IRS Updates Foreign Financial Institution Agreement

IRS Updates Foreign Financial Institution Agreement

The IRS has issued guidance (Rev. Proc. 2017-16) updating the foreign financial institution agreement for participating FFIs under the Foreign Account Tax Compliance Act that was previously published in Rev. Proc. 2014-38. Rev. Proc. 2017-16 also provides guidance to FFIs and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement on complying with the terms of the FFI agreement, as modified by the Model 2 IGA. The FFI agreement under Rev. Proc. 2014-38 expires on December 31, 2016. Accordingly, Rev. Proc. 2017-16 supersedes Rev. Proc. 2014-38 regarding the requirements of a participating FFI (including a reporting Model 2 FFI) that apply after that date. Treasury and the IRS have concurrently issued final and temporary regulations (T.D. 9809) under chapter 4 as well as final regs (T.D. 9808) under chapters 3 and 61 and <a href="/lr/resolve//cpgn" class="frllink">sections 3406</a> and <a href="/lr/resolve//cqjm" class="frllink">6402</a> and temporary regs under chapter 3. The revised FFI agreement references and incorporates some provisions of those regs. Rev. Proc. 2017-16 provides guidance on registering as a participating FFI (including a reporting Model 2 FFI) to comply with the terms of the FFI agreement and renewing an FFI agreement on the IRS FATCA registration website. It also provides guidance on the scope of FFIs that are eligible to register to enter into the FFI agreement to be treated as a participating FFI. Rev. Proc. 2017-16 updates the FFI agreement to make it consistent with the final and temporary chapter 4 regs and to provide further clarification of some of the requirements in the 2014 FFI agreement. The FFI agreement removes the provisions on U.S. branches that were in the 2014 FFI agreement in light of changes to the rules that apply to U.S. branches made by the final chapter 4 regs. The FFI agreement is revised to clarify that a reporting Model 2 FFI doesn't need to apply the FFI agreement to all branches of the reporting Model 2 FFI, unless the reporting Model 2 FFI has other branches that need to be covered by the FFI agreement to be treated as participating FFIs. The FFI agreement also incorporates allowances in the temporary chapter 4 regs for combined reporting and rules under those regs that clarify specified information reported by participating FFIs that are partnerships. The timing of certifications and the scope of IRS inquiries in the FFI agreement are updated to be made consistent with the final chapter 4 regs. And a coordination rule for reporting on owner-documented FFIs under those regs is added to the FFI agreement. Several revisions are made to the FFI agreement to reflect the expiration of transitional periods that were provided for in temporary chapter 4 regs (T.D. 9657) issued in March 2014. The FFI agreement is revised to clarify some withholding requirements of a participating FFI and to remove a reference to a trustee-documented trust subject to a Model 1 IGA. Changes are made to the FFI agreement to correct and clarify some provisions applicable to reporting Model 2 FFIs. The presumption rules for reporting Model 2 FFIs for entity accounts are also updated in the FFI agreement. Other changes are made regarding a reporting Model 2 FFI's documentation requirements. The FFI agreement includes new procedures for final certifications of compliance upon a termination of the FFI agreement and clarifies that an FFI's obligations for the period covered by the agreement when it was applicable will survive the agreement's termination. Rev. Proc. 2017-16 provides further guidance on updating an FFI's chapter 4 status.

Superseding Rev. Proc. 2014-38 <a href="/lr/resolve//fhgr"> <img src="//s3.amazonaws.com/binary.taxnotes.com/image/etl/doclink.gif" border="0" alt="2014 TNT 122-11: IRS Revenue Procedures"/></a>. T.D. 9657 <a href="/lr/resolve//fc6x"> <img src="//s3.amazonaws.com/binary.taxnotes.com/image/etl/doclink.gif" border="0" alt="2014 TNT 35-11: IRS Temporary Regulations"/></a>. T.D. 9808 <a href="/lr/resolve//gc9r"> <img src="//s3.amazonaws.com/binary.taxnotes.com/image/etl/doclink.gif" border="0" alt="2017 TNT 1-12: IRS Final Regulations"/></a>. T.D. 9809 <a href="/lr/resolve//gcbs"> <img src="//s3.amazonaws.com/binary.taxnotes.com/image/etl/doclink.gif" border="0" alt="2017 TNT 1-11: IRS Final Regulations"/></a>.

Updated FFI Agreement

The IRS has issued guidance updating the foreign financial institution agreement for participating FFIs under the Foreign Account Tax Compliance Act that was previously published in Rev. Proc. 2014-38.

The IRS has issued guidance (Rev. Proc. 2017-16) updating the foreign financial institution agreement for participating FFIs under the Foreign Account Tax Compliance Act that was previously published in Rev. Proc. 2014-38. Rev. Proc. 2017-16 also provides guidance to FFIs and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement on complying with the terms of the FFI agreement, as modified by the Model 2 IGA. The FFI agreement under Rev. Proc. 2014-38 expires on December 31, 2016. Accordingly, Rev. Proc. 2017-16 supersedes Rev. Proc. 2014-38 regarding the requirements of a participating FFI (including a reporting Model 2 FFI) that apply after that date. Treasury and the IRS have concurrently issued final and temporary regulations (T.D. 9809) under chapter 4 as well as final regs (T.D. 9808) under chapters 3 and 61 and sections 3406 and 6402 and temporary regs under chapter 3. The revised FFI agreement references and incorporates some provisions of those regs. Rev. Proc. 2017-16 provides guidance on registering as a participating FFI (including a reporting Model 2 FFI) to comply with the terms of the FFI agreement and renewing an FFI agreement on the IRS FATCA registration website. It also provides guidance on the scope of FFIs that are eligible to register to enter into the FFI agreement to be treated as a participating FFI. Rev. Proc. 2017-16 updates the FFI agreement to make it consistent with the final and temporary chapter 4 regs and to provide further clarification of some of the requirements in the 2014 FFI agreement. The FFI agreement removes the provisions on U.S. branches that were in the 2014 FFI agreement in light of changes to the rules that apply to U.S. branches made by the final chapter 4 regs. The FFI agreement is revised to clarify that a reporting Model 2 FFI doesn't need to apply the FFI agreement to all branches of the reporting Model 2 FFI, unless the reporting Model 2 FFI has other branches that need to be covered by the FFI agreement to be treated as participating FFIs. The FFI agreement also incorporates allowances in the temporary chapter 4 regs for combined reporting and rules under those regs that clarify specified information reported by participating FFIs that are partnerships. The timing of certifications and the scope of IRS inquiries in the FFI agreement are updated to be made consistent with the final chapter 4 regs. And a coordination rule for reporting on owner-documented FFIs under those regs is added to the FFI agreement. Several revisions are made to the FFI agreement to reflect the expiration of transitional periods that were provided for in temporary chapter 4 regs (T.D. 9657) issued in March 2014. The FFI agreement is revised to clarify some withholding requirements of a participating FFI and to remove a reference to a trustee-documented trust subject to a Model 1 IGA. Changes are made to the FFI agreement to correct and clarify some provisions applicable to reporting Model 2 FFIs. The presumption rules for reporting Model 2 FFIs for entity accounts are also updated in the FFI agreement. Other changes are made regarding a reporting Model 2 FFI's documentation requirements. The FFI agreement includes new procedures for final certifications of compliance upon a termination of the FFI agreement and clarifies that an FFI's obligations for the period covered by the agreement when it was applicable will survive the agreement's termination. Rev. Proc. 2017-16 provides further guidance on updating an FFI's chapter 4 status.

Section 1471 -- Foreign Financial Institution Withholding

Section 1472 -- Foreign Entity Withholding

Section 1473 -- Foreign Financial Institution Withholding Definitions

Section 1474 -- Foreign Institution Withholding Special Rules

Section 3406 -- Backup Withholding

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IRS Updates Foreign Financial Institution Agreement