What is FATCA?
The Foreign Account Tax Compliance Act – FATCA - enacted in 2010 by Congress targets non-compliance by U.S. taxpayers using foreign accounts. FATCA has 2 main programs:
- U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. Foreign financial institutions (FFIs) must report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
- All payments made by U.S. companies to foreign entities or persons for services performed in the United States are subject to a 30% withholding tax (Section 1441 of the tax code).
Which industries are affected?
FATCA affects any individual, business, partnership, trust, estate or other entity paying U.S. source income to a non-U.S. citizen or entity in exchange for services. Financial institutions, entertainment, technology, energy, and pharmaceutical industries could all be especially vulnerable, as well as law and accounting firms and universities.
Hiperos for FATCA
Hiperos for FATCA significantly reduces the time, costs and risk associated with FATCA compliance, as it relates to payment of non-US citizens or entities. By managing the process for completing and reviewing IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, Hiperos enables an organization to determine whether they are making payments to non-U.S. citizens, and if so, whether they are in compliance with their withholding and reporting obligations.