On April 8, 2011, in Notice 2011-34 (the "Notice"), the Department of the Treasury and the Internal Revenue Service issued supplemental guidance pertaining to the new US withholding regime and information reporting requirements for certain accounts maintained by foreign financial institutions (commonly referred to as the Foreign Account Tax Compliance Act provisions, or the "FATCA provisions"). The Notice provides that Treasury and the Service intend to:
1) Require a foreign financial institution that enters into an agreement with the Secretary of the Treasury (a "participating FFI") to implement specific procedures (as detailed in the full Alert) to identify which of its "pre-existing individual accounts" are "US accounts" for purposes of the FATCA provisions.
2) Require a participating FFI to impose 30 percent FATCA withholding on all "passthru payments" to recalcitrant holders or nonparticipating FFIs, including "withholdable payments" (i.e., payments of certain US source income) and the portions of payments attributable to direct or indirect interests in certain US assets that produce withholdable payments.
3) Identify certain local banks, affiliated members of participating FFIs and investment funds as "deemed-compliant" FFIs for purposes of the FATCA provisions.
4) Require detailed reporting of account balances, values and gross receipts and withdrawals with respect to accounts that are treated as "US accounts" for purposes of the FATCA provisions.
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