The US Treasury has published a second model document to serve as the basis of additional Intergovernmental Agreements (IGAs), which are required in order for the Foreign Account Tax Compliance Act (Fatca) to work in practice.
Officially called the Model Intergovernmental Agreement for Cooperation to Facilitate the Implementation of FATCA (Model 2), the latest update follows ongoing negotiations with a number of concerned jurisdictions, which would be affected by Act's requirement for financial institutions to report directly to the US tax authority, the IRS, information on accounts held by US "persons".
The Model 2 outlines definitions of expressions used in the proposed IGA - such as the FFI Agreement, which requires foreign financial institutions to report to the IRS, as well as defining who is an "Account Holder", and the all-important definition of a "US Person" affected by the Act's provisions.
The Model 2 notes the requirement for FFI's to register with the IRS by 1 January 2014, in respect of due diligence, reporting and withholding requirements, as well as the 2015 and 2016 requirements for so-called Nonparticipating Financial Institutions to report to the IRS, which then has the option of demanding more information.
To view the full Model 2 document, click here: Fatca Model 2 Agreement to Implement
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