Publication 5118-FATCA: Foreign Account Tax Compliance Act

Publication 5118, also known as Publication 5118-FATCA, is an Internal Revenue Service (IRS) resource that guides financial institutions (FIs) and certain non-financial foreign entities (NFFEs) through the Foreign Account Tax Compliance Act (FATCA) registration process.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law that aims to improve tax compliance for U.S. taxpayers holding financial accounts outside the United States. It requires foreign financial institutions to report information on accounts held by U.S. taxpayers to the IRS.

Who should use Publication 5118?

This publication is primarily intended for:

A. Financial Institutions (FIs): This includes banks, investment firms, insurance companies, and other institutions that hold financial accounts.

B. Direct Reporting Non-Financial Foreign Entities (NFFEs): These are entities that make certain types of payments to foreign financial institutions and are required to report information directly to the IRS.

What is the purpose of FATCA registration?

FATCA registration allows FIs and NFFEs to:

  • Identify themselves as compliant with FATCA requirements.
  • Obtain a Global Intermediary Identification Number (GIIN).
  • Be listed on the IRS FFI List, a publicly available resource that identifies institutions that have agreed to comply with FATCA.

Types of FATCA Registrations:

Publication 5118 outlines the different registration categories for FIs and NFFEs:

Participating Foreign Financial Institution (PFFI): This is the primary category for FIs that agree to identify and report information on U.S. accounts directly to the IRS.

Registered Deemed-Compliant FFI (RDCFFI): This category applies to FIs that comply with FATCA requirements through an agreement with their home country.

Direct Reporting NFFE: This category applies to NFFEs that make certain payments directly to the IRS.

Sponsoring Entity: This applies to entities that sponsor other FIs or NFFEs for FATCA compliance.

Trustee of a Trustee-Documented Trust: This applies to trustees of trusts that hold financial assets for U.S. beneficiaries.

How do I register with the FATCA Online Registration System?

The FATCA Online Registration System is a secure online platform for registering with the IRS. Publication 5118 offers a step-by-step guide that walks you through the registration process, including:

  • Creating an account.
  • Completing the registration form.
  • Submitting required documentation.

What information do I need to provide during registration?

The information required for registration varies depending on your entity type. However, you can generally expect to provide details such as:

  • Your legal name and address.
  • Your tax identification number (TIN), if applicable.
  • Information about your accounts and account holders.