The Internal Revenue Service has opened its new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act.
Financial institutions that must register with the IRS to meet their FATCA obligations can begin the process of registering by creating an account and providing required information, the IRS said Monday. Financial institutions can use the system to provide the required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.
FATCA was included as part of the HIRE Act of 2010 and requires foreign financial institutions, including hedge funds, to reveal information about their U.S. account holders to the IRS or face stiff penalties. The controversial law has provoked considerable controversy among foreign banks and countries, as well as U.S.-born expatriates and dual citizens, and its implementation has been repeatedly delayed, with the account and due diligence requirements recently delayed until next July.
However, the IRS and the Treasury Department have been moving ahead slowly with the law while negotiating intergovernmental agreements with other countries. Last week, the IRS introduced a draft version of the form that will be used for FATCA reporting.
The new registration system, which is designed to enable secure account management, is a Web-based application with around-the-clock availability. Within a secure environment, the new registration system enables financial institutions to establish online accounts; customize home pages to manage accounts; designate points of contact to handle registrations; oversee member and/or branch information; and receive automatic notifications of status changes.
The IRS is encouraging financial institutions to familiarize themselves with the system, create their online accounts and begin submitting their information. Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.
As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.
The IRS plans to electronically post the first IRS Foreign Financial Institution List in June 2014, and will update the list monthly. To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.
Access to the FATCA registration system and related support information can be found on the FATCA page of IRS.gov.
The FATCA Registration Link can be found at www.irs.gov/fatca-registration. The IRS is also offering an overview of the new FATCA online registration system here.
Under FATCA, withholding agents must withhold tax on certain payments to foreign financial institutions that do not agree to report certain information to the IRS about their U.S. accounts, including the accounts of certain foreign entities with substantial U.S. owners. An FFI may agree to report certain information about its account holders by registering to be FATCA compliant. With the FATCA registration system, financial institutions can securely register online as a Participating Foreign Financial Institution (PFFI), a Registered Deemed-Compliant FFI (RDCFFI), a Limited FFI (Limited FFI), or a Sponsoring Entity.
A user guide to the new system is available here.