Even though FATCA officially went ‘live’ on July 1st last year, APEX Funds Services reminds us sthat many of the key implementation deadlines will take place in the following years. FATCA generally imposes registration, due diligence and reporting obligations on Foreign Financial Institutions (“FFIs”).
Last year, FFIs were required to implement new account opening procedures and register with the US Internal Revenue Service (“IRS”). There was a surge in registrations on the IRS portal in late December as Model 1 FFIs rushed to register and obtain their Global Intermediary Identification Number (“GIIN”) before the year end deadline. For FFIs that have failed or were unwilling to register and comply, then 2015 will bring a number of challenges e.g 30% withholding tax on certain US source payments, stiff penalties and/or enforcement action by their local tax authority along with reputational, legal and other operational headaches.
Acording to Karen Wallace, Global Head of Compiance at APEX Funds Services Holdings, for FFIs that have registered under FATCA then their focus for 2015 should be on the following upcoming deadlines:
- March onwards: registering for an on-line account with the IRS or relevant local tax authorities in order to comply with the reporting obligations e.g registration required by the Cayman tax authority by 31 March 2015.
- 31 March 2015*: reporting deadline to the IRS for Model 2 IGA jurisdictions and FFIs in non-IGA jurisdictions.
- 31 May/30 June 2015: typical reporting deadlines for Model 1 IGA jurisdictions.
- 30 June 2015: review of pre-existing individual high value accounts as at 30 June 2014 must be completed
*The IRS has advised an automatic 90-day extension is granted to all filers (without the need to file any form or take any action) with respect to calendar year 2014 only.
For the above reporting dates, FFIs must report the name, address, U.S. TIN (date of birth for pre-existing accounts if no U.S. TIN), account number, name and identifying number of the reporting institution, and account balance or value for US reportable accounts for calendar year 2014. Reporting obligations will increase in 2016 and 2017 respectively. It is essential that FFIs have a comprehensive FATCA compliance programme in place to limit non-compliance risk and meet the obligations of the relevant IGAs and/or the IRS.