TEI comments on final FATCA regulations.

PositionTax Executive Institute, Foreign Account Tax Compliance Act

On August 26, TEI submitted a letter to the U.S. Department of the Treasury and Internal Revenue Service commenting on the final regulations under the Foreign Account Tax Compliance Act (FATCA). The letter addresses two issues of particular importance to non-financial institutions under the FATCA rules (i) the treasury center and holding company definitions for purposes of exceptions to certain FATCA requirements and (ii) reinstitution of the full "eyeball" test for certain payments to U.S. corporations. The letter also urges the government to finalize the relevant FATCA forms and their accompanying instructions as soon as possible so that non-financial institutions are aware of their compliance responsibilities. The letter was prepared under the aegis of TEI's IRS Administrative Affairs Committee, whose chair is Ernest Gates of Wal-Mart, and U.S. International Tax Committee, whose chair is Jim Silverstri of Capsugel. Benjamin R. Shreck, TEI Tax Counsel, coordinated the preparation of TEI's letter.

TEI Background

TEI is the preeminent association of in-house tax executives worldwide. Our nearly 7,000 members represent 3,000 of the leading corporations in the United States, Canada, Europe, and Asia. TEI represents a cross-section of the business community, and is dedicated to developing and effectively implementing sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. As a professional association, TEI is firmly committed to maintaining a tax system that works--one that is administrable and with which taxpayers can comply in a cost-efficient manner.

Definition of Financial Institution

Treas. Reg. [section][section] 1.1471-5(e)(5)(i)(C) and (D) exclude from the definition of a financial institution certain holding companies and treasury centers. However, a holding company or treasury center will continue to be a financial institution if such entity is part of an expanded affiliated group (as defined) that includes, among other things, an ,insurance company. (1)

The final FATCA regulations do not provide a general definition of an insurance company. The regulations do provide that a financial institution includes an insurance or holding company that issues, or is obligated to make payments with respect to, a cash value insurance or annuity contract described in Treas. Reg. [section]...

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