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FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act, generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments.
In terms of the FATCA schema the account holder type will be: FATCA 104 (if the account holder is determined to be a Specified U.S. Person) or FATCA 102 (if the account holder is determined to be a passive NFFE).
A compliance FI may have one of the following three FATCA classifications: (1) Participating FFI, including a Reporting Financial Institution under a Model 2 IGA; (2) Reporting Financial Institution under a Model 1 IGA; or (3) U.S. Financial Institution.
FATCA generally applies to two defined payment types: 1) Withholdable Payments and 2) Passthru Payments. However, FATCA withholding is not required with respect to any payment under, or gross proceeds from the disposition of, a grandfathered obligation.
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File Form 8966 to report information with respect to: certain U.S. accounts, substantial U.S. owners of passive non-financial foreign entities (NFFEs), specified U.S. persons that own certain debt or equity interests in owner-documented foreign financial institutions (ODFFIs), and.
Publication 5189 This notification indicates that a file may have been encrypted using AES-256-ECB, which the IRS stopped supporting on July 11, 2016, based on the size of the AES key file.
A withholdable payment is any payment of interest (including original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodic (FDAP) gains, profits and income from sources within the United States, including