Significant Changes Made in Final FATCA Regulations
February 8, 2013
On January 17, 2013, the U.S. Department of the Treasury and the U.S. Internal Revenue Service released final regulations implementing foreign account reporting provisions of the U.S. Hiring Incentives to Restore Employment Act enacted in March 2010. These provisions, which have become commonly known as “FATCA”, were introduced to address perceived deficiencies in the methods available to the IRS to combat the use of foreign financial accounts or foreign entities by U.S. persons to evade U.S. taxes. Generally, FATCA imposes a new 30% withholding tax on “withholdable payments” and certain other payments made to non-compliant foreign financial institutions and “recalcitrant account holders”. To avoid withholding under FATCA, an FFI generally must enter into an agreement in which it agrees to comply with new reporting, due diligence and withholding requirements with respect to its U.S. accounts.
Read “Significant Changes Made in Final FATCA Regulations.”