- Excess Lines Association of New York Advises on Foreign Account Tax Compliance Act (FATCA) Compliance
- July 22, 2014
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
In Bulletin No. 2014-15 issued yesterday, July 17, 2014, the Excess Lines Association of New York ("ELANY") responded to questions it has received to date about the implementation of the Foreign Account Tax Compliance Act ("FATCA"), which is scheduled to go into effect under its transition rules as of July 1, 2014, and whether it will have any effect on the filing and compliance process for excess line transactions with ELANY--whether online or by paper filings.
Using boldface type, ELANY emphasized in its bulletin that FATCA will have no impact, nor will it cause any changes to filing excess line transactions with ELANY or compliance with New York's excess line law.
Bulletin No. 2014-15 explains that FATCA is a tax law that may impact excess line policies procured from alien insurers. The alien insurer must be able to demonstrate FATCA compliance, or the excess line broker (as the withholding agent) must retain 30 percent of the premium if the alien insurer, alien broker, or intermediary (where applicable) is not FATCA compliant.
ELANY has asked listed alien insurers to identify a company contact person, or provide information on their Web sites on the designated provider of documentation to excess line brokers to demonstrate that they are "FATCA" compliant.
Meanwhile, Lloyd's has announced in regard to FATCA implementation that it will be treated as a "Qualified Intermediary," meaning it will be assuming primary withholding and reporting responsibility for premium paid to Lloyd's syndicates. A single form W-8IMY will be issued for Lloyd's and participating syndicates.
As applicable to FATCA, a Qualified Intermediary ("QI") is an eligible person or company that enters into a QI Agreement with the IRS and generally agrees to assume certain documentation and withholding responsibilities in exchange for simplified information reporting for its foreign account holders, along with the ability not to disclose proprietary account holder information to a withholding agent that may be a competitor.
A separate "FATCA" compliance document will be needed for intermediaries, including brokers, coverholders and/or service companies.
The National Association of Professional Surplus Lines Offices (NAPSLO) and the Council of Insurance Agents and Brokers (CIAB), among others, have published extensive materials on FATCA. To access this information, click on the respective hyperlinks below:
For more detailed information on FATCA please visit the IRS's FATCA Web page at http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA.
Additionally, copies of FATCA Tax Forms and Instructions can be found at: http://www.irs.gov/Businesses/Corporations/FATCA-Related-Forms.