IRS releases draft FATCA form

The IRS has released a draft version of Form 8966, which banks and other financial institutions will use to comply with FATCA.

FATCA, the Foreign Account Tax Compliance Act, comes into effect January 1, 2014.

Read: FATCA adds to KYC burden for advisors

The act imposes a 30% withholding tax on certain payments made to foreign financial institutions and non-financial foreign entities that refuse to identify U.S. account holders and investors. To avoid the withholding, firms must document and share information about their U.S. account holders, an expensive and time-consuming process.

Read: “Don’t go to jail for your clients”: STEP

The draft of Form 8966 doesn’t yet come with instructions, but includes sections asking for account holder information, the financial institution’s information, a Taxpayer Identification Number, and account information.

In July, the IRS announced it will not require withholding until July 1, 2014. As well, new account opening procedures and related requirements will also begin July 1.

Read: IRS offers six-month relief from FATCA

The IRS FATCA registration site is projected to open August 19, 2013.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.