FATCA certifications due December 15 and it is best to certify

FATCA certifications due December 15 and it is best to certify was published by JD Supra on 10/2/18.

A FATCA certification consists of answers to one or more series of questions that the Responsible Officers (RO) of certain entities must answer and submit to the IRS to confirm the entities’ compliance with the requirements of FATCA. 

There are two general types of certifications: one that relates to an entity’s preexisting accounts (COPA) and another that relates to the entity’s compliance with various FATCA requirements (Periodic Certification).

Who must certify?

COPA (Certification of Preexisting Accounts) Questions are for:

• Participating Foreign Financial Institutions (Foreign Financial Institutions – including Reporting Model 2 FFIs)
• Consolidated Compliance Groups
• Registered Deemed-Compliant FFIs – Local FFI
• Registered Deemed-Compliant FFIs – Restricted Funds
• Sponsoring Entity of Sponsored FFIs

Periodic Certification Questions are for:

• Participating Foreign Financial Institutions (Including Reporting Model 2 FFIs)
• Consolidated Compliance Groups
• Registered Deemed-Compliant FFIs – Local FFI
• Registered Deemed-Compliant FFIs – Non-reporting Member of PFFI
• Registered Deemed-Compliant FFIs – Qualified Collective Investment Vehicle
• Registered Deemed-Compliant FFIs – Qualified Credit Card Issuer or Servicer
• Registered Deemed-Compliant FFIs – Restricted Funds
• Sponsoring Entity of Sponsored FFIs
• Sponsoring Entity of Sponsored Direct Reporting NFFEs
• Sponsoring Entity of Sponsored FFI and Sponsored Direct Reporting NFFEs
• Trustee Documented Trusts
• Direct Reporting NFFEs

What happens if an Entity that is required to Certify does not?

IRS states that if an entity that is required to certify does not submit its certification(s) by the due date, the entity will be out of compliance with its obligations under FATCA.  The consequences of being non-compliant may include revocation of an entity’s FATCA compliant status and the entity’s Global Intermediary Identification Number (GIIN) being removed from the FFI list.

An FFIs FATCA compliant status is critical for its ability to continue operating as an “on-going concern” in the financial industry.  FFIs non-compliant with FATCA risk having payments withheld by counterparties, banking and or correspondent relationships terminated and being classified as a “Non-Compliant” entity.  

The Responsible Officer

A RO has many responsibilities and obligations and is the only person authorized to act on behalf of an FFI to represent its FATCA status.  Certifying FATCA compliance of an FFI to the IRS and notifying the IRS of material failures or non-compliance with FATCA requirements is a daunting task.  A RO has the responsibility of ensuring and collecting supporting information to support a certification to the IRS. A RO ought to keep in mind that:

• FATCA certifications must be made online through the FATCA registration system.
• A certification cannot be edited once it is submitted.
• All displayed questions are mandatory and must be answered.
• If unable to complete the certification, a RO is indicating that the entity is not compliant with its FATCA obligations.  
• ROs are encouraged to utilize all of the time provided to complete a certification, rather than “not certify” because certain necessary activities are not completed.  
• All ROs should review Draft FATCA Certifications that apply to a RO’s entity in order to gather  information and confirm that certain actions are taken.

Don’t be a victim of your Own Making

FFIs and ROs ought to consult specialized FATCA training providers that have experience with the IRS and are trained in the U.S. Internal Revenue Tax Code.   

https://www.jdsupra.com/legalnews/fatca-certifications-due-december-15-47004/