IRS Issues Proposed FATCA Regulations
Summary: The IRS recently issued proposed regulations under the Foreign Account Tax Compliance Act (“FATCA”). FATCA was enacted as part of the Hiring Incentives to Restore Employment (“HIRE”) Act in March 2010 and is designed to police offshore investments, accounts and trust interests held by certain US persons. The advent of FATCA will have a significant impact on non-US banks and other non-US financial institutions; non-US investment funds and certain other non-US entities, in each case if the entity has US source investments. The proposed regulations offer further guidance on steps that must be taken by such entities in order to avoid potential US withholding tax.