US and global information reporting and withholding: Looking ahead to 2014 and beyond
Although the US tax regime is based on self-assessed tax, the Internal Revenue Service continues to expand third-party information reporting requirements with the aim of ensuring that taxpayers file complete and accurate income tax returns by matching independent information with what is being reported on their returns. This Tax Insight serves as a high-level primer to facilitate discussions as businesses consider their compliance requirements for the current year.
The withholding provisions of FATCA are scheduled to begin in January 2014. Multinational businesses that have not already begun to assess the FATCA requirements, determine their specific impact, and create a customized plan to comply may be falling behind.
Now is the right time to learn more and take action.
While strict global Anti-Money Laundering (AML)/Know Your Customer (KYC) requirements have been with us for a long time, strict rules aimed at ending global tax evasion are a more recent phenomenon. The provisions of the Foreign Account Tax Compliance Act (FATCA) were enacted in 2010 with a primary goal of providing the United States' Internal Revenue Service (IRS) with an increased ability to detect US tax evaders concealing their assets in foreign accounts and investments.
This document highlights four key challenges that AML/KYC professionals should understand as their financial institutions begin to implement FATCA alongside existing account opening and AML/KYC capabilities.