In Notice 2013-43, the IRS delayed for six months until July 1, 2014, the start of withholding and certain other provisions of the Foreign Account Tax Compliance Act (FATCA).
The notice affects the effective dates of final regulations issued in April (T.D. 9610) providing rules on information reporting under FATCA by foreign financial institutions (FFIs) and withholding on certain payments to FFIs and other foreign entities.
Under FATCA, enacted as part of the Hiring Incentives to Restore Employment Act of 2010, P.L. 111-147, U.S. withholding agents are required to withhold tax on certain payments to FFIs that do not agree to report certain information to the IRS regarding their U.S. accounts and on certain payments to certain nonfinancial foreign entities (NFFEs) that do not provide information on their substantial U.S. owners to withholding agents.
Under the notice, withholding agents will be required to begin withholding on withholdable payments made after June 30, 2014, to payees that are FFIs or NFFEs, for obligations that are not grandfathered under the rules, unless the payments can be reliably associated with documentation on which the withholding agent can rely to treat the payments as exempt from withholding. The notice also makes corresponding adjustments to various other time frames in the final regulations.
The notice also provides additional guidance concerning the treatment of financial institutions in jurisdictions that have signed intergovernmental agreements to implement FATCA but have not yet brought those agreements into force.
By Sally P. Schreiber, J.D., a JofA senior editor.