IRS Issues Its First FATCA Financial Institutions List

by Mike Godfrey, Tax-News.com, Washington

05 June 2014

Around 77,000 banks and other foreign financial institutions (FFIs) have already registered with the United States and received a global intermediary identification number (GIIN), to comply with the Foreign Account Tax Compliance Act (FATCA), as shown in the first list published by the Internal Revenue Service (IRS) on June 2, 2014.

FATCA, enacted by the US Congress in 2010, is intended to ensure that the US obtains information on accounts held at FFIs by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.

FATCA will go into operation on July 1 this year, but, with regard to its reporting, due diligence, and withholding provisions, and so as to facilitate an orderly transition, the IRS is to refrain from rigorously enforcing many of its requirements in calendar years 2014 and 2015, as long as FFIs are making a good-faith effort to achieve compliance, such as completing their FATCA registration, where necessary, and obtaining a GIIN.

The IRS has published the first FFI list on its website, and included a link to a search and download application to ensure ease of use. In addition, a user guide has been posted online to explain the features provided.

The FFI List can be downloaded in its entirety or searched for specific information (FFI name, GIIN or country). Withholding agents may rely on an FFI's claim of FATCA status based on checking the payee's GIIN against the published FFI List.

A cumulative updated FFI list will now be posted monthly that will contain the names of all FFIs that have completed FATCA registration with the IRS and obtained a GIIN up to 5 business days before the end of the previous month. The first updated list will be posted by the IRS on July 1.

FFIs are still advised to refer to the FATCA regulations and other FATCA guidance for the rules concerning the need to identify and document account holders and payees; the need to withhold on withholdable payments (including transitional rules); and the need to report information to the IRS (or to the tax authority of a Model 1 intergovernmental agreement jurisdiction) concerning certain accounts and payees.