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February 08, 2012 |
The U.S. Treasury and IRS have released the proposed regulations under the Foreign Account Tax Compliance Act. The United States, France, Germany, Italy, Spain and the United Kingdom also released a joint statement that includes a "Possible Framework for Intergovernmental Approach" to FATCA. |
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January 19, 2012 |
The IRS releases temporary and proposed regulations under IRC § 871(m) concerning “dividend equivalent” payments. Payments under “specified notional principal contracts” (“SNPCs”) that are tied to U.S. source dividends are subject to U.S. tax and withholding. The temporary regulations maintain the status quo in the statute, which otherwise would have expired on March 18, 2012, through the end of 2012. The proposed regulations list seven new or modified types of SNPCs starting in 2013, and also provide that similar payments under other “equity-linked instruments,” such as futures and forward contracts, are subject to the same rules. |
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July 25, 2011 |
The IRS issues a revised Notice 2011-53 which includes a
delay in withholding on NFFEs. The original notice referred
only to withholding on FFIs. |
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July 15, 2011 |
The IRS releases Notice 2011-53, which describes the timeline for the implementation of Chapter 4 and discusses certain substantive and procedural matters that will be addressed in regulations issued by Treasury and the IRS. The new dates affect when FFI agreements go into effect, when withholding starts, and account due diligence deadlines. |
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April 8, 2011 |
The IRS publishes Notice 2011-34, which follows up on Notice
2010-60. The notice contains important provisions regarding
passthru payments and the procedures for checking existing
individual account. |
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August 27, 2010 |
The IRS issues Notice 2010-60, its first round of published
guidance concerning foreign financial institutions and
non-financial foreign entities. |
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May 20, 2010 |
The IRS issues Notice 2010-46, “Prevention of
Over-Withholding and U.S. Tax Avoidance with Respect to Certain
Substitute Dividend Payments,” to address provisions in IRC §
871(l) included in HIRE. The notice modifies Notice 97-66 on an
interim basis and revokes it entirely effective September 14,
2010. The notice states that regulations will be issued
generally providing withholding relief for securities lending
transactions conducted through a “Qualified Securities Lender”
(“QSL”) subject to IRS or QI audit. Transactions not conducted
through a QSL would be subject to a more cumbersome “credit
forward” system to allow relief for withholding earlier in a
chain of securities lending transactions. |
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April 7, 2010 |
The IRS issues Announcement 2010-22, requesting comments
regarding “guidance projects and issues concerning the
interpretation and implementation” of FATCA. |
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March 18, 2010 |
President Obama signs HIRE into law. |
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March 17, 2010 |
The Senate concurs with the House amendment and sends HIRE to the president. |
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March 4, 2010 |
The House agrees to the Senate FATCA language and passes HIRE, but with amendments to other parts of the bill. The bill goes back to the Senate. |
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February 24, 2010 |
The Hiring Incentives to Restore Employment (“HIRE”) Act
passes the Senate, incorporating and further refining the
provisions that originated in FATCA. HIRE gives the IRS more
discretion to define what kind of information is required from
FFIs and what constitutes a “financial account” that may be
subject to the disclosure rules. |
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February 1, 2010 |
The Obama Administration releases its 2011 Green Book. It
includes proposals that mirror FATCA, signaling that the
Administration is abandoning the proposals in its previous Green
Book and endorsing FATCA. |
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December 9, 2009 |
The Tax Extenders Act of 2009 (“Extenders”), which includes
the provisions that originated in FATCA, passes the House of
Representatives. Extenders makes numerous small but significant
changes to FATCA, including changing the effective date to the
beginning of 2013, broadening the ability of IRS regulation
writers to exempt certain kinds of payments and entities, and
introducing the idea of a “recalcitrant account holder,” an
account holder who refuses to cooperate with requests for
information. Withholdable payments by an FFI to a recalcitrant
account holder are subject to 30% withholding, and the FFI can
elect to push the withholding obligation upstream to a
withholding agent from whom it receives the withholdable
payment. |
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October 27, 2009 |
The Foreign Account Tax Compliance Act (“FATCA”) is
introduced simultaneously in the House (H.R. 3933) and Senate
(S. 1934). Taking a very different approach from the Green
Book, FATCA introduces a new 30% withholding tax on “foreign
financial institutions” (“FFIs”) and “nonfinancial foreign
entities” (“NFFEs”) as a way to force the disclosure to the IRS
of U.S. account holders and investors. Taking a cue from the QI
program, FATCA requires FFIs to enter into an agreement with the
IRS to disclose their U.S. account holders and follow due
diligence rules to avoid the 30% withholding tax. NFFEs are
required to disclose any U.S. owners with a greater than 10%
interest or they, too, will suffer 30% withholding. Withholding
applies to “withholdable payments,” defined as U.S. source
income and gross proceeds from the sale of securities that could
generate U.S. source income. FATCA’s original effective date is
January 1, 2011. |
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May 11, 2009 |
The Obama Administration releases its first “Green Book”
containing
budget proposals for 2010. The Green Book proposes a number of
measures to combat tax evasion by wealthy U.S. investors who
operate through non-U.S. financial institutions and investment
structures. One proposal would require qualified intermediaries
(“QI”) to be treated as U.S. payors for Form 1099 purposes,
greatly expanding their tax reporting obligations. To drive
investors toward QIs, another proposal would require 30%
withholding on all payments of U.S. source income paid to
nonqualified intermediaries (“NQIs”). NQIs in non-treaty
jurisdictions would be subjected to a further 20% withholding
tax on gross proceeds from the sales of securities. |
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