FATCA for nonfinancial businesses
WHITE PAPER |
UPDATE: On April 2, 2014, the Treasury announced an extra 10-day grace period, through May 5, 2014, for foreign financial institutions (FFIs) to register and be included in the first IRS list of entities treated as registered FFIs for purposes of the Foreign Account Tax Compliance Act (FATCA). Additionally, the Treasury published a list of countries (now 45) that have signed intergovernmental agreements (IGAs) under FATCA or that have agreements in substance. The announcement also stated that any country with an IGA that is either effective or that is agreed to in substance before July 1, 2014, will be treated as having a signed agreement in place through Dec. 31, 2014.
In response to widespread use of foreign bank accounts to facilitate U.S. tax evasion, Congress passed the Foreign Account Tax Compliance Act (FATCA), which requires taxpayers to disclose information regarding income paid to offshore accounts and account holders, or be subject to a 30 percent gross withholding tax.
While FATCA will have a huge impact on foreign financial institutions, virtually every U.S. company that transacts business with non-U.S. customers will have to comply with FATCA. On July 1, 2014, withholding agents, including banks and nonfinancial businesses, must begin withholding on a wide variety of payments. Manufacturers and other nonfinancial businesses may face substantial and unexpected new burdens, in order to comply with FATCA.
In this whitepaper, FATCA for nonfinancial businesses, Ramon Camacho discusses how manufacturers and other nonfinancial businesses can assess their FATCA obligations, and develop a compliance plan to avoid significant penalties.