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Phased Implementation of FATCA Requirements Announced - Emil Estafanous, CPA : Emil Estafanous, CPA

Phased Implementation of FATCA Requirements Announced

On Jul 14, a IRS announced skeleton to proviso in a mandate of a Foreign Account Tax Compliance Act (FATCA) (Notice 2011-53). The IRS has perceived countless comments about a problem of implementing aspects of a FATCA requirements. The notice’s phased doing is designed to give both unfamiliar financial institutions and U.S. self-denial agents adequate time to build a systems they need to approve with FATCA’s requirements.

Notice 2011-53 phases in doing of FATCA on a following timeline:

  • A unfamiliar financial establishment contingency enter an agreement with a IRS by Jun 30, 2013, to safeguard that it will be identified as a participating unfamiliar financial establishment in sufficient time to concede self-denial agents to refrain from self-denial commencement on Jan 1, 2014.
  • Withholding on U.S.-source dividends and seductiveness paid to nonparticipating unfamiliar financial institutions will start on Jan 1, 2014, and self-denial on all withholdable payments (including on sum proceeds) will be entirely phased in on Jan 1, 2015.
  • Due industry mandate for identifying new and pre-existing U.S. accounts (including certain high-risk accounts) will start in 2013. Reporting mandate will start in 2014.

For functions of a notice, high-risk accounts embody private banking accounts with a change of $500,000 or more.

FATCA was enacted in 2010 as partial of a Hiring Incentives to Restore Employment (HIRE) Act, P.L. 111-147. It requires unfamiliar financial institutions to news to a IRS information about financial accounts reason by U.S. taxpayers, or by unfamiliar entities in that U.S. taxpayers reason a estimable tenure interest. In sequence to equivocate being funded on underneath FATCA, a participating unfamiliar financial establishment contingency enter into an agreement with a IRS to:

  • Identify U.S. accounts;
  • Report certain information to a IRS per U.S. accounts; and
  • Withhold a 30% taxation on certain payments to nonparticipating unfamiliar financial institutions and comment holders who are reluctant to yield a compulsory information.

Foreign financial institutions that do not enter into an agreement with a IRS will be theme to self-denial on certain forms of payments, including U.S.-source seductiveness and dividends, sum deduction from a showing of U.S. bonds and passthrough payments.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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