On January 17, 2013, the Department of Treasury and the Internal Revenue Service (IRS) announced the release of the final FATCA regulations (Regulations). The Regulations become effective on January 28, 2013, and diverge significantly from the current temporary regulations. While there are numerous changes in the Regulations, we highlight just some of the significant changes:

●    The Regulations expand the definition of Foreign Financial Institutions (FFIs) deemed in compliance with FATCA so that the IRS may “focus the application of FATCA on higher-risk financial institutions”;

●  The Regulations exempt FFIs from investigating the account holders of all preexisting accounts held by individuals with a balance of $250,000 or less (the previous threshold was $50,000);

●  The Regulations provide greater authority for FFIs to rely on self-certification from the account holders as to their status as US taxpayers;

●   The Regulations treat all accounts opened prior to January 1, 2014 as preexisting accounts, whereas the temporary regulations treated all accounts opened prior to January 1, 2013 as preexisting accounts;

●   The Regulations push back or phase in many of the reporting requirements for FFIs;

●   The Regulations include references to Intergovernmental Agreements and exempt FFIs covered by Intergovernmental Agreements from some elements of the Regulations;

●   The Regulations ease the administrative burden of FATCA on FFIs in many ways such as permitting the use to foreign language forms in-lieu of IRS forms (so long as a translation is available), authorize withholding agents to accept W-8s received before FATCA went into effect, and an online portal which allows FFIs to apply for qualification under FATCA and otherwise manage their accounts.

The good news is that many of the changes ease the burden of compliance with FATCA. The bad news is that everyone still needs to comply with FATCA. We will continue to review the Regulations and plan to provide in-depth analysis on specific sections of the Regulations in upcoming posts.