On October 24, 2012, IRS released Announcement 2012-42 (the “Announcement”), which delays certain key dates for FATCA compliance.
- Pursuant to the Announcement, the first possible effective date for an FFI Agreement has been delayed six months — from July 1, 2013 to January 1, 2014. Accordingly, the procedures necessary to identify the FATCA status of new account holders are not required prior to that date.
- This extension will result in a corresponding delay in the date by which required diligence on existing accounts must be completed. (No earlier than January 1, 2015 or January 1, 2016 depending on the account balance).
- Withholding under FATCA on U.S.-source interest and dividends is still scheduled to commence on January 1, 2014 for many obligations issued on or after that date. However, withholding is delayed for up to two years — until January 1, 2016 — for many obligations issued before January 1, 2014.
- Gross proceeds withholding will be delayed by two years — from January 1, 2015 until January 1, 2017 — for obligations that produce U.S.-source interest and dividends (regardless of when those obligations were issued).
Given the IRS’s lack of progress on issuing guidance with respect to other critical areas of FATCA, it is somewhat difficult to believe these dates (as well as other critical dates) will not continue to be adjusted.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:Bogle-CharlesCarbone-AnthonyGoldman-RichardGouwar-James