Implementation of F.A.T.C.A., first enacted in 2010, took great strides in 2013.
On January 17, 2013, the I.R.S. issued the final F.A.T.C.A. regulations. In more than 500 pages, the I.R.S. laid out a roadmap for determining who is covered by F.A.T.C.A., who is exempt, and the burdens imposed on foreign financial institutions (“F.F.I.'s"), other foreign investors, and U.S. withholding agents to comply with its rules.
On July 12, 2013, the I.R.S. released Notice 2013-43, which revised the timelines included in the final F.A.T.C.A. regulations for withholding agents and F.F.I.'s to begin their due diligence, withholding, and information reporting requirements. Specifically, it delayed implementation of F.A.T.C.A. withholding on investment income (but not gross proceeds from sale) by six months so that withholding will first start on July 1, 2014. It also adopted a six-month extension for the F.A.T.C.A. registration portal (the “Portal”). Also deferred were rules applicable to grandfathered obligations, new account opening procedures, new qualified intermediaries (“Q.I.'s"), withholding foreign partnerships (“W.P.'s"), and withholding foreign trusts (“W.T.'s") agreements. Withholding on gross proceeds from sales of stocks and securities is still scheduled to come into effect on January 1, 2017.