life of its QI agreement simply because it registers as an FFI. In contrast, a WP or WT may be either an FFI (which would have to register) or an NFFE with no registration requirement whatsoever.540

1. Comparison of QI and FATCA regimes. Several commentators541 have compared the FATCA and QI regimes and said the FATCA regime does not replace the QI regime but goes well beyond it. QI status is purely elective, whereas FATCA status is not -- it applies to FFIs that register and enter into FFI agreements with the IRS to avoid FATCA withholding.

Unlike with FATCA, the election to act as a QI is made on an account-by-account basis. An entity with a QI agreement must affirmatively invoke QI status with a withholding certificate for identified accounts. If an affiliated group has a QI member, other members may remain NQIs. Conversely, if an FFI registers and enters into an FFI agreement with the IRS, that entity together with its EAG will have to register as FATCA compliant. The QI and FFI regime both extend the jurisdictional nexus of the IRS through contractual agreements that require those entities to assume specific obligations under each regime.

While the QI regime is available only in qualified countries, the FATCA regime for registering FFIs is available in all countries either through Model 1 or Model 2 IGAs or through the regulations. Similarly, the QI regime is limited to foreign entities or foreign branches of USFIs that are banks, brokers, or trust companies, while the FATCA regime applies to all FFIs. Registration applies to all entities in the EAG, including QIs, WPs, or WTs, while under the QI regime an organization can choose which qualifying entities of an affiliated group will apply to be QIs, WPs, or WTs. FATCA requires the reporting of U.S. account holders and their U.S.- and foreign-source income and gross proceeds (commencing in 2017),542 while the QI regime generally applies only to U.S.-source income received by U.S. persons and proceeds from sales effected in the United States.

In general, a QI's compliance obligations relate only to accounts receiving U.S.-source income (for example, reportable accounts). A QI must disclose U.S. persons only if they receive U.S.-source (and possibly non-U.S.-source income if paid inside the United States). An FFI must identify any U.S. accounts held by a specified U.S. person or U.S.-owned foreign entity under section 1471(d)(1), including accounts receiving only non-U.S.-source income, and then report that information to the IRS.

2. QI, WP, or WT documentation requirements. Beginning on January 1, 2015,543 QIs, WPs, or WTs will generally be required to provide withholding agents a Form W-8IMY indicating that they are PFFIs or RDCFFIs (including Model 1 or 2 FFIs) when opening a new account.544 As part of that process, they will be required to provide their GIIN. For preexisting accounts, if the payee is a prima facie FFI such as a QI, WP, or WT, those entities will generally have until December 31, 2014,545 to provide documentation evidencing they are PFFIs or RDCFFIs (including Model 1 or 2 FFIs).546 See II.D.

3. Anticipated changes to QIs under FATCA. According to the regulations' preamble, Treasury and the IRS are considering revising the requirements of the QI agreement for external audit procedures to verify a QI's compliance with its QI agreement.547 The IRS is considering this revision since it is designing a new FATCA registration and compliance process. In lieu of external audit reports, QIs that are FFIs could make periodic certifications of compliance similar to those required of PFFIs under the regulations. The IRS is also considering whether internal audits and reviews should be required or permitted instead of external audits, as well as the extent to which those reviews should include evaluations of a QI's internal controls in lieu of the account review procedures prescribed by Rev. Proc. 2002-55, 2002 C.B. 32 2002 TNT 160-4: IRS Revenue Procedures.548

4. FFI has an existing QI, WP, or WT agreement. According to the regulations' preamble, beginning January 1, 2014,549 QIs will be required to assume chapter 4 responsibilities for their accounts as a condition for maintaining QI status. QIs that contract with private arrangement intermediaries (PAIs) will be required to identify those PAIs as part of their FATCA registration process. For this purpose, existing QI agreements will be modified to take into account chapter 4.550 The IRS had promised that the new QI agreement will be released no later than July 15, 2013. The modified provisions of the new QI agreement will appear in the FATCA revenue procedure that the IRS has promised will also be published before the FATCA portal opens on this date.

Existing WPs and WTs that are FFIs will be required to renew their current agreements by registering on the FATCA portal and agreeing to comply with the modified agreement described in the FATCA revenue procedure. The renewing WP or WT will be issued a GIIN to use for reporting purposes and to establish its FATCA status with the withholding agents.

The existing agreements governing WPs and WTs will also be modified to incorporate the chapter 4 requirements (for financial accounts other than equity interests) for the entities' partners, owners, or beneficiaries. The FATCA revenue procedure will describe those modifications.

5. Renewal of agreements for QIs, WPs, or WTs. According to the regulations' preamble, existing QIs will be required to renew their QI agreements by registering on the FATCA portal and agreeing to comply with the modified QI agreement to be described in the FATCA revenue procedure.551 A renewing QI, WP, or WT will be issued a GIIN that it will use for FATCA reporting purposes and establishing its FATCA status with withholding agents. The IRS contemplated at the time of the release of the final regulations in January that the GIIN would be used by QIs, WPs, or WTs in lieu of the current QI-EIN, WP-EIN, or WT-EIN. For the QI, the GIIN would be used for purposes of QI reporting and establishing the QI status vis-à-vis withholding agents. For the WP or WT, the GIIN would be used for FATCA reporting purposes and establishing the entity's FATCA status with withholding agents.552 Since the IRS is still requesting that QI, WP, and WT FFIs provide their applicable TINs, it is likely that both tax identifiers will continue to be used for now for chapters 3 and 4 purposes unless the IRS provides guidance stating otherwise.553

6. New QI, WP, or WT agreements and the FFI registration process. FFIs that wish to apply for QI, WP, or WT status for the first time must do so by submitting a QI application or a WP/WT application. Once approved as a QI, WP, or WT through this process, the FFI must register or update its information regarding its QI, WP, or WT status (including its chapter 4 requirements) through the FATCA portal.

Beginning December 31, 2013,554 QI, WP, and WT agreements will be expanded to incorporate FFI requirements under FATCA with the QI, WP, and WT responsibilities under chapter 3 (to the extent applicable). As a result, all QI, WP, and WT agreements now in effect will expire as of June 30, 2014.555

On its website,556 the IRS said that FFIs seeking to obtain QI, WP, or WT status before the scheduled opening of the FATCA portal on July 15, 2013 (extended to August 19, 2013),557 had to submit the appropriate QI, WP, or WT application and all required attachments no later than May 3, 2013. However, IRS officials have informally indicated that an FFI that missed the May 3 deadline could first register on the FATCA portal and then submit its QI, WP, or WT application.

The current timing for the submission of an application to obtain QI, WP, or WT status is unclear. Under earlier guidance,558 the IRS indicated that applications would be accepted until November 15, 2013, for obtaining QI, WP, or WT status for the 2013 tax year and that an application received on or before that date would be processed in time to permit the designated registration.

Although applying for new QI status is now done on paper, it will likely be done online in the future.

7. PAI arrangements. According to the regulations' preamble, the IRS anticipates issuing guidance that permits PFFIs and RDCFFIs that are acting as PAIs559 to continue to act as PAIs for FATCA purposes under requirements similar to those provided in the current model QI agreement.560 However, the QI agreement will be modified in the FATCA revenue procedure to incorporate the requirement that a QI may only contract with a PAI that is a PFFI or an RDCFFI, in addition to the chapter 3 requirements for PAIs.561

PAIs will not be required to separately register with the IRS to obtain PAI status, as under existing procedures applicable to PAIs under chapter 3. However, PAIs will be required to register on the FATCA portal for chapter 4 purposes. QIs that contract with PAIs for purposes of their QI agreement will have to identify those PAIs as part of the FATCA portal registration process. The IRS anticipates amending the external audit requirements of PAIs to provide requirements comparable to those for QIs.562

8. QI, WP, WT, and PAI registration questions.

a. Identification of withholding agreement with the IRS as a QI, WP, or WT, Question 6a. An FFI that has in effect a withholding agreement with the IRS to be treated as a QI, WP, or WT should check the box next to the relevant status and provide the employer identification number that it was issued by the IRS for purposes of identifying itself when it is acting in its capacity as a QI, WP, or WT. Additionally, the FI will need to indicate whether it intends to maintain its status as a QI, WP, or WT. An FI that does not have in effect a withholding agreement with the IRS to be treated as a QI, WP, or WT should check "not applicable." If a user is applying as a sponsoring entity, select "not applicable." The FFI must select whether it is a QI, WP, or WT, and it must provide an EIN. The FFI must obtain a GIIN to be FATCA-compliant.

More specifically, in questions 6a, 6b, or 6c, the FFI must select whether it is a QI, WP, or WT in its country of tax residence and provide the applicable TIN (the QI-EIN, WP-EIN, or WT-EIN). Thus, if the FFI is a QI, WP, or WT, it will complete question 6a, 6b, or 6c, as the case may be, by answering yes (assuming it intends to maintain its status as a QI, WP, or WT). If the FFI is not a QI, WP, or WT but has a QI, WP, or WT branch, it should still answer yes to Question 6.

If the FFI does not intend to maintain its status, it should check the "no" box. If the FFI does not have a withholding agreement with the IRS as a QI, WP, or WT, it should answer Question 6d and check the "not applicable" box. Completing Question 6 is mandatory.

b. Branch QI status -- part 1, Question 9c. In part 1, Question 9c, if a branch is covered by a QI agreement, the FFI must check a box indicating whether the branch intends to maintain its QI status as a branch that is currently covered by a QI agreement (yes/no/not applicable). If the branch is outside the FFI's country of tax residence, it will also be required to obtain a GIIN. See III.H.6.

c. Part 3 of Form 8957. If the FFI indicates it is a QI, WP, or WT by answering yes to Question 6 in part 1 and it intends to maintain that status, the FFI must complete part 3 of the registration.

Question 13 of part 3 asks the FFI whether the QI, WP, or WT's legal name has changed since the effective date of the most recent QI, WP, or WT agreement (yes/no). If it has, the FFI must provide the new legal business name and give the reason for the name change by checking one of three boxes: "merger," "liquidation," or "rebranding (name change only)." Question 13 is mandatory.

The registration user guide provides the following directions for Question 13: If the QI, WP, or WT's legal name has changed since the effective date of the most recent QI, WP, or WT agreement, the financial institution should answer yes. If "yes" is selected, the financial institution must also provide the new legal business name of the QI, WP, or WT and the reason for the name change (for example, merger, liquidation, or rebranding). The financial institution should select "no" if the QI, WP, or WT has not changed its legal name since the date of its most recent QI, WP, or WT agreement.

Question 14 of part 3 asks the FFI to identify its responsible party by legal name (last family name, first given name, and middle name) and provide the business title, business telephone number, business fax number, and business e-mail address. It also asks whether the responsible party is the same person listed as the RO for the FFI. Apparently the responsible party can be, but does not necessarily have to be, the RO.

The registration user guide directs the financial institution to enter the name, business title, and contact information for the its responsible party as identified in the most recent QI, WP, or WT agreement and select "yes" if the responsible party is the same individual listed as the financial institution's RO in Question 10, and "no" if the responsible party differs from the individual listed in Question 10.

Question 15 of part 3 asks the FFI to identify any effective PAI contracts by providing the legal name of the PAI, its country, its mailing addresses (there is space for two mailing addresses on Form 8957), and its e-mail address. If the FFI has more PAIs, Form 8957 directs the FFI to use additional sheets to provide that information. The legal name is the name the PAI used in official incorporation or organization documents, or the name otherwise recognized by the government as the entity's official name. The address of the PAI is the address where the PAI maintains its principal office. If there are no PAI contracts, the financial institution should leave this question blank and select "next." If there are multiple entries, the financial institution should click on the "add another" button. The entries will appear in the table below.

d. Changes in QI, WP, or WT status. Any change to the lead FFI's EAG (questions 6a through 6d) will likely need to be reflected in the FFI's registration information on the FATCA portal.563 See III.M.1.

K. Signature -- Part 4 of Form 8957



Part 4 must be completed by all FFIs. It requires an FFI to certify that the information provided in the FATCA registration form is accurate and complete and to agree or confirm that it will comply with its FATCA obligations, if applicable, in accordance with the status or statuses for which it has registered itself or any of its branches. An FFI (including an FFI under a Model 1 or Model 2 IGA) that is registering to renew its QI, WP, or WT agreement will be agreeing to the terms of the renewed 2014 model QI, WP, or WT agreement.564

1. Certification. Under part 4, the FFI's RO must check a box and sign and date Form 8957 or its electronic version on the signature line evidencing the FFI's agreement with the IRS that the FFI will comply with FATCA. By checking the box, the RO is certifying to a broadly worded statement without yet seeing or reviewing an FFI agreement565:


    By checking the box, I ______________, as responsible officer for the financial institution, certify that, to the best of my knowledge, the information submitted above is accurate and complete and agree that the financial institution (including its branches, if any) will comply with its FATCA obligations in accordance with the terms and conditions reflected in the regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the financial institution based on its status in each jurisdiction in which it operates.

Completion of part 4 is mandatory for all registrants and requires that the RO insert his name in the certification. Presumably, if the RO is replaced, a new certification must be made by the incoming RO.

What is notable about this certification is that apparently only an individual may certify and not an entity. The reference to the "best of my knowledge" also may provide limited protection, since the RO is not certifying to matters to which he has no knowledge.

It is also notable that the certification relates to the "regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the financial institution based on its status in each jurisdiction in which it operates." Does that mean that the RO certification is an omnibus certification for the financial institution and its branches whether or not it has a place of business in a regulatory, Model 1, or Model 2 IGA jurisdiction? Also, does the reference to the term "regulations" refer only to the U.S. regulations, or does it also refer to other implementing legislation, such as the recently released final U.K. regulations?

The IRS has informally indicated that this broad certification is necessary because, for example, the rules and obligations in a Model 2 IGA partner country are not the same as the rules in a Model 1 or non-IGA jurisdiction. By checking the box, the RO is acknowledging that there are IGA countries that may have different rules.

One answer is that the certification relates only to the FATCA classification of the FFI only in its country of tax residence, and thus, a financial institution with branches in multiple jurisdictions may have to register, certify, obtain a GIIN, and report to the extent the branch determines its FATCA classification in each country of tax residence outside the FFI's country of tax residence.

Lastly, the certification implies that the RO is certifying to be compliant with the FATCA rules not only currently, but prospectively. Several industry representatives are concerned about exactly how much risk their ROs are taking on by agreeing to make those broad certifications for each FFI of an organization.

There is also concern that section 1471(e) imposes joint and several liability for the obligations of each member of an FFI in its EAG so that an erroneous certification by one RO of a member will cause another RO to be held accountable under this rule even though he may have no knowledge of the other members in the EAG -- a kind of vicarious liability.

2. Electronic signature. Part 4 of draft Form 8957 also has a line for the RO to sign and date a jurat or attestation clause: "I declare that I have examined this form, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete." It is unclear exactly how an RO will electronically sign the online registration inasmuch as the registration simply provides that the RO, after completing it, must acknowledge the agreement by checking the box (see III.K.1) and entering his name. While the registration process could require a security-enhanced signature that is machine readable, a typed-in signature of the RO will likely suffice. The IRS has indicated that an unsigned registration will not be processed.566

3. Certification and signature requirements. Part 4 is titled "Signature" and has a certification box, certification statement, signature line, and date line. Based on a plain reading of the certification, an RO would normally check the certification box indicating agreement with the certification statement, and insert his name as the RO for the FFI, certifying that he has the knowledge and the capacity to act as an RO as defined in the regulations. This essentially means that the RO is an officer of the FFI and knows that the information submitted is complete and correct and that the FFI will comply with FATCA. See III.H.7.

Can a third party, such as a POC, complete part 4 of Form 8957? Arguably, the person identified in part 1 of the form must satisfy the regulatory definition of an RO, and for that purpose must be an officer. The person completing part 4 is required to periodically certify to the IRS regarding the FFI's compliance with its FFI agreement, and to waive the FFI's rights to confidentiality under section 6103 so that other organizations can see the FFI's registration information on the published FFI and branch list (the FFI's name or branch name, GIIN, and country of tax residence).

IRS officials have suggested that they are thinking about permitting a person other than the RO to certify and sign Form 8957 if that person knows that the registration is accurate and complete and that the FFI is in compliance with its FATCA obligations in accordance with the terms and conditions reflected in the regulations, IGAs, and other administrative guidance, and also has the authority to certify. For this purpose, an officer of the PFFI or Model 1 FFI who is not the RO of the FFI might satisfy both requirements. It is less clear whether a person employed by a third-party vendor who is a POC of the FFI has the authority to certify absent a power of attorney. One could argue that the certification by the RO in Question 11b provides the POC with the written authority to also complete part 4 of Form 8957 because Question 11b states, "This authorization specifically includes authorization for the POC to complete Form 8957, to take other FATCA-related actions, and to obtain access to the financial institution's tax information."

4. Registration versus signing a separate FFI agreement. As part of the RO's registration process, the RO for the FFI certifies that to the best of his knowledge, not only is the submitted information accurate and complete, but also that the financial institution, including any branches, will comply with its FATCA obligations under the regulations, IGAs, or other administrative guidance to the extent applicable to the financial institution based on its status in each jurisdiction where it operates. It is agreeing to follow the U.S. (and non-U.S.) regulations, and as part of those regulations, agrees to meet its obligations under reg. section 1.1471-4 regarding its FFI agreement. For this purpose, an FFI agreement will be in effect in accordance with section 1471(b) if an FFI registers with the IRS and agrees to comply with the terms of an FFI agreement. The agreement will incorporate the requirements under reg. section 1.1471-4.567

Thus, an FFI that completes the registration online and completes the certification in part 4 of Form 8957 is agreeing to comply with the terms of an FFI agreement. While a draft FFI agreement has not yet been released by the IRS, one is expected soon unless the recital under part 4 is the entire FFI agreement. The IRS will have to clarify this point. The FFI agreement the RO is certifying to presumably can be copied or printed when available by clicking on the "Agreement" link on the FATCA home page.

5. Failure to register penalties. If an FFI decides not to register, it will not incur tax "penalties" for its failure to do so. In fact, an FFI may voluntarily decide not register. However, if it does, it may suffer a 30 percent withholding tax on any withholdable payments it receives as an NPFFI after June 30, 2014.568 That withholding may also apply to other PFFIs that have registered and are themselves FATCA compliant if they are in the FFI's EAG, unless the NPFFI itself qualifies by registering as a limited FFI or limited branch under a special transition rule, which will end in 2016. See III.H.4.j.

6. Penalties of perjury. The earlier draft of the Form 8957 included "penalties of perjury" language in the signature jurat in part 4. Many financial institutions were concerned that this clause could cause an RO who resides offshore, or the FFI itself (arguably with no jurisdictional nexus to the United States, either directly or through correspondent accounts), to now be subject to the U.S. criminal statutes if the RO signed his name on behalf of the FFI and knew that false statements or schedules are a part of the registration. The final version of Form 8957 deleted the "under penalties of perjury" language entirely, which may help allay those concerns as they apply to Form 8957 and the registration process.

However, the IRS may still decide to use section 7206(l) in appropriate cases involving new Form 8966 for FFIs and some withholding agents, or Form 1042/1042-S (as revised for FATCA) for withholding agents. Section 7206(1) criminalizes willfully making and subscribing a false statement under penalties of perjury on "any return, statement, or other document."569 The elements of this crime are (1) making or subscribing a return, statement, or other document; (2) under penalties of perjury; (3) with knowledge that the document is not true as to any material matter; and (4) willfulness. Both the corporation and its officers can be prosecuted for tax perjury.570

IRS officials have informally indicated that they will principally rely on the 30 percent withholding tax on withholdable payments received by an FFI that is not compliant, rather than on civil or criminal penalties for noncompliance. See III.E. However, an FFI that registers as an impostor FFI or seeks to use the FATCA portal illicitly to gain access to taxpayer information or other illegal activity will likely be treated far differently by the IRS. That fraudulent or illegal activity could be prosecuted by the government with both civil and criminal sanctions, as appropriate.

Form 8957 will not be processed if it is unsigned. Presumably, an electronic registration will also be rejected if it is not properly signed. As noted, it is unclear whether simply typing the name of the RO for the entity in part 4 on the signature line and inserting the date of the execution will be sufficient or whether there will other electronic signature requirements.

7. Electronic submission: registration user guide information. According to the registration user guide, the financial institution should not electronically sign and submit the registration before 2014. Before January 1, 2014, any information entered into the system, even if submitted as final by the website user, will not be regarded as a final submission but will merely be stored until the information is submitted as final on or after January 1, 2014. Thus, financial institutions can use the remainder of 2013 to become familiar with the FATCA registration website, to input preliminary information, and to refine that information. On or after January 1, 2014, each financial institution will be expected to finalize its registration information by logging in to its online account on the FATCA registration website, making any necessary additional changes, and submitting the information as final.

Before 2014, the financial institution may go to its home page for available account options and then log out when it is finished with its input. The individual signing the registration form on behalf of the financial institution should fill in the blank line with his name and check the box.

For purposes of part 4, an RO is the individual with authority under local law to submit the information provided on the form on behalf of the financial institution. For financial institutions or branches not governed by a Model 1 IGA, this individual must also have authority under local law to certify that the financial institution meets the requirements applicable to the financial institution status or statuses identified on the registration form.

The RO identified in part 4 need not be the same individual identified as the RO in question 10 or 11B. Thus, this may be a fifth definition of a person with RO FATCA responsibilities. Only the RO and not the POCs will receive the notifications regarding the financial institution's status. See "Responsible officers (ROs) and points of contact (POC)."

By signing the registration form, the individual certifies that to the best of his knowledge the information provided is accurate and complete and that the financial institution meets the requirements applicable to the status identified on the registration form. The registration user guide indicates that after the financial institution submits its registration, the user may view and print the agreement for the financial institution's records. Although this point is not completely clear, figure 28 on page 52 of the registration user guide, titled "FATCA Registration -- Viewing/Printing Agreement -- Agreement PDF," suggests the financial institution agreement is limited to the one paragraph attestation by the RO in part 4 after the RO checks the box and provides his name in the attestation clause.

L. FFI Receipt of GIIN



1. Completion of registration and overnight batch processing. Once all the lead and member information is entered or submitted, the financial institution will receive a message confirming that the registration process is complete. Once the information is submitted, there will be overnight batch processing, according to the IRS.

2. Summary report, member and branch tables, and account information. A registrant will be able to print a screen shot of any page viewed on the online registration portal, including the account information on the home page so the user can verify its correctness or for other purposes or to verify that the information inputted is correct. To print directly from the registration system, the registrant should use his Internet browser's print option. When printing forms, such as the branch table or the members table (leads FFIs only), files can be downloaded and printed in the PDF viewer.

M. Ongoing FFI Management



1. Ongoing data management.

a. Account maintenance. After the initial registration is complete, a lead FFI and its members will also have to manage the registration process for changes to the lead FFI's EAG. Similarly, the sponsoring entity will have to manage the process for changes to the group of sponsored FFIs.

If the lead FFI's initial registration is finalized on or after January 1, 2014, any changes after that date to the lead FFI's EAG will require the lead and/or member to log back in to its account on the FATCA portal to update the account. See II.D.2.

According to the registration user guide, a financial institution may view and edit its registration at any time. Also, a lead FFI may view and edit members' registration information. A financial institution may go back into the FATCA registration system and edit its registration at any time. After January 2014, this will require the financial institution to resubmit (and RO to recertify) its registration for approval by the IRS.

Registration edit procedures. On the home page, the user is directed to click on the "registration -- edit/complete/submit" link and to confirm that the financial institution needs to edit its registration by clicking on "yes" or "no" to return to the home page. The user may then edit the financial institution registration and click "save" and "next." To resubmit the registration, the user must enter the RO's name, click the checkbox, and click the submit button.

The edit process for the lead FFI's member information is much the same. The user is directed to click on the "view member information" line on the FATCA home page. See Exhibit 12 for a screen shot of the financial institution member information listed on a table, including the legal name of the financial institution, country, member type, FATCA ID, temporary access code, status, and GIIN.

On this page, the financial institution should click on the legal name to view the member financial information. To edit the member's registration, the financial institution will click on the "registration -- edit/complete/submit/" which will take it to the "Instructions for Financial Institution Registration" page. The user should edit the desired portions of the member registration and click the "next" or "save" button to save the edits. While a lead FFI edits a member's FATCA account, the member financial institution will receive an error message if it attempts to log in to its FATCA account.

Deleting a registration. The financial institution may delete its registration before the registration has been approved. After a registration is approved, the financial institution will have an option to cancel the agreement. Only lead FIs, singles, and sponsoring entities may delete their registration. Lead FFIs can delete their own registration when the members are in the following statuses: registration deleted, registration under review, or registration rejected/denied. For a member's registration to be deleted, it must be deleted by the lead FFI. If the user deletes the registration, the user no longer has access to it and cannot reinstate the registration later. If the user chooses to register again, it will need to create a new FATCA account.

For a lead FFI to delete its own registration, active member registrations must be deleted and active member agreements must be cancelled.

b. General concerns -- changes in circumstances. A robust account maintenance process will be necessary to keep each FFI's account information up to date and free of errors. ROs and POCs will be required to monitor for any changes in circumstances571 for the EAG (in the case of a lead FFI) or for the group of sponsored FFIs (in the case of a sponsoring entity). There may also be a need to obtain a new certification by the RO with the authority to recertify.

Monitoring each FFI for changes in circumstances that require an update to the account information (by the ROs or POCs) or a new certification (by the RO with recertification authority) will take a tremendous amount of work. Many changes may start the clock for the 90-day safe harbor period (assuming no withholdable payments are made during that period to accelerate when the documentation must be obtained to avoid withholding).572

                                   Exhibit 12



                       FFI Registration Member Information
 ______________________________________________________________________________

 Legal Name
 of Member                                             Temporary
 Financial                                             Access
 Institution  Country Member Type        FATCA ID      Code      Status    GIIN
 ______________________________________________________________________________

 Member       Country  Participating     123ABC.00001  1Abcdef!  Initiated
 Financial    1        financial
 Institution           institution not
 1                     covered by an IGA
                       or a reporting
                       financial
                       institution under
                       Model 2 IGA

 Member       Country  None of the above 123ABC.00002  *******   Registration
 Financial    2                                                  submitted
 Institution
 2

 Member       Country  Registered        123ABC.00003  3Cdefgh?  Initiated
 Financial    3        deemed-compliant
 Institution           financial
 3                     institution
                       (including a
                       reporting
                       financial
                       institution under
                       Model 1 IGA)

 Member       Country  Participating     123ABC.00004  *******   Registration
 Financial    4        financial                                 submitted
 Institution           institution not
 4                     covered by an IGA
                       or a reporting
                       financial
                       institution under
                       Model 2 IGA

 Member       Country  Participating     123ABC.00005  5Efghij*  Initiated
 Financial    5        financial
 Institution           institution not
 5                     covered by an IGA
                       or a reporting
                       financial
                       institution under
                       Model 2 IGA

 Member       Country  Limited financial 123ABC.00006  *******   Registration
 Financial    6        institution                               submitted
 Institution
 6

 Member       Country  Participating     123ABC.00007  *******   Registration
 Financial    7        financial                                 submitted
 Institution           institution not
 7                     covered by an IGA
                       or a reporting
                       financial
                       institution under
                       Model 2 IGA

 Member       Country  Participating     123ABC.00008  8Jklmn)   Initiated
 Financial    8        financial
 Institution           institution not
 8                     covered by an IGA
                       or a reporting
                       financial
                       institution under
                       Model 2 IGA

 Member       Country  Limited financial 123ABC.00009  9Klmno(   Initiated
 Financial    9        institution
 Institution
 9

 Member       Country  Registered        123ABC.00010  *******   Registration
 Financial    10       deemed-compliant                          submitted
 Institution           financial
 10                    institution
                       (including a
                       reporting
                       financial
                       institution under
                       Model 1 IGA)

 Member       Country  Registered        123ABC.00011  *******   Registration
 Financial    11       deemed-compliant                          submitted
 Institution           financial
 11                    institution
                       (including a
                       reporting
                       financial
                       institution under
                       Model 1 IGA)
 ______________________________________________________________________________

 Source: FATCA Online Registration User Guide, "Figure 44 -- Viewing/Editing a
 Member's Information -- View Member Information," at 57 (Aug. 19, 2013).

 GIIN means a Global Intermediary Identification Number assigned to a PFFI or
 RDCFFI. A separate GIIN will be issued to the FFI to identify each
 jurisdiction, including the FFI's jurisdiction of residence, in which the FFI
 maintains a branch that is not treated as a Limited Branch. It is anticipated
 that the IRS FFI and Branch List will be updated on a monthly basis to add or
 remove FFIs (or their branches). The GIIN may be used by an FFI to identify
 itself to withholding agents and tax administrations for FATCA reporting. A
 GIIN will be issued to only those FFIs that are not Limited FFIs, Limited
 Branches, or U.S. branches of an FFI , and will be issued after an FFI's FATCA
 Registration is submitted and approved.

 Format: XXXXXX.XXXXX.XX.XXX

 The GIIN is a 19-character identification number that is a composite of
 several other identifiers. These identifiers include the following:

 o Each registering FFI will be given a FATCA ID that will be used for purposes
   of establishing and accessing the FFI's online FATCA account. For all FFIs
   other than Member FFIs, the FATCA ID is a randomly generated six character
   alphanumeric string. These 6 characters are upper case letters excluding the
   letter O, or numbers, or a combination of both. For Member FFIs, the FATCA
   ID will be comprised of 12 characters: the first 6 characters will be the
   Lead FFI's FATCA ID, followed by a period, and the last 5 characters will be
   alphanumeric and assigned sequentially to each Member. The FATCA ID is not
   the same as the GIIN.

 o The Financial Institution Type can be Single, Lead of an EAG, Member (not
   Lead) of an EAG, or Sponsoring Entity. The Financial Institution type is
   provided by the Financial Institution when creating its FATCA account.

 o The Category Code is a two-character abbreviation identifying either the
   Financial Institution Type as previously described or a branch of the
   Financial Institution.

 o The Country Identifier will be the ISO 3166-1 numeric standard country code
   for the Financial Institution's country of residence for tax purposes that
   the Financial Institution identified in question 3 on the registration form,
   or, if the GIIN is for a branch, the branch country identified in question
   9A on the registration form.

 Source: IRS FATCA Online Registration User Guide, 7.3 "Appendix B - GIIN
 Composition Table," at 67 (Aug. 19, 2013).

See IV.A.2. As part of this compliance process, both the withholding agent and the payee must determine if there was an intervening withholdable payment that must be withheld upon, and they must maintain an audit trail of the chapter 4 classification at the time the payments are made. Importantly, if the chapter 4 withholding is turned off because the FFI's FATCA classification has been perfected, there may still be chapter 3 withholding.573 All this will no doubt strain existing withholding and reporting systems and processes.

c. Instances in which changes may need to be made to an FFI's registration information. There are several changes that will need to be monitored by the lead FFI regarding its EAG. They include changes to the FFI's legal name, changes in the RO or POC, migration of the FFI to a different jurisdiction or country, a change of mailing address, changes relating to the FFI's withholding agreements with the IRS as a QI, WP, or WT, or changes regarding its branches. The IRS still needs to provide further guidance on how and when to update a FFI's details on the FATCA portal.

d. Changes in legal name. If a member of a lead FFI's EAG changes its name only, the lead FFI or member will likely have to log in to the FATCA portal and notify the IRS that the entity has changed its name. Presumably, the IRS will update its IRS FFI list by associating the member's GIIN with that new name.

e. Changes in FFI's country of residence. If an FFI changes its country of residence by either reincorporating or changing where it is organized or managed and controlled, the FFI, lead FFI, or sponsoring entity will likely have to log in to the FATCA portal to notify the IRS that the FFI's country of residence has changed. This may or may not require the issuance of a new GIIN (see III.M.1.f).

These changes, which would have to be reflected on the FATCA portal, could also include a change in FATCA classification from a PFFI in a non-IGA jurisdiction to a Model 1 FFI or Model 2 FFI in an IGA jurisdiction, or vice versa. Similarly, a PFFI, a Model 1 FFI, or Model 2 FFI could become a limited FFI, or even a USFI (which may require de-registration) and a new registration. See III.M.1.m.

f. Changes in FFI's FATCA classification in its country of tax residence. If an FFI that has previously registered decides to open a branch in another country, the registration and GIIN obtained for the FFI in its home office likely will not reflect the status of the branch in another country. The branch's FATCA classification must be tested based on the branch's country of tax residence, and thus a new registration may be required by the financial institution on behalf of the branch (and a new, separate GIIN for the branch).

A legal entity classified as something other than an FFI might change its status because of how it does business and, as a result, becomes an FFI that must be registered. That could happen if an entity that was formerly an active NFFE obtained a banking license and became a depository institution, custodial institution, investment entity, insurance company, or holding company or treasury center of a financial group, and thus could become an FFI in a Model 1 IGA, Model 2 IGA, or non-IGA jurisdiction based on the rules of local law or U.S. regulations, as applicable.

Further, an RDCFFI may change its status to another FATCA status and be required to either register as an FFI or to de-register as an FFI. For example, a CDCFFI may become an RDCFFI or PFFI and have to register and obtain a GIIN. A legal entity that formerly was not an FFI, such as an exempt beneficial owner, active NFFE, or passive NFFE, might change its status and become an FFI and therefore have to register and obtain a GIIN.

g. Changing an RO or POC. If an RO or POC needs to be changed, the existing RO or POCs can log in to the member's account information and, on the FATCA home page, go to the "My Information" link to make the change. If the RO is changed, the new RO will be required to certify his status in part 4.

h. Instances in which FFIs will require a new registration. As part of the maintenance process, a lead FFI or sponsoring entity must closely monitor changes to each of the FFIs in its EAG, in the group of sponsored FFIs, or other legal entities in which it acquires an ownership interest.

i. New FFI is incorporated, organized, or spun off as part of a reorganization. If a new FFI is incorporated or organized and becomes a part of the lead FFI's EAG, the lead FFI and the new member must log in to the FATCA portal, begin the registration for the new member FFI, obtain a FATCA ID for the new entity, and complete the registration process for the new member so it may obtain its GIIN. (See III.H.1.a.i.) Registration for a new FFI may also be required as a result of a reorganization or spinoff transaction.

j. Existing FFI is acquired by new lead FFI EAG as part of M&A activity. This same registration process would be required if an existing FFI that had registered with a former lead FFI became a new member of a lead FFI's EAG as part of a public or private merger or acquisition transaction. This may also occur, for example, if an EAG member that was designated as part of a lead FFI's group is changed for business reasons and becomes (or is designated) a member of another lead FFI's group within the same EAG. In both these cases, a new member would likely be required to register as if it was newly formed and obtain a new GIIN that associates it with the new lead FFI. The old GIIN would no longer be valid and thus would be removed as part of the concurrent de-registration process for this FFI's old GIIN by the former lead FFI. The IRS would probably remove the old GIIN when the de-registration process was complete and reflect the new GIIN on its monthly published FFI and branch list. It is unclear if a change of the lead FFI will require the de-registration of all the designated EAG members in the former lead FFI's group and a re-registration of all those members to relate them to the new lead FFI. Presumably, the answer is yes.

k. Increase in shareholding in an entity, making it part of lead FFI EAG. The same process will likely be required if an existing entity's ownership is increased to make it a part of the lead FFI's EAG, assuming the entity had previously been a sponsoring entity or part of another lead FFI's EAG, or had registered as a single FFI. By having the lead FFI and new member log in and provide its information, the new member by registering will obtain a new GIIN that associates it with the new lead FFI. And, as explained earlier, the RO for the former lead FFI or sponsoring entity, or the legal entity itself, would log in and update its account to de-register the entity based on the earlier, now invalid registration. A recapitalization of an existing controlled entity could cause a legal entity to be included in a lead FFI's EAG.

l. Changes in FATCA type. If an FFI has been identified in question 1 of Form 8957 as a particular type of financial institution, the FFI, its lead FFI, or sponsoring entity will likely have to log in to the FATCA portal and update its account information for that change. For example, a "single" financial institution that had previously registered and obtained its own GIIN could either become a member of a lead FFI's EAG (and have to provide the FATCA ID for its new lead FFI), or itself become a lead FFI of an EAG or a sponsoring entity. Presumably, a new GIIN would have to be issued and the old one retired for this FFI.

Similarly, a lead FFI would have to register again if it also became a sponsoring entity, and presumably it might have two GIINs. Conversely, a sponsoring entity that had previously registered might have to register again if it also became a lead FFI -- and again might have two GIINs: one for its status as a sponsoring entity, which associates itself with the sponsored FFIs, and another for its status as a lead FFI, which associates itself with the members in its EAG.

Also, an entity that had previously registered as a member with a lead FFI could become a sponsoring entity and thus would again register and obtain a second GIIN for that status.

m. Instances in which an FFI must be de-registered. The examples of de-registration mentioned above by no means address the only times an FFI's account must be updated to take into account changes that are part of a de-registration process. Among the questions the IRS still needs to answer are (1) how an FFI de-registers, and (2) when reporting and other obligations for a lead FFI or sponsoring entity cease regarding de-registered entities.

n. Dissolution or merger of member. If a member of a lead FFI's EAG is dissolved or merged into another entity of either the lead FFI's EAG or the EAG of another lead FFI, the lead FFI or member will likely be required to log in to its account and notify the IRS that the entity has been dissolved or merged into another FFI. If the latter, the new lead FFI may have to newly register the merged FFI. In that case, the old GIIN presumably would be retired and a new GIIN issued associating the member with the new lead FFI.

o. Divestiture of member. If a member of a lead FFI's EAG is sold to another lead FFI or its EAG, the lead FFI or member likely will be required to again log in to its account and notify the IRS that the FFI has been sold to another lead FFI or its member. Here again, the old GIIN would be retired and a new GIIN issued for the member of the new lead FFI once the new FFI registers this entity and notifies the IRS that it is part of its EAG.

p. Decrease in shareholding of a member resulting in the entity no longer being part of the lead FFI's EAG. If a member of a lead FFI's EAG has its share ownership decreased so that it is no longer part of the lead FFI's EAG, a de-registration transaction will have likely occurred requiring the lead FFI or member to log in to the FATCA portal and notify the IRS that the member is no longer part of the lead FFI's EAG. Presumably, the IRS would retire the member's old GIIN and issue a new GIIN once the new lead FFI (or the FFI itself) registered the FFI and notified the IRS that the entity is part of its EAG.

q. Change in the FFI's activity. If a member of a lead FFI's EAG changes its activity so that it is no longer an FFI (for example, it ceases to be an FFI and can be classified based on its FATCA classification in the country of tax residence, such as NFFE), it should be de-registered on the FATCA portal and no longer needs a GIIN.

r. FFI becomes dormant. Under the U.K. guidance notes,574 HMRC has indicated that when a fund is closed but there are residual debtors and recovery actions are being pursued, the fund will not be an investment entity for purposes of the U.K. IGA. Thus, an entity that was formerly registered as a U.K. Model 1 FFI based on its investment entity status may change to a type of U.K. non-reporting financial institution that will no longer have to be registered. It is still unclear whether the account information of a U.K. member of a lead FFI's EAG must be updated if the member becomes dormant.

s. Country removed from the IGA list. Under Notice 2013-43, a country may be removed from the list of countries that are treated as having an IGA in effect if the country fails to perform the steps necessary to bring the IGA into force within a reasonable time. If a country is removed from the list, FFIs that are residents of that country and branches that are located in that country will no longer be entitled to the status that would be provided under the IGA, and they must update their status on the FATCA portal. See III.H.4.g.

t. Change in the financial institution's GIIN. If a single registrant or an EAG member must reset or change its GIIN because, for example, the single registrant becomes a member of an EAG, or the financial institution no longer is a member of the same EAG and is either a member of another EAG or a single registrant, it will be required to delete its FATCA account information in order to remove its old GIIN from the system, and it must register based on its new status. See III.M.1.l.


IV. Uses of FFI Registration Information

A. Verification of GIINs

1. FFI and branch list. Under FATCA, withholding agents must withhold tax on withholdable payments made to FFIs that do not agree to report information to the IRS about their U.S. accounts or accounts of some foreign entities with substantial U.S. owners. An FFI may agree to report information about its account holders by registering to be FATCA compliant. An FFI that has registered to be FATCA compliant and has been issued a GIIN will appear on an FFI and branch list published by the IRS.

Withholding agents may rely on an FFI's claim of FATCA status by checking the payee's GIIN against the FFI and branch list. The list is scheduled to be published monthly beginning June 2, 2014, for FFIs that electronically register between August 19, 2013, and April 25, 2014. Thereafter, the list will be published on the first of each month. Information available to the IRS at that time is compiled and included in the list as a search tool.

The FFI and branch list download screen includes a field for the date the field was last updated. This raises the question whether earlier monthly lists will be available on the FATCA portal if the withholding agent did not download them onto its computer to verify whether it under- or overwithheld.

2. Ongoing list, due diligence. If an FFI does not appear on the list in an earlier month and the withholding agent failed to withhold, what must the withholding agent do? The FFI might have been subject to one of the regulations' many transition rules and therefore not yet had to have its GIIN verified. For example, there are transition rules for payments to Model 1 FFIs or sponsoring FFIs, payments under a preexisting obligation to an undocumented prima facie FFI, payments under other preexisting obligations, or payments under grandfathered obligations. See II.D.

The regulations generally provide that if a withholding agent receives a withholding certificate or written statement that identifies the payee as a PFFI or an RDCFFI but does not provide the payee's GIIN, or provides a GIIN that does not appear on the current published FFI and branch list within 90 days after the date that the claim is made, it will be treated as invalid for FATCA purposes, and the payee will be treated as an undocumented payee beginning on the date the form was submitted until valid documentation or a correct GIIN is provided.

A withholding agent that discovers that the payee's GIIN does not appear on the list within 90 calendar days after the date the claim is made and has underwithheld as a result of its reliance on the payee's claimed status as a PFFI or an RDCFFI, may be required to withhold on any future withholdable payments to the payee, for the amount of tax that should have been withheld during the 90-day period.575

In other words, once a withholding agent receives a withholding certificate in which the payee claims to be a PFFI or an RDCFFI, it must verify the GIIN against the list within 90 days.576

Thus, a withholding agent will need to have a tickler system to search each monthly list after the withholding certificate or equivalent documentation is received until it finds the FFI's GIIN. And after the 90-day safe harbor expires, the withholding agent must treat the payee as an undocumented payee beginning on the date the form was submitted and not only withhold prospectively but also withhold on any future withholdable payments to catch up for any withholdable payments made to the payee during the earlier safe harbor period. If the withholding agent is withholding after the 90-day period on withholdable payments it makes to the undocumented payee, it must continue to check the monthly list to determine if the entity receives a GIIN so that it does not overwithhold once the payee becomes a documented PFFI or RDCFFI. For transitory exceptions to this rule, which may extend the date when withholding must occur, see II.D.

Also, if a withholding agent that makes a payment to a FFI can reliably associate it with a valid withholding certificate or documentary evidence to determine the chapter 4 status as a PFFI, DCFFI, or excluded FFI or other compliant chapter 4 status, it will not have to withhold.577 However, if a withholding agent cannot do so, it must presume the entity is an NPFFI and withhold.578 See II.E.

a. List due diligence and FFIs that have had their status as a compliant FFI terminated by the IRS. If an FFI has its status as a compliant FFI terminated by the IRS, it will be treated as an NPFFI, and its GIIN will be removed by the IRS from the published FFI and branch list.

i. Termination of FFI status. The regulations have established procedures to determine whether an FFI has complied with its FFI agreement.579 The RO must periodically certify to the IRS that the FFI has maintained effective internal controls during the certification period. If a material failure580 that was not remediated during the certification period has been identified, the RO must provide a qualified certification that the FFI will correct that failure and act to prevent its reoccurrence.581

If the IRS has concerns about substantial noncompliance with the requirements of the FFI agreement based on the information provided in the RO's certifications, it can request more information to verify that the FFI's compliance responsibilities have been met. The IRS may also request specified review procedures by a person (including an external auditor or third-party consultant).582

If the IRS finds that an FFI has failed to perform material obligations for its due diligence, withholding, or reporting requirements, or has failed to substantially comply with the requirements of the FFI agreement, an "event of default"583 will have occurred, and the IRS will deliver a notice of default to the FFI.584 The IRS will ask the FFI to remediate the default within a specified period, and the FFI must answer the notice by providing information that is responsive to the request or stating why it disagrees that an event of default has occurred.585 If the FFI does not provide a response within the time provided, the IRS at its sole discretion, after taking into account the terms of any applicable Model 2 IGA, may deliver a notice that terminates the FFI's status as a PFFI.586 Once that status terminates, the FFI will be treated as an NPFFI under the regulations.587

ii. Termination of RDCFFI status. For an RDCFFI, other than an FFI in a Model 1 IGA, the RO must certify every three years, either individually or collectively for the FFI's EAG, that all the requirements for the deemed-compliant category claimed by the FFI have been satisfied by the later of the date the FFI registers as an RDCFFI or June 30, 2014.588 Since Model 2 FFIs that comply with the registration requirements under the regulations589 will be RDCFFIs, this certification requirement also applies to them but does not apply to a Model 1 FFI in a Model 1 IGA country.590 Thus, if this registration requirement as well as the other procedural requirements for an RDCFFI (other than a FFI in a Model 1 IGA country) are not met, the FFI will be treated as an NPFFI.591

iii. Termination of Model 1 or Model 2 FFI status. The Model 1 IGA592 and Model 2 IGA593 templates, as well as the U.K. IGA594 and Swiss IGA,595 have language that provides for a longer time before an FFI or branch resident in a Model 1 IGA or Model 2 IGA jurisdiction will be determined by the competent authority to be in "significant noncompliance" with the obligations of the applicable IGA. This will be considered in significant noncompliance, which would presumably prevent an RO from making the RDCFFI certification that the Model 2 IGA satisfies the requirements as an RDCFFI.

For example, under the U.K. IGA (a Model 1 IGA), the U.S. competent authority will notify the U.K. competent authority when it has been determined that there is significant noncompliance596 with the obligations under the IGA regarding a U.K. Model 1 FFI. If U.K. enforcement actions do not resolve the noncompliance within 18 months after the notification of significant noncompliance, the United States will treat the U.K. Model 1 IGA as an NPFFI. Under the U.K. IGA, the IRS will make available a list of all U.K. Model 1 FFIs and other partner jurisdiction FFIs that are treated as NPFFIs (a "bad boy list"). The IRS has not yet provided guidance about the bad boy list of NPFFIs, including where it will be maintained and published, how often it will be updated, and, importantly, how an NPFFI can be removed from the list.

Under the Swiss IGA (a Model 2 IGA), the time to resolve the noncompliance is reduced from 18 months to 12 months. However, the IRS was directed by the regulations to take into account the terms of any applicable Model 2 IGA before terminating the status of an FFI as a compliant FFI, so perhaps the IRS will extend that 12-month period by administrative discretion before treating a Model 2 FFI as an NPFFI.597 See IV.A.2.a.i. Once terminated, the Model 1 FFI or Model 2 FFI will have its GIIN removed from the published FFI and branch list.

3. Details of search functionality. The FFI and branch list can be accessed via http://www.irs.gov/FATCA, unless the IRS provides guidance. This website will provide users with FATCA search functionality by allowing them to click on one of the options for financial institutions. Links on the right allow the user to download the full FFI list or a test file. A hyperlink to "Search Tips" is also provided. A user may download the list based on a search type consisting of the GIIN, financial institution name or branch designation, or country of residence for tax purposes (by a dropdown menu). The user may search by clicking on the "search" box or start a new search by clicking on the "clear" box. There is a HELP TEXT adjacent to each of the search types for assistance. Presumably, a user may use a combination of search elements (GIIN, institution name, and country of tax residence).

4. Download files. A user can either download test files or schema of the IRS FFI list (format and test data files only) or download the full FFI and branch list. The IRS list will be available via a bulk download, as well as in searchable form as discussed above. Presumably, an organization can further automate this search by using the bulk download feature.

5. Search results. A typical search from the FFI and branch list will generate a page that identifies the total number of search results and allows the user to view the search based on a three-column schedule that identifies the FFI or branch's GIIN, legal name,598 and country of tax residence and allows the results to be exported in XML or CSV formats.

As previously noted, the GIIN begins with the unique six alphanumeric character (the FATCA ID for a lead FFI, sponsoring entity or single registrant) and then a five-digit member identifier (which relates the EAG member to the lead FFI). The next two digits are the type of FFI (lead FFI, sponsoring entity, branch, member), and the last three digits reflect the financial institution's country of tax residence. Each separate identifier in the GIIN is separated by a (.) period, which results in a 19-character GIIN. See III.G.

The FFI and branch list will likely have the three following fields:

                                Table 2


 ______________________________________________________________________________

                                              Country of Residence for
                                              Tax Purposes (FFI or
 GIIN                      FFI Name           Branch)
 ______________________________________________________________________________

 2M8DQ4.00000.FI.783       ABCD Bank          United Kingdom
 2M8DQ4.00000.WB.784       Branch             Spain
 1RLP56.99999.SP.273       XYZZ Bank          Germany

The list does not provide the FATCA classification of the FFI or branch in its country of tax residence even though this information generally must be separately provided to the IRS as part of the registration process for each FFI or branch within an organization in order to obtain a separate GIIN for each FFI or branch outside the FFI's country of tax residence. See III.H.6. It is not yet clear if this omission is intentional. Also, the list can be used to determine the relationship of a lead FFI to a member or branch of an EAG, or the relationship of a sponsoring entity to a sponsored FFI, or whether the FFI registered as a single entity. However, the list does not appear to let the user know whether or not the entity is a QI, WP, or WT.

6. FFI lists of de-registered (or added) FFIs. Several commentators have asked why the IRS cannot also publish a list that identifies FFIs that have de-registered from (or been added to) the published FFI and branch list -- a so-called delta list. The IRS recently said that it cannot maintain a list of dropped FFIs because once the FFI has de-registered, the section 6103 confidentiality waiver authorizing the IRS to release FATCA information will no longer be effective. (The RO agreed to that waiver by checking the box in Question 11b when registering the FFI.)

7. File formats. The FFI list schema and test files, released in XML and CSV formats, provide tools to help FFIs prepare for the registration process by stress testing. The published list will contain significantly more records than the test files.

The FFI list schema contains information about the FFI and branch list that will be published. The XML and CSV test files contain dummy data records to illustrate the format and data that will be included in the FFI list.

8. Contact with the IRS for registration help. Although the FATCA portal has "get help" and "?" icons to assist users, organizations are hopeful that the IRS, in addition to providing promised guidance and other materials (see IV.F.2; see also Appendix II), will be available to answer questions by telephone to assist in the registration process.

Telephone support concerning log-in issues, as well as the requirements for registration, is available 6:30 a.m. to 6:30 p.m. (U.S. Central Time), Monday through Friday. From the United States, a user can call toll free at 866-255-0654, and from outside the United States, call 512-416-7750 (not toll free). There will also be mailing and e-mail addresses for general inquiries. There will likely be specific contact individuals for QIs and other FFIs. Tax law questions will likely be answered separately by a different group.

However, if an FFI has not timely registered and wishes to appeal directly to the IRS for an accelerated release of its GIIN, the IRS will unlikely be amenable to what may amount to thousands of such requests by FFIs and their POCs.

B. Use of FATCA Home Page



After the financial institution has created its account, the financial institution home page provides a central location for accessing all relevant information about the FFI's FATCA registration account, including messages regarding financial institution accounts, next steps, and available account options. The registration system allows a user to add, edit, or delete portions of the financial institution registration.

The FATCA home page will be accessible to an FFI's RO or POC after he logs in to the FFI's account with the access code and FATCA ID. According to the IRS, the FATCA home page will be "customizable," with the FFI's own account information, recommended next steps, communication messages from and to the IRS, and the account options. However, no guidance has been provided on exactly how the FATCA home page can be customized.

IRS officials have also indicated that the FATCA portal will give financial institutions the tools to oversee member or branch information and will provide a streamlined environment for financial institutions to register in one place no matter where they are located.

The FATCA portal also provides a means for online communications. It permits the IRS to communicate with the RO of each registrant (see IV.B.4) while allowing the registrant to communicate with the IRS by updating its account information.

According to the IRS, the registration system provides flexibility for FFIs to delegate authority to a lead FFI or a sponsoring entity, and it permits a lead FFI or sponsoring entity to report on and manage information for each of the designated members of the lead FFI's EAG (including the branches of each member) or for the sponsored FFIs of the sponsoring entity. The FATCA portal also allows the RO of a financial institution to designate POCs.

As noted below, the FATCA portal will generate automatic notifications (see IV.B.4) when a financial institution's status changes, sending an e-mail message for the FFI to check its FATCA account. Also, the FATCA portal will issue the GIIN to each RO of a member (including a branch), as well as to the lead FFI or sponsoring entity.

According to the registration user guide, the key features of the financial institution home page include:

  • Account information: This section includes the information that corresponds to the financial institution, such as financial institution type, FATCA ID, account status, RO name, etc. The fields will change based on the financial institution's status.
  • Account status: When the financial institution logs in to its home page, it can immediately check the account status field to confirm its current status.
  • Next steps: This section details the next steps to be completed by the financial institution.
  • Available account options: These links correspond to the financial institution type (single, lead FFI, member, or sponsoring entity) and are based on the financial institution's responses to specific questions (for example, whether the financial institution is identified as a QI, WP, or WT). These options allow the financial institution to perform functions pertaining to the financial registration, and they change based on the financial institution's registration status.
  • Message board: This section lists notifications sent by the system, such as registration status change messages.
  • FFI group information (lead only): On a lead FFI's home page, this section lists the information for each member. Click the "view member information" link to view and edit member information.
  • Lead FFI information (member only): On a member's home page, this section lists the information for a member's lead.

1. Account information. Each financial institution's FATCA home page will include the account information section on the left side, including the RO's name, the POC's name, the legal name of the financial institution, the financial institution type (for example, single, lead, member, or sponsoring entity), the FATCA ID, the GIIN, the account status (for example, registration submitted), and the effective date.

2. Next steps. The FATCA portal will have a reference to "Next Steps," which may include, for example, "monitor e-mail and message boards for account updates," and, if changes are needed, "Edit/Complete/Submit Registration."

3. Available account options. Among its available account options, the FATCA home page has links to "My Information (Part I)," "Review, QIs, WPs, or WTs Renewal (Part 3) -- Register," "Agreement -- Print/View," "Registration -- Edit/Complete/Submit," "Challenge Questions -- Edit/Review," and "Access Code -- Change."

4. Message board. On the right top of the FATCA home page is a message board that allows the RO or POC to review the financial institution's messages by checking a box. The message board will identify the date each message was e-mailed to the account, its type (for example, information), and a heading for the message, such as "Message 300: Registration Submission," "Message 175: Maximum Branch Limit Reached," or "Message 100: Account Created." The IRS has indicated that the message heading will not have personal taxpayer information (PII). At the RO or POC's option, one or more checked messages can be deleted with a "delete" icon. The message board in a pro forma screen seems to indicate that there is search functionality perhaps based on the date, type, or content of the message subtitle, although no search box is on the FATCA home page.

In informal discussions, the IRS said the e-mails on the message board will not include any taxpayer PII to avoid the possibility of that information getting into the wrong hands since the e-mails may not be secure. The IRS suggested this security feature will be similar to the process that a bank uses for an account holder's electronic bank statement, under which an e-mail notice is provided to an account holder that the bank statement is available by logging in to the account but no other information or account activity is provided in the e-mail notification.

5. Registrant information. In the bottom right-hand corner of the FATCA home page is a box labeled "Your Information," which contains branch information, the legal name of the lead financial institution, and the lead FATCA ID.

6. Other. There are also links in the upper right-hand corner of the FATCA home page that allow the financial institution to get help or log out. There are also question mark icons to the right of the GIIN, account status, and effective date (presumably, the date that the FFI receives its GIIN).

7. Account statuses. If the financial institution account status is "initiated," this means that the FATCA account has been created and the financial institution should now have a FATCA ID and access code. The next step for the user is to complete and submit the registration form.

If the account status is "registration submitted," the registration has been submitted and the IRS is processing the registration. The account status will not be an actual status until after the FFI takes action to submit its registration on or after January 1, 2014. The next step is to monitor updates to the account by accessing the home page.

If the account status is "registration incomplete," the required fields are incomplete on the FATCA registration. The next step for the user would be to select "Registration -- Edit/Complete/Submit" from the home page to complete and submit the FATCA registration for the financial institution.

If the account status is "registration under review," the FATCA registration is currently being reviewed and no action is required other than to monitor updates to the account by accessing the home page.

If the account status is "registration rejected/denied," the FATCA registration has been rejected and, according to the IRS, no action is required. I question when this will be an acceptable response to ensure that the financial institution is FATCA compliant.

If the account status is "Agreement Cancelled," the user has cancelled his FATCA agreement and will no longer be able to access the FATCA account for the financial institution. Again, according to the IRS, no action is required for this FATCA agreement. If the user chooses to establish a new FATCA agreement, he must create a new account.

If the account status is "Agreement Terminated," the FATCA agreement has been terminated and here again, according to the IRS, no action is required. And again, I question when this will be an acceptable response to ensure that the financial institution is FATCA compliant.

If the account status is "Approved," the FATCA agreement has been approved and the financial institution has been assigned a GIIN that the user can view through the home page. The financial institution and its branches that are not limited branches will appear on the next published FFI and branch list. No further action is required at this time, but the user must ensure the financial institution account is accurate by periodically accessing the home page and reviewing the information.

If the account status is "Limited Conditional," the FATCA agreement has been designated as "Limited Conditional." The financial institution won't receive a GIIN and won't appear on the next published IRS FFI and branch list. The IRS has indicated no action is required at this time. However, a user must ensure the financial institution account is accurate by periodically accessing the home page and reviewing the information. The IRS in the table notes indicates that the user should be aware that the limited conditional status is temporary. After 2015, no financial institutions may be registered in the limited conditional status. See Exhibit 13 for a table that describes and explains the next steps for each of the FATCA account statuses.

C. IRS Use of Portal



1. Preliminary data mining. IRS officials have indicated that the IRS initially will not be involved in proofing the information that is electronically submitted through the FATCA portal. The IRS has made clear on several occasions that it will not initially question the qualifications of the RO or POC. However, it has warned that an FFI will be held accountable if, as part of a later examination, it becomes clear that the user entering account information into the FATCA portal does not have the proper authority to do so, or is willfully entering fictitious or wrong information. See III.H.7.

Further, the IRS will examine account information that appears odd on its face. For example, it suggested that a German bank with a French mailing address might be questioned. It is unclear why this fact alone would be questionable because it seems likely that a German bank that has its home office in Germany may also have a branch located in France, which may cause the German bank to register on the French branch's behalf, and obtain a separate GIIN since the French branch is outside the German bank's country of tax residence. See III.H.6.

The system likely will have some built-in safeguards and error messages for obvious mistakes such as when a user types in a number character instead of an alphabetic character in a field that can only be a number (or vice versa), or when the user fails to complete all the required fields (which will be noted by an asterisk). Presumably, when a user clicks on the submit key in the final screen shot, the system will generate an error message if the required fields, including the RO's electronic signature, are not provided.

D. Future Uses of the FATCA Portal



1. IRS uses of the FATCA portal. The IRS has informally indicated that the use of the FATCA portal for registration purposes is only the precursor to other uses of the FATCA portal by the IRS, and that, unlike the existing QI process, the IRS is starting with a clean slate. Thus, the IRS may be able to design the FATCA portal for multiple uses, resulting in efficiencies. In fact, the preamble to the regulations says that the IRS anticipates that the required RO compliance certifications599 will be made electronically through the FATCA portal600 and that the portal also will be used by registering FFIs that are already QIs to renew their status or make any required certifications.601

                                Exhibit 13



                FATCA FFI Registration Account Status Table
 ______________________________________________________________________________

 The table below displays the descriptions and next steps for each of the FATCA
 account statuses
 ______________________________________________________________________________

 Status  Description                            Next Steps
 ______________________________________________________________________________

 1.      Initiated        Your FATCA Account has     Complete and submit the
                          been created. You should   FATCA Registration form.
                          now have a FATCA ID and
                          Access Code.

 2.      Registration     Your FATCA Registration    Monitor updates to your
         Submitted        has been submitted and we  account by accessing your
                          are processing your        home page.
                          registration. Note: This
                          account status will not
                          be an actual status until
                          after the FFI takes
                          action to submit its
                          registration on or after
                          January 1, 2014.

 3.      Registration     Required fields are        Select "Registration --
         Incomplete       incomplete on your FATCA   Edit/Complete/Submit"
                          Registration.              from your homepage to
                                                     complete and submit your
                                                     FATCA Registration.

 4.      Registration     Your FATCA Registration    No action required.
         Under Review     is currently being         Monitor updates to your
                          reviewed.                  account by accessing your
                                                     home page.

 5.      Registration     Your FATCA Registration    No action required.
         Rejected/        has been rejected.
         Denied

 6.      Agreement        You have canceled your     No action required for
         Canceled         FATCA Agreement and will   this FATCA Agreement. If
                          no longer be able to       you choose to establish a
                          access your FATCA          new FATCA Agreement, you
                          account.                   must create a new
                                                     account.

 7.      Agreement        Your FATCA Agreement has   No action required.
         Terminated       been terminated.

 8.      Approved         Your FATCA Agreement has   No action required at
                          been approved. You have    this time. Ensure your
                          been assigned a GIIN that  Financial Institution
                          you can view via your      account is accurate by
                          home page. Your Financial  periodically accessing
                          Institution (and its       your home page and
                          branches that are not      reviewing the
                          Limited Branches) will     information.
                          appear on the next
                          published IRS FFI and
                          Branch List.

 9.      Limited          Your FATCA Agreement has   No action required at
         Conditional      been designated as         this time. Ensure your
                          Limited Conditional. Your  Financial Institution
                          Financial Institution      account is accurate by
                          won't receive a GIIN and   periodically accessing
                          won't appear on the next   your home page and
                          published IRS FFI and      reviewing the
                          Branch List.               information. Please be
                                                     aware that the Limited
                                                     Conditional status is
                                                     temporary. After December
                                                     31, 2015, no Financial
                                                     Institutions may remain
                                                     registered in the Limited
                                                     Conditional status.
 ______________________________________________________________________________

 Source: FATCA Online Registration User Guide, 7.4, "Appendix C -- Account
 Status Table," at 69.

IRS officials also have informally indicated that FFIs may in the future be able to use the portal to submit a new application for QI status or possibly to obtain EINs, presumably including QI-EINs, WP-EINs, and WT-EINs, as well as EINs for FFIs that are U.S. withholding agents. The FATCA portal might also be used by FFIs to e-file Form 8966602 and other required reports since electronic filing of this new form is contemplated by the regulations.603

IRS officials have indicated that they intend to use the information FFIs provide on the FATCA portal for audit purposes and will be looking for FFIs that do not have GIINs to determine if withholding agents have improperly failed to withhold under section 1471(a). IRS officials have also indicated they will match the information provided by the FFI about U.S. account holders and accounts held by recalcitrant account holders against the individual reporting by U.S individual persons under section 6038D on new Form 8938, "Statement of Specified Assets Attached to Their U.S. Form 1040."

According to one former U.S. Treasury official involved in the FATCA implementation effort, the IRS will evaluate the information it gets from a jurisdiction's FFI. It also will receive information from U.S. taxpayers about the taxpayer's foreign accounts so the IRS will have different sources of information it can use to match up and see if there are any issues with an FFI's reporting.

2. FATCA partner country uses of FATCA portal. It is also likely that the information the IRS obtains from FFIs that is submitted on the FATCA portal will be shared by the IRS with other FATCA partner countries if requested under existing tax information exchange agreements or bilateral income tax treaties.

E. Timetable for Registration and Critical Dates



The first and most recent date for FATCA implementation is the August 19 opening of the FATCA portal. Organizations should not assume that registration is a simple task that can be accomplished without prior planning. On the contrary, planning and early analysis are critical for being ready to provide the necessary information.

As a first step, each organization will need to assess FATCA's impact on its business operations and design a preparation and compliance plan to meet its business needs and objectives. Completing the registration process will likely require items within this plan to be completed before entering information in the FATCA portal.

The registration process will force organizations to engage in various analyses, including a legal entity and branch analysis to determine each entity's or branch's type and FATCA classification, as well as an EAG analysis. The latter task means that each EAG within an organization should be defined, while identifying all members that need to register.

Entities must also determine their approach to FATCA program governance structure, most notably the identification of ROs and POCs. The registration process also will require the retrieval of other detailed information such as the formal legal entity name and mailing address.

1. Summary of key FATCA dates:

  • January 1, 2012. The IRS began accepting Form 8938, "Statement of Foreign Financial Assets." In calendar year 2012, only U.S. individual taxpayers are required to file Form 8938 as part of their income tax return (Form 1040 or 1040NR) for tax year 2011.604
  • March 30, 2013. The IRS FFI list schema and dummy are available at http://www.irs.gov/Businesses/International-Businesses/IRS-FFI-List-Schema-and-Test-Files.
  • August 19, 2013. The FATCA portal is accessible to FFIs, and Form 8957, "Foreign Account Tax Compliance Act (FATCA) Registration," and accompanying instructions was released. However, any information entered into the FATCA portal, even if submitted as final, will not be considered final. It will be stored until being submitted as final on or after January 1, 2014. Similarly, the IRS will not process any paper registrations received before 2014.
  • January 1, 2014. The first day an FFI can finalize its registration information by making any necessary changes and submitting the information as final.
  • April 25, 2014. FFIs and sponsoring entities must complete registration by this date to ensure inclusion on the initial IRS FFI and branch list. GIINs assigned to FFIs will likely be released to FFIs no later than this date.
  • June 2, 2014. The first FFI and branch list will be published by the IRS on this date. The IRS intends to update this list monthly.
  • July 1, 2014. Withholding begins on U.S.-source FDAP payments to financial institutions, NFFEs, and direct account holders of PFFIs.
  • March 15, 2015. FFIs and sponsoring entities must file their first Form 8966, "FATCA Report," for the 2014 (but not 2013) calendar year by this date.
  • March 31, 2015. FFIs and U.S. withholding agents must file Form 1042-S, "Foreign Person's U.S. Source Income Subject to Withholding," for withholding during the 2014 calendar year. Some U.S. withholding agents may have a reporting obligation for payments made to U.S.-owned NFFEs.
  • January 1, 2017. Withholding on foreign passthru payments and gross proceeds from sales or dispositions of property begins no earlier than January 1, 2017.

F. IRS Guidance

1. What has already been provided. Finalized Form 8957 and instructions were provided by the IRS on August 19, 2013, in conjunction with the opening of the FATCA portal. The IRS also posted to its website a FATCA online registration user guide, a FATCA registration overview, and tips for logging in to the FATCA registration system. The IRS has provided FFI list schema and test files on its website; FATCA e-mail news and updates through an online subscription service; draft withholding certificates without instructions (forms W-8BEN, W-8BEN-E, W-8IMY, and W-8EXP), and finalized Form W-9 and instructions; a draft Form 8966; and together with draft reporting forms (forms 1042 and 1042-S). The IRS has indicated that authorized persons can go to the FATCA portal (http://www.IRS.gov/FATCA) and register to receive a FATCA newsletter with updates on the release of new guidance, FAQs, forms, or instructions.

On August 24, 2013, the IRS posted on the portal training videos on how to create a FATCA account, how to log in to a FATCA account, how to recover a FATCA ID and reset a FATCA access code, registration system common features, and navigation. A video explaining the home page has been promised soon.

2. What has been promised and when. The IRS has indicated that the FATCA home page (http://www.IRS.gov/FATCA) is the central resource for FATCA financial institution information and guidance. It has promised to soon provide a FATCA revenue procedure containing all the terms and conditions applicable to FFIs for chapter 4 purposes (for example, an FFI agreement) and to FFIs assuming chapter 3 responsibilities (QIs, WPs, and WTs). The terms and conditions in the FATCA revenue procedure will be fully consistent with the rules in the regulations.605 The IRS has also promised PowerPoint demonstrations, FAQs, an FFI list to search or download, a new QI agreement, coordination regulations with chapter 3 and chapter 61, and finalized forms and instructions.

                               Appendix I



                     FFI and Other Acronyms Chart
 ______________________________________________________________________________

 Active NFFE         Active Nonfinancial Foreign Entity
 CDCFFI              Certified Deemed-Compliant Foreign Financial Institution
 DCFFI               Deemed-Compliant Foreign Financial Institution
 DPO                 Document Perfection Operation
 Excepted NFFE       Excepted Nonfinancial Foreign Entity
 Excepted FFI        Excepted Foreign Financial Institution
 EBO                 Exempt Beneficial Owner
 ECI                 Effectively Connected Income
 EAG                 Expanded Affiliated Group
 FATCA               Foreign Account Tax Compliance Act
 FATCA ID            FATCA Identification Number
 FDAP                Fixed or Determinable Annual or Periodical Income
 FFI                 Foreign Financial Institution
 IGA                 Intergovernmental Agreement
 IRM                 Internal Revenue Manual
 GIIN                Global Intermediary Identification Number
 HIRE Act            Hiring Incentives to Restore Employment Act of 2010
 Lead FFI            Lead Foreign Financial Institution
 Limited FFI         Limited Foreign Financial Institution
 Model 1 FFI         Reporting Financial Institution Under a Model 1 IGA
 Model 1 IGA         Model 1 Intergovernmental Agreement
 Model 2 FFI         Reporting Financial Institution Under a Model 2 IGA
 Model 2 IGA         Model 2 Intergovernmental Agreement
 NFFE                Nonfinancial Foreign Entity
 NPFFI               Non-Participating Foreign Financial Institution
 NQI                 Nonqualified Intermediary
 ODFFI               Owner-Documented Foreign Financial Institution
 PAI                 Private Arrangement Intermediaries
 Passive NFFE        Passive Nonfinancial Foreign Entity
 PFFI                Participating Foreign Financial Institution
 POC                 Point of Contact
 QI                  Qualified Intermediary
 QR                  Quality Reviewer
 RCO                 Receipt and Control Operation
 RDCFFI              Registered Deemed-Compliant Foreign Financial Institution
 RO                  Responsible Officer
 Sponsored FFI       Sponsored Foreign Financial Institution
 TE                  Tax Examiner
 TIN                 Tax Identification Number
 USFI                United States Financial Institution
 USWA                United States Withholding Agent
 WP                  Foreign Withholding Partnership
 WT                  Foreign Withholding Trust
Appendix II

IRS Promised Guidance



Source: Updated from a chart submitted by Cyrus Daftary, as part of a panel entitled, "Overcoming FATCA Implementation Challenges: Technology, FATCA Implementation, Prioritization and Related Topics," EEi, 25th Annual Forum on International Tax Withholding and Information Reporting (May 2-3, 2013).

FOOTNOTES

1 A.W. Reed, "The Frog Who Caused a Flood," Myths & Legends of Australia (1965).

2See Appendix I for an acronym chart.

3See Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, "Tax Haven Banks and U.S. Tax Compliance" (July 17, 2008) 2008 TNT 139-15: Congressional Committee Reports. The staff report cites several studies by tax experts to support the $100 billion gap figure.

4 Section 501(a) of the HIRE Act added chapter 4 to subtitle A of the code (sections 1471 through 1474).

5 H.R. 3933 and S. 1934, introduced October 27, 2009.

6 Press release, "Baucus, Rangel, Kerry, Neal Improve Plan to Tackle Offshore Tax Abuse Through Increased Transparency, Enhanced Reporting and Stronger Penalties" (Oct. 27, 2009) 2009 TNT 206-32: Congressional News Releases.

7 To date, seven countries have signed Model 1 IGAs: Germany (May 31, 2013), Spain (May 14, 2013), Norway (including a memorandum of understanding) (Apr. 15, 2013), Ireland (Jan. 23, 2013), Mexico (Nov. 19, 2012), Denmark (Nov. 19, 2012), and the United Kingdom (Sept. 12, 2012). One country has signed a Model 2 IGA -- Switzerland (Feb. 14, 2013) -- and Japan on June 11 entered an agreement to do so. Treasury is in negotiations with more than 75 jurisdictions, according to an April 9 statement by Robert Stack, Treasury deputy assistant secretary for international tax affairs. Treasury release, "An Update on FATCA: Momentum Building Worldwide" (Apr. 9, 2013) 2013 TNT 69-27: Treasury News Releases. Treasury is apparently in "final negotiations" with Canada, Finland, France, Guernsey, the Isle of Man, Italy, Jersey, and the Netherlands. Treasury had hoped to conclude negotiations with those countries by the end of 2012. Treasury release, "U.S. Engaging With More Than 50 Jurisdictions to Curtail Offshore Tax Evasion" (Nov. 8, 2012) 2012 TNT 218-23: Treasury News Releases. The 2012 release identified the following jurisdictions in which Treasury was "actively engaged in a dialogue towards concluding an IGA": Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. The jurisdictions that Treasury is working with to explore options for intergovernmental engagement are Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, St. Maarten, Slovenia, and South Africa.

8 On July 12, 2013, Treasury released revised versions of both of the Model 1 and Model 2 IGAs and annexes. On August 7, 2013, the United Kingdom released final regulations, "The International Tax Compliance (United States of America) Regulations 2013," which became effective September 1. S.I. 2013/1962 . The U.K. final regs confirm that the new dates outlined in Notice 2013-43 are also effective in the United Kingdom (see III.H.4.g).

9 REG-121647-10 2012 TNT 27-7: IRS Proposed Regulations.

10 T.D. 9610 2013 TNT 13-6: IRS Final Regulations; reg. section 1.1471-0 et seq.

11 Section 6038D. See Form 8938, "Statement of Specified Financial Assets."

12 Reg. section 1.1471-4(d).

13 Reg. section 1.1472-1(e).

14 Reg. sections 1.1471-2(a); 1.1471-4(a)(1); 1.1471-4(b); 1.1472-1(a); 1.1474-1(a)(4)(i).

15 Reg. sections 1.1474-1(c); -1(d); and -1(i).

16 Peter A. Cotorceanu, "FATCA and Offshore Trusts: The First Nibble," Tax Notes, Apr. 22, 2013, p. 409 2013 TNT 78-3: Special Reports.

17 Section 1471(d)(4); reg. section 1.1471-5(d).

18 Section 1472(d); reg. section 1.1471-1(b)(74). The term "nonfinancial foreign entity" also means a foreign entity treated as an NFFE under a Model 1 or Model 2 IGA.

19 Cotorceanu, supra note 16, at 410; section 1471(b); reg. sections 1.1471-4(d)(3) and 1.1471-4(d)(6); Model 1 IGA, art. 2.2; Model 2 IGA, art. 2.1.

20 Reg. section 1.1473-1(b); Model 1 IGA, arts. 1, 1(nn); Model 2 IGA, art. 1(ff).

21 Section 1472(b); reg. section 1.1472-1(b)(1).

22 Reg. section 1.1472-1(b)(1), 1.1472-1(e)(2).

23 Reg. section 1.1471-4(a)(2), 1.1471-4(c).

24 Reg. section 1.1471-4(a)(3), 1.1471-4(d).

25 Reg. section 1.1471-4(a)(1).

26 Reg. section 1.1471-4(a)(4), -5(i).

27 While participating FFIs, registered deemed-compliant FFIs (RDCFFIs), and limited FFIs may register, certified deemed-compliant FFIs (CDCFFIs) do not register or obtain a global intermediary identification number (GIIN) on the FATCA portal in order to properly document their chapter 4 or FATCA status. Reg. section 1.471-3(d)(5). See III.H.4.

28 "U.S. Treasury Submission for OMB Comment Request," 78 Fed. Reg. 20389 (Apr. 4, 2013).

29 HMRC, "The International Tax Compliance (United States of America) Regulations 2013" (May 31, 2013) (tax information and impact note).

30 S.I. 2013/XXXX (U.K. draft regs).

31 HMRC, tax information and impact note, supra note 29.

32 The IRS in its recently released instructions to Form 8957 (Aug. 19, 2013) provided more detail on the components of this estimate. The time to complete and file Form 8957 is based on the following estimates: learning about the law or the form (18 minutes); preparing and sending the form to the IRS (25 minutes); and record keeping (7 hours, 24 minutes).

33 Amy S. Elliott, "IRS Officials Offer Preliminary Details of FATCA Registration Process," Tax Notes, Oct. 8, 2012, p. 145 2012 TNT 194-1: News Stories.

34 This suggestion was made by Laurie Hatten-Boyd of KPMG LLP before the release of the final regulations in January 2013, when the relief applied only to some identified FFIs (for example, Model 1 FFIs) and before the release of Notice 2013-43, which extended the start date of the FATCA portal and the initial FFI registration period. See II.D.2.

35 Preamble to T.D. 9610, 78 F.R. 5897. In a Model 2 IGA country or a non-IGA country, an FFI agreement will be effect in accordance with section 1471(b) if an FFI registers with the IRS and agrees to comply with the terms of an FFI agreement. Reg. section 1.1471-4(a). The term "FFI agreement" means an agreement described in reg. section 1.1471-4(a). An FFI agreement includes a qualified intermediary agreement, a withholding partnership agreement (WP), and a withholding trust agreement (WT) that is entered into by an FFI (other than an RDCFFI, including a Model 1 FFI) and that has an effective date on or after July 1, 2014. The term "FFI agreement" also includes a QI agreement that is entered into by a foreign branch of a USFI (other than a branch that is a Model 1 FFI) and that has an effective date on or after July 1, 2014. Reg. section 1.1471-1(b)(43); Model 2 IGA, art. 1.1(v). The IRS is expected to provide a FATCA revenue procedure containing all the terms and conditions applicable to FFIs for chapter 4 purposes and for FFIs also assuming chapter 3 responsibilities as QIs, WPs, or WTs.

36 Other than CDCFFIs, which do not have to register, obtain a GIIN, and provide the GIIN to a withholding agent in order to avoid section 1471 withholding. Reg. section 1.1471-3(d)(5).

37 In Internal Revenue Manual section 3.21.112.2 (effective July 1, 2013), the IRS terms the FATCA portal the "registered user portal." Under the FATCA overview section (IRM section 3.21.112.1), the IRS indicates that the portal is designed by the Austin, Texas, submission processing campus FATCA employees and other request tracking system users.

38 IRS, "FFI List Schema and Test Files," available at http://www.irs.gov/Businesses/International-Businesses/IRS-FFI-list-Schema-and-Test-Files.

39 Reg. section 1.1471-3(d)(4)(i).

40 Notice 2013-43, at 9-10.

41Id. at 6.

42 "FATCA Information for Foreign Financial Institutions and Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

43 According to the registration user guide, the FATCA portal should function on most browsers (e.g., Mozilla, Firefox, Internet Explorer, Google Chrome). However, Safari may not properly display the windows in the FATCA registration system. The browser's settings should have JavaScript installed and enable session cookies and the Web browser encryption (at least 128 SSL-3). It should also allow access to a PDF viewer and have U.S. keyboard settings enabled. A user must configure his browser to allow cookies and cascading-style sheet capabilities for the application to function properly. Session cookies exist temporarily in memory and are deleted when the Web browser is closed. To print directly from the registration system, the user should use the Internet browser's print option. When printing forms such as the branch table or the members table (lead FFIs only), files can be downloaded and printed in the PDF viewer. Registration user guide at 13. See II.B.9.

44 Notice 2013-43, at 6. Withholding agents generally will be required to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs for payments that are not grandfathered obligations, unless the payments can be reliably associated with valid documentation the withholding agent can use to treat the payments as exempt from withholding. See II.D.

45 Registration user guide, section 1.3, "Registration Process Overview," at 10.

46 The instructions to the registration user guide provide guidance on how an FFI should answer questions throughout the registration process. The help text icons are intended to assist users through that process; however, an FFI should rely on the instructions provided in the guide for assistance in how to answer a specific question. The guide also includes a glossary of definitions used for purposes of FATCA registration. The guide covers the online registration process only.

47See reg. section 1.1471-1(b) and reg. section 1.1473-1.

48 IRM section 3.21.112.2.3.

49 IRM section 3.21.112.2.3.1.

50 The batch block tracking system (BBTS) follows the procedures in IRM section 3.10.5.6.1. Clerical staff batch Form 8957 using entity batch creation as outlined in IRM section 2.10.5.6.1, "Batch Creation Screen." They continue to follow local procedures, bundle forms in batches of 25 with the same sort, create batches at BBTS, print batch transmittals, associate transmittals with batches of 25, and stage batches in a designated area by their date of receipt. Clerical staff release work and prepare originals to be shipped to files. They release batches of work completed by tax examiners in BBTS, and stamp a unique identifier number (UIN) in the upper right corner of Form 8957. The UIN is in the format of "FATCA XXXXXXX," with the XXXXXXX representing sequential numbers beginning at 0000001. Numbered forms are entered into a local location database as designated by the local site. That site specifies the identifying information that must be entered into the database. That allows forms to be located and retrieved from files as needed. Completed forms are bundled and routed to files following the guidelines outlined by the input correction operation.

51 IRM section 3.21.112.2.5.1.

52 IRM section 3.21.112.2.5.1.1.

53Id.

54 IRM section 3.21.112.2.5.1.2.

55 The EUP is the internal application that IRS employees will use to input paper registration forms, search for financial institution registration information, perform quality review checks, and update registration statuses. The EUP enables the employee to complete processes related to registration management and to respond to customer inquiries. It is designed to allow employees to enter, view, and edit FFI registration information in the system; provide FFI registration information to customers seeking assistance with the registration; and to reset access codes. The EUP facilitates electronic communication and provides e-mail alerts to keep the registration process moving. It allows access to the following users, depending on their role: the FATCA analyst (Large Business and International), FATCA customer service (LB&I), the FATCA tax examiner (W&I), and the FATCA quality reviewer (W&I). IRM section 3.21.112.2.5.

56 The IRS has not yet provided details on Letter 5026, how an FFI can remediate an incomplete or erroneous registration, or how much time it has to do so.

57 IRM section 3.21.112.2.5.1.3.

58Id.

59 IRM section 3.21.112.2.5.1.4.

60 IRM section 3.21.112.3.

61 IRM section 3.21.112.3.1.

62Id.

63 IRM section 3.21.112.3.2.

64 Securities Industry and Financial Markets Association comment letter (June 21, 2013) 2013 TNT 122-12: Treasury Tax Correspondence.

65 In Announcement 2012-42, 2012-47 IRB 561 2012 TNT 207-9: Internal Revenue Bulletin, the IRS extended the start date for withholding and new account onboarding procedures to January 1, 2014, and it revised the phased-in timelines for withholding and new account onboarding, which was scheduled to begin January 1, 2013, for U.S. withholding agents and July 1, 2013, for PFFIs as provided under the proposed regulations.

66 Notice 2013-43, at 6.

67Id.

68 Reg. section 1.1471-4(b)(4). A PFFI is not required to deduct and withhold tax on a foreign passthru payment made by a PFFI to an account held by a recalcitrant account holder or to an NPFFI before the later of January 1, 2017, or the date of publication in the Federal Register of final regulations defining foreign passthru payment.

69 Notice 2013-43, at 6-7.

70Id.

71 Model 1 IGAs and Model 2 IGAs contain a coordination provision providing that a partner jurisdiction may permit its FFIs to use a definition in the relevant U.S. regulations in lieu of a corresponding definition in the IGA, as long as the application would not frustrate the purposes of the IGA. Model 1 IGAs and Model 2 IGAs provide that a partner jurisdiction may permit its FFIs to apply the due diligence procedures described in the relevant U.S. regulations in lieu of the due diligence procedures in the IGA to establish the status of account holders and payees. Paragraph 6 of article 4 of the Model 1 IGA coordinates the time by which the parties must obtain and exchange information with the time by which PFFIs must report similar information to the IRS under the relevant U.S. regulations.

72 The Model IGAs, and all IGAs that have been concluded to date, contain a most favored nation provision, providing that for specified IGA terms, including the due diligence rules applicable to reporting Model 1 FFIs and reporting Model 2 FFIs, a partner jurisdiction is entitled to the benefit of any more favorable provision agreed to in a comparable IGA with another partner jurisdiction, subject to conditions.

73 Notice 2013-43, at 7-8.

74Id.

75 The IRS released a draft Form 8966, "FATCA Report," on August 13, 2013, but draft instructions have not yet been released. The draft Form 8966 was released for comments and is pending OMB approval.

76Id. at 8-9.

77 Paragraph 6 of article 4 of the Model 1 IGA coordinates the time by which the parties must obtain and exchange information with the time by which PFFIs must report similar information to the IRS under the relevant U.S. regulations.

78 Notice 2013-43, at 11; reg. section 1.1441-1(e).

79 Notice 2013-43, at 11.

80Id. at 11.

81Id. at 11-12.

82Id. at 6. Withholding agents generally will have to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs for payments that are not grandfathered obligations, unless the payments can be reliably associated with valid documentation that the withholding agent can use to treat the payments as exempt from withholding.

83Id. at 10.

84 Reg. section 1.1471-2(a)(1) and 1.1471-2(a)(4)(ii).

85 Reg. section 1.1471-3(e)(3)(i). A withholding agent that has received a payee's claim of PFFI or RDCFFI status and is required to confirm that the branch of that FFI has a GIIN that appears on the published FFI and branch list, has reason to know that the payee is not a PFFI or RDCFFI if its name (including a name reasonably similar to the name the withholding agent has on file for the payee) and GIIN do not appear on the most recently published FFI and branch list within 90 calendar days of the date that the claim is made. Reg. section 1.1471-3(e)(3).

86 Reg. section 1.1471-3(e)(3)(i).

87 Reg. section 1.1471-3(d)(4)(i).

88 Reg. section 1.1471-3(d)(4)(ii).

89 Reg. section 1.1471-3(d)(4)(iii).

90Id.

91 T.D. 9610, at 105.

92 PricewaterhouseCoopers LLP, "IRS Opens FATCA Online Registration System to Provide a Beneficial User Testing Period," PwC Global IRW Newsbrief, at 1 (Aug. 20, 2013) (PwC newsbrief).

93Id.

94 The initial registration is expected to run from August 19, 2013, through April 25, 2014. Notice 2013-43, at 9-10.

95 Reg. section 1.1471-3(f)(4).

96 Reg. section 1.1471-3(d)(4)(i), as amended by the corrections to the final regulations (T.D. 9610, 78 F.R. 5874), 78 F.R. 55202, RIN-BK68 (Sept. 10, 2013), hereinafter referred to as "Technical Corrections."

97 The IRS has indicated in its registration user guide that information on the registration of sponsored FFIs will be provided on the FATCA website.

98 Notice 2013-43, III.E, at 9-10.

99 Reg. section 1.1471-3(d)(4)(i), as amended by the Technical Corrections at page 14.

100Id.

101 Reg. section 1.1471-2(b)(2)(i) defines the term "grandfathered obligation" to include any obligation that is outstanding on July 1, 2014. For this purpose, an obligation generally includes (1) a debt instrument (for example, a bond, guaranteed investment certificate, or term deposit); (2) an agreement to extend credit for a fixed term (for example, a line of credit or revolving credit facility), as long as the agreement as of its issued date fixes the material terms, including the stated maturity date under which the credit will be provided; (3) a derivatives transaction entered into between counterparties under an International Swaps and Derivatives Association master agreement that is evidenced by a confirmation; or (4) a life insurance contract under which the entire contract value is payable no later than upon the death of the individual(s) insured under the contract or an immediate annuity contract payable for a specified period certain or for the life of the annuitant. Reg. section 1.1471-2(b)(2)(ii).

102 Reg. section 1.1471-2(b)(1).

103 Reg. section 1.1471-2(b)(2)(iv).

104 Reg. section 1.1471-2(b)(1).

105 Notice 2013-43, at 6.

106Id. at 8. A withholding agent other than a PFFI will be required to document payees that are prima facie FFIs by December 31, 2014, instead of by June 30, 2014.

107 Reg. section 1.1471-3(f)(3).

108 Reg. section 1.1471-2(a)(4)(ii)(B).

109Id.

110 Notice 2013-43, at 8. For withholding agents other than PFFIs, the deadlines for completing due diligence on preexisting obligations will be postponed by six months.

111Id. at 6. The notice does not affect the timing provided in the final regulations for withholding on gross proceeds, passthru payments, and payments of U.S.-source FDAP under offshore obligations by persons not acting in an intermediary capacity.

112 Reg. section 1.1471-1(b)(82).

113 Reg. section 1.1473-1(a)(4)(vi). The exception for offshore payments of U.S.-source FDAP income will not apply for a flow-through entity that has a residual withholding requirement for its partners, owners, or beneficiaries under reg. section 1471-2(a)(2)(ii). For purposes of section 1.1473-1(a)(4)(vi), an intermediary includes a person who acts as a qualified securities lender as defined under chapter 3. Reg. section 1.1471-1(b)(62) defines the term "intermediary" by reference to reg. section 1.1441-1(c)(13), which provides that an intermediary is a person who acts as a custodian, broker, nominee, or otherwise as an agent for another person regarding a payment received, regardless of whether that other person is the beneficial owner of the amount paid, a flow-through entity, or another intermediary.

114 Notice 2013-43, at 6.

115 Reg. section 1.1471-4(b)(4). A PFFI is not required to deduct and withhold tax on a foreign passthru payment made by that PFFI to an account held by a recalcitrant account holder or to an NPFFI before the later of January 1, 2017, or the date that final regulations defining the term "foreign passthru payment" are published in the Federal Register. See preamble to T.D. 9610, 78 F.R. 5882; Notice 2013-43, at 6. The notice does not affect the timing provided in the final regulations for withholding on gross proceeds, passthru payments, and payments of U.S.-source FDAP under offshore obligations by persons not acting in an intermediary capacity.

116 Reg. section 1.1473-1(a)(3)(i).

117 Reg. section 1.1473-1(a)(1).

118 Registration user guide at 17.

119Id.

120 Reg. section 1.1471-3(d)(4)(iv)(A). Notice 2013-43 provides that for payments made before 2015, verification of a GIIN generally is not required for payees that are Model 1 FFIs. That provision will continue to apply following the changes described in Notice 2013-43. As a result, although Model 1 FFIs will be able to register and obtain GIINs beginning on January 1, 2014, they will have time beyond July 1, 2014, to register and obtain a GIIN to ensure that they are included on the FFI and branch list before 2015. Notice 2013-43, at 10-11.

121 Reg. section 1.1471-3(d)(4)(iv)(B).

122 Reg. section 1.1471-3(d)(4)(iv)(C).

123 Reg. section 1.1471-3(d)(4)(iv)(D).

124 U.K. guidance notes, at 145.

125See supra note 118.

126 To establish a payee's status as a foreign individual, foreign government, or international organization, a withholding agent may rely on a pre-FATCA Form W-8 in lieu of obtaining an updated version of the withholding certificate. To establish the chapter 4 status of a payee that is not a foreign individual, foreign government, or international organization, a withholding agent may, for payments made before 2017, rely on a pre-FATCA Form W-8 in lieu of obtaining an updated version of the withholding certificate if the withholding agent has one or more forms of documentary evidence described in reg. section 1.1471-3(c)(5)(ii), as necessary to establish the chapter 4 status of the payee, and the withholding agent has obtained any additional documentation or information required for the chapter 4 status (such as withholding statements, certifications regarding owners, or required documentation for underlying owners). See reg. section 1.1471-3(d)(4)(ii) and (iv) for specific requirements when relying on pre-FATCA Form W-8 for a PFFI or RDCFFI. This provision does not apply to non-registering local banks, FFIs with only low-value accounts, sponsored FFIs, owner-documented FFIs (ODFFIs), territory financial institutions that are not the beneficial owners of the payment, or foreign central banks (other than a foreign central bank specifically identified as an exempt beneficial owner under a Model 1 or Model 2 IGA).

127 A CDCFFI is an FFI described in reg. section 1.1471-5(f)(2)(i) through (iv) that has certified its status as a DCFFI by providing a withholding agent the documentation required under the regulations. A CDCFFI includes a non-registering local bank, FFIs with low-value accounts, sponsored closely held investment vehicles, and limited life debt investment entities. The IRS may also treat certain exempt beneficial owners as FFIs who not have to register or obtain GIINs. Reg. section 1.1471-6(b).

128 Reg. section 1.1471-3(f)(4).

129Id.

130 Reg. section 1.1471-3(e).

131 Reg. section 1.1471-3(c)(1) provides that a withholding agent can reliably associate a withholdable payment with valid documentation if, before the payment, it has obtained (either directly or through an agent) valid documentation appropriate to the payee's chapter 4 status, it can reliably determine how much of the payment relates to the valid documentation, and it does not know or have reason to know that any of the information, certifications, or statements in, or associated with, the documentation are unreliable or incorrect.

132 Reg. section 1.1471-3(e)(3)(i).

133 Reg. section 1.1471-3(c)(7)(ii).

134 For acceptable documentary evidence, see reg. section 1.1471-3(c)(5)(ii).

135 Reg. section 1.1471-3(c)(7)(ii).

136 Reg. section 1.1471-3(e)(3)(i).

137 PwC newsbrief, supra note 92, at 4.

138See III.F.

139See III.H, III.I; III.K; and III.V.

140 Reg. section 1.1471-4(f)(2)(i).

141Id.

142 Registration user guide at 17.

143 Reg. section 1.1471-4(f)(2)(ii).

144Id.

145Id.

146 Instructions to Form 8957, at 1 ("Future Developments").

147 Instructions to Form 8957, at 2 ("Registration Definitions"); registration user guide at Appendix A ("Glossary of Terms").

148Id.

149 Reg. section 1.1471-4(f)(ii).

150Id.

151 Reg. section 1.1471-4(f)(2)(ii).

152 Registration user guide at 44.

153 II.H.3.a. The country of residence is the jurisdiction where the member is treated as a resident for income tax purposes (for example, the place of incorporation or place of principal management and control). If the member is a dual resident, the registrant is directed in this question to identify one of the countries where the member is a tax resident. The second country of tax residence will be identified later as a branch jurisdiction in the member's online FATCA account. For a partnership or other flow-through entity, the financial institution's country of residence means the jurisdiction under the laws of which the entity is organized or established or, if not organized or established under the laws of any jurisdiction, the jurisdiction where it maintains its principal office. See registration user guide at 44; and "Determination of financial institution's country of residence."

154 The registrant should select member type "none of the above" if it is registering a member that is a USFI with foreign branches.

155 As the compliance FI adds members, the members' names and information will appear in the table below the "Add another" button. To remove a member, the user clicks on the "Delete" link next to the corresponding entry in the table. To download a list of members, the user clicks on the "download complete member list (PDF)" button. The link for that list will not display on the page if the lead FFI has no members.

156 Registration user guide at 9.

157Id. at 27.

158Id.

159 The IRS still needs to confirm this point because users will not be proofed by the IRS as part of the account creation process.

160 Only these registrants will be able to create an online account. Registration user guide at 19. See III.H.1.d, III.H.1.a, and III.H.1.c.ii.

161 Preamble to REG-121647-10, at 86.

162 Registration user guide at 19.

163 If the user enters the data in the FATCA ID and access code fields before checking the box, those two fields will be cleared and the log-in button will be disabled.

164 If the user checks the "member" box, an error message will appear.

165 Remember to document the answers to the challenge questions. Presumably, they are case-sensitive.

166 Registration user guide at 21.

167 The FATCA ID will not be recognized if the user enters any letters as lowercase letters. FATCA IDs do not contain the letter "O." If the FATCA ID has a character that appears like the letter "O" enter the number zero (0).

168 The guide provides that if a user does not log out of the registration system using the "logout" button, the system does not log the user out immediately. That can occur if, for example, the user closes the browser or if the user gets an error message that forces him to back out of the registration system. If the user tries to log back in immediately, he will get a default error message indicating that the FATCA account is locked because it is being edited by another user. The system times out after 15 minutes of inactivity, so after 15 minutes, the original session that was exited will time out and the user will be able to log in again.

169See IRS video, "Recovering a FATCA ID or Resetting a FATCA Access Code" (released Aug. 24, 2013). Both answers must be correct to reset the access code. If one answer is incorrect, the system will not identify which one it is incorrect. It will give the user another chance to correctly answer both questions. The system will automatically lock out after five unsuccessful attempts to answer the challenge questions. The user is directed to continue until he is successfully allowed to login again. It is unclear what happens if the user does not remember his challenge questions. Unless the IRS agrees to provide the user the answers through a separate e-mail communication, the user presumably has to log in as a new user and reset or change (re-input) the log-in and FATCA account information.

170 IRM 3.21.112.3.

171 IRM section 3.21.112.4.

172 IRM section 3.21.112.3.1; 3.21.112.2.5.1.2.

173See IRS video, supra note 169.

174 Prop. reg. section 1.1471-1(b)(25); preamble to REG-121647-10, at 85-86.

175 Reg. section 1.1471-1(b)(52). However, if the FFI is also a withholding agent, Form 1042-S, line 11 asks for its nine-digit EIN.

176 IRM section 3.21.112.4; preamble to T.D. 9610, 78 F.R. 5897.

177 Registration user guide, at 6 and 67.

178 IRM 3.21.112.4; Preamble to T.D. 9610, 78 F.R. 5896.

179 Reg. section 1.1471-1(b)(52).

180 The term "chapter 4 status" means a person's status as a U.S. person, a specified U.S. person, an individual that is a foreign person, a PFFI, a DCFFI, a restricted distributor, an exempt beneficial owner, an NPFFI, a territory financial institution, an excepted NFFE, or a passive NFFE. Reg. section 1.1471-1(b)(17).

181 Preamble to T.D. 9610, 78 F.R. 5877.

182Id. The IRS is also discussing with the partner jurisdictions the possibility of adopting a single format for reporting FATCA information, whether the information is reported directly to the IRS or to the tax administration in a Model 1 IGA jurisdiction.

183 IRM section 3.21.112.4. See also http://www.irs.gov/Businesses/International-Businesses/IRS-FFI-list-Schema-and-Test-Files for sample list schema and test files in XML and CSV formats.

184 Reg. section 1.1473-1(c).

185 Reg. section 1.1471-5(c).

186 Reg. section 1.1474-1(d)(2)(i).

187 Reg. section 1.1471-5(g)(2).

188 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a GIIN will also likely be treated as a change in circumstances. See reg. section 1.1471-5(g)(3)(iii) (addressing when the holder of an account following a change in circumstances will be treated as a recalcitrant account holder). See also reg. section 1.1441-1(e)(4)(ii)(D) for related chapter 3 rules.

189 The term "exempt beneficial owner" means any person described in reg. section 1.1471-6(b) through (g) or that is otherwise treated as an exempt beneficial owner under a Model 1 IGA or a Model 2 IGA. Reg. section 1.1471-1(b)(38).

190 Reg. section 1.1471-5(f)(2); See "Exceptions to certain CDCFFIs to register and obtain a GIIN."

191 Registration user guide, at 7; instructions to Form 8957, at 4.

192 Preamble to REG-121647-10, at 33.

193 The registration user guide defines a member financial institution as an FFI that is registering as a member of an EAG and is not acting as a lead FFI -- that is, registering as a PFFI, an RDCFFI, or a limited FFI. For purposes of registration, a member financial institution also may be a foreign branch of a USFI that is treated as a reporting financial institution under a Model 1 IGA or is renewing its QI agreement. A member financial institution will need to obtain its FATCA ID from its lead FFI. The FATCA ID is used to identify the member financial institution for purposes of registration and is not the same number as the GIIN. A GIIN is issued to financial institutions, other than limited FFIs or limited branches, after the FATCA registration is submitted and approved. See III.I.1.

194 This is apparently true even though a USFI is not a foreign entity, which would seem to be a precondition to status as an FFI under reg. section 1.1471-5(d). Presumably, the regulations will be amended to permit not only FFIs but also accommodate USFI as lead FFIs. The term "U.S. financial institution" means a financial institution that is a U.S. person, including a U.S. branch treated as a U.S. person. Reg. section 1.1471-1(b)(127). A withholding agent may treat a withholdable payment to a U.S. branch of a PFFI or DCFFI as a payment to a U.S. person if the U.S. branch is treated as a U.S. person for purposes of reg. section 1.1441-1(b)(2)(iv). For this purpose, a U.S. withholding agent and a foreign withholding agent may agree for the U.S. branch to be treated as a U.S. person through the use of a Form W-8IMY, rather than a Form W-9 provided by the U.S. branch, or the withholding agent can obtain an EIN and a valid GIIN from the U.S. branch's home office. Reg. section 1.1471-3(a)(3)(vi); reg. section 1.1471-3(f)(6). A withholding agent is not required to withhold under section 1471(a) on any payment to a U.S. branch that is treated as a U.S. person for purposes of reg. section 1.1441-1(b)(2)(iv), because the U.S. branch has agreed to accept primary withholding responsibility for a payment for purposes of chapters 3 and 4. Reg. section 1.1471-2(a)(1). For a U.S. branch agreeing to be treated as a U.S. person, the U.S. branch must apply the due diligence rules applicable to U.S. withholding agents -- i.e., reg. section 1.1471-3 for entities (e.g., obtain and validate withholding certificates against all documentation from each payee, and as applicable, each of its substantial U.S. owners or specified U.S. persons), and chapters 3 and 61 for individuals -- in lieu of the FFI due diligence rules under the chapter 4 regulations or the due diligence rules under an IGA. Reg. section 1.1471-3(d)(12)(iii)(a) (required owner certification for passive NFFEs); reg. section 1.1471-3(d)(6)(iv) (content of FFI owner reporting statement); reg. sections 1.1471-4(a)(2); 1.1471-4(c); 1.1471-4(c)(2)(v); 1.1471-3(a)(3)(vi).

195 IRS, "FATCA Information for USFIs and Foreign Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

196 Presumably a foreign branch of a USFI that is a QI, WP, or WT could also be a lead FFI.

197 Reg. section 1.1471-5(d), -1(b)(121).

198 IRM section 3.21.112.2.5.1.2.

199 A lead FFI is not required to act as a lead FFI for all member financial institutions within an EAG. Thus, an EAG may include more than one lead FFI that will carry out FATCA registration for a group of its member financial institutions. A lead FFI will be provided the rights to manage the online account for its members.

200 Registration user guide, at 65.

201 The term "nonfinancial foreign entity" means a foreign entity that is not a financial institution (including a territory NFFE). It also means a foreign entity treated as an NFFE under a Model 1 or Model 2 IGA. Reg. section 1.1471-1(b)(74).

202 The term "exempt beneficial owner" means any person described in reg. section 1.1471-6(b) through (g) or that is otherwise treated as an exempt beneficial owner under a Model 1 or Model 2 IGA. Reg. section 1.1471-1(b)(38). The registration user guide defines an exempt beneficial owner to mean an entity that is described in reg. section 1.1471-6 as (1) a foreign government, a political subdivision of a foreign government, or a wholly owned agency or instrumentality of any one or more of the foregoing; (2) an international organization or a wholly owned agency or instrumentality thereof; (3) a foreign central bank of issue; (4) a government of a U.S. territory; (5) a treaty-qualified retirement fund; (6) a broad participation retirement fund; (7) a narrow participation retirement fund; (8) a fund formed under a plan similar to a section 401(a) plan; (9) an investment vehicle used exclusively for retirement funds; (10) a pension fund of an exempt beneficial owner; or (11) an entity wholly owned by exempt beneficial owners.

203 Registration user guide, at 65.

204 Presumably, once the information is submitted to the IRS upon the completion of the initial registration process, that information can be retrieved by the IRS for audit purposes. It is less clear whether information that has been input during the initial registration process and saved, but not yet submitted as final, will be similarly retrievable by the IRS.

205 Draft Form W-8BEN-E (rev. July 2013) includes a box for a GIIN on line 13 in Part II, "Disregarded Entity or Branch Receiving Payment."

206 Section 1471(e) provides for joint and several liability of each member in the lead FFI's EAG, including for this purpose the lead FFI. It is unclear whether a USFI that is acting as the lead FFI, by its certification also agrees to be jointly and severally liable if the members' FATCA obligations are not met.

207 One possible interpretation of this rule would be that a member FFI may be left with only three additional choices for its POCs because the member financial institution will also have an RO who is a POC, and the lead FFI RO will also be a member financial institution POC.

208Id.

209 Preamble to T.D. 9610, 78 F.R. 5891.

210 According to the registration user guide, at 9, a sponsoring entity is an entity that will perform the due diligence, withholding, and reporting obligations of one or more sponsored investment entities or controlled foreign corporations (sponsored FFIs).

211 Notice 2013-43, at 9-10.

212 Preamble to T.D. 9610, 78 F.R. 5897.

213Id.

214 Notice 2013-43, at 9-10.

215 Reg. section 1.1471-3(d)(4)(i) as amended by the Technical Corrections at page 14.

216 The IRS has indicated in the registration user guide that information on the registration of sponsored FFIs will be provided on the FATCA website.

217 Because Notice 2013-43 does not discuss the sponsored FFI transition rule, it is likely that sponsored FFIs that are RDCFFIs, including Model 1 FFIs, can generally continue to apply that rule and will have until January 1, 2016, rather than the June 30, 2014, deadline, to obtain their own GIINs and must provide the sponsoring entity GIIN until January 1, 2016. However, any information entered into the FATCA portal before 2014 will be stored until it is submitted as final on or after January 1, 2014. See II.D.2.

218 Reg. section. 1.1471-5(f)(1)(i)(F).

219 The registration user guide defines a sponsoring entity as an entity that will perform the due diligence, withholding, and reporting obligations of one or more sponsored investment entities or CFCs (sponsored FFIs). Guidance note 2.20 provides that a sponsoring entity is an entity that has a contractual arrangement for its due diligence and reporting responsibilities to be carried out by the sponsoring entity. A sponsoring entity (typically a fund manager) is an entity that is authorized to manage the sponsored FFI (typically a fund or a subfund) that is an investment entity that is not a QI, WP, or WT, and to enter contracts on behalf of the sponsored FFI. A sponsoring entity must register as a sponsoring entity and must register each of the funds or subfunds it manages (or a subset of them) as sponsored entities. A sponsoring entity must undertake all FATCA compliance on behalf of the sponsored funds (and when appropriate, outsource FATCA compliance obligations to third-party service providers). This will include, for example, account identification and documentation. A sponsoring entity will need to ensure that new investors in the funds it manages are appropriately documented for FATCA purposes (which typically will be done by a transfer agent acting as a third-party service provider). If a sponsoring entity acts on behalf of a range of funds, the classification of an account as a new account or preexisting account can be done by reference to whether the account is new to the sponsoring entity (fund manager) and not the fund. But see the comment below regarding offshore funds and multiple service providers. See also guidance note 2.20, "Multiple Service Providers." This will prevent a fund manager from having to see FATCA documentation from the same account holder repeatedly if that account holder is invested in more than one of the sponsored funds. When the sponsoring entity is able to link accounts in this manner, the account will need to be aggregated for the purposes of determining whether the accounts exceed the de minimis requirement for reporting. Subject to the design of the final reporting schema, a sponsoring entity will then report to HMRC on all the account holders of the funds it manages. "Guidance Note 2.20 -- Reporting of sponsored offshore funds." In practice, a fund manager will act for funds located in several jurisdictions. When acting as a sponsoring entity, the fund manager will need to act on behalf of the sponsored fund ranges independently for each tax authority in which the funds are domiciled. Example 1: A U.K. fund manager manages fund ranges in the United Kingdom and IGA Country 1. The U.K. manager can register as a sponsoring entity for all or some of the funds in each of these jurisdictions. The sponsoring entity would report to the HMRC on behalf of the U.K. fund range and would report to the tax authorities in IGA Country 1 on behalf of the funds domiciled there. Example 2: The facts are the same as above, except that the U.K. fund manager manages funds in a non-IGA country. The fund manager will need to report to the United States on behalf of the funds domiciled in non-IGA countries.

220 Reg. section 1.1471-4(d)(2)(ii)(c) states that "a sponsoring entity that has agreed to fulfill the reporting responsibilities on behalf of a sponsored FFI shall report in accordance with the requirements of reg. section 1.1471-4(d)(2)(III), (3), or (5) of this section (as applicable) with respect to each U.S. account and paragraph (d)(6) of this section with respect to each account held by a recalcitrant account holder of the sponsored FFI to the extent and in the manner required if such sponsored FFI were a PFFI. The sponsoring entity shall identify each sponsored FFI for which it is reporting to the extent required on the forms for reporting U.S. accounts and recalcitrant account holders and the accompanying instructions to the forms." Reg. section 1.1471-5(f)(1)(i)(F)(3), as amended by Technical Corrections at page 27.

221 Reg. section 1.1471-5(f)(1)(i)(F)(5).

222 Reg. section 1.1471-5(f)(1)(i)(F)(4). A material failure for this purpose is not defined, but reg. section 1.1471-4(f)(3)(iv) defines a material failure of a PFFI to fulfill the requirements of the FFI agreement as a failure resulting from deliberate action on the part of one or more of the PFFI's employees (its agent, sponsor, or compliance FI) to avoid the requirements of the FFI agreement, or an error attributable to the PFFI's failure to implement internal controls sufficient for the PFFI to meet the regulatory requirements.

223 Reg. section 1.1471-5(f)(1)(i)(F)(4).

224 Presumably, an FFI that is an investment entity under the regulations or under the Model 1 or Model 2 IGAs will qualify.

225 Reg. section 1.1471-5(f)(1)(F)(1)(i), (ii).

226 Section 957(a). A CFC is any foreign corporation in which more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of stock, is owned directly, indirectly, or constructively by U.S. shareholders on any day during the corporation's tax year. Section 951(b) defines a U.S. shareholder as a U.S. person who owns directly, indirectly, or constructively 10 percent or more of the total combined voting power of all classes of stock entitled to vote in a foreign corporation.

227 It is unclear whether this is the same "shared account system" defined in reg. section 1.1471-3(c)(8)(iii).

228 Reg. section 1.1471-5(f)(1)(i)(F)(2)(i)-(iii). The registration user guide defines a sponsored FFI as an investment entity or an FFI that is a CFC and has a sponsoring entity that will perform the due diligence, withholding, and reporting obligations on its behalf.

229 Registration user guide at 17. In my view, a change in the IRS's position on this issue is unlikely.

230 The regulations provide an exception to the inclusion of an FFI holding specified capital investments in an EAG. An investment entity will not be considered a member of an EAG as a result of a contribution of seed capital by a member of that EAG if (1) the member that owns the investment entity is an FFI that is in the business of providing seed capital to form investment entities; (2) the member intends to sell that interest to unrelated investors; (3) the investment entity is created in the ordinary course of the member's business; (4) the member intends to retain no more than 50 percent of the value of the investment (including ownership by other members in the EAG) within three years of making the investment; and (5) for an equity interest that has been held by the member owning the investment entity, the aggregate value of the equity interest held by that entity and other members of the EAG is 50 percent or less than the value of the investment entity. This exemption recognizes the burden an FFI or fund sponsor would face in constantly monitoring ownership changes in the investment entity because of ongoing sales of interests in the investment entity to investors. Reg. section 1.1471-5(i)(3).

231 The registration user guide provides that a sponsoring entity should select "none of the above" for question 4. Registration user guide at 30.

232 The registration user guide says that a sponsoring entity should select "not applicable" in response to this question. Registration user guide at 33.

233 The registration user guide says that if a financial institution is applying as a sponsoring entity, the registrant does not need to answer questions about its branches and should answer "no" to question 7. Registration user guide at 34.

234 Registration user guide at 11.

235 Registration user guide at 9.

236 Instructions to Form 8957 at 5.

237Id.

238 Registration user guide at 29.

239 If the entity is treated as a disregarded entity for U.S. tax purposes, the single owner's legal name may have to be used for FATCA registration purposes, and if that entity is itself a disregarded entity, the legal name of its single entity owner may have to be used.

240 Reg. section 1.1471-3(c)(6)(ii)(E). A change in the financial institution's legal name would affect the association of documentation and withholding certificates with the registrant and the registrant's chapter 4 status. See also reg. section 1.1441-1(e)(4)(ii)(D) for the related chapter 3 rules.

241 Registration user guide at 30.

242 A U.S. territory is defined for FATCA registration purposes as American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands.

243 Registration user guide at 30-31.

244 The registration user guide defines a reporting financial institution as a financial institution that is treated as a reporting financial institution under the terms of a Model 1 or Model 2 IGA that is in effect. The term "reporting financial institution" also includes a foreign branch of a USFI that is treated as a reporting financial institution under the terms of a Model 1 IGA that is treated as in effect. A foreign branch of a USFI treated as a reporting financial institution under the terms of a Model 2 IGA is not required to submit a FATCA registration form to obtain a GIIN, unless it is renewing a QI agreement.

245Id.

246Id.

247Id.

248Id.

249 Reg. section 1.1471-3(b)(2). In 1986 Congress added section 851(g), which contains a special rule for series funds and provides that for a regulated investment company with more than one fund, each fund is treated as a segregated portfolio of assets whose beneficial interests are owned by holders or interests in the RIC over other classes or series for those assets. The issue of whether a protected cell company or asset pool is a separate legal entity appears to still be evolving for federal income tax purposes, especially as it relates to chapter 4. On September 13, 2010, the IRS issued proposed regulations covering the tax treatment of protected cell companies or segregated portfolio companies. REG-119921-09 2010 TNT 177-12: IRS Proposed Regulations.

250 Reg. section 1.1471-3(b)(2). A withholding agent that makes a payment under an offshore obligation may also rely on a written notification provided by the payee, regardless of whether that notification is signed, indicating the payee's entity classification (other than as a QI, WP, or WT) unless the withholding agent has reason to know that the entity classification indicated by the payee is incorrect. A withholding agent may not rely on a person's claim of classification other than as a corporation if the person's name indicates that the person is a per se corporation described in reg. section 301.7701-2(b)(8) unless the certificate or written statement contains a statement that the person is a grandfathered per se corporation described in reg. section 301.7701-(2)(b)(8) and that its grandfathered status has not been terminated.

251 Reg. section 1.1471-3(a)(3)(v).

252Id. Generally, the U.S. branch of a foreign corporation or partnership is treated as a foreign person. However, reg. section 1.1471-3(a)(3)(vi) provides another exception to the general rule that a withholdable payment to a U.S. branch of a PFFI or an RDCFFI is a payment to a U.S. person if the U.S. branch is treated as a U.S. person for purposes of reg. section 1.1441-1(b)(2)(iv). In that case, the U.S. branch is treated as the payee.

253 Reg. section 301.7701-2(c)(i). U.S. law treats U.S. persons and foreign persons differently for tax purposes. The term "U.S. person" means a citizen or resident of the United States, a domestic partnership, a domestic corporation, any estate other than a foreign estate, any trust if a court within the United States can exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or any other person that is not a foreign person. A foreign person includes a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, a foreign estate, or any other person that is not a U.S. person. See section 7701(a)(31) for the definition of a foreign estate and a foreign trust. Except for a business entity that is classified as a per se corporation, a business entity with at least two members can choose to be classified as (1) an association taxable as a corporation or (2) a partnership, and a business entity with a single member can choose to be classified as either (1) an association taxable as a corporation or (2) disregarded as an entity separate from its owner. The registration user guide defines the term "United States" for purposes of FATCA registration to mean the United States, including the states thereof, but it does not include the U.S. territories. Any reference to a state of the United States includes the District of Columbia.

254 However, a USFI with a branch that is a QI or is in a Model 1 jurisdiction must register and obtain a separate GIIN. A USFI with a non-QI branch resident in a Model 2 jurisdiction or in a non-IGA jurisdiction is not required to register with the IRS. See III.H.6. Further, a U.S. entity that is a sponsoring entity may have to register and obtain its own GIIN. See III.H.1.b.

255 Section 7701(a)(3)(C), (a)(4), and (a)(5).

256 Mode1 1 IGA, art 1.2; Model II IGA, art. 1.2; Cotorceanu, supra note 16, at 416.

257 Section 7701(a)(3)(C), (a)(4), and (a)(5).

258 The registration user guide defines a Model 1 IGA as an agreement between the United States or Treasury and a foreign government or one or more foreign agencies to implement FATCA through reporting by financial institutions to that foreign government or agency thereof, followed by automatic exchange of the reported information with the IRS. For a list of jurisdictions treated as having an IGA in effect, see http://www.irs.gov/fatca.

259 Model 1 IGA, art. 1.1(l).

260 Model 1 IGA, art. 1.1(m).

261 U.K. guidance notes, section 2.

262Id. at 10-13.

263Id. at 144; U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

264Id. at 13-14.

265 The registration user guide defines a Model 2 IGA as an agreement or arrangement between the United States or Treasury and a foreign government or one or more foreign agencies to implement FATCA through reporting by financial institutions directly to the IRS in accordance with the requirements of an FFI agreement, supplemented by the exchange of information between that foreign government or agency thereof and the IRS. For a list of jurisdictions treated as having an IGA in effect, see http://www.irs.gov/fatca.

266 Model 2 IGA, art. 1.1(m).

267 Model 2 IGA, art. 1.1(n).

268 Cotorceanu, supra note 16, at 416 (citing Model 1 IGA, art. 1.1(l) and (m); and Model 2 IGA, art. 1.1(m) and (n)).

269 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's country of tax residence would have to be updated on the FATCA portal and may affect the registrant's chapter 4 status. See also reg. section 1.1441-1(e)(4)(ii)(D).

270 Reg. section 1.1471-2(a)(4)(iv).

271 Reg. section 1.1471-1(b)(85). The registration user guide defines a PFFI as a FFI that (1) is registering to agree to enter into an FFI agreement, (2) is treated as a reporting financial institution under a Model 2 IGA and is certifying that it will comply with the terms of an FFI agreement, as modified by the terms of the applicable Model 2 IGA, or (3) is a foreign branch of a USFI that has a QI agreement in effect and is also agreeing to the terms of an FFI agreement, unless that branch is treated as a reporting financial institution under a Model 1 IGA (see RDCFFI definition).

272Id.

273 Section 1471(d)(4). The registration user guide defines an FFI to mean a financial institution that is not located in the United States, including (1) an FFI treated as a reporting financial institution under a Model 1 IGA, including foreign branches of a USFI or territory-organized financial institution; (2) an FFI treated as a reporting financial institution under a Model 2 IGA; and (3) a foreign branch of a USFI or a territory-organized financial institution that a QI agreement is in effect.

274 Section 1471(5).

275 Reg. section 1.1471-5(d).

276 The registration user guide defines a USFI as U.S. financial institution that is a resident of the United States.

277 Reg. section 1.1471-1(b)(27).

278 Preamble to T.D. 9610, 78 F.R. at 5897.

279 Reg. section 1.1471-5(d).

280 One of the tests for corporate tax residence in the United Kingdom, a Model 1 IGA country, is central management and control. Thus, under U.K. law, a company incorporated under the laws of another country is resident in the United Kingdom if it is centrally managed and controlled from the United Kingdom. Which IGA would govern if that company were a financial institution and were incorporated in a Model 2 IGA country that chose the "organized under the laws of" standard, as Switzerland has done in its IGA? The answer is that the U.K. IGA would govern the U.K. operations and the Swiss IGA would govern the Swiss operations. Cotorceanu, supra note 16, at 416.

281 Cotorceanu, supra note 16, at 416.

282 Section 1471(a); reg. section 1.1471-3(a)(3)(vii). Preamble to T.D. 9610, 78 F.R. 5897.

283 Preamble to T.D. 9610, 78 F.R. 5897.

284See Cotorceanu, supra note 16, at 416.

285 Section 7701(a)(3)(4) and (a)(5); reg. sections 1.1471-4(e)(2)(ii); see also reg. section 1.1471-3(f)(6) for the presumption rule related to effectively connected income for payments to some U.S. branches.

286 Reg. section 1.1471-3(a)(3)(vi); see reg. section 1.1471-3(f)(6).

287 Reg. section 1.1471-5(e)(1). The registration user guide defines a financial institution as an institution that is a depository institution, custodial institution, investment entity, or insurance company (or holding company of an insurance company) that issues cash value insurance or annuity contracts.

288 Reg. section 1.1471-5(e)(1)(i).

289 The term "depository account" means any account that is (1) a commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, passbook, certificate of indebtedness, or any other instrument for placing money in the custody of an entity engaged in a banking or similar business for which the institution is obligated to give credit (regardless of whether the instrument is interest bearing or non-interest-bearing), including a credit balance on a credit card account issued by a credit card company that is engaged in a banking or similar business; or (2) any amount held by an insurance company under a guaranteed investment contract or under a similar agreement to pay or credit interest thereon or to return the amount held. A depository account does not include a negotiable debt instrument that is traded on a regulated market or over-the-counter market and distributed and held through financial institutions or an advance premium or premium deposit. Reg. section 1.1471-5(b)(3)(i).

290 An entity is not considered engaged in banking or a similar business if it accepts deposits from persons only as collateral or security under a sale or lease of property or under a similar financing arrangement between the entity and the person holding the deposit with the entity. Entities engaged in banking or a similar business include entities that would qualify as banks under section 585(a)(2) (including banks as defined in section 581 and any corporation to which section 581 would apply but for the fact that it is a foreign corporation). Whether an entity is subject to the banking and credit laws of a foreign country, the United States, a state, a U.S. territory, or a subdivision thereof, or is subject to supervision and examination by agencies having regulatory oversight of banking or similar institutions, is relevant to, but not necessarily determinative of, whether that entity qualifies as a financial institution under section 471(d)(5)(A). Whether an entity conducts a banking or similar business is determined based on the character of the actual activities of that entity. Reg. section 1.1471-5(e)(2)(i)-(iv).

291 Preamble to T.D. 9610, 78 F.R. 5886.

292 Reg. section 1.1471-5(e)(1)(ii).

293 The term "custodial account" means an arrangement for holding a financial instrument, contract, or investment (including a share of stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based on a nonfinancial index, a notional principal contract as defined in reg. section 1.446-3(c), an insurance or annuity contract, and any option or other derivative instrument) for the benefit of another person.

294 Reg. section 1.1471-5(e)(3)(i)(A)(2).

295 Reg. section 1.1471-5(e)(3)(ii). Under a special rule for start-up entities, an entity with no operating history as of the date of the determination is considered to hold financial assets for the account of others as a substantial portion of its business if the entity expects to meet the gross income threshold described in reg. section 1.1471-5(e)(3)(i)(B) based on its anticipated functions, assets, and employees, with due consideration given to any purpose or functions for which the entity is licensed or regulated (including those of any predecessor). Reg. section 1.1471-5(e)(3)(i)(B).

296 Reg. section 1.1471-5(e)(4)(ii).

297 Reg. section 1.1471-5(e)(5)(i)(C).

298See reg. section 1.1471-5(b)(3)(vii) for a definition of cash value insurance contract.

299 Preamble to T.D. 9610, 78 F.R. at 5888.

300Id.

301 However, it is also possible that industry groups will successfully convince the U.S. government to create an exemption for some investment entities that have their interests owned by entities when there is a lower risk of tax evasion.

302 Reg. section 1.1471-5(e)(4)(i)(A)(1).

303 Reg. section 1.1471-5(e)(4)(i)(A)(2).

304 Reg. section 1.1471-5(e)(4)(i)(A)(3).

305 Reg. section 1.1471-5(e)(4)(iii).

306 Reg. section 1.1471-5(e)(4)(iii)(B).

307 Reg. section 1.1471-5(e)(4)(iv)(A).

308 Reg. section 1.1471-5(e)(4)(i)(B).

309Id.

310 Reg. section 1.1471-5(e)(4)(iv)(B).

311 Reg. section 1.1471-5(e)(4)(i)(C).

312 Security as defined in section 475(c)(2) without regard to the last sentence thereof.

313 Commodity as defined in section 475(e)(2).

314 NPC as defined in reg. section 1.446-3(c).

315 Reg. section 1.1471-5(e)(4)(ii).

316 Sullivan & Cromwell LLP, "FATCA: Final Regulations -- Treasury Issues Long-Awaited Final Regulations on FATCA; U.S. Enters Into Related Intergovernmental Agreement with Switzerland" (Feb. 26, 2013).

317 The term "passive NFFE" means an NFFE other than an excepted NFFE. Reg. section 1.1471-1(b)(88). The term "nonfinancial foreign entity" means a foreign entity that is not a financial institution (including a territory NFFE). The term also means a foreign entity treated as an NFFE under a Model 1 or Model 2 IGA. Reg. section 1.1471-1(b)(74). The term "excepted NFFE" means an NFFE described in reg. section 1.1472-1(c)(1) and an NFFE that is a publicly traded corporation, some affiliated entities related to a publicly traded corporation, some territory entities, active NFFEs, and excepted NFFEs (including holding companies, treasury centers, captive finance companies that are members of a nonfinancial group, start-up companies, entities that are liquidating or emerging from bankruptcy, and nonprofit organizations). Reg. section 1.1472-1(c)(i)-(v).

318 Reg. section 1.1471-5(e)(4)(i)(A) provides that an entity is an investment entity if it primarily conducts as a business one or more of the following activities or operations for or on behalf of a customer: "(1) trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); foreign exchange, interest rate, and index instruments; transferable securities, or commodity futures; (2) individual or collective portfolio management; or (3) otherwise investing, administering or managing funds, money or financial assets on behalf of other persons." Reg. section 1.1471-5(e)(4)(i)(B) further describes an investment entity: "The entity's gross income is primarily attributable to investing, reinvesting or trading in financial assets and the entity is managed by" a depository institution, a custodial institution, an insurance or holding company, or professional asset manager. An entity is managed by another entity if the managing entity performs, either directly or through another third-party service provider, any of the services described in reg. section 1.1471-5(e)(4)(i)(A) on behalf of the managed entity. Financial assets means a security (as defined in section 475(c)(2) without regard to the last sentence thereof), partnership interest, commodity (as defined in section 475(e)(2)), NPC, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, NPC, or annuity contract.

319 Reg. section 1.1471-5(e)(5)(i)(C).

320 Reg. section 1.1471-5(e)(1)(v)(B).

321 Reg. section 1.1471-5(e)(5)(i)(D).

322 Reg. section 1.1471-5(e)(5)(i)(D)(2)(ii).

323 Preamble to T.D. 9610, 78 F.R. 5889.

324 Reg. sections 1.1471-5(f); 1.1471-2(a)(4)(ii)(B)(2)(iv); and 1.1471-3(d)(4). A withholding agent is generally not required to withhold under section 1471(a) on a withholdable payment made to a payee that the withholding agent can treat as a DCFFI. For this purpose, a limited branch of a DCFFI is treated as an NPFFI. However, reg. section 1.1471-2(a)(i) or (iii) requires withholding in some cases. Reg. section 1.1471-2(a)(i) applies to PFFIs and to Model 1 FFIs, while reg. section 1.1471-2(a)(2)(iii), by its heading, applies to some PFFIs and RDCFFIs. Reg. section 1.1471-2(a)(2)(i) provides that a withholding agent that after June 30, 2014 (see Notice 2013-43 at 6), makes a payment of U.S.-source FDAP income to a PFFI or Model 1 FFI that is an NQI receiving the payment as an intermediary, NWP, or NWT, must withhold 30 percent of the payment unless the withholding is reduced under that section of the regulations. A withholding agent is not required to withhold on a payment, or portion of a payment, that it can reliably associate, in the manner described in reg. section 1.1471-3(c)(2), with a valid intermediary or flow-through withholding certificate that meets the requirements of reg. section 1.1471-3(d)(4) and an FFI withholding statement that meets the requirements of reg. section 1.1471-3(c)(3)(iii)(B)(1) and (2) and that allocates the payment or portion of the payment to payees for which no withholding is required under chapter 4. Further, a withholding agent is not required to withhold on a payment that it can reliably associate with documentation indicating that the payee is a U.S. branch of a PFFI that is treated as a U.S. person under reg. section 1.1441-1(b)(2)(iv)(A). In a companion provision, reg. section 1.1471-2(a)(2)(iii) provides that a person that otherwise would be a payee for a payment but that makes an election to be withheld upon does not agree to accept primary withholding responsibility for the payment under chapter 3 or 4. Accordingly, that person cannot be treated as the payee, and the withholding agent must determine whether it must withhold based on the chapter 4 status of the payee on whose behalf the person is receiving the payment. The election to be withheld upon is available only to the extent provided in reg. section 1.1471-2(a)(2)(iii)(A) and (B). The election is unavailable to an entity that must accept primary withholding responsibility for the payment, such as a WP or WT receiving a payment of U.S.-source FDAP income. It is also unavailable to an entity that already must be withheld upon because it may not accept primary withholding responsibility for the payment and, as such, already must give the withholding agent documentation regarding the payee, such as a PFFI that is an NQI receiving a payment of U.S.-source FDAP income. A withholding agent is required to withhold on a payment or portion of a payment that is U.S.-source FDAP income subject to withholding that is made after June 30, 2014 (see Notice 2013-43, at 6), to a QI that has elected to be withheld upon. In that case, the withholding agent must, under a withholding statement described in reg. section 1.1471-3(c)(3)(iii)(B) provided by the QI, withhold 30 percent of the portion of the payment that is allocable to recalcitrant account holders and NPFFIs. If no allocation information is provided, the withholding agent must apply the presumption rules of reg. section 1.1471-3(f) to determine the payee's chapter 4 status. A QI that is an FFI and that makes the election to be withheld upon for a payment of U.S.-source FDAP income may not assume primary withholding responsibility under chapter 3 for that payment. Conversely, a QI that is an FFI and does not make the election to be withheld upon for a payment of U.S.-source FDAP income is required to assume primary withholding responsibility under chapter 3 for that payment. The election to be withheld upon is available only for a payment of U.S.-source FDAP income if (1) the withholding agent is a PFFI, Model 1 FFI, QI, or a U.S. withholding agent; (2) the person that receives the payment is a PFFI or RDCFFI that acts as a QI for the payment and is not a QI branch of a USFI; (3) the payee provides the withholding agent, upon or before the payment, a valid intermediary withholding certificate for the payment that notifies the withholding agent that the payee has elected to be withheld upon, certifies that it is not assuming primary withholding responsibility under chapter 3, and designates whether the election is made for all accounts held with the withholding agent or for the specific accounts identified on the withholding certificate; and (4) the intermediary withholding certificate is accompanied by a withholding statement described in reg. section 1.1471-3(c)(3)(iii)(B). Reg. section 1.1471-2(a)(2)(iii)(A)(4).

325 Reg. section 1.1471-5(f)(1) defines an RDCFFI as an FFI that meets the procedural requirements described in reg. section 1.1471-5(f)(1)(ii) and is either described in reg. section 1.1471-5(f)(1)(i)(A)-(F) or is treated as an RDCFFI under a Model 2 IGA. An RDCFFI also includes any FFI or branch of an FFI that is a Model 1 FFI that complies with the registration requirements of a Model 1 IGA. The registration user guide defines an RDCFFI as (1) an FFI that is registering to confirm that it meets the requirements to be treated as a local FFI, non-reporting FI member of a PFFI group, qualified collective investment vehicle, restricted fund, qualified credit card issuer, or sponsored investment entity or CFC (see reg. section 1.1471-5(f)(1)(i) for more information about these categories); (2) a reporting financial institution under a Model 1 IGA that is registering to obtain a GIIN; or (3) an FFI that is treated as a non-reporting financial institution under a Model 1 or 2 IGA and is registering under the applicable Model 1 or 2 IGA.

326 Notice 2013-43, at 6.

327 Reg. section 1.1471-5(f)(1)(ii)(D) and 1.1471-5(f)(1)(iii). A DCFFI that becomes a PFFI or a member of a PFFI group as a result of a merger or acquisition will not be required to redetermine the chapter 4 status of any account maintained by the FFI before the date of the merger or acquisition unless that account has a later change in circumstances. Reg. section 1.1471-5(f)(1)(iii).

328 An FFI will not be considered to have solicited customers or account holders outside its country of incorporation or organization merely because it operates a website, so long as the website does not specifically indicate that the FFI maintains accounts for or provides services to nonresidents and does not otherwise target or solicit U.S. customers or account holders. Further, an FFI will not be considered to have solicited customers or account holders outside its country of incorporation or organization merely because it advertises in print media or on a radio or television station that is distributed or aired primarily within its country of incorporation or organization but is also incidentally distributed or aired in other countries, as long as the advertisement does not specifically indicate that the FFI maintains accounts for, or provides services to, residents and does not otherwise target or solicit U.S. customers or account holders. Reg. section 1.1471-5(f)(1)(i)(A)(3).

329 For purposes of this calculation, an FFI that is incorporated or organized in an EU member state may treat account holders that are residents (including residents that are entities) of other EU member states as residents of the country in which the FFI is incorporated or organized. Reg. section 1.1471-5(f)(1)(i)(A)(5).

330 Notice 2013-43, at 6.

331 Reg. section 1.1471-5(f)(1)(i)(A).

332 Notice 2013-43, at 6.

333Id.

334 Reg. section 1.1471-5(f)(1)(i)(B).

335 A fund will be considered to be regulated as an investment fund if its manager is regulated regarding the investment fund in all the countries in which the investment fund is registered and in all the countries in which the investment fund operates. Reg. section 1.1471-5(f)(1)(i)(C)(1).

336 However, an FFI will not be prohibited from qualifying as a qualified collective investment vehicle solely because it has issued interests in bearer form, as long as the FFI ceased issuing interests in that form after 2012, retires all those interests upon surrender, and establishes policies and procedures to redeem or immobilize all those interests before 2017. Before payment, the FFI must document the account holder under the procedures of reg. section 1.1471-4(c) applicable to accounts other than preexisting accounts, and must agree to withhold and report on those accounts as would be required under reg. section 1.1471-4(b) and (d) if it were a PFFI. An FFI may disregard equity interests owned by specified U.S. persons acquired with seed capital within the meaning of reg. section 1.1471-5(i)(4) if the U.S. person is described in reg. section 1.1471-5(i)(3)(i) and (ii) (substituting the term "U.S. person" for "FFI" and "member"), and the specified U.S. person neither has held, nor intends to hold, that interest for more than three years. Reg. section 1.1471-5(f)(1)(i)(C)(2).

337 Reg. section 1.1471-5(f)(1)(i)(C)(3).

338 A fund will be considered regulated as an investment fund if its manager is regulated regarding the fund in all the countries in which the investment fund is registered and in all the countries in which the investment fund operates. Reg. section 1.1471-5(f)(1)(i)(D)(1).

339See supra note 333. Interests in the FFI that are issued by the fund through a transfer agent or distributor that does not hold the interests as a nominee of the account holder will be considered to have been issued directly by the fund. Reg. section 1.1471-5(f)(1)(i)(D)(2).

340 A distributor is an underwriter, broker, dealer, or other person that participates, under a contractual arrangement with the FFI, in the distribution of securities and holds interests in the FFI as a nominee. Reg. section 1.1471-5(f)(1)(i)(D)(3).

341 Notice 2013-43, at 6.

342 Also, by that date, the FFI's prospectus and all marketing materials must indicate that sales and other transfers of interests in the FFI to specified U.S. persons, NPFFIs, or passive NFFEs with one or more substantial U.S. owners are prohibited unless those interests are both distributed by and held through a PFFI. Reg. section 1.1471-5(f)(1)(i)(D)(4).

343 Notice 2013-43, at 6.

344 The FFI must certify to the IRS that for any distributor that ceases to qualify as a distributor identified in reg. section 1.1471-5(f)(1)(i)(D)(3), the FFI will terminate its distribution agreement with the distributor, or cause the distribution agreement to be terminated, within 90 days of notification of the distributor's change in status. The FFI must also certify that for all debt and equity interests of the FFI issued through that distributor, the FFI will redeem those interests, convert them to direct holdings in the fund, or cause them to be transferred to another distributor within six months of the distributor's change in status. Reg. section 1.1471-5(f)(1)(i)(D)(5).

345 However, the FFI will not be required to review the account of any individual investor who purchased her interest when all the FFI's distribution agreements and its prospectus contained an explicit prohibition on the issuance or sale of shares to U.S. entities and U.S. resident individuals. An FFI will not be required to review the account of any investor that purchased its interest in bearer form until the time of payment. At the time of payment, however, the FFI will be required to document the account under the procedures of reg. section 1.1471-4(c) applicable to accounts other than preexisting accounts. By the later of June 30, 2014, or six months after the date the FFI registers as a DCFFI, the FFI will be required to certify to the IRS (1) that it did not identify any U.S. accounts or accounts held by an NPFFI as a result of its review; (2) that it transferred any such accounts to an affiliate or other FFI that is a PFFI, Model 1 FFI, or USFI; or (3) that it withheld and reported on those accounts as would be required under reg. section 1.1471-4(b) and (d) if it were a PFFI. Reg. section 1.1471-5(f)(1)(i)(D)(6)-(7). Notice 2013-43, at 6.

346 Notice 2013-43, at 6.

347 Reg. section 1.1471-5(f)(1)(i)(D)(8).

348 Notice 2013-43, at 6.

349 Reg. section 1.1471-5(f)(1)(i)(E). For this purpose, a customer deposit does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns. Reg. section 1.1471-5(f)(1)(i)(E)(2).

350 Reg. sections 1.1471-2(a); 1.1472-1(c)(1)(iv); 1.1471-2(a)(3).

351 Preamble to T.D. 9610, 78 F.R. 5889.

352 Described in reg. section 1.1471-5(e)(5)(i)(C), (D), or (E).

353 Excluding income derived by any member that is an entity described in reg. section 1.1471-5(e)(5)(ii) or (iii) (excepted nonfinancial start-up companies or companies entering into a new line of business and excepted nonfinancial companies in liquidation or bankruptcy) and income derived from transactions between members of the expanded affiliated group.

354 The 25 percent gross income test. Passive income as defined in reg. section 1.1472-1(c)(1)(v).

355 The 5 percent income test.

356 The 25 percent assets test. Excluding assets derived by any member that is an entity described in reg. section 1.1471-5(e)(5)(ii) or (iii) (excepted nonfinancial start-up companies or companies entering into a new line of business and excepted nonfinancial companies in liquidation or bankruptcy).

357 Reg. section 1.1471-5(e)(5)(i)(B).

358 Reg. section 1.1471-5(e)(5)(i)(E).

359 Reg. section 1.1471-5(e)(5)(ii).

360 Reg. section 1.1471-5(e)(5)(iii).

361 Reg. section 1.1471-5(e)(5)(iv)(D) as amended by Technical Corrections at p. 26.

362 Reg. section 1.1471-5(e)(5)(v).

363 Reg. section 1.1471-5(e)(5)(vi).

364 A CDCFFI is an FFI described in reg. section 1.1471-5(f)(2)(i) through (iv) that has certified as to its status as a DCFFI by providing a withholding agent the documentation required under reg. section 1.1471-3(d)(6). A CDCFFI includes a non-registering local bank, FFIs with low-value accounts, sponsored closely held investment vehicles, and limited life debt investment entities. With the exception of a sponsored closely held investment vehicle, if the withholding agent has a withholding certificate that identifies the payee as a CDCFFI and on which the payee certifies that it meets the requirements to qualify as the type of CDCFFI on the withholding certificate, a withholding agent may treat a payee as a category of CDCFFI. Reg. section 1.1471-3(d)(5)(i).

365 An ODFFI is an FFI that meets the following requirements. An FFI may be treated as an ODFFI only for payments received from and accounts held with a designated withholding agent (or for payments received from and accounts held with another FFI that is also treated as an ODFFI by that designated withholding agent). A designated withholding agent is a USFI, PFFI, or Model 1 FFI that agrees to undertake the additional due diligence and reporting required under reg. section 1.1471-5(f)(3)(ii)(D) and (E) to treat the FFI as an ODFFI. An FFI meeting those requirements will be treated as a DCFFI only for a payment or account for which it does not act as an intermediary.

366 Reg. section 1.1471-5(f) and 1.1471-2(a)(4)(ii)(B)(2)(iv).

367 A withholding agent may treat a payee as an ODFFI if all the following requirements are met. A withholding agent may not rely on a withholding certificate to treat a payee as an ODFFI if the withholding certificate does not contain all the information and associated documentation under requirements 1, 3, and 4: (1) The withholding agent has a withholding certificate that identifies the payee as an ODFFI that is not acting as an intermediary; (2) the withholding agent is a USFI, PFFI, or Model 1 FFI that agrees to act as a designated withholding agent for the payee; (3) the payee submits to the withholding agent an FFI owner reporting statement that meets the requirements of reg. section 1.1471-3(d)(6)(iv); (4) the payee submits to the withholding agent valid documentation meeting the requirements of reg. section 1.1471-3(d)(6)(iii) for each person identified on the FFI owner reporting statement; (5) the withholding agent does not know or have reason to know that the payee (or any other FFI that is an owner of the payee and that the designated withholding agent is treating as an ODFFI) maintains any financial account for an NPFFI; and (6) the withholding agent does not know or have reason to know that the payee is in an EAG with any other FFI other than an FFI that is also treated as an ODFFI by the withholding agent or that the FFI has any U.S. specified persons that own an equity interest in the FFI or a debt interest (other than a debt interest that is not a financial account or that has a balance or value not exceeding $50,000) in the FFI other than those identified on the FFI owner reporting statement. Reg. section 1.1471-3(d)(6)(i).

368 Reg. section 1.1471-5(f)(2)(i)-(iv).

369 Reg. section 1.1471-5(f)(2).

370 Reg. section 1.1471-1(b)-(76).

371 Reg. section 1.1471-3(d)(5).

372 A fixed place of business does not include a location that is not advertised to the public and from which the FFI performs solely administrative support functions. Reg. section 1.1471-5(f)(2)(i)(C).

373See reg. section 1.1471-5(f)(2)(i)(D).

374See reg. section 1.1471-5(f)(2)(i)(C). Each FFI in the group, other than an FFI with only low-value accounts or as described in reg. section 1.1471-6(f), meets the requirements of reg. section 1.1471-5(f)(2)(i).

375 The balance or value of a financial account is determined by applying the rules described in reg. section 1.1471-5(b)(4), substituting the term "financial account" for the term "depository account" and the term "person" for the term "individual." Reg. section 1.1471-5(f)(2)(ii)(B).

376 Reg. section 1.1471-5(f)(2)(ii)(C).

377 Reg. section 1.1471-3(d)(5)(ii). A withholding agent that makes a payment under an offshore obligation may treat a payee as a sponsored closely held investment vehicle if it obtains a written statement that indicates the payee is a sponsored FFI and provides the sponsor's GIIN, which the withholding agent has verified in the manner described in reg. section 1.1471-3(e)(3). For a payment of U.S.-source FDAP income, the written statement must also indicate that the payee is the beneficial owner, and it must be supplemented with documentary evidence supporting the payee's claim of foreign status.

378 Reg. section 1.1471-1 and 1.1471-4(d)(2)(ii)(C).

379 Reg. section 1.1471-5(f)(2)(iii)(E). The IRS may revoke a sponsoring entity's status as a sponsor for all sponsored FFIs if there is a material failure by the sponsoring entity to comply with its obligations under reg. section 1.1471-5(f)(2)(iii)(E) for any sponsored FFI. Reg. section 1.1471-5(f)(2)(iii)(F).

380 Reg. section 1.1471-5(f)(2)(iii)(F).

381 An FFI that is a limited life debt investment entity will be treated as a CDCFFI before 2017. Reg. section 1.1471-5(f)(2). Thus, after 2016, the deemed-compliant status of this entity terminates, and it will be required to register and obtain a GIIN as a PFFI. Preamble to T.D. 9610, 78 F.R. 5892. Because Notice 2013-43 does not discuss this transition classification, the period for qualification as a limited life debt investment entity should remain unchanged by the notice.

382 Reg. section 1.1471-5(f)(2)(iv). Further, no other person has the authority to fulfill the obligations that a PFFI is subject to under reg. section 1.1471-4 on behalf of the FFI. Reg. section 1.1471-5(f)(2)(iv)(E).

383 Reg. section 1.1471-5(f).

384 Reg. section 1.1471-5(f)(3)(ii)(D) and (E).

385 An ODFFI must meet the following requirements: (1) the FFI is an FFI solely because it is an investment entity; (2) the FFI is not owned by or in an EAG with any FFI that is a depository institution, custodial institution, or specified insurance company; (3) the FFI does not maintain a financial account for any NPFFI; (4) the FFI provides the designated withholding agent all the documentation described in reg. section 1.1471-3(d)(6) and agrees to notify the withholding agent if there is a change in circumstances; and (5) the designated withholding agent agrees to report to the IRS (or, for a Model 1 FFI, to the relevant foreign government or agency thereof) all the information described in reg. section 1.1471-4(d) or 1.1474-1(i) (as appropriate) regarding any specified U.S. persons that are identified in reg. section 1.1471-3(d)(6)(iv)(A)(1) and (2), as amended by Technical Corrections at p. 28. However, the designated withholding agent is not required to report information regarding an indirect owner of the FFI that holds its interest through a PFFI, a DCFFI (other than an ODFFI), an entity that is a U.S. person, an exempt beneficial owner, or an excepted NFFE. Reg. section 1.1471-5(f)(3)(ii).

386 Marie Sapirie et al., "Treasury Releases FATCA Regs, Statement on Info Exchange," Tax Notes, Feb. 13, 2012, p. 767 2012 TNT 27-1: News Stories.

387 "FATCA Information for Foreign Financial Institutions and Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29; reg. section 1.1471-2(a).

388 "FATCA Information for Governments," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

389 Preamble to T.D. 9610, 78 F.R. at 5896.

390 Notice 2013-43, at 12-13.

391 The list of jurisdictions that are treated as having an IGA in effect is available at http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx.

392 "FATCA Information for Foreign Financial Institutions and Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

393Id.

394 Notice 2013-43, at 12-13.

395Id. According to this Treasury Web page, the following jurisdictions are treated as having an IGA in effect: Model 1 IGA -- Denmark (Nov. 19, 2012); Germany (May 31, 2013); Ireland (Jan. 23, 2013); Mexico (Nov. 19, 2012); Norway (Apr. 15, 2013); Spain (May 14, 2013); United Kingdom (Sept. 9, 2012); Model 2 IGA -- Japan (June 11, 2013); Switzerland (Feb. 14, 2013).

396 The bill implementing the accord is to be submitted to the German Bundestag, or lower house of parliament, in conjunction with the signing of the agreement. It is expected that the legislation will be adopted before the next parliamentary elections, to give German banks the legal certainty they need to make the necessary technical preparations.

397 On August 7, 2013, the United Kingdom released final regulations (see supra note 8), and on August 14, 2013, HMRC released final guidance notes , referenced throughout this article unless noted otherwise.

398 United Kingdom Finance Act 2013(a).

399 Draft U.K. guidance notes (Dec. 11, 2012) ; updated draft U.K. guidance notes (May 31, 2013) . On August 7, 2013, the United Kingdom released final regulations, supra note 8. See final U.K. guidance notes (Aug. 14, 2013).

400 "Statement of Mutual Cooperation and Understanding Between the U.S. Department of the Treasury and the Authorities of Japan to Improve International Tax Compliance and to Facilitate Implementation of FATCA" (June 11, 2013) 2013 TNT 113-33: Administrative Assistance.

401 Registration user guide, at 10.

402Id.

403Id.

404 To date, seven countries have signed Model 1 IGAs: Germany (May 31, 2013), Spain (May 14, 2013), Norway (including a memorandum of understanding) (Apr. 15, 2013), Ireland (Jan. 23, 2013), Mexico (Nov. 19, 2012), Denmark (Nov. 19, 2012), and the United Kingdom (Sept. 12, 2012). One country has signed a Model 2 IGA -- Switzerland (Feb. 14, 2013) -- and Japan on June 11 entered an agreement to do so. Treasury is in negotiations with more than 75 jurisdictions, according to an April 9 statement by Stack, supra note 7. Treasury is apparently in "final negotiations" with Canada, Finland, France, Guernsey, the Isle of Man, Italy, Jersey, and the Netherlands. Treasury had hoped to conclude negotiations with those countries by the end of 2012. Treasury release, supra note 7. The 2012 release identified the following jurisdictions in which Treasury was "actively engaged in a dialogue towards concluding an IGA": Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. The jurisdictions that Treasury is working with to explore options for intergovernmental engagement are Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, Saint Maarten, Slovenia, and South Africa.

405 U.K. guidance note 2.1.

406Id. at section 1471.

407 U.K. guidance note 2.15; U.K. final reg. section 3(1)(a)-(f); guidance note 11; U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

408 U.K. reg. section 4(a)-(f); U.K. final reg. section 3(1)(a)-(f); guidance note 11; U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

409 Notice 2013-43, at 10-11, provides that for payments made before 2015, verification of a GIIN is not required for payees that are Model 1 FFIs. That provision will continue to apply following the changes described in Notice 2013-43. As a result, although Model 1 FFIs will be able to register and obtain GIINs beginning on January 1, 2014, they will have time beyond July 1, 2014, to register and obtain a GIIN to ensure that they are included on the FFI and branch list before 2015. Notice 2013-43, at 10-11. However, a Model 1 FFI must register before July 1, 2014, if (1) it maintains one or more branches (other than a limited branch or a U.S. branch) in countries that are not covered by a Model 1 IGA; (2) it is renewing its QI, WP, or WT agreement; or (3) it intends to be a lead FFI for one or more members that are not established in, and operating exclusively in other Model 1 countries. See 2.a.vii. But see II.D.2.a.i for transition relief for RDCFFIs, including Model 1 FFIs.

410 U.K. guidance note 11; reg. section 1.1471-3(d)(4)(iv)(A); U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

411 U.K. reg. section 4(a)-(f).

412 U.K. reg. section 4(2).

413 The U.K. FATCA regulations define a depository institution as (1) a person carrying on a regulated activity for the purposes of the Financial Services and Markets Act 2000 by virtue of article 5 of FSMA 2000 (regulated activities) Order 2001(a); or (2) a person described within paragraphs (a) to (e) or (h) to (j) of the definitions of electronic money issuer in regulation 2(1) of the Electronic Money Regulations 2011.

414 For the purposes of FSMA 2000 by virtue of article 5 of FSMA Act 2000 (regulated activities) Order 20011 (accepting deposits).

415 U.K. reg. section 4(a), (b). An entity meets the financial assets test for a calendar year if the gross amount of the income of its business as carried on in the United Kingdom for the applicable period wholly or mainly derives from investing or dealing in (1) assets capable of being the subject matter of regulation 14F of part 2B of the Authorized Investment Funds (Tax) Regulations 2006(d); (2) insurance or annuity contracts; (3) commodities; or (4) derivative contracts within the meaning of part 7 of CTA 2009(a). U.K. final reg. section 5(a)-(d).

416 U.K. IGA, art. 1.1.(j).

417 U.K. guidance note 2.28.

418Id.

419Id.

420 U.K. guidance note 2.28; U.K. guidance note 11; U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

421 U.K. guidance note 2.28; S.I. 2009/XXXX.

422 U.K. guidance note 2.28; section 576 of the Corporation Tax Act 2009. U.K. reg. section 5 uses the phrase "mainly derives from investing or dealing in" rather than the words "primarily attributable to" as in the U.K. guidance notes.

423 U.K. guidance note 2.28.

424Id.

425 U.K. guidance note 2.31.

426 U.K. guidance note 2.36.

427Id.

428Id.

429Id.

430 U.K. guidance note 2.26. Under Section IV.A of the Annex II to the Model 1 IGA released on July 12, 2013, a trustee-documented trust will be treated as a non-reporting financial institution that is treated as a DCFFI for purposes of section 1471. A trustee-documented trust includes a trust under the laws of the FATCA partner if its trustee is a reporting USFI, Model 1 FFI, or PFFI and reports all information required to be reported under the agreement regarding all the trust's U.S. reportable accounts. Presumably, the United Kingdom will want to amend its IGA for the relief provided for these and several other entities under the updated Annex II to the Model 1 IGA (e.g., specific collective investment entities), unless the most favored nation or coordination provisions already permit the United Kingdom to take advantage of these benefits.

431 U.K. final reg. section (7)(a), (b). However, under Section IV.E of Annex II to the Model 1 IGA (released July 12, 2013), some collective investment vehicles will be treated as a non-reporting financial institutions that are deemed-compliant for purposes of section 1471. For this purpose, such entity will include (1) an investment entity established in the FATCA partner jurisdiction that is regulated as a collective investment vehicle (including debt interests in excess of $50,000); (2) an investment entity held through one or more exempt beneficial owners, active NFFEs, described in subparagraph B(4) of section VI of Annex I, U.S. persons that are not specified U.S. persons, or financial institutions that are not NPFFIs. Presumably the United Kingdom will want to amend its IGA for the relief provided to these and a number of other entities under Annex II to the Model 1 IGA (e.g., trustee-documented trusts). Section F has several special rules that apply to such an investment entity including reporting the interests in the investment entity by the investment entity or another person, unless the most favored nation or coordination provisions already permit the United Kingdom to take advantage of these benefits

432See section 1158 of the Corporation Tax Act 2010.

433 Within the meaning of part 6 of the Income Tax Act 2007.

434 For purposes of FSMA 2000(f)(g). U.K. reg. section 7 (a), (b).

435 U.K. guidance note 2.31.

436 Reg. section 1.1471-4(d)(6) defines a dormant account for purposes of the reporting of accounts held by recalcitrant holders under reg. section 1.1471-4(d)(6)(i).

437 U.K. guidance note 3.18.

438Id.

439 U.K. guidance note 2.29.

440Id.

441See U.K. reg. section 10. "A treasury company means a company whose business consists wholly or mainly in carrying on for a financial group of which it is a member, or for a qualifying entity with whom it has a qualifying relationship, any of the activities within section 316(9) of TIOPA 2010(e) and for this purpose: (i) the reference in paragraph (d) of that subsection to a U.K. group company and a group treasury company is a related entity which is within any paragraph (1)(a) to (d) of this regulation; and (ii) financial group means a group of entities consisting of the company and its related entities where at least one of the entities falls within paragraph (1)(a) to (d) of this regulation." See also U.K. reg. section 9(a), (b).

442 U.K. guidance note 2.30.

443Id.

444Id.

445 Reg. section 1.1471-6.

446 U.K. guidance note 2.1; U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

447 U.K. guidance notes. U.K. IGA, art. 4.1(c); Model 1A and 1B IGA, art. 4.1(c) (July 12, 2013).

448Id.

449 Registration user guide, at 10.

450Id.

451Id.

452 Model 2 IGA (no TIEA or double tax convention (DTC)), art 2.1; Notice 2013-43, at 6. Withholding agents generally will be required to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs for payments that are not grandfathered obligations, unless the payments can be reliably associated with valid documentation that the withholding agent can use to treat the payments as exempt from withholding.

453 Model 2 IGA (no TIEA or DTC), art. 1.1.o.

454Id., art. 1.1.m.

455 Reg. section 1.1471-1(b)(85).

456 Model 2 IGA (no TIEA or DTC), art. 1.1.g.

457Id., art. 1.1.j.

458Id., art. 1.1.i.

459Id., art. 1.1.k.

460Id., art. 1.1.l.

461Id., art. 1.1.q.

462 Reg. section 1.1471-4(e)(3).

463 Reg. section 1.1471-4(e)(3)(ii).

464 Reg. section 1.1471-4(e)(e)(iii).

465 "FATCA Information for Foreign Financial Institutions and Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

466 U.K. IGA, art. 4.5; Model 1 IGA, art. 4.5; Model 2 IGA, art. 3.5.

467 Model 1 IGA, art. 4, art. 5a-5c; Model 2 IGA, art. 3, 5a-5c.

468 Reg. section 1.1471-4(e)(3)(i).

469 Reg. section 1.1471-4(e)(3)(ii).

470 Reg. section 1.1471-4(e)(iii)(B), as amended by the Technical Corrections, supra note 96.

471 Reg. section 1.1471-4(e)(3)(iii).

472 Because Notice 2013-43 does not specifically discuss the limited FFI or limited branch transition rule, it is likely that limited FFIs or limited branches can continue to apply this transition rule and will have until December 31, 2015, to become compliant FFIs that are part of the EAG.

473 Reg. section 1.1471-4(e)(3)(iv).

474 Reg. section 1.1471-4(e)(4).

475 Reg. section 1.1471-4(e)(2)(iii).

476Id. as amended by Technical Corrections.

477 Reg. section 1.1471-4(e)(2)(iv)(B) as amended by the Technical Corrections.

478 Reg. section 1.1471-4(e)(2)(iv).

479 Reg. section 1.1471-4(e)(2)(v).

480 IRM sections 3.21.112.2.5.1.2; 3.21.112.2.5.1.3; 3.21.112.3.2.

481 IRM sections 3.21.112.3.1; 3.21.112.2.5.1.2; 3.21.112.2.5.1.3; 3.21.112.3.2.

482 U.K. IGA, art. 4.5; Model 1 IGA, art. 4.5; Model 2 IGA, art. 3.5.

483 "FATCA Information for USFIs and Foreign Entities," available at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29.

484 Instructions to Form 8957, "Special Instructions, Line 4," page 5.

485 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's country of tax residence would have to be reflected on the FATCA portal and may affect the registrant's chapter 4 status. See also reg. section 1.1441-1(e)(4)(ii)(D).

486 For example, in some countries a person, including an FFI, may have a post office address or a P.O. box but not have a specific mailing address at the location of the business.

487 For example, see instructions to Form 1042-S, box 12, "Withholding Agent's Name and Address," at 17 (2012).

488 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's mailing address will have to be reflected on the FATCA portal and may affect the registrant's chapter 4 status if the change is to a U.S. address unless the entity is a USFI. See also reg. section 1.1441-1(e)(4)(ii)(D) for related chapter 3 rules.

489 It is possible for an FFI to have a branch resident in a non-IGA jurisdiction that is a PFFI and to have another branch resident in that same jurisdiction that is an RDCFFI under reg. section 1.1471-5(f)(1)(i)(A)-(F). It is also possible that each branch is doing business under a different name and each branch has a different mailing address in the jurisdiction. On these facts, the IRS may want to require each branch to have its own unique GIIN rather than rely on a countrywide GIIN for all the branches in a particular jurisdiction as it has suggested is the current approach.

490 Reg. section 1.1471-4(e)(2)(ii) as amended by Technical Corrections, p. 22. The registration user guide defines a branch as a unit, business, or office of a financial institution that is treated as a branch under the regulatory regime of a country or is otherwise regulated under the laws of that country as separate from other offices, units, or branches of the financial institution.

491 Reg. section 1.1471-4(e)(2)(ii).

492 Reg. section 1.1471-3(e)(3)(i).

493Id.

494 Reg. section 1.1471-3(d)(4)(i).

495 Reg. section 1.1471-3(d)(4)(i), -2(a)(1).

496 Reg. section 1.1471-3(d)(4)(iv). See supra note 118, for a discussion of the requirements for payments made before 2015 under the provisions of Notice 2013-43, at 10-11.

497 Reg. section 1.1471-3(d)(4)(iv). Notice 2013-43 provides that for payments made before 2015, a verification of a GIIN is not required for payees that are Model 1 FFIs. This provision will continue to apply following the changes described in the notice. As a result, while Model 1 FFIs generally will be able to register and obtain GIINs beginning on January 1, 2014, they will have additional time beyond July 1, 2014, to register and obtain a GIIN to ensure that they are included on the FFI and branch list before 2015, subject to the exception noted in the text of this report. Notice 2013-43, at 10-11. But see II.D.2.a.i for transition relief for RDCFFIs, including Model 1 FFIs.

498 Model 1 IGA, art. 1.1(l) and (m); Model 2 IGA, art. 1.1(m) and (n); Swiss IGA, art. 2.1(13) and (14); Cotorceanu, supra note 16, at 416.

499 Section 7701(a)(4).

500Id.

501 Section 7701(a)(3), (a)(4), and (a)(5).

502 Reg. section 1.1471-4(e)(2)(ii), -3(f)(6).

503 Under the presumption rules in reg. section 1.1471-3(f)(6), a withholding agent that makes a payment to a U.S. branch may presume, in the absence of documentation indicating otherwise, that the U.S. branch is the payee and that the payment is effectively connected with the conduct of a trade or business in the United States if the withholding agent has both an EIN for the branch and a valid GIIN for the home office establishing that the U.S. branch is a branch of a PFFI or an RDCFFI. A U.S. branch will be subject to this presumption if it is a U.S. branch of a foreign bank subject to regulatory supervision of the Federal Reserve Board or a U.S. branch of a foreign insurance company required to file an annual statement on a form approved by the National Association of Insurance Commissioners with the insurance department of the state, territory, or District of Columbia.

504 A U.S. entity that is a sponsoring entity may have to register and obtain its own GIIN. See III.1.c. A USFI with a branch that is a QI or with a branch in a Model 1 jurisdiction will have to register and obtain a separate GIIN. A USFI with a non-QI branch resident in a Model 2 jurisdiction or in a non-IGA jurisdiction is not required to register with the IRS.

505 Reg. section 1.1471-3(a)(3)(vii).

506Id.

507 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's country of tax residence or FATCA classification will have to be reflected on the FATCA portal and may affect the registrant's chapter 4 status. See also reg. section 1.1441-1(e)(4)(ii)(D) for related chapter 3 rules.

508 Preamble T.D. 9610, 78 F.R. 5884.

509Id.

510 Reg. section 1.1471-4.

511 Instructions to Form 8957, at 6.

512 Registration user guide, at 66.

513 Reg. section 1.1471-4(c)(7) states: "In order for a participating FFI to comply with the requirements of an FFI agreement with respect to its identification procedures for preexisting accounts, a responsible officer of the participating FFI must certify to the IRS regarding the participating FFI's compliance with the diligence requirements of this paragraph (c)." Similarly, reg. section 1.1471-4(f)(3) states: "The responsible officer must either certify that the PFFI maintains effective internal controls or, if the participating PFFI has failed to remediate any material failures (defined in paragraph (f)(3)(iv) of this section) as of the date of the certification, must make the qualified certification described in paragraph (f)(3)(iii) of this section." Presumably, an equivalent officer of the designee may be used in a Model 1 IGA jurisdiction.

514 In an earlier information release, the IRS said that "in a typical case the RO will be the individual who will sign the FFI agreement."

515 The IRS had originally proposed that an RO would provide positive identification verification by submitting his Social Security number or ITIN as part of the registration process. A FATCA individual identification number (FIIN) would have been issued to the RO or authorized third party (ATP) once his identity was verified, and the FIIN would have then been used by the individual who signs the FFI agreement or certification. For many FFIs, the RO or ATP may not have had an SSN or ITIN, and the process to apply for an ITIN can take several weeks. This process and the need to obtain a FIIN for an RO or ATP have been eliminated.

516 Under the former ATP procedure, some in-house individuals and some types of U.S.-licensed tax professionals subject to a regulatory jurisdiction could have been designated through power of attorney procedures by the RO, allowing the RO to delegate full FATCA registration duties (including signing) to an ATP.

517 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's ROs or POCs will have to be reflected on the FATCA portal.

518 Instructions to Form 8957, at 5.

519Id.

520 Registration user guide, at 9.

521Id.

522 Reg. section 1.1471-5(i)(2).

523 Section 1471(e).

524 Reg. section 1.1471-3(b)(2).

525 Section 318(a)(2)(A) provides that stock owned directly or indirectly by or for a trust (other than an employees' trust described in section 401(a) that is exempt from tax under section 501(a)) will be considered owned by its beneficiaries in proportion to the beneficiaries' actuarial interest in the trust. Section 318(a)(2)(B) provides that stock directly or indirectly owned by or for a grantor trust (sections 671 through 679) will be considered owned by that person. The methods used in determining the value of an interest in property for estate tax purposes are also used in determining a beneficiary's actuarial interest in a trust for purposes of the constructive ownership rules. Reg. section 1.318-3(b).

526 Reg. section 1.1471-5(i)(3).

527 Preamble to T.D. 9610, 78 F.R. 5886.

528 Reg. section 1.1471-5(i)(5); preamble to T.D. 9610, 78 F.R. 5893.

529 Reg. section 1.1471-3(d)(4)(i). Because Notice 2013-43 does not specifically discuss the sponsored FFI transition rule, it is likely that sponsored FFIs can generally continue to apply this transition rule and will have until January 1, 2016, rather than June 30, 2014, to obtain their own GIINs and must provide the sponsoring entity GIIN until January 1, 2016. However, any information entered into the FATCA portal before 2014 by the sponsoring entity (or sponsored FFIs), even if submitted as final, will not be regarded as a final submission, but will be stored until it is submitted as final on or after January 1, 2014. See H.1.b.

530See supra note 115, for a discussion of the requirements for payments made before 2015 under the provisions of Notice 2013-43, at 10-11.

531 Reg. section 1.1471-5(f)(1)(i)(F).

532 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's ROs or POCs will have to be reflected on the FATCA portal.

533 November 2011 is the most current version of Form 14345.

534 Registration user guide, at 10.

535 A QI is defined as an FFI or a foreign clearing organization other than a U.S. branch or U.S. office of that institution or organization or a foreign branch of a U.S. financial institution that has entered into a withholding and reporting agreement (QI agreement) with the IRS. An FFI that becomes a QI is not required to forward beneficial ownership information regarding its customers to a U.S. financial institution or other withholding agent of U.S.-source, investment-type income to establish the customer's eligibility for an exemption from, or reduced rate of, U.S. withholding tax. Instead, the QI may establish for itself the eligibility of its customers for an exemption or reduced rate, based on Form W-8 or Form W-9 or other specified documentary evidence and information as to residence obtained under the know-your-customer rules to which the QI is subject in its home jurisdiction as approved by the IRS or as specified in the QI agreement. The QI certifies eligibility on behalf of its customers and provides withholding rate pool information to the U.S. withholding agent for the portion of each payment that qualifies for an exemption or reduced rate of withholding. The IRS will publish a model QI agreement for FFIs. A prospective QI must submit an application to the IRS providing specified information, and any other information and documentation requested by the IRS. The application must establish to the IRS's satisfaction that the applicant has adequate resources and procedures to comply with the QI agreement. Before entering into a QI agreement that provides for the use of documentary evidence obtained under a country's know-your-customer rules, the IRS must receive (1) that country's know-your-customer practices and procedures for opening accounts and (2) responses to 18 related items. If the IRS has already received that information, a prospective QI need not resubmit it. The IRS has received that information and has approved know-your-customer rules in 59 countries. An FFI or other eligible person becomes a QI by entering into an agreement with the IRS. Under the agreement, the financial institution acts as a QI only for accounts that the financial institution has designated as QI accounts. A QI is not required to act as a QI for all of its accounts; however, if a QI designates an account as one for which it will act as a QI, it must act as a QI for all payments made to that account. The model QI agreement details the QI's withholding and reporting obligations. All QIs are withholding agents for purposes of the nonresident withholding and reporting rules, and are payers (which are required to withhold and report) for purposes of the backup withholding and Form 1099 information reporting rules. However, under the QI agreement, a QI may choose not to assume primary responsibility for nonresident withholding. In that case, the QI is not required to withhold on payments made to non-U.S. customers, or to report those payments on Form 1042-S. Instead, the QI must provide a U.S. withholding agent a Form W-8IMY that certifies the status of its (unnamed) non-U.S. account holders and withholding rate pool information. Similarly, a QI may choose not to assume primary responsibility for Form 1099 reporting and backup withholding. In that case, the QI is not required to backup withhold on payments made to U.S. customers or to file Forms 1099. Instead, the QI must provide a U.S. payer with a Form W-9 for each of its U.S. nonexempt recipient account holders (i.e., account holders that are U.S. persons not generally exempt from Form 1099 reporting and backup withholding). A QI may elect to assume primary nonresident withholding and reporting responsibility, primary backup withholding and Form 1099 reporting responsibility, or both. A QI that assumes that responsibility is subject to all the related obligations imposed by the code on U.S. withholding agents or payers. The QI must also provide the U.S. withholding agent (or U.S. payer) with additional information about the withholding rates to enable the agent to appropriately withhold and report on payments made through the QI. Those rates can be supplied for withholding rate pools that aggregate payments of a single type of income (e.g., interest or dividends) that is subject to a single rate of withholding. If a U.S. nonexempt recipient has not provided Form W-9, the QI must provide the name, address, and TIN (if available) to the withholding agent (and the withholding agent must apply backup withholding). That disclosure is unnecessary if the QI is, under local law, prohibited from making the disclosure and the QI has followed procedural requirements (including providing for backup withholding).

536 Denise M. Hintzke and Anthony Martirano, "Running a Qualified Intermediary in a Post FATCA World," Executive Enterprise Institute 25th Annual Forum on International Tax Withholding (May 3, 2013); see also Chip Collins et al., "FATCA Session III -- Strategic Planning, Systems Implications, Things Treasury Needs to Know, Etc.," Executive Enterprise Institute 22nd Annual Forum on International Tax Withholding (June 18, 2010).

537 Reg. section 1.1441-1(e)(5).

538 Reg. section 1.1471-1(b)(142) provides that the term "withholding foreign trust" means a foreign grantor trust or foreign simple trust that has executed the agreement described in reg. section 1.1441-5(e)(5)(v). Reg. section 1.1471-1(b)(140) provides that the term "withholding foreign partnership" means a foreign partnership that has executed the agreement described in reg. section 1.1441-5(c)(2)(ii).

539 Reg. section 1.1471-4(e)(4).

540 Preamble to T.D. 9610, 78 F.R. 5873; reg. section 1.1472-1(d)(2). An NFFE that is a WP or WT may have separate compliance requirements to identify its substantial U.S. owners. Reg. section 1.1471-1(b)(1).

541See Hintzke and Martirano, supra note 536; see also Collins et al., supra note 536.

542 Notice 2013-43 at 6. The notice does not affect the timing provided in the final regulations for withholding on gross proceeds, passthru payments, and payments of U.S.-source FDAP under offshore obligations by persons not acting in an intermediary capacity.

543 Notice 2013-43, at 8. A withholding agent will be required to document payees that are prima facie FFIs by December 31, 2014, instead of by June 30, 2014.

544 Reg. section 1.1471-2(a)(1).

545See supra note 538.

546 Reg. section 1.1471-2(a)(4)(ii)(B)(1).

547 Preamble to T.D. 9610, 78 F.R. 5897.

548Id. Rev. Proc. 2002-55.

549 Presumably, this date will be moved to July 1, 2014, the general revised start date for withholding and for implementing new account procedures. Notice 2013-43, at 6. Withholding agents generally will have to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs for payments that are not grandfathered obligations, unless the payments can be reliably associated with documentation that the withholding agent can use to treat the payments as exempt from withholding.

550 Preamble to T.D. 9610, 78 F.R. 5897.

551Id.

552Id.

553 Reg. section 1.1471-3(b)(3).

554See supra note 549.

555 Under Notice 2013-43, all QI, WP, or WT agreements that would otherwise expire on December 31, 2013, will be automatically extended until June 30, 2014.

556 IRS, "Guidance for Applications for QI/WP/WT Status and FATCA Registration" (Apr. 15, 2013) 2013 TNT 82-40: Other IRS Documents (QI guidance notice).

557 Notice 2013-43, at 9-10.

558See QI guidance notice, supra note 556.

559 A QI may enter into a private arrangement with another intermediary under which the other intermediary generally agrees to perform all the obligations of the QI. See section 4 of the sample withholding agreement in Rev. Proc. 2000-12 for details.

560 Preamble to T.D. 9610, 78 F.R. 5898.

561Id.

562Id.

563 Reg. section 1.1471-3(c)(6)(ii)(E). A change in a financial institution's QI, WP, or WT status will have to be reflected on the FATCA portal.

564 Registration user guide at 10.

565 Presumably, the agreement will be released soon as part of a revenue procedure or other guidance since it is specifically referenced in the FFI's home page under "Available Account Options -- Agreement -- Print/View." It is unclear whether POCs will have access to that screen. The IRS is confirming this point.

566 IRM sections 3.21.112.3.2; 3.21.112.2.5.1.3; 3.21.115.2.5.1.2.

567 Reg. section 1.1471-4(a).

568 Reg. section 1.1471-2(a)(1); Notice 2013-43, at 6. Withholding agents generally will have to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs for payments that are not grandfathered obligations, unless the payments can be reliably associated with documentation that the withholding agent can rely on to treat the payments as exempt from withholding.

569 Section 7206(1); United States v. Scholl, 166 F.3d 964, 980 (9th Cir. 1989).

570United States v. Ingredient Technology, 689 F.2d 88 (2d Cir. 1983).

571 Reg. sections 1.1471-3(c)(6)(ii)(E), 1.1471-4(c)(2)(iii).

572 Reg. section 1.1471-5(g)(3)(iii).

573 Reg. section 1.1474-6(b).

574 HMRC, "Implementation of International Tax Compliance (United States of America) Regulations 2013," 3.18 (Aug. 14, 2013).

575 Reg. section 1.1471-3(d)(4)(v).

576 However, a payee that has not yet received a GIIN but whose registration with the IRS as a PFFI or an RDCFFI is in process may provide the withholding agent a Form W-8 claiming the chapter 4 status it applied for, and writing "applied for" in the box for GIIN. The FFI will have 90 calendar days from the date of its claim to provide a withholding agent its GIIN, and the withholding agent will have 90 calendar days from the date it receives the GIIN to verify the accuracy of the GIIN against the published FFI and branch list before it has reason to know that the payee is not a PFFI or an RDCFFI. Reg. section 1.1471-3(e)(3)(i). A withholding agent that has received a payee's claim of PFFI or RDCFFI status and that is required to confirm that the branch of that FFI has a GIIN that appears on the published FFI and branch list has reason to know that that payee is not such an FFI if the payee's name (including a name reasonably similar to the name the withholding agent has on file for the payee) and GIIN do not appear on the most recently published FFI and branch list within 90 calendar days of the date that the claim is made. Reg. section 1.1471-3(e)(3). If an FFI is removed from the published FFI and branch list, the withholding agent knows that that FFI is not an PFFI or an RDCFFI on the earlier of the date that the withholding agent discovers that the FFI has been removed from the list or the date that is one year from the date the FFI's GIIN was actually removed from the list. Thus, withholding agents will be required to reconfirm the status of an FFI at least annually.

For example, if a withholding agent initially relied on an FFI's GIIN and confirmed the FFI's status on the published FFI and branch list, and the FFI is subsequently removed from the list by either the IRS or by the registrant, the withholding agent must reconfirm the status of the FFI within one year of the date the FFI was removed from the list, absent reason to know otherwise. This reconfirmation process will require withholding agents to maintain a tickler file for a one-year period starting from the date the FFI was initially removed from the list, the status of the FFI to ascertain whether the FFI either was reinstated back onto the list as a compliant-FFI (and has retained its former GIIN), or has obtained a new GIIN (because of a change in circumstances), and if after this period ends (absent reason to know otherwise, which could trigger withholding earlier) the withholding agent must withhold on any withholdable payments made to the FFI, which will now be treated as an NPFFI.

577 Reg. section 1.1471-3(f)(4).

578Id.

579 Reg. section 1.1471-3(f)(3).

580 Reg. section 1.1471-4(f)(3)(iv). Material failures include the following: (1) the PFFI's deliberate or systemic failure to (a) report accounts that it was required to treat as U.S. accounts, (b) withhold on passthru payments to the extent required, (c) deposit taxes withheld, or (d) accurately report recalcitrant account holders or payees that are NPFFIs, as required; (2) a criminal or civil penalty or sanction imposed on the PFFI (or any branch or office thereof) by a regulator or other governmental authority or agency with oversight over the PFFI's compliance with the AML due diligence procedures to which it (or any branch or office thereof) is subject and that is imposed based on a failure to properly identify account holders under the requirements of those procedures; and (3) a potential future tax liability related to the PFFI's compliance (or lack thereof) with the FFI agreement for which the FFI establishes, for financial statement purposes, a tax reserve or provision.Reg. section 1.1471-4(f)(3)(iv)(C).

581 Reg. section 1.1471-4(f)(3)(iii).

582 Reg. section 1.1471-4(f)(4)(i), (ii).

583 Reg. section 1.1471-4(g)(1). An event of default also includes the occurrence of the following: (1) failure to obtain, in any case in which foreign law would (but for a waiver) prevent the reporting of U.S. accounts, valid and effective waivers from holders of U.S. accounts or failure to otherwise close or transfer those U.S. accounts; (2) failure to significantly reduce, over a period of time, the number of account holders or payees that the PFFI is required to treat as recalcitrant account holders or NPFFIs; (3) failure, in any case in which foreign law prevents or otherwise limits withholding; (4) failure to establish or maintain a compliance program for fulfilling the requirements of the FFI agreement or to perform a periodic review of the PFFI's compliance; (5) failure to take timely corrective actions to remedy a material failure after making the qualified certification; (6) failure to make the initial certification or to make the periodic certification within the specified period; (7) making incorrect refund claims under the collective refund procedures; (8) failure to cooperate with an IRS request for additional information or making any fraudulent statement or misrepresentation of material fact to the IRS; or (9) any transaction relating to sponsorship, promotion, or noncustodial distribution for or on behalf of any local FFI that is an investment entity.

584 Reg. section 1.1471-4(g)(2).

585Id.

586 Reg. section 1.1471-4(g)(2).

587 Reg. section 1.1471-3(f)(4).

588 Reg. section 1.1471-5(f)(1)(ii). Notice 2013-43 at 6.

589 Reg. section 1.1471-5(f)(1)(ii).

590 Reg. section 1.1471-5(f)(1).

591 Reg. section 1.1471-3(f)(4).

592 Model 1 IGA, art. 5.2.

593 Model 2 IGA, art. 4.2.

594 U.K. IGA, art. 5.2.

595 Swiss IGA, art. 11.2.

596 Under U.K. guidance note 10.2, "significant non-compliance" may be determined from either an IRS or HMRC perspective. In either event, the relevant competent authorities will notify the other regarding the circumstances. When one competent authority notifies the other of significant noncompliance, there is an 18-month period in which the financial institution must resolve the noncompliance. When HMRC is notified of or identifies significant noncompliance by a U.K. financial institution, it will apply any relevant penalties under the legislation.

HMRC will also engage with the financial institution to discuss the noncompliance, discuss ways to prevent future noncompliance, and agree on measures and a timetable to resolve the financial institution's significant noncompliance. HMRC will inform the IRS of the outcome of those discussions. If the problems remain unresolved after 18 months, the financial institution will be treated as an NPFFI. Details of how that entity can correct its status will be published later. The following are examples of what would be considered significant noncompliance: (1) repeated failure to file a return or repeated late filing; (2) ongoing or repeated failure to register, supply accurate information, or establish appropriate governance or due diligence processes; (3) the intentional provision of substantially incorrect information; and (4) the deliberate or negligent omission of required information.

597Id.; reg. section 1.1471-4(g)(2).

598 The sample list merely states "Branch." Presumably, this would be the legal name of the branch in its country of tax residence.

599 Reg. section 1.1471-4(c)(7), 1.1471-4(f)(3).

600 Preamble to T.D. 9610, 78 F.R. 5878.

601Id.

602 Form 8966 will be used by FFIs, including QIs, WPs, WTs, and withholding agents, in limited circumstances to comply with chapter 4 reporting obligations. The new form will set forth all the information that must be reported for financial accounts under the regulations. The IRS intends to publish in 2013 or in early 2014 final versions of Form 8966. Preamble to T.D. 9610, 78 F.R. 5897.

603 Reg. section 1.1471-4(d)(3)(vi), 1.1471-4(d)(3)(vii); 1.1471-4(d)(6)(iv), 1.1471-4(d)(6)(iv)(v).

604 Under prop. reg. section 1.6038D-6, some U.S. entities may be required to file Form 8938 for tax years beginning after 2011. However, those regulations are proposed only, and there will be no reporting requirement for U.S. entities until the regulations are finalized.

605 Preamble to T.D. 9610, 78 F.R. 5897.


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