Foreign Account Tax Compliance: Witholding and Information Reporting Requirements on 'Withholdable Payments' to Foreign Entities


The Hiring Incentives to Restore Employment Act (the "HIRE Act"), signed into law this past March, includes certain foreign account tax compliance provisions designed to combat offshore tax evasion through increased tax withholding and information reporting obligations with respect to "withholdable payments" made to certain foreign entities (the "FATC Provisions"). The FATC Provisions also require certain foreign financial institutions (broadly defined, as discussed below, to include virtually all offshore investment funds) to disclosure significant information to the Internal Revenue (the "IRS") regarding their United States ("U.S.") investors. Although the FATC Provisions discussed herein generally apply only to payments made after December 31, 2012, taxpayers and commentators have raised numerous questions regarding the application and potential impact of these provisions. This Tax Alert summarizes these provisions.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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