Urged by the financial services industry that the rules under FATCA would be “totally unworkable” the IRS issued several Notices (2010-60, 2011-34 and 2011-53) to ease the implementation of FATCA. Now come the proposed Regulations containing some relief, especially in the start date of the obligations under the Act.
The proposed regulations exclude from the definition of withholdable payment any payment made under an obligation outstanding on 1 January 2013. Therefore payments on obligations entered into before 1 January 2013 will not be subjected to FATCA (under the Act the cut off date was 18 March 2012).
Withholding on certain “foreign sourced pass thru payments” is deferred until at least 2017.
There are significant changes to what constitutes “financial accounts” for the purposes of FATCA. The definition is refined to exclude most debt and equity securities issued by banks and brokerage firms, subject to an anti-abuse rule.
There are several other changes made by the proposed Regulations
Does the world and especially the U.S need increased scrutiny of investments whether they be in the U.S or abroad?