The IRS on Oct. 24 issued a compliance timeline and guidance under the 2010 law that requires foreign financial institutions to report information about their U.S. accountholders to the U.S. tax collector. The guidance came in IRS Announcement 2012-42.
That law, the Foreign Account Tax Compliance Act, enacted March 18, 2010, is aimed at curbing tax evasion through the use of offshore bank accounts by requiring FFIs -- including investment advisers, hedge funds, private equity funds, banks and other types of financial service institutions -- to report on U.S. accountholders’ assets above a given threshold or suffer a 30-percent withholding rate on many types of their U.S.-source income.
The United States entered into the first intergovernmental agreement under FATCA with the United Kingdom on Sept. 14 (see October newsletter, p. 4). The IRS deadline for many of the requirements under FATCA is Jan. 14, 2014, including due diligence procedures to identify and document accounts. Further information is available in Announcement 2012-42, along with an accompanying table of deadlines.