The Financial Times (FT) ran a story on Saturday 18 October about confusion over the Foreign Account tax Compliance Act (FATCA) deadline for trusts.
It’s certainly true that the US has provided no clear deadline for trusts that need to register with the IRS under a Model 1 IGA. As the FT notes, the collective view of the three professional bodies, STEP, Law Society of England & Wales and ICAEW, that have produced joint guidance on FATCA for trustees is that, for those that need to, it would be prudent to ensure that the registration process on the IRS website is completed by the end of this week (25 October). While the IRS registration system has performed well over the summer, the risk of last minute problems as Financial Institutions rush to register cannot be ruled out.
The late October recommendation is thus based on a cautious view, but we note that registration on the IRS website is not the end of the process. The key requirement for trusts (or corporate trustees) who need to register is that they appear on the published list of Financial Institutions by 1 January 2015. There is a lag between registering on the IRS website and appearing on the published list. Moreover, many trustees are now being asked to confirm their FATCA status by Financial Institutions they transact with. Clearly, as the end of the year approaches, these requests are likely to become ever more insistent.
The STEP Blog 