FATCA Primer For Non-Financial Enterprises

The Foreign Account Tax Compliance Act (FATCA) added a new chapter 4 (sections 1471–1474) to the Internal Revenue Code and Treasury Regulations thereunder.  While foreign financial institutions (FFIs) have the most substantial compliance burden under FATCA, the new law also affects non-financial foreign entities (NFFEs).  The compliance burden on NFFEs is less onerous than the compliance obligations of FFIs, but failure to comply could result in a 30 percent withholding tax on certain U.S.-source payments.  NFFEs may be required to make certifications as to their FATCA status even if they do not receive U.S.-source payments, and failure to provide such certifications may result in other administrative burdens, such as forced account closures.