Certain entities may register in the IRS FATCA portal and, upon registration approval, receive a Global Intermediary Identification Number (GIIN). For some entities, the FATCA portal registration process involves the entity entering into an FFI Agreement with the IRS and submitting certain certifications. If the entity fails to submit these certifications, their IRS FATCA account may turn from Approved to Terminated. But you can reverse this status!
IRS FATCA Certifications
The FFI Agreement requires certain entities submit to the IRS a Certification of Preexisting Account (COPA) and a Periodic Certification. Through the COPA, an entity certifies to the IRS that it has timely complied with FATCA due diligence procedures. The following are the specific certifications:
Participating Foreign Financial Institution (Including Reporting Model 2 FFIs)
Consolidated Compliance Group
Registered Deemed-Compliant FFIs – Local FFI
Registered Deemed-Compliant FFIs – Restricted Funds
Sponsoring Entity of Sponsored FFIs
The FATCA Periodic Certification is the vehicle by which an entity certifies to the IRS that it has complied with the terms of the FFI agreement. The following are the specific certifications:
Participating Foreign Financial Institution (Including Reporting Model 2 FFIs)
Consolidated Compliance Group
Registered Deemed-Compliant FFIs – Local FFI
Registered Deemed-Compliant FFIs – Nonreporting Member of PFFI
Registered Deemed-Compliant FFIs – Qualified Collective Investment Vehicle
Registered Deemed-Compliant FFIs – Qualified Credit Card Issuer or Servicer
Registered Deemed-Compliant FFIs – Restricted Funds
Sponsoring Entity of Sponsored FFI
Sponsoring Entity of Sponsored Direct Reporting NFFEs
Sponsoring Entity of Sponsored FFI and Sponsored Direct Reporting NFFEs
Trustee Documented Trusts
Direct Reporting NFFEs
FATCA Account Registration Status: Agreement Terminated
You may discover your entity’s FATCA account is in “Agreement Terminated” status when your Responsible Officer (RO) receives an email to check the message board in the FATCA account or when your new bank cannot validate a self-certification because your GIIN has disappeared from the IRS FFI List or when you are about to do your annual reporting at the last minute and your reporting service provider informs you of the bad news.
The good news is an account in Agreement Terminated status due to the failure to submit a COPA and/or Periodic Certification can get its GIIN reinstated.
Steps for GIIN Reinstatement
If an entity requires its GIIN to be reinstated, it must send the required documents and the GIIN reinstatement request to the IRS' Foreign Payments Practice (FPP) lbi.fi.certs@irs.gov. The IRS staff at this email address cannot reinstate a GIIN that you have chosen to deregister. This email address is only for entities that have a FATCA registration account in Agreement Terminated status due to non-compliance with the FATCA certification requirement.
The IRS requires the entity to:
“Make a written request for the GIIN to be reinstated.
Submit the applicable qualified certification(s) through the online registration system.
Provide detailed explanation why it was not compliant with its FATCA certification obligations within the certification submission.
If the entity is submitting a qualified certification and the only event of default is the failure to submit the required FATCA certification in a timely manner, respond to the statement "There were other event(s) of default that occurred during the certification period." by selecting "yes" and providing an explanation why the certification was submitted late and the actions taken to remediate the event of default and prevent the event from reoccurring.
If additional space is needed, the entity can provide a supplemental statement by email or mail to the address provided in the notice.
Provide a remediation plan.
The remediation plan is to include an explanation of the event(s) of default, reason for the event(s) of default, steps that have or will be taken to remediate the event(s) of default and steps that have or will be taken to prevent such event(s) of defaults from occurring in the future.
In reviewing a remediation plan, the IRS will take into account an entity's good faith efforts to comply with all of the rules, regulations and requirements for [FATCA] compliance. In general, repeated compliance failures are not indicative of good faith efforts and may lead to a reinstatement request being denied.
Respond to IRS inquiries in a comprehensive and timely manner, no later than 30 calendar days.
IRS inquiries may include but are not limited to questions pertaining to the entity's governance, due diligence and reporting processes and procedures if not already provided with the remediation plan.”
IRS Decision
By the time the IRS has changed your entity to Agreement Terminated status, there have been multiple internal compliance failures in your organization. To ensure the IRS chooses to reinstate your GIIN, it is imperative to timely respond to messages from the IRS during the above process. What email was assigned to the account that resulted in your entity’s compliance failure? Make sure the RO email included in the entity’s FATCA account is one that is actually monitored.
While the good news is it may be possible to reinstate the GIIN, the bad news is the process may take a minimum of one month from the time the IRS receives your request and associated documentation. This means venture capital funding might not be deposited into a bank account you are unable to open without a GIIN or that you may miss an FATCA reporting deadline in another jurisdiction.
Once the GIIN is reinstated, the GIIN will not appear on the IRS FFI list until the list is updated the following month. In the meantime, take a screenshot of the IRS FATCA account which has been updated to “Approved” status. You may use this screenshot with counterparties so they are able to validate your GIIN.
Do Not Re-Register
The solution to the IRS terminating your account for non-compliance is not to simply register the entity again for a different GIIN. Yes, the account might initially generate a GIIN and gain approved status. However, this status will be temporary. The IRS reviews all registrations and entities that are found to have re-registered for a new GIIN after being terminated for non-compliance will not maintain their "Approved" registration status.
Next FATCA Certification Deadline
Check your internal records, or better yet, the actual IRS FATCA account homepage to determine when your next FATCA certifications are due. For those which are due for the period ending December 31, 2021, the deadline is July 1, 2022.
For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.