The US internal revenue service (IRS) has confirmed that foreign financial institutions (FFIs) will not be required to close or withhold tax on accounts that do not contain a US taxpayer identification number (TIN) after 1 January 2020. This extends the current relaxation announced in September 2017, which expires in January.
In general, the TIN is mandatory for FATCA reporting in respect of pre-existing accounts for the 2017 reporting year onwards. The September 2017 announcement relaxed this requirement for 2017, 2018, and 2019, provided the FFI reported the account holder’s date of birth, made annual requests for the TIN and searched its electronic records for missing US TINs before reporting 2017 information.
Similarly, where the requirements of the IRS relaxation were met, HMRC agreed not to treat missing US TINs for pre-existing accounts as a failure on the part of UK financial institutions to comply with the UK regulations.
Following the IRS extension, HMRC has noted in its international exchange of information manual (IEIM402040), that for calendar year 2020 and future years it will still be possible for financial institutions to report accounts without a TIN by entering nine zeros in the TIN field.
The IRS will consult with HMRC to take account of valid reasons why TINs could not be obtained and efforts made to collect them. HMRC will approach financial institutions on a case-by-case basis to gather those reasons and ensure they have adequate procedures in place to obtain TINs.
The latest relaxation is set out in the IRS’s FATCA FAQs (see FAQ3 under ‘Reporting’ at bit.ly/33WROFZ).
The US internal revenue service (IRS) has confirmed that foreign financial institutions (FFIs) will not be required to close or withhold tax on accounts that do not contain a US taxpayer identification number (TIN) after 1 January 2020. This extends the current relaxation announced in September 2017, which expires in January.
In general, the TIN is mandatory for FATCA reporting in respect of pre-existing accounts for the 2017 reporting year onwards. The September 2017 announcement relaxed this requirement for 2017, 2018, and 2019, provided the FFI reported the account holder’s date of birth, made annual requests for the TIN and searched its electronic records for missing US TINs before reporting 2017 information.
Similarly, where the requirements of the IRS relaxation were met, HMRC agreed not to treat missing US TINs for pre-existing accounts as a failure on the part of UK financial institutions to comply with the UK regulations.
Following the IRS extension, HMRC has noted in its international exchange of information manual (IEIM402040), that for calendar year 2020 and future years it will still be possible for financial institutions to report accounts without a TIN by entering nine zeros in the TIN field.
The IRS will consult with HMRC to take account of valid reasons why TINs could not be obtained and efforts made to collect them. HMRC will approach financial institutions on a case-by-case basis to gather those reasons and ensure they have adequate procedures in place to obtain TINs.
The latest relaxation is set out in the IRS’s FATCA FAQs (see FAQ3 under ‘Reporting’ at bit.ly/33WROFZ).
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