FATCA Passthru Withholding Delayed To Assess Scope of Problem, Eggert Says
PARIS — New regulations implementing the 2010 Foreign Account Tax Compliance Act delayed withholding obligations for so-called passthru payments until 2017 to give authorities more time to assess the size of the problem these obligations were meant to address, Treasury Associate International Tax Counsel Jesse Eggert said Feb. 12.
FATCA was designed to fight cross-border tax evasion by obliging foreign financial institutions to notify the Internal Revenue Service about their U.S.-owned accounts—or face up to a 30 percent withholding tax if they fail to comply.
The final FATCA regulations (T.D. 9610) that IRS published in January laid out a detailed process for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents, to identify U.S. accounts and report information, and it also established withholding requirements (13 ITM, 1/18/13). Eggert was commenting on what he called major areas in which the new final regulations made changes from the proposed FATCA regulations (REG-121647-10) released in early 2012 (27 ITM, 2/9/12).
He spoke during a Paris briefing looking at both FATCA and the Tax Relief and Compliance Enforcement (TRACE) project of the Organization for Economic Cooperation and Development, held jointly by OECD and OECD’s Business and Industry Advisory Committee (31 ITM, 2/13/13)….