The IRS postponed certain Foreign Account Tax Compliance Act (FATCA) withholding and due diligence deadlines for six months, until June 30, 2014. Due to overwhelming interest from countries around the word, the IRS extension will provide additional time for foreign financial institutions (FFIs) to comply.
The FATCA, enacted in 2010 as part of the Hiring Incentives to Restore Employment Act, targets non-compliant U.S. taxpayers through foreign accounts and establishes a global approach to fighting offshore tax evasion. It requires FFIs to report information to the IRS about accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. U.S. financial institutions must withhold a portion of payments made to any FFIs that refuse to identify and report required IRS information.
The law defines requirements for individuals, U.S. and foreign financial institutions, and governments. Such requirements, associated FATCA deadlines and countries joining the U.S. cause are discussed in the Weaver newsletter article IRS Announces Postponement of FATCA Deadlines.