All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

US releases further FATCA guidance


The US Treasury has today issued proposed regulations on the implementation of FATCA.

The proposed regulations implement FATCA’s obligations in stages to minimise burdens and costs consistent with achieving the statute’s compliance objectives.

The rules and implementation schedule are also adjusted to allow time for resolving local law limitations to which some foreign financial institutions (FFI) may be subject.

“When taxpayers overseas avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden. FATCA is an important part of the US government’s effort to address that issue, and these regulations implement FATCA in a way that is targeted and efficient. We believe these efforts will serve as a complement and catalyst to the ongoing global efforts to combat offshore tax evasion.” said Emily McMahon, acting assistant secretary for tax policy at the US Treasury.

The proposed regulations will:

  • Reduce the administrative burdens associated with identifying US accounts by calibrating due diligence requirements based on the value and risk profile of the account and by permitting FFIs in many cases to rely on information they already collect, including information received to comply with anti-money laundering/know your customer rules;

  • Expand the categories of FFIs that are deemed to comply with FATCA without the need to enter into an agreement with the IRS, to focus the application of FATCA on higher-risk financial institutions that provide services to the global investment community; and

  • Phase-in the reporting and withholding obligations of FATCA over an extended transition period to provide sufficient lead time for financial institutions to develop necessary systems and maximise the number of financial institutions that will be able to comply with FATCA.

After months of discussions with foreign governments, the Treasury also jointly issued a statement with France, Germany, Italy, Spain and the UK expressing mutual intent to pursue a government-to-government framework for implementing FATCA. This is seen as an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations.


"The proposed regulations appear to reduce the burden of implementation but leave financial institutions with a significant amount of work in order to ensure compliance," said Rob Bridson of PwC. "The impact of the intergovernmental approach which is finally adopted will also have an impact on what financial institutions are required to do to comply with FATCA."

"European financial institutions breathed a partial sigh of relief today," said Andrey Krahmal, of Allen & Overy. "This means not only that the burden of FATCA compliance may be lowered, but also that possible conflicts between FATCA compliance and local laws such as those relating to data protection might be avoided"

"For the first time, the US authorities have indicated that they are willing to reciprocate in the exchange of information on overseas investors investing into the US market," said Angela Foyle, of BDO. "This could have big implications for US firms and the flow of funds into the country.”

Further reading:

New FATCA guidance to lift compliance burden

FATCA: IRS is listening, says Shulman

More from across our site

Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
12th annual awards announce winners
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree