How to navigate the new FATCA web portal Sep 02 2013 Rachel Wolcott, Compliance Complete The starting gun for Foreign Account Tax Compliance Act (FATCA) compliance was fired last month with the launch of the web portal, which allows foreign financial institutions (FFIs) to register online with the U.S. tax authorities. The U.S. Internal Revenue Service (IRS) published volumes of support information and even online videos to help FFIs register online and obtain a global intermediary identification number (GIIN). The IRS is encouraging all FFIs to use the online registration tool, but it has published a draft registration form ( Form 8957) for those that prefer paper. "The [U.S.] Treasury and the IRS are trying hard to make the registration process as user-friendly as possible. The videos and manuals are practical and helpful," said Anthony Calabrese, a senior manager at Ernst & Young's international tax services unit in London. Important deadline It is important to note that while the FATCA online registration portal is open for business, whatever information is submitted in 2013 will be considered to be in draft form. FFIs will need to update, confirm and submit everything by January 1, 2014 to ensure the receipt of the all-important GIIN. Sometime after April 25, 2014, the IRS plans to launch another web-based tool for FATCA, this time a list of participating FFIs and their GIINs. If FFIs fail to register by the April deadline, then the IRS cannot guarantee inclusion on that first list, although it is expected that list will be updated frequently, perhaps monthly. Michael Hirschfeld, partner at Dechert in New York, said: "It's important [to be on the list], because U.S. withholding agents are going to start withholding on July 1, 2014. They know they won't have to deal with that if FFIs give them an updated Form W-8 that says, 'Look, I'm compliant with FATCA,' which may require the GIIN number. If there is a GIIN number on [the W-8] they then have to verify it isn't bogus using the other IRS portal." One big exception to this deadline is for financial institutions based in a country with a model-one intergovernmental agreement (IGA). Technically, firms in a model-one IGA country should not have to register until 2015, because they will be deemed compliant, Calabrese said. Currently, however, most countries have not signed IGAs. So FFIs that do not want to be withheld upon must be registered by January 1. "You want to be on the list, because it allows you to say to the world that you are a compliant FI," Calabrese said. Who should use the registration portal? The draft FFI registration Form 8957 stated that a firm's responsible officer (RO) was the sole point of contact (POC) for FATCA and the only person authorised to use the online portal. With the launch of the online registration portal, a FFI can appoint up to five POCs to use the portal and perform registration tasks. The online registration portal will then send email updates to the POCs to inform them of status changes and other FATCArelated information. But who should an FFI select to be a POC? FFIs may want to consider making a variety of people POCs for FATCA registration. While much of the responsibility for FATCA may fall upon the tax department, it will soon also spread to compliance, operations and even information technology. Specialists from all these areas could make good POCs. "It depends on the organisation and its culture; however, firms should consider appointing those people with a good knowledge of FATCA and [who] are able to get things done," Calabrese said. Awaiting further guidance, updated forms FATCA will come in force on July 1, 2014 — a six-month delay from the original timeline. The delay is chalked up to the IRS's desire to sign more IGAs with partner countries. Currently only nine countries have signed IGAs with the U.S. The delay will also give the IRS time to sort out the many outstanding questions on FATCA, as well as issue updated forms, instructions and guidance. Ernst & Young's August 22 Global Tax Alert said there are several yet-to-be-issued guidance items that are necessary for withholding agents, FFIs and others affected by the Act to complete their FATCA implementation programmes, including:        conforming regulations under chapters 3 and 4; technical corrections to the final FATCA regulations; substantive corrections to the final FATCA regulations; model FFI agreement; final versions of the revised Forms W-8 and W-9 and instructions; final version of the Form 8966, FATCA Report and instructions; and final versions of the 2014 Forms 1042 and 1042-S and instructions. Finalising, revising and issuing the various forms related to and affected by FATCA will be an important task for the IRS. FFIs should be on the lookout for these forms as they appear. "The forms may not be the most exciting thing, but they are an important component of people understanding and complying with FATCA," Hirschfeld said. The IRS said some of the most important revised forms, such as the W-8 BEN, W-8 BENE, 1042 and 1042-S, will be coming out fairly quickly. "More important than the forms will be the instructions, because that's where you find some of the practical guidance," Calabrese said. Another big issue still to be resolved is coordinating how FATCA works with the existing U.S. tax code. "What we're waiting for that's going to be important is the chapter three and chapter four coordinating regulations that the IRS promised. How the current rules and the FATCA rules come together is going to be important," Calabrese said. Amnesty programme In the run-up to FATCA going live in 2014, IRS has offered its third Offshore Voluntary Disclosure Program (OVDP). The idea is to give U.S. persons who have not been paying taxes a chance to contact the IRS and agree a settlement without fear of a criminal prosecution. There will be some civil penalties to pay, but they will be at a reduced level then they would be otherwise. The OVDP gives U.S. residents – whether or not they are intentionally avoiding tax – a chance to make good, but time is limited. The current programme, which opened in January 2012, could close at any time. Once FATCA is implemented fully, it is likely the IRS will continue to offer the OVDP, because it will have a much better idea of who is paying tax and who is not. "As the FATCA deadline comes closer, there is still time for people to come clean, but there will be a time when these U.S. people who haven't paid tax won't be able to hide. Their identity will become clear to the IRS. Ultimately the IRS will close down the OVDP. Now is the time to seriously consider the OVDP. The ostrich approach will not work. Eventually you will get caught," Hirschfeld said.