Laven Partners FATCA Series – Part 3/3: IRS Reporting

Complying with the Foreign Account Tax Compliance Act (FATCA) can essentially be broken down into three distinct areas:
– Registration
– Due Diligence
– Reporting

The first paper in our FATCA series highlighted the requirements for registration while our second paper delved into necessary due diligence protocol. This third paper explores the essential reporting requirements for Foreign Financial Institutions (“FFIs”).

Reporting Deadlines

Participating FFIs and FFIs in Model 2 IGA domiciles will need to begin reporting on 31 March 2015. FFIs in Model 1 IGA domiciles will not be subject to reporting until 30 September 2015.

For this first year of reporting, FFIs will have to report the following in regards to each of their U.S. account holders in 2014:
1. Account holder’s name
2. Account holder’s U.S. taxpayer identification number (TIN)
3. Account holder’s address
4. Account number
5. Account balance or value
6. For accounts held by recalcitrant/nonconsenting account holders: report aggregate number and balance or value

Reporting Requirements

In regards to the reporting requirements listed above, the IRS requests account holders complete and submit the appropriate form to declare their tax reporting obligation to the appropriate FFI. While U.S. Persons must complete a W-9 Form, non-U.S. Persons have to determine which of the forms below they need to complete.

W-8BEN – if an individual;
W-8ECI – if an individual or entity is claiming that income is effectively connected with the conduct of trade or business in the U.S. (unless claiming treaty benefits);
W-8IMY – if an entity is a partnership, simple trust, grantor trust (unless claiming treaty benefits);
W-8EXP – if an entity is a government, international organization, central bank of issue, tax-exempt organization, private foundation, or government of a U.S. possession; or
W-8BEN-E – for all other entities.

Moving forward, we see local tax authorities beginning to take reporting procedures into their own hands. The Cayman Islands Tax Information Authority has issued an Entity Self-Certification form, as well as an Individual Self-Certification form, which can be substituted for the IRS forms previously mentioned. While these are some of the first alternative reporting forms to be circulated, we expect other local tax authorities to follow suit. This is in particular in light of the FATCA-like rules in other jurisdictions, such as the UK.

The IRS also recently released instructions for the Forms 8966 and 1042-S– which FFIs and NFFEs can utilize to report the statuses of their account holders and the income subject to reporting, respectively.

Are You Prepared?

Despite the recent guidance issued by the IRS, the reporting requirements under FATCA can still be difficult to manage.
Laven Partners is here to help. Our tailored registration and compliance policy programmes can assist in complying with the reporting process and the overall FATCA obligations for an FFI.

Call Laven Partners’ Tax Compliance Desk to speak with our FATCA specialists today.

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Laven offers a UK regulatory hosting platform which provides clients with the opportunity to conduct regulated activities as an Appointed Representative (AR).


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