As if new requirements around the Foreign Account Tax Compliance Act are not complicated enough, several new acronyms are also being piled on us making the complex regulations even more difficult to follow.
To help you keep up with the verbiage, we defined the top 10 troublesome acronyms around FATCA.
- FATF – Financial Action Task Force
The Financial Action Task Force is an inter-governmental group that develops and promotes international policies to combat money laundering and terrorist financing and has helped with FATCA regulations.
- FDAP Income – Fixed, Determinable, Annual or Periodic Income
FDAP income is all income except gains derived from the sale of real or personal property or items of income excluded from gross income, such as tax exempt municipal bond interest. This is generally used to define what constitutes a withholdable payment under FATCA.
- FFI-EIN – Foreign Financial Institution Employer Identification Number
This identifying number was revealed recently on the draft of Form W-8BEN-E and will be used by foreign financial institutions for filing purposes with the IRS.
- FWP – Foreign Withholding Partner
A foreign withholding partnership is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting accordingly. The Treasury and the IRS have indicated that they intend to amend FWP agreements to require these foreign financial institutions to become participating or deemed-compliant FFIs.
- FWT – Foreign Withholding Trust
A foreign withholding trust is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. The Treasury and the IRS have indicated that they intend to amend FWT agreements to require these foreign financial institutions to become participating or deemed-compliant FFIs.
- NFFE – Non-financial foreign entity
Most people are now familiar with the commonly used FFI denoting a foreign financial institution, but NFFE is not as well known. This acronym is used to identify foreign entities that are not financial institution, such as corporations, that may also be subject to some FATCA regulations.
- POC – FATCA Point of Contact
FATCA Points of Contact were established in the recently released FATCA registration information. The FATCA Responsibility Officer can select up to five points of contact to help complete the registration process. At least one point of contact must be in-house, but third-party individuals may be included as well.
- QI – Qualified Intermediary
A qualified intermediary is an eligible person that enters into a qualified intermediary agreement with the IRS, which generally means the intermediary agrees to assume certain documentation and withholding responsibilities in exchange for simplified information reporting for its foreign account holders. The Treasury and the IRS have indicated that they intend to amend QI agreements to require these foreign financial institutions to become participating or deemed-compliant FFIs.
- RO – FATCA Responsibility Officer
Each participating foreign financial institution must identify one FATCA Responsibility Officer who will be identified in the IRS’s online registration system. This individual has authority to act for the foreign financial institution with regards to FATCA and is responsible for signing the agreement or certification on behalf the institution.
- WA – Withholding Agent
A withholding agent is a U.S. or foreign individual, corporation, partnership, trust, association, or any other entity that has control, receipt, custody, disposal, or payment of any item of income that is subject to withholding. Several persons may be withholding agents for a single payment.
Loading...