If you sell, liquidate or otherwise terminate a Reporting Foreign Financial Institution (FFI) by December 31, 2018, now is the time to deregister it. Although you may be preparing for holiday vacation, you’ll be happy in 2020 that you won’t have to submit nil reports on these entities.
Nil Jurisdictions
Certain jurisdictions require that a Reporting FFI submit a FATCA report even when the FFI has no FATCA reportable accounts. This reporting is known as nil reporting. Jurisdictions requiring nil reporting include the following:
How Does the Jurisdiction Know that the Entity Exists?
When an entity registers in the IRS FATCA portal it will receive a Global Intermediary Identification Number (GIIN). Once the GIIN is issued, the registered entity will be identified on the published IRS FFI List. The IRS FFI List is updated monthly to add or remove approved entities – including deregistered entities. [See my July 25, 2017 blog post: FATCA & CRS: Don’t Forget to Deregister].
Many foreign jurisdictions cross reference the entities that submitted reporting in the local jurisdiction against the IRS FFI list. If an entity is on the IRS FFI list and fails to submit a nil report, the local jurisdiction may assess penalties.
Where Do I Deregister My FFI?
Deregistration from the IRS FATCA portal requires that the Responsible Officer (RO) or authorized person access the FFI account and follow the agreement termination process.
Some local jurisdictions have their own registration or “notification” processes. Generally, a local jurisdiction requires that the RO first deregister the entity from the IRS FATCA portal. Thereafter, the RO or other authorized person must follow the specific local deregistration process. Depending on the jurisdiction, deregistration may be accomplished online, via e-mail or through a signed letter.
Don’t Forget Certification for Deregistered Entities
You may be required to submit to the IRS a Certification of Preexisting Account (COPA) or Periodic Certification within six months of deregistration. [See my September 10, 2018 blog post: FATCA: Mandatory Certification for GIIN Deregistration]. The first round of IRS certifications concluded on December 15, 2018.
The IRS online certification process was based on the December 15, 2018 deadline without the opportunity for an entity to certify ahead of schedule. It will be important to monitor how the IRS will handle the rolling certification process for deregistering entities.
Policies & Processes
If you are unable to complete the review of your entities prior to December 31 then January 2019 is the time to review your FATCA/CRS policies and processes. The RO should assign a specific individual the task of managing the entity registration and deregistration during the year. Pay attention in 2019 so you can avoid unnecessary nil reporting in 2021!
For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.