“Many managers are still in the process of dealing with FATCA’s requirements and implications, despite the implementation timeline is looming large.
According to an online survey conducted in December 2013 by SEI in partnership with DMS Offshore Investment Services Ltd, awareness of FATCA’s imminent deadline is surprisingly low.
Foreign Account Tax Compliance Act (FATCA) is designed to prevent tax evasion by U.S. taxpayers utilizing unreported foreign financial accounts. The act stipulates U.S. persons to report the financial accounts they hold outside the U.S. and foreign financial institutions (FFIs) to report U.S. account holders, with all of the information ultimately going to the Internal Revenue Service. The measure was enacted in March 2010 as part of the Hiring Incentives to Restore Employment Act (HIRE).
According to the survey, managers are behind the curve on FATCA- related preparations. Some of the factors that lead to this conclusion include the fact that only 14% of managers have executed service agreement with reporting FFI’s administrator. Interestingly 26% of the respondents are either unprepared or are not aware of the requirement.
Moreover one-third of the survey respondents has either not yet established a plan for completion of investor due diligence nor have decided on how to proceed. 41% of the respondents had not yet decided whether to rely on existing due diligence documents or obtain new W-8 and W-9 forms from all investors in the reporting FFIs.”
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The FATCA implementation timetable
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