As reported, the IRS has delayed the starting dates of key parts of FATCA for those non-US financial institutions in countries not covered by an intergovernmental agreement with the US. This covers a number of significant due diligence, reporting and withholding deadlines.
In a review of the changes to the implementation timetable, Withers stated that US withholding agents and non US financial institutions (FFIs) that have not already prepared for FATCA compliance “should ensure that appropriate policies and procedures are implemented as soon as possible, and should not count on any further last-minute reprieve.”
Withers explained that FFI agreements entered into prior to January 1, 2014 will have an effective date of January 1, 2014, and FFIs must now have account opening procedures for new accounts in place by this date (or, for FFIs that sign an FFI agreement after January 1, 2014, by the effective date of the agreement).
For example, the category of “pre-existing obligations” not subject to FATCA withholding has been expanded to include accounts, instruments, and contracts maintained or executed by a US withholding agent prior to January 1, 2014 (a one year extension from the previous January 1, 2013 deadline in the proposed regulations). Participating FFIs will also be entitled to treat accounts maintained prior to January 1, 2014 as pre-existing.
Under the proposed regulations, Withers also covered the following points:
- Extension of withholding deadlines
- Extension of due diligence deadlines
- Extension of reporting phase-in for 2013 calendar year
- Expanded categories of “grandfathered obligations”
