A Denver tax attorney at The McGuire Law Firm can assist you regarding the FATCA provisions and application of these provisions. Below is information related to U.S. and foreign financial institutions.
U.S. Financial Institutions
United States financial institutions (USFIs) in addition to other United States withholding agents must withhold 30% of certain payments to foreign entities that have a United States source, if the USFI or withholding agent are unable to document an entity for purposes of FATCA. An additional requirement exists for USFIs and United States withholding agents to report information relating to certain non-financial foreign entities with substantial U.S. owners to the Internal Revenue Service.
FATCA Registration applications can be submitted by USFIs online at the FTACA Registration website.
Foreign Financial Institutions
To avoid being withheld upon, under FATCA, a Foreign Financial Institution (FFI) can register with the Internal Revenue Service. In registering, the FFI agrees to report to the IRS information regarding their United States accounts, which would include the accounts of certain foreign entities of which have substantial United States owners.
Foreign Financial Institutions that enter into an agreement with the Internal Revenue Service in regards to reporting account holders, may be required to withhold 30% on payments to foreign payees if the payees do not comply with FATCA.
Most government entities, non-profits, small financial institutions and retirement entities are likely to be exempt from the status of an FFI that would require registering and reporting. FFIs would include banks & depository institutions, mutual funds, hedge funds, private equity funds, and certain insurance companies. If an FFI is not exempt the failure to register could cause a 30% withholding tax on some United States source payments that are made to the FFI. FFIs that register receive a Global Intermediary Identification Number (GIN) from the Internal Revenue Sevice.
A Denver tax attorney at The McGuire Law Firm can assist clients in regards to the FATCA provisions and regulations, as well as through the IRS’ voluntary disclosure program.