US IRS Issues Preliminary FATCA Guidance Establishing Due Diligence Procedures and Information Reporting Rules for Foreign Financial Institutions
16 September 2010
Mayer Brown Legal Update
The HIRE Act, enacted on March 18, 2010, imposed new information reporting and withholding tax rules, which are contained in chapter 4 of the Internal Revenue Code. These rules generally impose significant new due diligence, information reporting and control burdens on non-US financial intermediaries and investment entities. The US Internal Revenue Service (the “IRS”) has published Notice 2010-60 to provide preliminary guidance regarding the implementation of those rules. The Notice provides preliminary technical guidance regarding the definition of a foreign financial institution (FFI). It also provides guidance on certain exceptions from FFI status and chapter 4 withholding generally, due diligence procedures for identifying accounts beneficially owned by US persons, information that FFIs must report to the IRS pursuant to an FFI Agreement and the scope of grandfathered obligations exempt from chapter 4 withholding. Comments are requested by November 1, 2010.