IRS FFI Agreement Terminated. Now What?
If you missed the July 1 deadline for submitting a FATCA Responsible Officer (RO) Periodic Certification, the Internal Revenue Service (IRS) may change the registration status of your Foreign Financial Institution (FFI) to “Agreement Terminated”. This will result in your FFI’s Global Intermediary Identification Number (GIIN) being removed from the IRS FFI List.
An important aspect of registering an FFI in the IRS FATCA portal is obtaining a GIIN. For those participating in FATCA, the FATCA regulations and the Intergovernmental Agreement (IGA) implementing regulations require certain FFIs to obtain a GIIN.
A GIIN is the identification number that the IRS assigns to an FFI, branch of a financial institution (FI), direct reporting non-financial foreign entity (NFFE), sponsoring entity, sponsored entity, and sponsored subsidiary branch once the entity’s FATCA registration has been approved. The GIIN serves the purpose of identifying the registered entity to withholding agents and tax administrators for FATCA reporting purposes.
Once the GIIN is issued, the registered entity will be identified on the published IRS FFI List the next time the list is updated. The IRS FFI List is updated monthly to add or remove approved entities. The IRS removes a GIIN from the IRS FFI List when the FFI Agreement is terminated.
Event of Default
Failing to submit an RO Periodic Certification is one type of event of default (EOD). Failing to submit a Certification of Preexisting Accounts (COPA) is another EOD that may result in a registration status being changed to Agreement Terminated.
Other EODs include:
Indication the RO was unable to complete and submit a required certification;
Indication the RO was not required to submit a certification, contrary to the requirement indicated by the FI’s FATCA classification, country/jurisdiction of tax residence, or registration of any branches or sponsored entities for which the FI needs to certify; or
Completion and submission of a certification that has a “failure to certify” result.
The IRS will send a message to the RO instructing the RO to access the FFI account in the IRS FATCA portal. Once in the specific FFI account, the RO must review the registration message board to determine what specific issue the IRS has identified as the basis for terminating the FFI Agreement.
To reinstate a GIIN that the IRS has unilaterally terminated, you must contact the IRS' Foreign Payments Practice (FPP) by phone, mail, or email. The contact information will be provided in the events of default notice on your FFI’s FATCA registration message board. (It is important to remember that the IRS will not reinstate a GIIN that you cancel by terminating your FFI’s FATCA account in the IRS FATCA portal.) The RO must correct the EOD within 60 days. It is important to contact the IRS as soon as possible with questions or with the resolution (i.e., submitting the required certification).
Depending on the circumstances, the IRS will issue a second notice of default or a notice of termination if the RO does not resolve the EOD within 60 days. The IRS provides the opportunity to request a reconsideration of a notice of default, but such a request must be submitted to the IRS before the IRS issues a notice of termination. The IRS also permits the RO to file an appeal of a notice of termination. Such an appeal must be submitted to the IRS within 90 days of issuance of the notice of termination.
Reregistering Is Not the Solution
Do not think you can outsmart the IRS FATCA portal by simply reregistering the FFI for a new GIIN. The IRS reviews all FATCA portal registrations. Even if you initially obtain a new GIIN and “Approved” status through reregistering the entity, once the IRS completes its review, the FFI’s registration status will be changed from “Approved” to “Agreement Terminated.”