IRS Issues Follow-Up Guidance On FATCA Reporting And Withholding Requirements

On April 8, 2011, the Internal Revenue Service ("IRS") and Treasury Department ("Treasury") issued Notice 2011-34 (the "Notice") setting forth additional guidance with respect to the reporting and withholding requirements under the Foreign Account Tax Compliance Act ("FATCA").¹ FATCA introduced a new 30% withholding tax on any "withholdable payment" made to either a foreign financial institution ("FFI") or a non-financial foreign entity ("NFFE") unless the FFI meets certain reporting obligations or the NFFE discloses certain information regarding substantial U.S. owners. A "withholdable payment" generally includes any payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income from sources within the U.S. It also includes gross proceeds from the sale of property that is of a type that can produce U.S.-source dividends or interest,