This week the IRS confirmed that it has begun fulfilling its obligations to those jurisdictions with which the US government has signed a Model 1A inter-governmental agreement. Under the reciprocal exchange accords, it has transmitted information on those who are tax resident outside the US to the relevant national tax authorities. This puts the spotlight on the US’s position under the OECD’s Common Reporting Standard (CRS).
The US has made it clear that it does not intend to adopt the CRS, arguing that FATCA (US Foreign Account Tax Compliance Act ) better fulfils its needs. This leaves the US as a ‘non-participating jurisdiction’ under the CRS regulations. While under the CRS there is no equivalent of the withholding sanction that is the big stick underpinning FATCA, the result of the US being a non-participating jurisdiction is that all Financial Institutions (FIs) in the CRS will need to treat any US Reporting FI as a Non-Financial Foreign Entity (NFFE). In English, what that means is that any CRS FI holding an account for a US FI (such as a trust in Wyoming, South Dakota or wherever) will need to ‘look through’ the US FI and establish – and report if need be – on its controlling persons.
Some will find this perverse given that the US is exchanging information with many CRS jurisdictions, but not via the CRS. It’s a position the OECD seems to be holding, however, and it raises issues that STEP members should be aware of when dealing with US FIs.
George Hodgson, Deputy Chief Executive, STEP
The STEP Blog 
George
Also keep in mind that so called reciprocal IGAs only require the US to report the account holder and not dig down to beneficial ownership, whereas the country who has entered the IGA is so required.
Simon,
Thank you. Agreed and perhaps we should also point out that in practice any US reporting under FATCA only covers a limited range of income and doesn’t cover account value. Even so, I fear the fact that the US is providing any information at all may nevertheless come as a surprise to some.
George