First Friday FATCA Update

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September 1, 2017

Since our previous monthly FATCA update, we have addressed the following recent FATCA developments:

  • The Sixth Circuit issued an opinion on August 18, 2017 upholding the dismissal of a challenge to FATCA brought by Senator Rand Paul and several current and former U.S. citizens living abroad who hold foreign accounts (see prior coverage).
  • The IRS posted draft instructions to the Form 8966 (FATCA Report) dated August 9, 2017, with some changes pertaining to participating foreign financial institutions (PFFIs) and other changes reflecting the final and temporary Chapter 4 regulations released in January of this year (see prior coverage).

Additionally, an official with the IRS Office of Chief Counsel recently stated that the IRS will delay the date on which U.S.… Read More

New CAAs on Exchange of CbC Reports Pushes Total to 20

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August 24, 2017

The IRS has concluded competent authority arrangements (“CAAs”) for the exchange of country-by-country (“CbC”) reports with Australia and the United Kingdom.  The CAA with Australia was signed in Australia on July 14 and by the United States on August 1.  The CAA with the United Kingdom was signed on August 16.  The new arrangements bring the number of CAAs for the exchange of CbC reports to 20. The CAAs for the exchange of CbC reports generally require the competent authorities of the foreign country and the United States to exchange annually, on an automatic basis, CbC reports received from each reporting entity that is a tax resident in its jurisdiction, provided that one or more constituent entities of the reporting entity’s group is a tax resident in the other jurisdiction, or is subject to tax with respect to the business carried out through a permanent establishment in the other jurisdiction.… Read More

Sixth Circuit Upholds Dismissal of Sen. Rand Paul’s Challenge to FATCA

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August 22, 2017

On August 18, the Sixth Circuit issued an opinion upholding the dismissal of a challenge to the Foreign Account Tax Compliance Act (FATCA) brought by Senator Rand Paul and several current and former U.S. citizens living abroad who hold foreign accounts.  In the case, Crawford v. United States Department of the Treasury, Senator Paul and his co-plaintiffs argued that FATCA’s withholding and reporting requirements imposed on individuals and foreign financial institutions (FFIs), certain intergovernmental agreements (IGAs) negotiated by the Treasury, and the requirement to file a foreign bank account report (FBAR) by U.S. persons with financial accounts that exceed $10,000 in a foreign country were unconstitutional.… Read More

IRS Delays Mandatory Reporting for Issuers of Catastrophic Health Plans

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August 18, 2017

On August 3, the IRS issued Notice 2017-41 to extend the period of voluntary reporting by insurance issuers regarding “catastrophic plans” for 2017 coverage and to provide that information reporting penalties will not apply to such voluntary reporting.  “Catastrophic plans” provide essential health benefits as defined under the Affordable Care Act (ACA), but only to the extent they exceed the annual limit on cost-sharing under the ACA, and a limited number of primary care visits.  Catastrophic plans can generally only be sold to low-income individuals and those determined by HHS to have suffered undue hardship and satisfy the coverage requirement under Section 5000A when purchased by such individuals. … Read More

Draft Instructions for Form 8966 (FATCA Report)

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August 14, 2017

The IRS recently posted draft instructions to the Form 8966 (FATCA Report) dated August 9, 2017, with some changes pertaining to participating foreign financial institutions (PFFIs) and others reflecting the final and temporary Chapter 4 regulations released in January of this year.  The Form 8966 reports information with respect to certain U.S. accounts, substantial U.S. owners of passive non-financial foreign entities (NFFEs), specified U.S. persons that own certain debt or equity interests in owner-documented FFIs, and certain other accounts as applicable based on the filer’s status under Chapter 4 of the Internal Revenue Code.  A Model 1 FFI files the Form 8966 (or its equivalent) with its host country’s tax authority which, pursuant to the Model 1 IGA, shares the information with the IRS. … Read More

First Friday FATCA Update

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August 4, 2017

Since our last monthly FATCA update, the IRS has updated its FATCA frequently asked questions to include four new FAQs addressing the renewal of foreign financial institution (FFI) agreements and extending the deadline for renewing FFI agreements to October 24, 2017 (discussed here and here).

Recently, the Treasury released the Model 1B Intergovermental Agreement (IGA) between the United States and Turkmenistan.

Under FATCA, IGAs come in two forms: Model 1 or Model 2.  Under a Model 1 IGA, the foreign treaty partner agrees to collect information of U.S. accountholders in foreign financial institutions operating within its jurisdiction and transmit the information to the IRS. … Read More

IRS Extends Deadline for FFI Agreement Renewal

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August 2, 2017

Following the July 31, 2017, deadline for renewing an FFI agreement (prior coverage), the IRS announced in a new FAQ that a participating FFI (including a reporting model 2 FFI) that renews its FFI agreement by October 24, 2017, will continue to be treated as a participating FFI.  Rev. Proc. 2017-16, which includes the current FFI agreement, provides that a participating FFI that fails to renew its FFI agreement by July 31, 2017, will be treated as having terminated its FFI agreement as of January 1, 2017, and will be treated as a nonparticipating FFI and removed from the IRS FFI list. … Read More

Version III of Senate GOP Health Care Bill Retains Same Health Coverage Reporting Rules

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July 20, 2017

Senate Republicans have just released another update to the Better Care Reconciliation Act, which would repeal and replace the Affordable Care Act.  This updated bill preserves the same health coverage reporting rules under the prior version that was released a week ago on July 13 (discussed here).  Senate Republican leader Mitch McConnell stated that he expects a vote early next week on a motion to start the debate on either a repeal-and-replace bill or a standalone ACA-repeal bill.… Read More

Updated FAQs on FFI Agreement Renewal

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July 19, 2017

Recently, the IRS updated its FATCA frequently asked questions to include four new FAQs addressing the renewal of foreign financial institution (FFI) agreements.  The new FAQs address the requirement that financial institutions (FIs) must renew their FFI agreements by July 31, 2017, pursuant to Revenue Procedure 2017-16, to be treated as having in effect an FFI agreement as of January 1, 2017.

FAQ#8 clarifies that, generally, FATCA requires the following types of FIs to renew their FFI agreements: participating FFIs not covered by an intergovernmental agreement (IGA); reporting Model 2 FFIs; reporting Model 1 FFIs operating branches outside of Model 1 jurisdictions (other than branches treated as nonparticipating FFIs under Article 4(5) of the Model 1 IGA). … Read More

Updated Senate GOP Health Care Bill Retains Additional Medicare Tax and Most Health Coverage Reporting Rules

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July 13, 2017

This morning, Senate Republican leaders released an updated Better Care Reconciliation Act that would largely retain the existing health coverage reporting regime enacted as part of the Affordable Care Act (ACA). In contrast to the prior Senate bill (see prior coverage), the updated bill would keep in place the 3.8% net investment income tax, as well as the 0.9% additional Medicare tax, which employers are required to withhold and remit when paying wages to an employee over a certain threshold (e.g., $200,000 for single filers and $250,000 for joint filers). The updated bill is otherwise similar to the prior bill from a health reporting standpoint, as it would keep the current premium tax credit (with new restrictions effective in 2020) and retain the information reporting rules under Code sections 6055 and 6056.… Read More

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