by Brian Mahany
With the some 50 countries ready to sign information exchange agreements with the United States and recent changes to some key FATCA dates, we thought it would be helpful to list critical dates.
FATCA, for those who still haven’t heard of the new law, stands for the Foreign Account Tax Compliance Act. Already in effect for individuals, the IRS recently extended some critical dates for foreign banks and other financial institutions. Our team of foreign reporting lawyers represents both individuals with unreported foreign accounts and foreign hedge funds. Although geared to Americans with overseas accounts, the law is pretty far reaching in scope and effects a number of U.S. based businesses as well. If you have a FATCA compliance question, we have answers.
[ NOW – 2012: FATCA requires individuals meeting certain thresholds to report foreign accounts on Form 8938. This is in addition to current FBAR reporting requirements.]
January 1, 2013: US institutions must insure new accounts are FATCA compliant
January 1, 2013: Foreign Financial Institutions (called FFI’s) can begin registering with IRS. FFIs include foreign banks, brokerage firms, hedge funds and even some insurance companies.
January 1, 2013: Grandfathering date for pre-existing accounts.
July 2013: US institutions must have completed due diligence on existing accounts held by FFIs
July 2013: Registered FFI’s must have compliant systems in place for new account holders
January 2014: US institutions must withhold 30% of payments to noncompliant FFIs.
January 2014: FFIs must begin withholding 30% to undocumented accounts
July 2014: FFIs must have completed due diligence reviews on accounts with more than $1 million
July 2014: FFIs must have documented procedures to insure their employees do not assist others in evading taxes
September 2014: Foreign financial institutions must report names, addresses, account numbers and balances of US taxpayers with foreign accounts or those who are not cooperating.
January 2015: Additional withholding obligations for both US institutions and FFIs. The regulations include sales of real estate.
July 2015: FFIs must complete due diligence reviews on pre-existing accounts.
January 2016: FFIs can no longer rely on local laws which prevent compliance.
April 2016: FFIs must begin reporting income paid to US taxpayers (much like US banks currently issue 1099s for interest and dividends)
January 2017: Withholding on foreign passthroughs scheduled to begin. We expect additional regulations clarifying the withholding obligations as the date grows closer
Does this all sound a bit confusing? We can help.
We have teamed up with Finomial, a leading solution provider for offshore hedge funds, to assist foreign financial institutions coming into compliance at minimal expense and with minimal disruption. If you are a U.S. institution or taxpayer, we can help too. The CPAmerica organization named us their preferred legal services provider for offshore and foreign reporting issues. In other words, we are where the experts turn to for answers on a wide variety of offshore issues including FBARs, FATCA, Foreign Investment In Real Property Tax Act (FIRPTA), foreign corporation reporting, the Offshore Voluntary Disclosure Program (OVDI) and repatriation issues.
If you are an individual with a question, contact attorney Bethany Kroes at Financial institution questions? Contact attorney Wassim Malas at Both can also be reached by telephone at (414) 704-6731. All inquiries are protected by the attorney – client privilege.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and coming soon, San Francisco, California.