The IRS’s Weak Tea
At the US agency responsible for enforcing the Fatca tax withholding reporting law, an apparent lack of frequency in updating GIIN registrations, along with the as-yet-untested launch of its compliance service, reflect poorly on its capabilities
I covered Foreign Account Tax Compliance Act (Fatca) developments in this space just two weeks ago, and try to keep the subject matter in these columns varied, but a big development with the US foreign tax withholding reporting law that Inside Reference Data covered this past week invites commentary.
It appears that the first step of Fatca—the registration of Global Intermediary Identification Numbers (GIINs) for foreign financial firms, which was thought to be well on its way by the middle of 2014 with a July deadline for one class of firms, and absolutely complete by January 1 for the remaining firms—is not as complete as it seemed.
Thousands of GIINs (out of about 140,000 in all so far) have apparently been invalidated or replaced each month, for the past five months. So firms trying to complete required reporting under Fatca, especially with deadlines coming in March and September, cannot rely on the first list of GIINs they obtained, or any such list that is too old, for directing payments.
It’s unclear whether the Fatca foreign financial institution search tool on the US Internal Revenue Service website—which states that it is updated monthly, with its most recent update being December 23—is functional or being updated often enough to address or stop confusion about out-of-date GIIN numbers.
But considering that the IRS recently launched another tool for Fatca compliance—the International Data Exchange Service—and there is not yet a clear picture as to how well that works, it makes you wonder if the agency has a sufficient handle on what is required to administer the Fatca law.
