Eugene Grygo, Chief Content Editor, FTF News
Perhaps as a present for banks at this festive time of year, the Internal Revenue Service (IRS), a beacon of warmth, generosity and clarity, wants everyone to know that it has upgraded the Foreign Account Tax Compliance Act (FATCA) Online Registration System.
With the update complete on November 16, the system offers the following improvements:
- “New questions have been added, such as asking foreign financial institutions [FFIs] to indicate their tax identification number in their country or jurisdiction, if they have one. Other questions relate to identifying the common parent entity of the expanded affiliated group;”
- Some financial institutions can change their “Financial Institution Type;”
- And “Member financial institutions can now transfer to another expanded affiliated group without having to cancel their current agreement and re-register. Following the change or transfer, a new FATCA account will be created with existing registration information, including branches.”
Another key improvement is that the upgraded system also “will allow users to update their information, download registration tables and change their financial institution type. The upgrade also includes an updated jurisdiction list,” according to the IRS.
The IRS reminds us that FATCA “requires certain sponsored entities” including those covered by an intergovernmental agreement (IGA) to have their own GIINs (not the bottled kind) for FATCA reporting and withholding purposes by Dec. 31, 2016.
“To facilitate this requirement, the FATCA Online Registration System will now enable sponsoring entities to add their sponsored entities and, if applicable, sponsored subsidiary branches,” IRS officials say. “These entities can be added either individually or by submitting a file containing information for multiple entities.”
The IRS adds that it offers “a Microsoft Excel-based Sponsored Entity Data Preparation Tool” for end-users that need the multiple record file upload option.
“As a result of the new sponsored entities and sponsored subsidiary branches, the values available for the GIIN have been expanded,” the IRS says. “See the Instructions for Sponsored Entity Data Preparation Tool for XML File for the definitions of sponsored entities and sponsored subsidiary branches.”
All seriousness aside, the system is intended to help those impacted by the controversial reach of FATCA to meet their obligations. The two-year-old online system “allows the IRS to identify foreign financial institutions [FFIs] and certain other entities with FATCA obligations,” officials say. “These entities generally report on foreign financial accounts held by U.S. taxpayers under the terms of FATCA or pursuant to the provisions of specific intergovernmental agreements.”
The online registration “is the backbone of FATCA,” said IRS Commissioner John Koskinen in a prepared statement. “Working with financial institutions and through intergovernmental agreements, our progress against undisclosed foreign accounts continues,” he adds, ominously.
The IRS says that it has registered more than 170,000 financial institutions, “located in more than 200 jurisdictions,” officials say. “In most cases, those foreign financial institutions that do not comply with FATCA or participate through an IGA are subject to 30 percent withholding on certain U.S. source payments.”
I guess the reminder is there for anyone that forgot the tough 30 percent penalty.
For more info, firms can access the FATCA Online Registration System User Guide and FAQs section, which have been updated too. The links are at www.irs.gov/fatca.
Need a Reprint?