United States

Cayman FATCA portal remains open and FTIN relief confirmed


The Cayman Islands has announced that the Automatic Exchange of Information Portal (AEOI), used to submit U.S. Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) reports, will now remain open until Sept. 13, 2017 to accept late submissions. Previously, the portal was set to close on Aug. 31, 2017, the FATCA and CRS report due date, in preparation for data transmission. While this delayed closing does not change the deadline for filing, it is much needed relief for Cayman financial institutions still struggling to gather and submit information via the portal.

Also, in a separate unrelated release, the U.S. Internal Revenue Service has informally confirmed its intent to ease the burden for banks and other withholding agents (including U.S. branches of foreign banks) by not requiring foreign identification numbers (FTINs) on IRS Forms W-8 for certain investors and accountholders until Jan. 1, 2018. First introduced last year, final and temporary regulations under TD 9808, required that an FTIN be provided on certain W-8s starting Jan. 1, 2017 or the forms would be considered invalid and withholding was required at a rate of 30 percent on certain U.S. sourced FDAP income. Under the new relief, only new Form W-8s obtained after Jan. 1, 2018 will require an FTIN, or a reasonable explanation as to why the FTIN was not provided. In addition, valid Forms W-8 obtained prior to Jan. 1, 2018 will not be considered invalid on Jan. 1, 2018 if the FTIN, or reasonable explanation statement, is absent, even in circumstances in which amounts subject to Chapter 3 withholding have been paid to an account holder.

First introduced last year, final and temporary regulations under TD 9808 require U.S. financial institutions or U.S. branches of foreign financial institutions, to collect tax withholding certificates (such as Forms W-8)  from non-US persons who are beneficial owners of financial accounts with an FTIN issued by their tax jurisdiction of residence or a reasonable explanation as to why the FTIN was not provided. Failure to provide such information results in the non-U.S. person being subject to a 30 percent withholding rate on certain U.S. source income.   

This recent informal relief confirmation comes as no surprise, however, as the IRS, amidst continuing industry backlash, has made several previous comments that they may be looking for ways to ease this burden. This includes a June statement listing several relief options they were potentially considering. Based on their most recent statement, it appears that the IRS has finally, albeit informally for now, confirmed they will be providing relief.

Banks and other withholding agents will likely find the informal confirmation comes as welcome relief from what would have otherwise been a difficult mandate to follow and should continue to watch for the release of a formal announcement from the IRS with more specific guidance. They should also continue to monitor Cayman’s enforcement of its filing deadline and take advantage of the additional time that the portal will be open to ensure the accuracy and completeness of information and to document their good faith efforts to comply with the rules. 


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