IRS Opens Online Registration Portal
As projected by the Internal Revenue Service (“IRS”) in Notice 2013-43, the Foreign Account Tax Compliance Act (“FATCA”) online registration portal opened on August 19, 2013 and a “FATCA Registration Online User Guide” is now available.
A “foreign financial institution” (“FFI”), such as a foreign private investment fund, can now begin the process of registering for FATCA by creating an account and inputting the required information. Prior to January 1, 2014, any information entered into the system, even if submitted as final, will not be regarded as a final submission. Thus, FFIs can use the remainder of 2013 to familiarize themselves with the registration process, to input preliminary information and to refine that information. On or after January 1, 2014, FFIs are expected to finalize their registration information. As registrations are finalized and approved in 2014, registering FFIs will receive a notice of registration acceptance and will be issued a global intermediary identification number. The IRS will electronically post the first IRS FFI List by June 2, 2014, and will update the list on a monthly basis thereafter. To ensure inclusion in the June 2, 2014 IRS FFI List (and thereby avoid being subject to the FATCA withholding tax that is scheduled to become effective on July 1, 2014), FFIs must finalize their registration by April 25, 2014.
Negotiations Concluded on U.S.-Cayman Islands IGA
On August 13, 2013, the Cayman Islands Government (“CIG”) announced the conclusion of negotiations with the United States on a Model 1 intergovernmental agreement (“IGA”). According to the announcement, both governments have initialed the IGA and an official signing is expected to be held as soon as possible, at which time the text of the IGA will become available to the public.
Although the exact details of the IGA will not be known until the release of the text, the IGA is generally expected to reduce the burden that Cayman Islands FFIs have under FATCA. On the signing of the IGA, a Cayman Islands FFI will be permitted to register on the FATCA online registration portal as a registered deemed-compliant FFI. Such status means that Cayman Islands FFIs will not be required to enter into an agreement with the IRS. Rather, Cayman Islands FFIs will be able to satisfy their FATCA obligations by reporting information regarding U.S. accounts to the CIG, which information the CIG will then automatically relay to the IRS. The IGA is also expected to lessen certain FATCA withholding and compliance oversight obligations for Cayman Islands FFIs.
Our prior memoranda regarding FATCA can be accessed here:
http://www.sewkis.com/files/Publication/bb381c49-e12a-4cb9-840c-7470491be0bf/Presentation/PublicationAttachment/6e8e8b12-dab4-4a28-b1c7-76b63da36f66/FATCA%20Update%20Memorandum%20July2013.pdf
http://www.sewkis.com/files/Publication/6bde8d9c-46ba-4190-83f2-401358672189/Presentation/PublicationAttachment/1a5cea65-ffea-4e5e-b0e1-43c3b9281053/FATCA%20Update%20Memorandum.pdf
http://www.sewkis.com/pubs/xprPubDetail.aspx?xpST=PubDetail&pub=456
Our webinar regarding FATCA can be accessed here:
http://www.sewkis.com/events/xprEventsDetail.aspx?xpST=EventDetail&event=137
We will continue to keep you updated on any developments regarding FATCA and the U.S.-Cayman Islands IGA. If you have any questions regarding the application of FATCA to your organization, please contact: Jim Cofer (212/574-1688, cofer@sewkis.com), Ron Cima (212/574-1471, cima@sewkis.com), Jon Brose (212/574-1615, brose@sewkis.com), or Dan Murphy (212/574-1210, murphyd@sewkis.com).
