Dec. 27 --The American Council of Life Insurers has asked the Internal Revenue Service to delay the July 1, 2014, implementation date of the Foreign Account Tax Compliance Act by another six months.
The IRS should extend the start date at least to Jan. 1, 2015, ACLI said. “A July 2013 implementation date is too early a date for government and withholding agents alike when all aspects are taken into consideration,” the group said in a Dec. 26 comment letter on Notice 2013-43, which announced the first six-month delay to the FATCA start date .
If the IRS doesn't delay the program's start date, “we ask that Treasury and IRS announce that no withholding penalties or other negative ramifications will apply or be imposed until January 1, 2015 for nonparticipating or limited FFIs,” the group said.
A mid-year implementation date will duplicate U.S. withholding agent obligations, the group said, noting that the Information Reporting Program Advisory Committee had made a similar point in its request for the IRS to delay the program's implementation .
For example, withholding agents would need to duplicate reporting on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, if the IRS retains the July 1 start date, the group said.
Another key impediment to withholding agents' ability to comply by the July 1 deadline is the fact that some FATCA-related guidance and a number of related forms have yet to be released, ACLI said.
Without the issuance of final FATCA guidance to date, particularly final Chapter 4 regulations, and rules conforming Chapters 3, 4 and 61, “withholding agents are not able to fully understand, implement and finalize changes that need to be made to policies, procedures and systems to meet their FATCA obligations,” ACLI said.
The group also cited the need for local guidance from jurisdictions under a Model 1 intergovernmental agreement (IGA) where companies operate.
Many companies hesitate to implement FATCA until they know that the country in which they operate will have an IGA, ACLI said.
The uncertainty as to whether a jurisdiction will have an IGA in place by July 1, in addition to the requirement under Model 1 IGAs for signatory countries to implement local legislation and/or regulatory changes to implement the agreement, make a July 1 compliance date more difficult, the group said.
“In short, U.S. regulatory authorities should recognize that it has taken more than three years to develop FATCA regulations,” ACLI said. Other countries will take more than the next two or three months to develop their own laws and rules to enforce and facilitate the IGA, it said.
The ACLI represents more than 90 percent of the assets and premiums of the U.S. life insurance and annuity industry, as well as nearly all reserve life insurer and fraternal benefit society member companies operating internationally, according to its letter.
Text of the ACLI letter is in TaxCore.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).