• IRS Extends FATCA Deadlines
  • July 22, 2011
  • Law Firm: Kaye Scholer LLP - New York Office
  • The Foreign Account Tax Compliance Act (“FATCA”), enacted as part of the Hiring Incentives to Restore Employment (“HIRE”) Act in March 2010, is designed to police offshore investments, accounts and trust interests held by certain U.S. persons. Under FATCA, foreign financial institutions (“FFIs”) are required to enter into an agreement with the U.S. Treasury to (a) identify, through established due diligence procedures, any financial account held by specified U.S. taxpayers or U.S.-owned foreign entities (“U.S. accounts”), (b) report information about each U.S. account, and (c) withhold taxes on certain payments made to account owners that fail to submit information to the FFI and non-participating FFIs (i.e., FFIs that do not enter into an agreement with the U.S. Treasury). FFIs that fail to enter into such an agreement are subject to a 30% U.S. withholding tax on U.S.-source interest, dividends, rents, salaries and similar (fixed and determinable annual or periodical) payments, as well as on gross proceeds rom the sale or other disposition of property that can produce U.S.-source interest or dividends.