Notice 2015-66 was issued on 18 September 2015 announcing that the US Treasury Department and IRS intend to amend section 1471-1474 of the regulations.

Transitional Rules

The transitional rules provided in Notice 2015-66 are intended to allow for and facilitate an orderly transition for withholding agents and FFIs regarding FATCA compliance and are in response to growing concerns on how the phase-out of transitional rules may affect information reporting and withholding systems.

Specifically, Sections 1471-1474 will extend:

  1. The date when withholding on gross proceeds and foreign passthru payments will begin.
  2. Transitional rules to the application of FFI status for limited branches" and "limited foreign financial institutions" that are members of expanded affiliated groups.
  3. The deadline for (i) a sponsoring entity to register its sponsored entities and re-document such entities with withholding agents and (ii) the ability of the withholding agent to rely on such certification by the sponsoring entity.

Intergovernmental Agreements(IGAs)

Model 1 IGAs for which the obligation to exchange has not taken effect

Many partner jurisdictions that have signed IGAs or reached an agreement in substance on the text of an IGA continue to work through their internal procedures to bring the IGA into force. For Model 1 IGAs that have not yet entered into force on 30 September 2015, Treasury intends to continue to treat FFIs covered by the IGA as complying with, and not subject to withholding under, FATCA so long as the partner jurisdiction continues to demonstrate firm resolve to bring the IGA into force and any information that would have been reportable under the IGA on 30 September 2015, is exchanged by 30 September 2016.

Model 1 IGAs for which the obligation to exchange is in effect

IGA jurisdictions that have an IGA in force for which the obligation to exchange information has taken effect and requires the partner jurisdiction to exchange information on US reportable accounts with respect to 2014 by 30 September 2015.

Treasury and the IRS understand that partner jurisdictions are continuing to develop and implement the systems needed for automatic information exchange and may not have those systems in place by 30 September 2015. In addition, several partner jurisdictions are in the process of enacting legislation to implement their IGAs, without which they are not able to exchange information with the United States.

Consistent with treating 2014 and 2015 as a transition period, Treasury and the IRS will treat FFIs covered by an IGA as complying with, and not subject to withholding under FATCA even if the relevant partner jurisdiction has not exchanged 2014 information by 30 September 2015, as long as the partner jurisdiction notifies the US competent authority before 30 September 2015 of the delay and provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.

This notice does not affect the timing of when FFIs should report information in their own partner jurisdictions, reporting dates in partner jurisdictions will remain in effect until such time as they are changed under local laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.