IRS Issues Final FATCA Regulations

Summary: The United States Internal Revenue Service (IRS) has issued long-awaited final regulations (the Final Regulations) under the Foreign Account Tax Compliance Act (FATCA). FATCA, designed to police offshore investments, accounts and trust interests held by certain US persons, was initially enacted in March 2010 but is only beginning to take effect this year. FATCA has significant impact on non-US financial institutions, including non-US banks and non-US investment funds, as well as on certain other non-US entities. The Final Regulations set forth steps that must be taken by covered entities so as to avoid potential US withholding tax under FATCA, and include provisions coordinating FATCA compliance under certain intergovernmental agreements as an alternative to compliance under the Final Regulations.