Press Room: Tax Release
FATCA – Good News – “Good Faith” (and Other Good Things)
In Notice 2014-33, IRS announced that the calendar years 2014 and 2015 will be regarded as a “transition period” for purposes of IRS enforcement and administration of FATCA’s due diligence, reporting and withholding provisions. Presumably, this means that no penalties will be asserted for inadvertent failures of entities (not individuals) that have put forth “good faith” efforts to comply with FATCA.
The Notice provides a couple of examples of “good faith” efforts. The notice does not mean that compliance with FATCA is extended to January 1, 2016 – it means that the IRS will not hold a taxpayer liable for “foot faults” if they have made real efforts to comply with FATCA.
Other “Good Things” in the Notice include:
An expansion of what is considered to be a “pre-existing obligation”;
Certain relief for limited FFIs or limited branches; i.e., an FFI or branch that is prohibited from complying with FATCA because of local law rules; and
An IRS intention to amend the previously issued FATCA regulations to provide (i) a modification of the standards of knowledge for accounts documented before July 1, 2014, and (ii) a revision of the definition of a reasonable explanation of foreign status.
So far – so good!