Revised Guidelines and Timelines Under FATCA

Articles / January 2, 2014

By Allen J. Littman and Sarah K. Ma

In July 2013, the Internal Revenue Service (“IRS”) released Notice 2013-43 (“Notice”), which updated the timelines for foreign financial institutions (“FFIs”) and withholding agents implementing the Foreign Account Tax Compliance Act (“FATCA”). This article highlights the key date changes of Notice 2013-43, which remain relevant at this time.

Under Notice 2013-43, the IRS and Department of Treasury announced a general six-month delay in the key timelines affecting withholding agents, participating FFIs (“PFFIs”) and registered deemed-compliant FFIs. In general, the FFI agreements of FFIs completing their registration on or before June 30, 2014 will be effective on June 30, 2014. Most significantly, beginning on July 1, 2014, FATCA new account opening procedures must be implemented to identify U.S. accounts, and withholding agents, including participating FFIs, must withhold 30 percent from certain payments made to new accounts held by non-participating FFIs or recalcitrant account holders. Even more immediately, the FATCA registration period began on January 1, 2014. The chart below illustrates the specific new due dates for certain actions.

Treatment of FFIs in Jurisdictions with an Intergovernmental Agreement (“IGA”) in Effect

Addressing concerns raised by the fact that many IGAs will not be negotiated, signed and entered into force in time for the January 1, 2014 effective date, the IRS announced in this Notice that a jurisdiction will be treated having an IGA in effect if it is identified by Treasury as having an IGA in effect, and these will include those jurisdictions that have signed an IGA even if the IGA has not yet been brought into force. A FFI that resides in a jurisdiction with an IGA in effect as described by the IRS can register on the FATCA registration website as a registered deemed-compliant FFI (if it is required to report under a Model 1 IGA) or as a PFFI (if it is required to report under a Model 2 IGA). Withholding agents will not be required to verify the GIIN of a payee that is a reporting Model 1 IGA until January 1, 2015. Notice 2013-43 also states that a jurisdiction may be removed from Treasury’s list if it fails to perform the steps necessary to bring the IGA into force with a reasonable period of time.


Although the recent IRS Notice 2013-43 extended many of the FATCA deadlines, some commentators are calling for further extensions. However, IRS officials have stated that the deadlines will not be extended again. Given the highly technical and detailed nature of these rules, and the looming registration dates, all FFIs should seek the guidance of a qualified U.S. tax adviser well before the April 25, 2014 deadline to ensure registration and placement on the initial list of compliant FFIs that will be issued on June 2, 2014. There is much work to be done before April 25, 2014. Failure to get started now will put an FFI at serious risk of FATCA withholding on payments to be made to it by U.S. withholding agents and PFFIs after the June 30, 2014 effective date.

[1] Notice 2013-43, 2013-31 I.R.B. 113 (Jul. 21, 2013).

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