Process Is Its Own Reward: The IRS Modifies FATCA Effective Dates & Interim Compliance Standards

Keywords: IRS, FATCA, effective dates, compliance standards

On May 2, 2014, there were exactly 60 days until withholding and due diligence rules under the Foreign Account Tax Compliance Act ("FATCA") became effective. Notwithstanding the fact that the US Internal Revenue Service (the "IRS") has promulgated well over 1,000 pages of proposed, temporary and final rules, substantial uncertainty continues to exist over how the rules can be competently administered. The IRS, notwithstanding months of reiterating its commitment to the July 1, 2014 FATCA effective date, has just released Notice 2014-33 to provide some relief to affected financial institutions.

Notice 2014-33 provides for an 18-month enforcement transition period for withholding agents and foreign financial institutions ("FFIs") that undertake "good faith" efforts to comply with FATCA. Specifically, Notice 2014-33 provides that 2014 and 2015 will be regarded as a transition period for purposes of IRS