Alerts Feb 23, 2016 FATCA Relief for FFIs On January 19, 2016, the IRS published Notice 2016-8 providing relief to foreign financial institutions (FFIs) for several reporting requirements under the Foreign Account Tax Compliance Act (FATCA), such as certifications for preexisting accounts.  The Notice announces that the IRS intends to amend the FATCA regulations to modify the date for submitting to the IRS the preexisting account certifications required of certain FFIs and to modify the transitional information reporting rules for accounts of nonparticipating FFIs, which will eliminate the requirement to report gross proceeds for the 2015 year.   FATCA generally requires FFIs and other entities to determine whether their accounts have U.S. owners, including direct U.S. account holders and substantial U.S. owners of entities holding the account.  The institution then has to report account information to the IRS.  Participating FFIs (those that have registered with the IRS) have entered into an agreement with the IRS to provide the information and must certify the accuracy of the information.  Participating FFIs must certify to  the IRS that they have complied with the due diligence procedures for preexisting accounts within the required time frame.  For FFIs with an agreement effective June 30, 2014, this certification was originally due August 29, 2016.  An FFI must also periodically certify that it has complied with the FFI agreement.  For an FFI  with a June 30, 2014 agreement, the first certification period ends December 31, 2017, and the certification is due by July 1, 2018.  The Notice indicates the  FATCA regulations will be amended to provide that the preexisting account certification is not due until the same time that the FFI submits its first period certification of compliance.  Therefore, both the preexisting account certification and the first periodic certification will be due July 1, 2018, reducing compliance burdens on participating FFIs.   The IRS indicated that these changes do not affect the deadlines for FFIs to complete the due diligence procedures for preexisting accounts.  FFIs will be  required to certify that they completed those procedures within the time required.   Entities that receive payments on behalf of account holders, partners, owners or beneficiaries must provide documentation to the withholding agent.  A taxpayer  may electronically furnish one of the W-8 series forms for the withholding agent to rely on, in determining the rate at which to withhold.  If the form is signed  electronically, the withholding agent may accept the electronic version as original and can rely on the form to determine the taxpayer’s status.  Apparently  withholding agents have been rejecting electronic forms because they could not confirm the electronic signature, which could trigger withholding under the presumption rules.  Notice 2016-8 allows a withholding agent to rely on an electronic W-8 series or W-9 form received from various foreign entities (on behalf of individual taxpayers) that have not entered into Qualified Intermediary agreements.  The IRS said this will reduce the burden on withholding agents and prevent unnecessary overwithholding.   Notice 2016-8 also provides relief for transitional reporting by certain FFIs that maintain accounts for a nonparticipating FFI.  The FFI must report foreign reportable amounts paid to accounts for 2015 and 2016.  Alternatively, it may report income, gross proceeds and redemptions from the account.  The Notice  eliminates the reporting of gross proceeds for 2015, because of the burden created under the current regulations, which require the reporting of gross proceeds paid to nonparticipating FFI accounts before gross proceeds paid to a U.S. account have to be reported.   Taxpayers may rely on the modified rules described in the Notice prior to the issuance of the amended regulations.   If you have any questions, you can contact Ronald Carlen or any member of the International Services Group for assistance. © CITRIN COOPERMAN & COMPANY, LLP CONNECTICUT | MARYLAND | NEW JERSEY | NEW YORK | PENNSYLVANIA | CAYMAN .