Independent Audit/Compliance Review of a FATCA Program

Author: Jennifer Dors, CAMS-Audit

In 2010 the US government passed a new legislation known as FATCA. FATCA stands for Foreign Account Tax Compliance Act and is intended to prevent US taxpayers from avoiding the payment of US income taxes by hiding money offshore. Starting in 2013 foreign (non US) financial institutions (FFI’s) are required to enter into agreements with the US Internal Revenue Service (IRS) to report relevant information to the IRS regarding financial accounts held by identified US persons. Failing to comply with this regulation, the IRS will impose a 30% withholding tax on US source payments (and potentially certain non-US source payments at a later date) paid to the FFI or their clients. FFIs around the world must take the necessary steps to meet these obligations if they do not want to be subject to 30% withholding.

Download PDF