U.S. Information Reporting and Withholding at the Source -- FATCA

Thomson Reuters Checkpoint
Marianna G. Dyson and Michael M. Lloyd co-authored this portion of their forthcoming comprehensive treatise on U.S. information reporting and withholding that encompasses the Foreign Account Tax Compliance Act (FATCA). The FATCA part of the treatise explains the dividend and income reporting requirements for banks, brokerages and other financial institutions under FATCA. A summary report, available for download here, provides a broad overview of FATCA, which was enacted in 2010 to prevent offshore tax evasion by U.S. citizens and residents. Beginning in 2015, FATCA requires foreign financial institutions (FFIs) and other financial intermediaries to file reports with the Internal Revenue Service on the accounts of their U.S. clients with balances over $50,000. FFIs that fail to comply are subject to a 30 percent withholding tax and could be restricted from participating in U.S. capital markets. In addition, FATCA imposes new documentation requirements and withholding and reporting obligations on U.S. withholding agents, which include any U.S. payer making certain payments of U.S. source income.
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