In summary, on March 18, 2010, the Hiring Incentives to Restore Employment Act of 2010, requires withholding agents to withhold 30 percent of certain payments to a foreign financial institution unless the FFI has entered into an agreement (FFI agreement) with the IRS to, among other things, report certain information with respect to U.S. accounts. This Act also imposes on withholding agents certain withholding, 2 documentation, and reporting requirements with respect to certain payments made to certain non-financial foreign entities (NFFEs).
On February 15, 2012, Treasury and the IRS published proposed regulations in the Federal Register as proposed regulations. On January 17, 2013, Treasury and the IRS published final regulations. The final regulations provided for a phased implementation of the requirements of FATCA, beginning on January 1, 2014, and continuing through 2017. In particular, the final regulations provided that withholding agents (including participating FFIs (PFFIs), qualified intermediaries (QIs) that assume withholding responsibility, withholding foreign partnerships (WPs), and withholding foreign trusts (WTs)) would be required to begin withholding with respect to withholdable payments made after December 31, 2013 (with an exception for “grandfathered obligations” outstanding on January 1, 2014, and associated collateral). Due diligence for documenting payees and account holders by U.S. withholding agents and PFFIs would be phased in during 2014 and 2015. Annual reporting by PFFIs would be phased in starting in 2015 (with respect to information related to the 2013 and 2014 calendar years), with reporting of the full scope of FATCA information required beginning in 2017.
The final regulations provide that a PFFI will be required to file information reports on its
U.S. accounts with respect RETROACTIVELY to the 2013 and 2014 calendar years no later than March 31, 2015.