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I need some assistance with these assignment. the effect of the foreign account tax compliance act on financial institutions Thank you in advance for the help!
I need some assistance with these assignment. the effect of the foreign account tax compliance act on financial institutions Thank you in advance for the help! The US Congress passed FATCA to ensure that US citizens with offshore accounts and investments pay taxes on those accounts and investments (Heiberg 1689). In order to achieve this goal, the Act requires foreign financial institutions (FFIs) to identify their American customers and furnish the Internal Revenue Service (IRS) with the particulars of those Americans for purposes of taxation. The Act mandates the Treasury and IRS with its implementation. In order to operationalize the Act, the Treasury and IRS issued a series of notices and proposed and final regulation January 2013, soon after the Act came into force. In order to overcome identified foreign legal setbacks to the successful implementation of FATCA, the Treasury has entered a number of intergovernmental agreements (IGAs), with more come (Dhanawade 141). For most of the IGAs signed so far, IRS will share information directly with foreign governments. The implication is that business organizations operating within the jurisdiction of a government that has signed an IGAwill now be required submit to the respective government information that was hitherto either not required or permitted to be shared. In order to solicit compliance, FATCA slaps a 30% withholding tax on FFIs that fail to withhold the 30% FATCA tax where it is due.
The application of FATCA is not limited to the financial services industry alone .(Grinberg 33). The Act will affect many activities of nonfinancial organizations and require compliance. Following is an inexhaustive outline of the situations under which FATCA may apply to a company. .(Grinberg 33). The Act will affect many activities of nonfinancial organizations and require compliance. Following is an inexhaustive outline of the situations under which FATCA may apply to a company. .A Group of Companies with FFIs FATCA imposes the heaviest burden of compliance on FFIs (Grinberg 51). While many nonfinancial businesses may believe that few or none of their businesses constitute an FFI, FATCA’s definition of the term is so broad that it nets in a conglomeration of business.
