The Tax Times: FATCA Guidance Clarifies Form 8966 Filing Requirements

Monday, April 6, 2015

FATCA Guidance Clarifies Form 8966 Filing Requirements

IRS has added new frequently asked questions (FAQs) concerning Foreign Account Tax Compliance Act (FATCA) reporting to its website. Specifically, the new FAQs clarify certain aspects of the requirement and deadline for filing Form 8966 (FATCA Report) for certain filers.

Nil Reporting. New FAQ 1 answers the question: are filers of Form 8966 required to file a nil report (i.e., one that declares that it has no substantial U.S. owners for the calendar year)?

In a previously posted FAQ, IRS had clarified that only "direct reporting" NFFEs are required to submit nil reports. A direct reporting NFFE is an NFFE that has elected to report its direct or indirect substantial U.S. owners to IRS and complies with the requirements under Reg. § 1.1472-1(c)(3), including the requirement to report directly to IRS on Form 8966. For all other entities, IRS does not require the submission of nil reports - that is, such submissions are optional. However, because other jurisdictions may still require such reporting, taxpayers should check with the jurisdiction in question.

New FAQ 1 states that a direct reporting NFFE (and a sponsoring entity of a direct reporting NFFE) is required to submit Form 8966 (a nil report) to declare that it has no direct or indirect substantial U.S. owners for the calendar year.

Reporting Deadline. FAQ 2 addresses the question: when is Form 8966 due for reporting with respect to calendar year 2014 for participating FFIs and reporting Model 2 FFIs?

For participating FFIs, the Form 8966 is due on or before March 31 of the year following the end of the calendar year to which the form relates. In the Form 8966 instructions, for reporting with respect to calendar year 2014 only, an automatic 90-day extension of time to file Form 8966 is permitted, without the need to file any form or take any action.

On the other hand, the Form 8966 instructions state that the automatic 90-day extension of time to file Form 8966 is not available to reporting Model 2 FFIs reporting on a non-consenting U.S. account.

A filer (other than reporting Model 2 FFIs reporting on a non-consenting U.S. account) with a Mar. 31, 2015 due date, has until June 29, 2015 (the extended 90-day deadline) to submit Forms 8966.

IRS provided that reporting Model 2 FFIs reporting on a non-consenting U.S. account should refer to the applicable Model 2 IGA for the due dates of the Forms 8966.

IRS recognizes that FFIs will be using the International Data Exchange Services (IDES) system, a secure web application for the U.S. to transmit and exchange FATCA data with foreign jurisdictions, for the first time. See our post IRS Opens Gateway for Exchange of FATCA Data on U.S. Owned Foreign Accounts.

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