The Foreign Account Tax Compliance Act (FATCA), enacted by the
US Congress in 2010, becomes operational on July 1, 2014. And while
the Internal Revenue Service (IRS) has recently released some
important guidance, many critical issues remain unresolved.
FATCA requires foreign financial institutions (FFIs) to perform
certain due diligence procedures to identify US persons who have
invested in either non-US financial accounts or non-US entities.
The intent behind FATCA is to keep US persons from hiding income
and assets overseas, as they are required to report to the IRS on
their worldwide income—regardless of their residency. The US
Treasury has entered into intergovernmental agreements (IGAs) with
many countries in order to alleviate some of the burdens associated
with FATCA compliance.
The US-Canada IGA was released on February 5, 2014.
