Tuesday, November 20, 2012

Bank Should Brace for ‘FATCA Cliff’ as Deadlines Converge

Financial institutions should brace for a “FATCA cliff” as they prepare to implement the Foreign Account Tax Compliance Act, PricewaterhouseCoopers LLP says in a news alert.

Taxpayers need to be prepared as the Internal Revenue Service heightens its scrutiny of reporting and withholding, both in general and as multiple dates for compliance with the Foreign Account Tax Compliance Act converge into the so-called “FATCA cliff,” PricewaterhouseCoopers practitioners said Nov. 13.

Withholding has become an IRS enforcement issue, with the agency creating a new withholding “territory” with seven new offices and trained specialists around the country.

Withholding issues now are referred to this territory on a mandatory basis, according to PwC's Elizabeth Askey. The group also will have responsibility for FATCA issues, she said.

Practitioners said IRS will now have more structured enforcement in this area, and will be focusing closely on payments for services, particularly those made to foreign persons.

The following is a list of FATCA items to consider :
  1. The convergence of multiple deadlines on January 1, 2014 creates a FATCA Cliff that requires a higher degree of integrated planning and resource loading for 2013 (FATCA due diligence, reporting and withholding are all now live within the same year).
  2. Monitor and analyze IGA and local law restrictions on FATCA withholding and reporting.
  3. Analyze pre-assisting accounts in preparation for release of FATCAfinal regulations.
  4. Update tactical approaches for operational and technology solutions for FATCA reporting .
  5. Identify and resolve current information reporting issues impacting FATCA.
  6. Analyze legal agreements to identify FATCA responsibility (contractual versus regulatory requirement).

Need Help figuring out FATCA?

Have US Withholding Tax Issues?

Contact the Tax Lawyers atMarini & Associates, P.A. for a FREETax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).


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