Requesting FATCA Transitional Relief

SIFMA provides comments to the U.S. Department of Treasury and the Internal Revenue Service (IRS) requesting transitional relief from the Foreign Account Tax Compliance Act (FATCA).

SIFMA understands the extraordinary challenges that Treasury and the Internal Revenue Service (IRS) faced in developing the 2014 Regulations, while simultaneously negotiating Intergovernmental Agreements (IGAs) and drafting final versions of Forms W-8, 1042, 1042-S, 8966, and related instructions. Although we acknowledge the government’s efforts, and we greatly appreciate Treasury’s recent announcement of countries that will be treated as having IGAs in effect, the consensus of SIFMA members is that it will not be possible for the global financial services industry to fully implement the FATCA regulations and the Harmonization Rules by July 1, 2014.

It is simply not feasible in less than three full months for all of the impacted domestic and foreign financial institutions to complete detailed implementation plans, prepare written procedures, train personnel, educate clients, and develop and test the systems changes required for compliance with the voluminous changes issued this late in the process. While our membership is supportive of the goals of FATCA and is familiar with the regulatory foundation upon which FATCA is built, the IRS has estimated that there are as many as 600,000 foreign financial institutions (FFIs) that may be required to register. Only a small fraction of these institutions has the expertise to adequately comply with FATCA on such short notice. Moreover, although SIFMA greatly appreciates Treasury’s recent use of its discretion in this area, and the network of IGA countries has grown rapidly over the past several months, it is important to recognize that several significant economies have not signed an IGA and many thousands of financial institutions still will be required to establish their FATCA status or register by May 5, 2014 in order to avoid the risk of a substantial disruption in financial markets.