U.K. Bankers' Group Raises FATCA Compliance Issues
U.K. Bankers' Group Raises FATCA Compliance Issues
- AuthorsWulff-Cochrane, Sarah
- Institutional AuthorsBritish Bankers' Association
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2015-5817
- Tax Analysts Electronic Citation2015 TNT 47-20
09 March 2015
Mr B Stack
Deputy Assistant Secretary (International Tax Affairs)
Office of the International Tax Counsel
Department of the Treasury
1500 Pennsylvania Avenue, NW, Room 3058
Washington, DC 20220, USA
Robert.Stack@do.treas.gov
Mr D O'Donnell
LB&I Deputy Commissioner (International) (Acting)
Internal Revenue Service
1111 Constitution Avenue, NW
Large Business and International Division, Attn: SE:LB:IN
Washington, DC 20224, USA
douglas.w.odonnell@irs.gov
Dear Mr Stack and Mr O'Donnell,
FATCA compliance issues
The British Bankers' Association (BBA) is the leading association for the UK banking and financial services sector, speaking for 200 banking members, headquartered in 50 jurisdictions and operating in over 180 territories worldwide jurisdictions.
FATCA compliance
BBA member banks remain committed to timely FATCA compliance in support of US goals to tackle tax evasion, and have made significant progress in achieving compliant FATCA processes.
We last wrote to you in May 2014, regarding the late publication of regulatory guidance and concerns about the pace of Intergovernmental Agreement (IGA) developments; both of which were concerning BBA members and delaying implementation work within the financial services industry. We appreciated the important and helpful measures subsequently undertaken by the IRS and US Treasury to mitigate these concerns, specifically:
A deferred timetable for entity customers;
Defining 2014 and 2015 as transitional years; and
The creation of a list of countries (often referred to as 'the white list') which enabled FFIs to act in anticipation of an IGA being concluded in the near future.
We would like to offer further information about the challenges which remain for banks in relation to FATCA compliance and would offer the following points for your consideration on behalf of BBA members.
The publication of IRS Notices extending the transitional arrangements for countries still negotiating IGAs has delayed the negative impacts highlighted in our previous correspondence. If, however, IGAs are not signed by the time FATCA reporting for 2014 is required in 2015, our members are concerned that, absent further concessions or guidance, FFIs in these countries will be unable to report. This will be the result of prevailing legal restrictions or the absence of domestic legislation implementing the terms of the IGA. Whilst FIs may be able to carry out some aspects of FATCA compliance, they may not be able to report to the IRS under these circumstances and hence it is not clear whether the white list protection would continue to be available.
This would give rise to significant problems for entities in those jurisdictions and also where entities in those jurisdictions have dealings or accounts with other jurisdictions. We would therefore urge the US to try and get as many regimes as possible to sign IGAs and to expeditiously produce local law and guidance. In the meantime, we would welcome a clear statement from the IRS allowing FIs to continue to be considered compliant, even in the absence of reporting, until the affected territories have enacted or amended the appropriate local laws. This could also be achieved by requiring FIs operating in these countries to apply for additional filing extensions as a result of exceptional circumstances (namely, being legally prohibited from reporting). Regardless of the method used to achieve this, it would be helpful for the IRS and US Treasury to confirm that that extensions will be granted under these circumstances and that FIs applying for them will not be considered to be failing to comply with their obligations under FATCA.
Whilst we recognise that the conclusion of IGAs with these jurisdictions is dependent on a number of factors, we would ask the IRS and US Treasury to indicate as soon as possible whether any country is at risk of being removed from the white list. The current arrangements of a monthly review do not provide FIs and withholding agents with sufficient time to take the necessary action to ensure their compliance with FATCA and local law requirements. This would also enable them to discuss the matter directly with the appropriate regulators and government in the affected territories and highlight the consequences that this would have on FIs operating in that country before the jurisdiction is formally removed from the white list.
Recently updated IRS FAQ on account opening
We note that the IRS recently updated Q10 as part of FAQ section1 (copied below) which relates to the account opening process. It is unclear whether the FATCA regulations or the IGAs require FFIs to always obtain a self-certification at account opening and, in the event this is not provided, not open the account. Many FIs have opted for a model which only obtains a self-certification subsequent to the opening of the account, a "day 2" model. This approach was previously considered acceptable and is reflected in local Guidance, existing business practice and complies with local laws concerning the provision of account services. The BBA would welcome the opportunity to discuss this matter further with the IRS to ensure that there is clarity amongst FIs about their obligations.
_____________________________________________________________________
Q10. If a Reporting Model 1 No. Pursuant to section
FFI or a Reporting Model III, paragraph B, of
2 FFI that is applying Annex I of the IGA, the
the due diligence FFI must obtain a
procedures in section self-certification at
III, paragraph B, of account opening. If
Annex I of the IGA cannot the FFI cannot obtain a
obtain a self-certification self-certification at
upon the opening of a account opening, it
New Individual Account, cannot open the account.
can the FFI open the account
and treat it as a U.S.
Reportable Account?
Added: 02-02-2015
_____________________________________________________________________
Should you have any questions about the points raised in this letter we would be happy to provide further information or arrange a convenient discussion.
Sarah Wulff-Cochrane
Director of Tax Policy
British Bankers' Association
sarah.wulff-cochrane@bba.org.uk
Ms M McLeod
Principal Deputy Legal Adviser
The Office of the Assistant Legal Adviser for Treaty Affairs
Department of State, L/T Room 5420, 2201
C Street, N.W
Washington, D.C, 20520, USA
Mary.McLeod@state.gov
Mr. Brett York
Office of International Tax Counsel
United States Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220
brett.york@treasury.gov
Mr. John Sweeney Office
of Chief Counsel Internal
Revenue Service
1111 Constitution Ave., NW
Washington, DC 20224
john.j.sweeney@irscounsel.treas.gov
Ms. Danielle Rolfes
International Tax Counsel
United States Department of the Treasury
1500 Pennsylvania Ave, NW
Washington, DC 20220
danielle.rolfes@do.treas.gov
Ms. Quyen Huynh
Office of International Tax Counsel
United States Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220
Quyen.Huynh@treasury.gov
1 http://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#General
END OF FOOTNOTE
- AuthorsWulff-Cochrane, Sarah
- Institutional AuthorsBritish Bankers' Association
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2015-5817
- Tax Analysts Electronic Citation2015 TNT 47-20