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FATCA – The U.S. and Trusts

        April 25, 2014.  That is the last date a foreign financial institution may register at in order to assure inclusion on the first list of foreign financial institutions the Internal Revenue Service will publish on June 2, 2014.  Foreign financial institutions (FFIs”) that register at the IRS portal will be assigned a Global Intermediary Identification Number (“GIIN”).  Although withholding agents may rely on the payee’s GIIN for payments made prior to 2017 with regard to financial obligations outstanding on June 30, 2014[1], unless the withholding agent can confirm the GIIN of the payee on the Internal Revenue Service’s published FII list, the agent must still withhold on payments to that payee which are subject to FACTA.[2]

        What is FATCA?  The Foreign Account Tax Compliance Act (“FATCA”) was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010[3].  FATCA is codified as sections 1471-1474 of the Internal Revenue Code of 1986, as amended (“IRC”).  Its purpose is to enable the Internal Revenue Service to identify the beneficial owner of any foreign account if the account holder[4] is a U.S. person and to create a mechanism whereby information regarding that person and the foreign account will be provided to the Internal Revenue Service in order to confirm the U.S. person’s compliance.

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[1] Treas. Reg. §1.1471-3(d)(4)(ii).
[2]See Treas. Reg. §1.1471-3(e)(3)(i).
[3] Pub. L. No. §§111-147, 124 Stat. 71.
[4] The term “Account holders” is broadly defined.  See generally Treas. Reg. §§ 1.1471-1(b)(2), 1.1471-5(a)(3), and text at notes.