• The Foreign Account Tax Compliance Act and Notice 2010-60
  • December 17, 2010 | Authors: Yemi Ojutiku; H. David Rosenbloom
  • Law Firm: Caplin & Drysdale, Chartered - Washington Office
  • On March 18, 2010, the Foreign Account Tax Compliance Act ("FATCA"), Subtitle A of Title V of Public Law 111-147, was enacted into law. The provisions of FATCA are intended, as the title indicates, to promote compliance with U.S. law requiring U.S. persons to report income from offshore accounts. The section of FATCA that has received most attention is 501(a), which adds a new Chapter 4 (sections 1471 - 1474) to Subtitle A of the Internal Revenue Code ("the Code"). Chapter 4 imposes withholding, documentation, and reporting requirements with respect to certain payments made to foreign financial institutions and other foreign entities. This article offers a summary of Chapter 4 and enriches it with references to Notice 2010-60, which was published on August 27, 2010 to provide preliminary guidance regarding issues involving Chapter 4 implementation. As will be clear, FATCA is a statute of very broad reach that will present substantial challenges for taxpayers and tax administration alike.