FATCA: USFIs & Foreign Grantor / Non-Grantor Trusts' Mandatory IRS Certs
The first round of IRS compliance certifications begins this summer. The current deadline is likely October 2018: 90 days after the IRS deploys the certifications capability on the IRS FATCA Registration Portal. Make sure you do not overlook certifying U.S. Financial Institutions (USFIs) and Foreign Grantor / Non-Grantor Trusts.
What Are the Certifications?
There are two certifications:
Certification of Pre-existing Accounts; and
For an outline of the key certification points, please see my May 31, 2018 blog: FATCA: Who Needs to File a Mandatory Certification with the IRS?
Who Must Submit the Certifications?
FATCA requires certification submission by Responsible Officers (ROs) of: Participating Foreign Financial Institutions (PFFIs) including Model 2 IGA FFIs Reporting Model 1 FFIs if they have registered a branch located outside of a Model 1 jurisdiction.
A PFFI includes:
Foreign Grantor Trusts
Foreign Non-Grantor Trusts
USFIs that have registered for Global Intermediary Identification Numbers (GIINs).
Foreign Grantor & Non-Grantor Trusts
The U.S. Internal Revenue Service (IRS) allows trusts to be created with a U.S. situs which the IRS will then treat as a foreign trust. See my December 28, 2017 blog: What Is a Foreign Grantor Trust?
Assuming the Foreign Grantor or Foreign Non-Grantor Trust is professionally administered, it will be considered a PFFI under FATCA. It will register for a GIIN and enter into an FFI Agreement with the IRS. If the trust is classified as a Sponsored Closely-Held Investment Vehicle, then its Sponsoring Entity will obtain a GIIN and enter into an FFI Agreement with the IRS.
The IRS FFI Agreement requires that the trust / Sponsoring Entity establish a FATCA compliance program and timely file FATCA IRS certifications.
USFIs with GIINs
Generally, a USFI is not required to obtain a GIIN and enter into an FFI Agreement with the IRS. However, some organizations have opted to register certain of their USFIs to act as Sponsoring Entities or as Leads in an Expanded Affiliated Group (EAG).
By entering into the FFI Agreement, these USFIs have agreed to establish a FATCA compliance program and timely file IRS FATCA certifications.
Although you are in the midst of completing FATCA and CRS reporting, it is important to determine now whether you have adequate written policies and procedures in place.
In addition, ROs may want to set a deadline for those employees she delegated FATCA responsibilities to, to provide her a sub-certification.