The Foreign Account Tax Compliance Act (FATCA) is a United States of America federal law designed to enforce the requirements for U.S. persons and citizens (including those living outside the USA) to file yearly reports on their non-US financial accounts to the IRS.
TMF Group, with over 7,000 experts in over 83 countries, provides FATCA services as part of its Global Information Reporting capabilities. We assist with FATCA classification, registration, on boarding, pre-existing account due diligence and reporting.
FATCA affects two groups:
- U.S. taxpayers who need to report on certain foreign financial accounts and offshore assets.
- Foreign Financial Institutions (FFI) who need to report on financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.
FATCA is quite broad in its application and has far reaching impact, not only on U.S. based companies but also on companies with U.S. assets or clients and more. FATCA can have adverse tax and commercial consequences if not adequately addressed; including a 30% withholding tax on gross proceeds. Many jurisdictions around the world have signed an intergovernmental agreement (IGA) and transposed FATCA into their domestic laws. Some follow local reporting and some direct IRS reporting (model I and Model II).
TMF Group FATCA Services
We can assist clients in several areas:
- FATCA Classification
Companies must determine whether they are a FFI and have a requirement to report based on FATCA. TMF Group has developed a comprehensive classification tool to do just that.
- FFI Registration
We aid FFIs needing to register with the U.S. internal Revenue Service (IRS) in order to obtain a Global Intermediary Identification Number (GIIN) and aid in FATCA compliance for U.S. Purposes.
- FATCA On-boarding
FFIs have to perform customer due diligence for new account holders to determine whether or not they will fall under the reportable account holder category. We assist with the collation and review of each account holder’s documentation. We can also determine if there is US indicia. If so, we can help resolve issues, where applicable, directly with the account holder.
- FATCA Pre-Existing Account Due Diligence
FATCA due diligence should be performed on pre-existing accounts. The process is similar to our FATCA on-boarding process; we collect and review the account holder’s information and determine if FATCA reporting is in order, review indicia, assist with curing it and provide a clear overview to the FFI and its account holders.
- FATCA Reporting
Entities have to submit information either to their local tax authority or directly to the U.S. Authorities. TMF Group has set up a service on behalf of our clients to prepare and transmit annually on reportable accounts, account holders and required personal information in accordance with FATCA regulations.