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Mastering FATCA Compliance and Implementation for NFFEs

Webinar: ID# 1014322
Recorded CD or On-Demand
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Mastering FATCA Compliance and Implementation for NFFEs
About This Course:
Beginning July 1, 2014, U.S. taxpayers that make payments to foreign persons are required to analyze and report information regarding payments both to foreign financial institutions and non-financial foreign entities (NFFEs) under the Foreign Account Tax Compliance Act (FATCA), which was adopted as part of the HIRE Act of 2010. To date, the impact of these rules on foreign financial institutions has been widely discussed, but the rule’s broad impact on NFFEs has received less attention.

The FATCA provisions—Chapter 4 of the Code (§§ 1471 et. seq.)— may require 30% withholding on “withholdable payments” to foreign entities that have not provided an appropriate withholding certificate (such as Form W-8 or W-9) or other acceptable documentation.

Withholdable payments include payments of U.S. source FDAP income (basically, all gross income other than income from the sale of goods), and in 2017, gross proceeds from the sale or disposition of assets that produce or can produce U.S. source interest or dividend income.

However, there are broad carveouts that apply to many payments made by NFFEs, including interest and OID on short-term obligations and payments for the following: the use of property, office and equipment leases, services (including wages and other forms of employee compensation), software licenses, freight, transportation, and interest on outstanding accounts payable arising from the acquisition of goods and services.

The withholding tax may apply whether the foreign entity receives the payments as beneficial owner or as agent for a client and whether the beneficial owner is a U.S. or foreign person. The withholding tax applies to many items not otherwise subject to FDAP withholding (e.g., portfolio interest and capital gains of foreign investors) and cannot be reduced or eliminated by treaty.

Listen as our panel of tax specialists explains the impact of the FATCA rules on NFFEs and drills down into the details that tax advisors to NFFEs need to know.

Outline:
  • NFFEs:
    • NFFEs — identification and classification
    • Qualifying as an exempted NFFE
    • IRS required disclosures for certain NFFEs
    • W-8 implications
  • Chapter 4 withholding:
    • Determining withholding agents
    • Withholdable payments
    • Interaction with Chapter 3 and Chapter 61 withholding
    • Noncompliance penalties
    • Best practices for compliance implementation
Benefits:

This discussion will focus on the rules applicable to NFFEs and withholding agents, including:
  • Who is a Chapter 4 withholding agent?
  • What types of payments are subject to Chapter 4 withholding? What payments are not “withholdable” items?
  • Which NFFEs qualify for exemption from FATCA?
  • What information needs to be provided to a Chapter 4 withholding agent to avoid withholding, and who should provide the documentation What are the new requirements applicable to the W-8 series of forms?
  • How does Chapter 4 withholding interact with FDAP withholding, amounts taxed as effectively connected income, and income tax treaties?
  • How does recovery of and crediting of Chapter 4 withholding by foreign payees work?
  • What are the penalties for failure to withhold?
  • What steps should withholding agents take to implement an effective Chapter 4 compliance program?

This is an encore presentation with live Q&A.

You will learn the details of compliance with FATCA for NFFEs, including who qualifies as a Chapter 4 withholding, the types of payments subject to Chapter 4 withholding, NFFE exemption requirements, documentation to avoid withholding, FATCA interaction with new W-8 Forms and FDAP withholding, the penalties for failing to properly withhold, and steps to implement an effective Chapter 4 compliance program.

The Presenters

Bill Leary, Director, International Tax
Doeren Mayhew, Houston
Mr. Leary brings more than 25 years’ experience to his role as a Director in the firm’s International Tax Group. He provides tax advisory services at the international, national, regional and local levels, including more than 40 foreign jurisdictions. He has extensive expertise in transactional planning and mergers and acquisitions, IRS practice and procedures, transfer pricing, tax process engineering and several other areas. Prior to joining the firm, Mr. Leary built his international tax skillset at PricewaterhouseCoopers and BKD.

S. Michael Chittenden
Miller & Chevalier Chartered, Washington, D.C.
Mr. Chittenden practices in the areas of payroll taxes, information reporting and withholding, and employee benefits. As part of his practice, he has experience counseling multinational non-financial companies, financial institutions, and foreign retirement plans on reporting and withholding requirements under the Foreign Account Tax Compliance Act ("FATCA").

Will Fernandez, Senior Manager
Deloitte Tax, Boston
Mr. Fernandez specializes in FATCA, international tax withholding and information reporting, and tax technology solutions. Prior to joining Deloitte, he was Vice President and Legal Counsel of Compliance Technologies International, LLP and Of Counsel to Burt, Staples & Maner, LLP. Before that, he specialized in international tax withholding and reporting issues and managed multiple tax remediation projects for major financial and banking institutions and multinational corporations at Pricewaterhouse Coopers, LLP.


CPE Credits Available!

This program has been approved for 1.5 CPE hours through Strafford Publications. CPE Credit is available only for the LIVE webcast. Recorded versions do not qualify for credit.

Strafford is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.

To obtain CPE credit, attendees must participate in the live event, return an Official Record of Attendance to Strafford affirming their participation (including the CPE code announced during the program), and pay a processing fee of $35 per person. Strafford then will mail a certificate of credit within approximately two weeks of receiving your completed Official Record of Attendance.
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Mastering FATCA Compliance and Implementation for NFFEs
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