FATCA proposed regulations were released under the Foreign Account Tax Compliance Act ("FATCA") of 2009. The proposed regulations describe procedures for implementing the FATCA withholding tax and information reporting regime and will affect business practices, policies and procedures for financial institutions and taxpayers.
On February 8, 2012, the Department of Treasury ("Treasury") and Internal Revenue Service ("IRS") issued the long-awaited proposed regulations providing guidance for foreign financial institutions ("FFIs"), non-financial foreign entities ("NFFEs"), and U.S. withholding agents to implement various provisions under the Foreign Account Tax Compliance Act ("FATCA") of 2009, which was enacted as Section 501 in the Hiring Incentives to Restore Employment Act of 2010.
The proposed regulations describe detailed procedures for implementing the FATCA withholding tax and information reporting regime, and are expected to significantly affect the business practices, policies and procedures, and systems for a wide variety of financial institutions and other taxpayers globally.
Previously, Treasury and the IRS published three Notices that set forth preliminary guidance describing certain priority issues for the implementation of FATCA. The proposed regulations incorporate principles introduced in the Notices as well as comments received from stakeholders.
The attached newsbrief provide a summary of the more notable and significant changes in the proposed regulations from the previous guidance.