FATCA Fundamentals: FFIs and NFFEs

Summary

This practice note discusses the procedures your foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) should follow under the Foreign Account Tax Compliance Act (FATCA). You will find the FATCA rules in Internal Revenue Code (I.R.C.) Sections 1471 through 1474. The concepts outlined in this practice note are of vital importance to tax practitioners because the Internal Revenue Service (IRS) has boosted its scrutiny of U.S. persons holding interests in NFFEs whose principal assets generate passive income. This practice note provides an explanation of the protocols the NFFEs should follow, including performing appropriate due diligence to report substantial U.S. owners or certifying that they have no U.S. ownership. This practice note also includes a discussion of the compliance requirements for NFFEs.