The Internal Revenue Service continues to make progress toward full implementation of the Foreign Account Tax Compliance Act (FATCA). Yesterday, the IRS released another draft form to be used by foreign financial instititutions (FFIs). The newly released form, entitled Form 8966 “FATCA Report” (available here), will be used by FFIs to comply with their FATCA reporting obligations. This new Form 8966 will set forth all the information that must be reported with respect to financial accounts in accordance with these regulations.
As we have previously discussed (see prior posts here and here), FATCA generally requires FFIs (a broadly defined term that includes banks and a host of non-bank financial entities) to annually disclose to the IRS the names of their U.S. depositors or face a 30 penalty withholding tax on U.S.-source payments.
The first reporting deadline for FFIs is March 31, 2015 (with respect to the 2014 calendar year. (The reporting dates set forth in the FATCA final regulations have been postponed by IRS Notice 2013-43 as discussed here.) FFIs will use Form 8966 to provide this information to the IRS.
No instructions were released with the draft. Part I of the Form 8966 provides the identification of the filer (the FFI making the report). Part II of the form identifies the U.S. account holder (if the account is held by an individual). For accounts held by entities, Part III of the form is used to identify the U.S. owners of the entity. Part IV requires disclosure of financial information regarding the account, including the account number, account balance, currency denomination, interest earned, dividends paid, and amount of gross proceeds/redemptions.
On a related subject, on August 19, 2013, the IRS is expected to unveil its FATCA registration website which will be used by FFIs to register and to submit their annual reports to the IRS.