US: IRS Foreign Entities Must Forget ‘Unfair’ Old FAQs on FATCA.

(Bloomberg BNA) - Foreign financial entities need to forget prior IRS FATCA guidance to ensure consistent compliance with the legislation, according to an IRS official.

Deleted in the past two years, these online FAQs “are not available to everyone, so it would be an unfair advantage over” other entities “if some did,” IRS attorney Kamela Nelan said Sept. 20 at the Tax Congress for Financial Institutions in London.

Nelan spoke via Skype from Washington amid concern that some foreign financial entities have been using past IRS guidance on FATCA in plans to review their compliance with the regime as qualified intermediaries.

Built on the foundation of the Tax Management Portfolios™, Bloomberg BNA Tax & Accounting is a comprehensive tax research solution designed by tax practitioners for tax practitioners. An easy-to-use interface and improved search deliver the fastest and easiest access to the expert analysis, in-depth news, extensive primary source material, and full range of practitioner-developed tools only available from Bloomberg BNA.

Qualifying Intermediary System

Foreign countries participating in FATCA typically allow their local financial entities to participate in the regime under intergovernmental agreements. Yet the U.S. can make use of a qualifying intermediary system for cases in which foreign laws prevent overseas entities’ compliance with these agreements.

Under the Qualifying Intermediary Agreement from the Internal Revenue Service, any participating financial entity must seek certification for its status every three years. In one of these years, the entities must review their compliance with the alternative agreement.

“If you were implementing those FAQs, and now the IRS are saying that you shouldn’t, that creates a problem,” Tara Ferris, a New York-based principal at Ernst & Young LLP, formerly a senior IRS counsel, told Bloomberg BNA at the conference’s sidelines.

The IRS deleted the FATCA-related FAQs from its website between 2015 and 2016, added Ferris, who hosted the conference’s closing question-and-answer session with the U.S. tax agency. The FAQs “give a lot of extra guidance to qualifying intermediaries—guidance that is not in the QI Agreement or the regulations.”

30 Percent Withholding Tax

Enacted in 2010, the Foreign Account Tax Compliance Act requires foreign financial entities to report U.S.-owned accounts or risk facing a 30 percent withholding tax on their U.S.-source income. Since then, the Organization for Economic Cooperation and Development has developed a similar measure for non-U.S. accounts, taking effect from Sept. 30.

Any qualifying intermediaries struggling with the FAQs from the IRS on FATCA can contact the tax authority, Nelan told tax practitioners at the conference.

“If necessary, we can put out new FAQs, but we cannot have people rely on old ones as they’re not there anymore,” she added. “New ones have replaced them.”

The IRS last week formally withdrew two sets of 2014 proposed regulations on FATCA in a move to eliminate uncertainty under two newer sets of proposed rules issued in January 2017. In general, the new rules deal with bank reporting, as well as refund and income tax credit claims by foreign individuals.

The changes were made via two corrections in the Sept. 15 Federal Register.

EU Countries to Probe Brexit E…