For the Press
The Foreign Account Tax Compliance Act (FATCA) was enacted by Congress in March 2010 to target noncompliance by U.S. taxpayers using foreign bank accounts.
FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. FFIs that enter into an agreement with the IRS (via an online registration portal) to report on their U.S. account holders may be required to withhold 30 percent on some payments to foreign payees if those payees do not comply with FATCA. The FATCA regulations issued by the U.S. Treasury Department exempt some categories of FFIs from the requirement to register and report, including most governmental entities and nonprofit organizations, some retirement entities, and some small, local financial institutions.
If a jurisdiction enters into an intergovernmental agreement (IGA) with the U.S. to implement FATCA, the reporting and other compliance burdens on the financial institutions in the jurisdiction may be simplified. Financial institutions in IGA jurisdictions will not be subject to withholding under FATCA.
The U.S. Treasury Department has published model IGAs that follow two approaches. Under Model 1, financial institutions in the partner jurisdiction report information about U.S. accounts to the partner jurisdiction’s tax authority, which then provides the information to the IRS. Model 1 comes in a reciprocal version (Model 1A), under which the U.S. will also share information about the partner jurisdiction's taxpayers with the partner jurisdiction, and a nonreciprocal version (Model 1B), under which only the partner jurisdiction is required to provide information. Under Model 2, financial institutions in the partner jurisdiction report directly to the IRS, and the partner jurisdiction agrees to reduce any legal barriers to that reporting.
Tax Analysts has many subject matter experts who can discuss FATCA. To schedule an interview or a background session, please contact us at firstname.lastname@example.org or call 1-800-955-2444.
Tax Analysts also offers a product called FATCA Expert that’s a one-stop shop for finding FATCA-related material. In addition to comprehensive news and commentary, FATCA Expert includes an IGA status chart as well as sections on U.S. legislation and guidance, official forms, the U.S. model IGAs, FATCA partner legislation and guidance, and comment letters.