On 8 February 2012 the long awaited draft rules of the IRS have been published. The delay seems to be related to talks between different European Governments and the IRS to work around potential legal issues around handing over client data directly to the IRS.
The IRS have been putting numerous changes into the draft regulations compared to the Notices issued so far. A lot of changes are directed to lower the burden of implementation but do not change their overall approach in terms of identifying US Persons and stop the tax evasion.
Some of the major changes are:
- Pass through payment delayed until 1 January 2017 (as opposed to 1 January 2015)
- Enhanced scope for grandfathering for instruments issued before 1 January 2013 (as opposed to 18 March 2012)
- Increase of threshold private banking client up to USD 1 million (as opposed to USD 500’000) and clarification around the definition of a relationship managers activity in scope
- Limited reporting for 2013 and 2014 and further detailed reporting will be phased into 2016 (rather than end of 2014) – basis will be calendar year 2015
- Electronic search might help to reduce burden on paper file review (conditions apply to the electronic research)
- Enhanced definition / scope for deemed compliant entities (probably not relevant for Switzerland)
- Pre-existing accounts less than 250’000 (life insurance contracts) do not need to be reported
- Failure of identifying single US accounts does not lead to an issue for compliance per se
- Focus on internal reviews (regular) rather than external audits
More details: Initial impressions of the FATCA proposed regulations
