IRS Unveils FATCA Guidance, but Practitioners Say Challenges Remain

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IRS unveils its eagerly awaited second notice on the Foreign Account Tax Compliance Act, offering what practitioners say is welcome guidance under the new law that requires foreign banks to disclose their U.S.-owned accounts or face a 30 percent withholding tax in some cases. In Notice 2011-34, IRS further refines the methodology banks must use to determine how to identify their U.S. accounts, with a new focus on private banking. It also offered new guidance on “passthru payments” subject to the withholding tax and on entities that will be deemed compliant for reporting purposes.