Final FATCA Regulations Provide Some Relief

Final regulations under FATCA were released on January 18, 2013. The final regulations contain a number of taxpayer favorable changes from the proposed regulations released in February of last year. They narrow the categories of foreign financial entities (“FFIs”) who will be required to enter into agreements with the IRS to monitor and report on their US account holders, expand and clarify exemptions for foreign governments and foreign pension plans, expand grandfathered instruments and provide other important guidance. Major changes to prior guidance include:

• Relief for private trusts and holding companies. Private trusts and personal holding companies are exempted from treatment as FFIs as long as they are not managed by another FFI, such as a professional investment manager or trust company FFI (see below). Where such an entity is professionally managed, it will be treated as an FFI. But an entity that functions or holds itself out to customers as a collective