The US Treasury Department and the IRS issued proposed regulations that provide details on many of the principles in the FATCA legislation. The proposed regulations include suggestions received from stakeholders and provisions that were not included in the Notices.
On October 27, 2009, members of the U.S. Senate Finance Committee and the U.S. Ways and Means Committee unveiled the Foreign Account Tax Compliance Act of 2009 ("FATCA"), which was a comprehensive proposal to clamp down on U.S. tax evasion and improve taxpayer compliance by providing the Internal Revenue Service ("IRS") with new administrative tools to detect and deter offshore tax abuses. The provisions of FATCA were ultimately enacted on March 18, 2010, as part of the Hiring Incentives to Restore Employment Act of 2010, Pub. L. 111-147 (H.R. 2847) (the "Act"). Section 501(a) of the Act added chapter 4 (sections 1471 - 1474) to Subtitle A of the Internal Revenue Code. Chapter 4 expands the U.S. information reporting regime by imposing documentation, withholding, and reporting requirements on payments to and received by Foreign Financial Institutions ("FFIs") and Non-Financial Foreign Entities ("NFFEs").
FATCA's statutory provisions were intentionally broad and gave considerable discretion to the U.S. Department of the Treasury ("Treasury") and the IRS to narrow its scope in the implementing regulations. Notice 2010-60, released in August 2010, provided the first directional thinking on how the provisions of FATCA would operate. Treasury and the IRS subsequently issued two additional Notices (collectively these three Notices are referred to as the "Notices") that provided additional guidance on how FATCA's provisions would operate.
On February 8, 2012, Treasury and the IRS issued proposed regulations that provide details on many of the principles introduced in the Notices. The proposed regulations also incorporate some of the ideas and suggestions received from various stakeholders. The regulations also include several provisions that were not included in the Notices.