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IRS extends temporary relief for FFIs to report US TINs through 2027
November 2023
In brief
What happened?
The IRS on October 28 issued Notice 2024-78 extending the temporary relief provided in Notice 2023-11 for Reporting Model 1 foreign financial institutions (FFIs) required to report US taxpayer identification numbers (US TINs) for certain preexisting accounts. The extension of the temporary relief is intended to enable the IRS to continue its efforts to collect and analyze additional information for accounts without US TINs. See our Insight, IRS provides FATCA relief to foreign financial institutions, for more information on Notice 2023-11.
Why is it relevant?
If an FFI in an eligible Model 1 intergovernmental agreement (IGA) jurisdiction complies with the procedures described in Notice 2024-78, the IRS will not determine that there is significant noncompliance with the Reporting Model 1 FFI’s obligations under the IGA solely because of its failure to report US TINs associated with its preexisting accounts for the 2025, 2026, and 2027 calendar years. Significant noncompliance with the documentation and data collection obligations under an IGA could result in the FFI being subject to Foreign Account Tax Compliance Act (FATCA) withholding on US-source payments received.
Action to consider
FFIs should review the relief provisions and continue their efforts to collect US TINs from preexisting accounts. Notably, the relief extended in this notice does not apply to accounts other than preexisting accounts. Accordingly, FFIs should have robust onboarding processes to ensure that accounts are fully documented with US TINs, when relevant, at the time of account opening.
In detail
Background
FATCA requires certain FFIs to report to the IRS information about financial accounts held by US persons or foreign entities in which US persons hold certain debt or ownership interests. A Reporting Model 1 FFI must report the US TIN of each specified US person that is a reportable account holder and, in the case of a non-US entity with one or more specified US persons who are controlling persons, the US TIN of each controlling person for its US reportable accounts. FFIs in a Model 1 IGA jurisdiction that satisfy their reporting and registration obligations are not subject to withholding under Section 1471 unless the FFI is treated by the IRS as a nonparticipating foreign financial institution.
Transitional relief was implemented to provide time for reporting Model 1 FFIs to obtain and report the required US TINs for preexisting accounts. Relevant FFIs that do not have US TINs for certain preexisting accounts are required to use a series of codes (TIN Codes) in lieu of the missing US TINs. The IRS uses the TIN Codes to better understand the reason for missing TINs and inform future guidance.
Notice 2023-11
Notice 2023-11 provided temporary relief for reporting Model I FFIs that were unable to obtain and report required US TINs for preexisting accounts for calendar years 2022, 2023, and 2024. Notice 2023-11 required these reporting Model 1 FFIs to provide an accurate TIN Code for each account that was missing a required US TIN.
Reporting Model 1 FFIs that complied with the requirements of Notice 2023- 11 were not determined to be significantly noncompliant with the obligations under the applicable Model 1 IGA with respect to reporting required for US TINs for preexisting accounts solely because of a failure to obtain and report each required US TIN. Specific codes were provided only for situations in which the IRS has determined that an FFI may have reasonably complied with the documentation rules but still may not have obtained a US TIN.
The relief provided in the notice is limited to preexisting accounts. Thus, Reporting Model 1 FFIs with a missing US TIN associated with a new account must use TIN Code 999999999.
Extension of temporary US TIN relief
Extension of relief for reporting on certain preexisting accounts that are US reportable accounts
Notice 2024-78 extends, for calendar years 2025, 2026, and 2027, the temporary relief provided in Notice 2023-11 for Reporting Model 1 FFIs required to report US TINs for certain preexisting accounts. Reporting Model 1 FFIs that comply with the requirements of Notice 2024-78 will not be treated as in significant noncompliance with their obligations under an applicable Model 1 IGA solely because of the failure to report required US TINs with respect to preexisting accounts. This relief is limited to Reporting Model 1 FFIs that are in an eligible jurisdiction that makes good faith efforts to increase the likelihood that US citizens residing in that jurisdiction will report their US TINs to the FFIs.
The relief provided by Notice 2024-78 is limited to reporting on preexisting accounts and does not apply to US reportable accounts opened after the determination date specified in the applicable Model 1 IGA, including new accounts held by account holders of preexisting accounts.
Requirements for Reporting Model 1 FFIs
Reporting Model 1 FFIs seeking to obtain the relief provided by this notice must:
- obtain and report the date of birth of each account holder that is an individual and controlling person whose US TIN is not reported;
- annually request from each account holder any missing required US TIN;
- annually search electronically searchable data maintained by the Reporting Model 1 FFI for any missing required US TINs;
- report an accurate TIN Code for each account that is missing a required US TIN;
- report a foreign TIN (FTIN) for each specified US person that is missing a required US TIN if the FFI’s electronically searchable account information contains a FTIN assigned to a taxpayer by its country of residence; and
- use the AddressFix element to report the city and country of residence for each specified US person with a missing required US TIN.
Annual request for missing required US TINs
Reporting Model 1 FFIs must request annually the missing required US TINs by using the method of communication that, in the FFI’s reasonable judgment, is most likely to reach the account holder. In addition, the communication must include either of the following:
- the web address of the State Department’s Joint FATCA FAQs (as of the publication date of this notice, https://travel.state.gov/content/travel/en/international-travel/whileabroad/Joint-Foreign-Account-Tax-Compliance-FATCA-FAQ.html), or
- (1) a copy of the FAQs described in the preceding bullet and (2) either (a) a copy of the relief procedures provided by the IRS for certain former citizens, or (b) the web address for such procedures (as of the publication date of this notice, https://www.irs.gov/individuals/international-taxpayers/relief-procedures-for-certain-former-citizens).
FFIs seeking to obtain relief under this notice must retain records of policies and procedures adopted to satisfy this requirement and documentation that those policies and procedures were followed to establish its compliance with the requirements until the end of calendar year 2031.
Eligible Model 1 IGA jurisdictions
A Reporting Model 1 FFI is eligible for relief with respect to reporting for a particular calendar year or other appropriate reporting period, if the applicable Model 1 IGA jurisdiction makes good faith efforts, by the date that is nine months after the end of the calendar year to which the information relates, to do the following:
- encourage US citizens resident in the jurisdiction to provide their US TIN to FFIs when requested;
- take measures to enforce compliance by Reporting Model 1 FFIs identified by the IRS to the Model 1 IGA jurisdiction as potentially noncompliant;
- encourage FFIs located in a Model 1 IGA jurisdiction not to discriminate against US citizens that do provide a US TIN; and
- if notified by the IRS, take steps to conclude Competent Authority Arrangements with the US Competent Authority, to implement an IGA, amend an Annex II to an IGA, or exchange country-by-country information.
Observation: A number of Reporting Model 1 IGA jurisdiction tax authorities have been proactive in sending notices to FFIs that have submitted filings with missing US TINS or where date of birth data is missing. These jurisdictions have been looking for filings to be updated to include the missing information; or if the missing information is unavailable, they are asking for explanations as to why the data is unavailable.
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