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August 13, 2013: IRS Releases Draft Form 8966

Foreign Account Tax Compliance Act (FATCA)


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IRS releases draft form 8966 – FATCA report

The IRS has released a draft of the new Form 8966, FATCA Report. Under the FATCA Regulations, participating foreign financial institutions (FFIs), and to a limited extent U.S. withholding agents, are required to report to the U.S. Internal Revenue Service (IRS) information on certain U.S. accounts and recalcitrant accounts on the Form 8966. The first Form 8966 reporting deadline is March 31, 2015 with respect to accounts maintained in 2014 (for U.S. withholding agents it would be for any U.S. owned passive non-financial foreign entities (NFFEs) or owner-documented FFIs it makes withholdable payments to in 2014).

The draft Form 8966 contains all of the expected fields required to do reporting per the regulatory requirements. It also appears that the transitional reporting required to be performed by participating FFIs with respect to payments that they make to non-participating FFIs was moved to the Form 8966. The regulations state that this reporting, which is required in 2015 and 2016, is to be done on the Form 1042-S; a form generally used by withholding agents today to report payments of U.S. source income made to foreign persons. Although instructions have not been released confirming this change, the draft Form 8966 does contain fields indicating that non-participating FFI payment reporting will be done on the form. These fields include a check box in Part II for a non-participating FFI, even though the final regulations do not require any traditional Form 8966 reporting for a payment to a non-participating FFI. In addition, Part V contains an option for pooled reporting for non-participating FFIs.

Without instructions to accompany the draft Form 8966, we can only speculate that nonparticipating FFI aggregate payment reporting was meant to be moved from the Form 1042-S to the Form 8966.

However, such a change seems logical and will help streamline reporting for participating FFIs by centralizing reporting into one form.

The form itself contains five sections organized as follows:

  • Part I – Identification of Filer
    • Information about the reporting FI, sponsoring entity, or other withholding agent filing the report and if applicable, the name of the sponsored FFI, or other intermediary if an entity is filing the form on behalf of such an entity (i.e., name, address, global intermediary identification number (GIIN), and U.S. taxpayer identification number (TIN))
  • Part II – Account Holder or Recipient Information
    • Information for the account holder or recipient for whom the report is being filed (i.e., name, address, and TIN) including the type of account holder or recipient if it’s an entity
  • Part III – Identifying Information of U.S. Owners that are specified U.S. persons
    • Information for the specified U.S. owners of passive NFFEs and owner-documented FFIs (i.e., name, address, and TIN), if the account holder or recipient is a passive NFFE or owner-documented FFI
    • For example, to report a passive NFFE or owner documented FFI with U.S. owners, you would input the information of the entity in Part II and the information on the owner in Part III
  • Part IV – Financial Information
    • Information about the financial account including the account number, currency code (presumably the instructions will have a list of currency types along with a corresponding code), account balance, and amount of payments for the calendar year (separate fields for interest, dividends, gross proceeds/redemptions, and other payments)
  • Part V – Pooled Reporting Type
    • Checkboxes to indicate that the Form 8966 is being submitted for pooled reporting which for FFIs is required for recalcitrant accounts, dormant accounts, and presumably non-participating FFI payments
    • Fields to indicate the number of accounts being reported, the aggregate payment amounts, the aggregate balance of all accounts and the currency code
    • This section does not have to be completed by a U.S. withholding agent with respect to its payees as Form 8966 pooled reporting is only required for FFIs

Despite the lack of instructions, the release of the draft Form 8966 is a welcome event that provides insight on the new Form 8966 reporting requirements. The Form 8966 reporting is required to be submitted electronically and the IRS has not released the electronic formatting and filing requirements at this point in time. Fortunately, reporting does not begin until 2015 and the newly released form will at least provide impacted parties with the data elements they will need to track for reporting purposes.

Regarding countries that have or will enter into an intergovernmental agreement (IGA) with the U.S., reporting FFIs in a Model 2 IGA jurisdiction are able to use the Form 8966 format to report their reportable accounts to the IRS. However, FFIs in a Model 1 IGA jurisdiction will need to wait for the local tax authority to issue instructions on how reporting will be conducted within the jurisdiction (likely to contain the same or substantially similar data elements as the Form 8966).

Full article and copy of the draft of the Form 8966 are available for download. For more information please contact a Deloitte FATCA Leader or click here.

As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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