1 / 6

FACTA

FACTA. Foreign Account Tax Compliance Act Became law on 3/18/10 as part of the HIRE Act Purpose – to act as a hammer so as to enforce compliance rules

baby
Download Presentation

FACTA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. FACTA

  2. Foreign Account Tax Compliance Act • Became law on 3/18/10 as part of the HIRE Act • Purpose – to act as a hammer so as to enforce compliance rules • Require non-US Financial Institutions (FFI’s) and other foreign financial entities (NFFE’s) to provide information to IRS identifying U.S. investors

  3. Hammer – • 30 % W/T levied on all U.S. source income payments – Includes gross proceeds from the sale of securities • Normal W/T rules are still applicable as well • FFI – Broad definition • Includes banks, broker/dealers, hedge funds, PE funds, Etc. • Affiliated Group Attraction - > 50% threshold • Will then apply to all foreign affiliates whether or not they receive U.S. source amounts

  4. Escape Clause Enter into an agreement with the IRS • Identification of it’s U.S. accounts – Reach extended to all of its worldwide affiliates • Compliance with extensive diligence criteria to ensure that none are missed • Annual report to the IRS • 30% W/T for “recalcitrant account holders” or non compliant FFE’s • Follow up information as requested by the service • Obtain a waiver to circumvent privacy or bank secrecy laws Termination of the agreement for non-compliance with any of the above

  5. NFFE – Essentially everybody that is not a FFI • Includes foreign corporations and partnerships • A search for substantial U.S. owners > 10% ownership • WHAT TO DO • Certify to W/T agent that there are no subsantial U.S. owners OR • Provide identifying information of substanial U.S. owners to the W/T agent to then be reported to the IRS

  6. Effective Date • APPLICATION TO PAYMENTS MADE ON OR AFTER JANUARY 1, 2013 EXCEPT FOR GRANDFATHERED OBLIGATIONS • Outstanding on March 18, 2010 • Only debt • AND not considered reissued due to subsequent substantial modification

More Related