On August 27, 2010 the Internal Revenue Service (the “IRS”) published Notice 2010-60 (the “Notice”), providing initial guidance on certain priority issues regarding the Foreign Account Tax Compliance (“FATCA”) provisions of the Hiring Incentives to Restore Employment Act (the “HIRE Act”), which was enacted on March 18, 2010. The FATCA provisions introduce a complex and expansive reporting and withholding regime that is intended to force non-U.S. financial intermediaries and U.S.-owned foreign entities to identify and report on U.S. accountholders and investors as a means of preventing U.S. tax evasion.
The Notice is significant since it is the first step in the process of implementing the reporting and withholding requirements introduced by the FATCA provisions. The Notice, however, is intended only as preliminary guidance with respect to certain issues raised by the FATCA provisions and leaves other critical questions presented by the statute to be addressed in future guidance.
The memorandum provides a brief background discussion of the FATCA provisions, summarizes the Notice’s principal provisions and provides preliminary observations regarding its implications, and identifies certain critical issues that are not addressed in the Notice.
Please feel free to contact any of your regular contacts at the firm or any of our U.S. partners and counsel listed under Tax if you have any questions.