Treasury to Treat FATCA Agreements in Substance as Agreements in Effect

Treasury and the IRS announced on April 2 (Announcement 2014-17, 2014-17 IRB 1) that jurisdictions that have reached agreements in substance with the United States on the terms of intergovernmental agreements under the Foreign Account Tax Compliance Act can be treated as having agreements in effect until the end of 2014.

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The final FATCA regulations (T.D. 9610) generally provide that for withholding not to apply, withholding agents must verify the status of foreign financial institutions beginning on July 1, 2014. The announcement allows jurisdictions that have reached agreements in substance on IGAs before July 1, and have consented to be included on a list, to be treated as having IGAs in effect until December 31, 2014, and allows FFIs to register on the FATCA registration website consistent with that status. After December 31, only signed IGAs will be considered to be in effect.

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