Chapter 4 Regulations Relating to Verification and Certification Requirements for Certain Entities and Reporting by Foreign Financial Institutions, 10976-10989 [2019-05527]
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Federal Register / Vol. 84, No. 57 / Monday, March 25, 2019 / Rules and Regulations
(f) * * *
(1) Notwithstanding the general 15year maturity limit on loans to members
in paragraph (c)(4) of this section, a
federal credit union may make loans
with maturities of up to 20 years in the
case of:
*
*
*
*
*
(g) * * *
(1) Authority. Notwithstanding the
general 15-year maturity limit on loans
to members in paragraph (c)(4) of this
section, a federal credit union may make
residential real estate loans to members,
including loans secured by
manufactured homes permanently
affixed to the land, with maturities of up
to 40 years, or such longer period as
may be permitted by the NCUA Board
on a case-by-case basis, subject to the
conditions of this paragraph (g).
*
*
*
*
*
§ 701.22
[Amended]
4. Amend § 701.22(b)(1) by removing
the words ‘‘§ 723.8’’ and adding in their
place ‘‘§ 723.4’’.
■
[FR Doc. 2019–05186 Filed 3–22–19; 8:45 am]
BILLING CODE 7535–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9852]
RIN 1545–BL96
Chapter 4 Regulations Relating to
Verification and Certification
Requirements for Certain Entities and
Reporting by Foreign Financial
Institutions
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
This document finalizes (with
limited revisions) certain proposed
regulations. The final regulations
provide compliance requirements and
verification procedures for sponsoring
entities of foreign financial institutions
(FFIs) and certain non-financial foreign
entities (NFFEs), trustees of certain
trustee-documented trusts, registered
deemed-compliant FFIs, and financial
institutions that implement
consolidated compliance programs
(compliance FIs). These final
regulations affect certain financial
institutions and NFFEs.
DATES:
Effective date: These regulations are
effective on March 25, 2019.
SUMMARY:
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Applicability dates: For dates of
applicability, see §§ 1.1471–1(c),
1.1471–4(j), 1.1471–5(m), and 1.1472–
1(h).
FOR FURTHER INFORMATION CONTACT:
Charles Rioux, at (202) 317–6942 (not a
toll free number).
SUPPLEMENTARY INFORMATION:
Background
This Treasury decision contains
amendments to 26 CFR part 1. On
January 6, 2017, a notice of proposed
rulemaking (REG–103477–14) proposing
regulations under chapter 4 of Subtitle
A (sections 1471 through 1474) of the
Internal Revenue Code of 1986 (Code)
relating to verification requirements for
certain entities was published in the
Federal Register (82 FR 1629). The
notice of proposed rulemaking also
included proposed regulations,
unrelated to these verification
requirements, by cross-reference to
temporary regulations that were
published in the same issue of the
Federal Register (82 FR 2124; TD 9809).
On September 15, 2017, a correction to
the notice of proposed rulemaking was
published in the Federal Register (82
FR 43314). No public hearing was
requested or held. Written comments
were received, and are available at
www.regulations.gov or upon request.
After consideration of the comments
received, the proposed regulations
relating to verification requirements for
certain entities under chapter 4 are
adopted (with limited modifications) by
this Treasury decision. This Treasury
decision does not finalize the proposed
regulations in the notice of proposed
rulemaking that cross-reference the
temporary regulations. Those proposed
regulations (REG–132857–17) will be
adopted as final regulations at a later
date. Hereinafter, the term ‘‘proposed
regulations’’ when used in this
preamble means the proposed
regulations (REG–103477–14) relating to
verification requirements for certain
entities under chapter 4.
The existing chapter 4 regulations
permit certain FFIs and NFFEs to be
sponsored by other entities (sponsoring
entities) for purposes of satisfying their
chapter 4 requirements. Generally, a
sponsoring entity is an entity that agrees
to perform chapter 4 due diligence,
withholding, and reporting
requirements on behalf of certain FFIs
(sponsored FFIs) or chapter 4 due
diligence and reporting obligations on
behalf of certain direct reporting NFFEs
(sponsored direct reporting NFFEs). An
FFI that is a sponsored FFI is a deemedcompliant FFI, and a NFFE that is a
sponsored direct reporting NFFE is an
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excepted NFFE. The proposed
regulations provide verification
requirements (including certifications of
compliance) and events of default for
sponsoring entities. The proposed
regulations also provide certification
requirements and procedures for the
IRS’s review of trustees of certain
trustee-documented trusts and
procedures for the IRS’s review of
periodic certifications provided by
registered deemed-compliant FFIs. In
addition, the proposed regulations
describe the procedures for future
modifications to the requirements for
certifications of compliance for
participating FFIs. The proposed
regulations also clarify the requirements
in the chapter 4 regulations for periodic
certifications of compliance for
consolidated compliance programs of
participating FFIs and provide
requirements for preexisting account
certifications for these programs.
Summary of Comments and
Explanation of Revisions
After consideration of all the
comments, the proposed regulations are
adopted as amended by this Treasury
decision. The comments and revisions
are discussed below.
Definition of Responsible Officer
The proposed regulations require a
sponsoring entity of a sponsored FFI to
appoint a responsible officer to oversee
the compliance of the sponsoring entity
with respect to each sponsored FFI.
Proposed § 1.1471–1(b)(116) defines the
term responsible officer with respect to
a sponsoring entity as an officer of the
sponsoring entity with sufficient
authority to fulfill the duties of a
responsible officer described in
§ 1.1471–5(j) or § 1.1472–1(f) (as
applicable). A comment requested that
the definition of responsible officer be
expanded to include an officer of an FFI
in the sponsoring entity’s expanded
affiliated group that has responsibility
for ensuring the compliance of the
sponsoring entity. The comment noted
that in some cases an investment
manager that is a sponsoring entity is a
member of an affiliated group in which
one member of the group is designated
to oversee the compliance of all
members with their chapter 4
requirements.
The proposed regulations require the
responsible officer of a sponsoring
entity to be an individual who is an
officer of the sponsoring entity because
the certifications required under these
regulations should be made by the
individual in the best position to know
and represent whether the sponsoring
entity is complying with its obligations.
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The Department of the Treasury
(Treasury Department) and the IRS
understand that in practice, the person
in the best position to know and
represent if the sponsoring entity is
complying with its obligations under
these regulations may be an individual
other than an officer of the sponsoring
entity given industry practices
established by managers and
administrators of investment funds and
similar vehicles for both chapter 4 and
operational purposes. Therefore, these
final regulations define responsible
officer with respect to a sponsoring
entity to include an officer of an entity
that establishes and maintains policies
and procedures for, and has general
oversight over, the sponsoring entity,
provided such individual has sufficient
authority to fulfill the duties of a
responsible officer described in
§ 1.1471–5(j) or § 1.1472–1(f) (as
applicable).
A comment noted that many
investment entities do not appoint
officers but may appoint directors for
corporate governance purposes who
would be able to fulfill the requirements
of responsible officers. The comment
further noted that in many cases in
which investment entities are
partnerships, the general partner or
managing member has authority to act
on behalf of the partnership, and the
general partner or managing member
may be an entity rather than an
individual. The comment requested that
the definition of a responsible officer of
an investment entity be expanded to
include these persons. In response to
these comments, these final regulations
revise the definition of a responsible
officer of a financial institution or
sponsoring entity that is an investment
entity to include, in addition to an
officer of such entity, an individual who
is a director, managing member, or
general partner of such entity, or, if the
general partner or managing member of
the investment entity is itself an entity,
an individual who is an officer, director,
managing member, or general partner of
such other entity.
The comment also requested that the
term responsible officer be expanded to
include, with respect to a participating
FFI, an officer of a U.S. financial
institution (USFI) in the participating
FFI’s expanded affiliated group (in
addition to an officer of a participating
FFI or reporting Model 1 FFI in the
participating FFI’s expanded affiliated
group). This comment is not adopted
because § 1.1471–4(f) already permits a
USFI to act as a compliance FI for
purposes of establishing a consolidated
compliance program and making a
consolidated certification on behalf of
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one or more participating FFIs in an
expanded affiliated group.
Coordination of Certification
Requirements for Compliance FIs and
Sponsoring Entities of Sponsored FFIs
or Sponsored Direct Reporting NFFEs
A comment requested clarification
that a certification of a compliance FI or
sponsoring entity on behalf of an
electing FFI, sponsored FFI, or
sponsored direct reporting NFFE would
satisfy the certification requirements of
the electing FFI, sponsored FFI, or
sponsored direct reporting NFFE. These
final regulations clarify that to the
extent a compliance FI or sponsoring
entity satisfies the certification
requirements in § 1.1471–4(f)(2)(ii),
§ 1.1471–5(j)(2) and (3), or § 1.1472–
1(f)(2) on behalf of an electing FFI,
sponsored FFI, or sponsored direct
reporting NFFE, then the electing FFI,
sponsored FFI, or sponsored direct
reporting NFFE will not have a separate
certification requirement under
§ 1.1471–4(f)(3), § 1.1471–5(f)(1)(ii)(B),
or § 1.1472–1(c)(3)(vi). For example, if a
participating FFI agrees to be a
sponsored FFI, the FFI is not required
to submit any certification with respect
to its participating FFI status after it is
registered as a sponsored FFI by its
sponsoring entity provided its
sponsoring entity certifies on behalf of
the FFI to the extent required under
§ 1.1471–5(j)(3).
The comment also requested that the
certification period of a participating
FFI that is a member of the expanded
affiliated group that includes a
compliance FI but is not an electing FFI
under such compliance FI be aligned
with the certification period of the
compliance FI. The comment stated that
coordinating the certification due dates
of all FFIs in the expanded affiliated
group would provide administrative
benefits to the group. However, the
comment did not explain why all FFIs
could not join the consolidated
compliance program. The Treasury
Department and the IRS have decided
not to revise the regulations in response
to this request because a participating
FFI already has the option of joining the
consolidated compliance program under
the compliance FI in order to align its
certification period with that of the
compliance FI.
Requirement for a Written Sponsorship
Agreement
The proposed regulations require a
responsible officer of a sponsoring
entity to certify that the sponsoring
entity is compliant with the
requirements of a sponsoring entity and
maintains effective internal controls
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with respect to all sponsored FFIs for
which it acts (or provide a qualified
certification). One of the statements to
which the responsible officer must
certify is that the sponsoring entity has
a written sponsorship agreement in
effect with each sponsored FFI
authorizing the sponsoring entity to
fulfill the requirements of § 1.1471–
5(f)(1)(i)(F) or (f)(2)(iii) or an applicable
Model 2 IGA.
A comment requested the elimination
of the requirement that the sponsoring
entity have a written sponsorship
agreement in effect with each sponsored
FFI. The comment stated that this
requirement would increase
administrative burden for sponsored
FFIs. Another comment requested
clarification of whether the sponsorship
agreement must be a separate agreement
between a sponsoring entity and a
sponsored FFI that specifically refers to
the requirements of a sponsoring entity
with respect to a sponsored FFI under
§ 1.1471–5(f)(1)(i)(F) or (f)(2)(iii) or an
applicable Model 2 IGA. The comment
stated that many sponsoring entities
already have managerial agreements in
place with sponsored FFIs that would
allow the sponsoring entity to fulfill
these requirements even without
explicitly referring to them.
These final regulations retain the
requirement that a sponsoring entity
have a written sponsorship agreement in
place with each sponsored FFI. A
written sponsorship agreement
memorializes the agreement between
the parties, which helps to ensure
compliance. However, in response to
the comments and to reduce burden, the
Treasury Department and the IRS have
decided that it is not necessary for the
sponsorship agreement to be a
standalone agreement, and that a
sponsorship agreement between a
sponsoring entity and a sponsored FFI
can refer generally to the obligations of
the parties under FATCA. Accordingly,
these final regulations provide that the
written sponsorship agreement may be
part of another agreement between the
sponsoring entity and the sponsored FFI
provided it refers to the requirements of
a sponsored FFI under FATCA. For
example, a provision in a fund manager
agreement that states that the
sponsoring entity agrees to satisfy the
sponsored FFI’s FATCA obligations
would be sufficient. Additionally, the
proposed regulations do not specify
when a sponsorship agreement must be
in place for purposes of a sponsoring
entity’s certification requirements. To
allow sufficient time for a sponsoring
entity to enter into sponsorship
agreements (or revise existing
agreements), these final regulations
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provide that a sponsoring entity of a
sponsored FFI must have the written
sponsorship agreement in place with
such sponsored FFI by the later of
March 31, 2019, or the date when the
sponsoring entity begins acting as a
sponsoring entity for such sponsored
FFI. See § 1.1471–5(j)(6). These final
regulations include similar rules for a
sponsoring entity of a sponsored direct
reporting NFFE regarding the date by
which the written sponsorship
agreement must be in place and that it
need not be a standalone agreement. See
§ 1.1472–1(f)(4).
Extension of Time for Certifications for
the Certification Period Ending on
December 31, 2017, for Sponsoring
Entities of Sponsored FFIs or Sponsored
Direct Reporting NFFEs and Trustees of
Trustee-Documented Trusts
The proposed regulations provide that
a sponsoring entity of a sponsored FFI
or sponsored direct reporting NFFE and
a trustee of a trustee-documented trust
must make the certifications of
compliance described in § 1.1471–
5(j)(3), § 1.1471–5(l)(2), or § 1.1472–
1(f)(2), as applicable, on or before July
1 of the calendar year following the end
of the certification period. The proposed
regulations also provide that a
sponsoring entity of a sponsored FFI
must submit the preexisting account
certification described in § 1.1471–
4(c)(7) by the due date of the sponsoring
entity’s certification of compliance for
the certification period. The earliest
certification period for a sponsoring
entity or trustee of a trustee-documented
trust ends on December 31, 2017, under
the proposed regulations, making the
earliest certification due date July 1,
2018. One comment requested that the
certifications required of sponsoring
entities be deferred to apply only for
certification periods ending after 2018
in order to have sufficient time to
prepare the certifications. The Treasury
Department and the IRS understand that
sponsoring entities need time to prepare
for the certifications in light of the
timing of the publication of these
regulations. However, the Treasury
Department and the IRS do not agree
that sponsoring entities should not
make certifications for the certification
period ending December 31, 2017,
because sponsoring entities have
already had sufficient notice of their
substantive requirements and because of
the compliance value of certifications
covering this period. These final
regulations address the comment by
providing additional time for
sponsoring entities to make
certifications that would otherwise be
due on July 1, 2018. Under these final
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regulations, certifications by sponsoring
entities and trustees of trusteedocumented trusts for the certification
period ending on December 31, 2017,
must be submitted on or before March
31, 2019.
Registration by a Sponsored FFI or
Sponsored Direct Reporting NFFE After
Termination of the Sponsoring Entity by
the IRS
The proposed regulations provide that
if a sponsoring entity of a sponsored FFI
is terminated by the IRS, the sponsored
FFI of the terminated sponsoring entity
may not register as a sponsored FFI of
a sponsoring entity that has a
relationship described in section 267(b)
with the terminated sponsoring entity
unless the sponsored FFI obtains
written approval from the IRS. The
proposed regulations provide a similar
rule regarding a terminated sponsoring
entity of a sponsored direct reporting
NFFE, but do not permit the sponsored
direct reporting NFFE to obtain written
approval from the IRS to register as a
sponsored direct reporting NFFE of a
section 267(b)-related sponsoring entity.
Section 267(b) describes certain
relationships among individuals,
corporations, trusts, tax-exempt
organizations, and S corporations. The
rules described in this paragraph are
intended to prevent a sponsored FFI or
sponsored direct reporting NFFE from
registering under an entity that is
related to the terminated sponsoring
entity, such as an entity under common
control with the terminated sponsoring
entity. However, the proposed
regulations inadvertently omitted
certain relationships between
sponsoring entities that are
partnerships. These final regulations
correct this omission by providing that
the rules described in this paragraph
generally prohibit registration by a
sponsored FFI or sponsored direct
reporting NFFE under a sponsoring
entity that has a relationship described
in section 267(b) or 707(b) to the
terminated sponsoring entity. Thus, for
example, a sponsored FFI of a
terminated sponsoring entity that is a
partnership may not register under
another sponsoring entity that is a
partnership if the same person owns,
directly or indirectly, more than 50
percent of capital interests or profits
interests of both sponsoring entities.
Additionally, these final regulations
conform the rule for sponsored direct
reporting NFFEs with the rule for
sponsored FFIs by allowing a sponsored
direct reporting NFFE to register under
a sponsoring entity, notwithstanding
that there is the impermissible
relationship described in this paragraph,
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if the sponsored direct reporting NFFE
obtains written approval from the IRS.
Sponsored Entities Located in a Model
1 IGA Jurisdiction
The preamble to the proposed
regulations provides that a financial
institution covered by a Model 1 IGA
that chooses to qualify as a sponsored
FFI under § 1.1471–5(f) instead of
Annex II of the Model 1 IGA must
satisfy all of the requirements of the
regulations applicable to such an entity.
82 FR 1629 at 1631. Comments
requested that a financial institution
located in a jurisdiction with a Model 1
IGA that does not include a sponsored
entity as a type of nonreporting
financial institution in Annex II be
allowed to comply with local guidance
on sponsored entities or the Model 1
IGA Annex II rather than the
regulations. The Treasury Department
and the IRS are open to discussing the
issue with the competent authorities of
affected jurisdictions.
Nonsubstantive Changes
These final regulations include
several minor nonsubstantive changes to
the proposed regulations. Section
1.1471–4(f)(2)(ii)(B)(1) was reorganized
for clarity. Minor clarifying edits were
made in §§ 1.1471–4(f)(3)(i), 1.1471–
5(f)(1)(i)(F)(4), (f)(1)(iv) introductory
text, (f)(1)(iv)(A) and (B), (f)(2)(iii)(E),
(j)(3)(ii) and (iii), (j)(4)(ii), (j)(5) and (6),
(k)(4)(i), (ii), (iii), and (v), and (l)(2)(ii)
and (iii), and 1.1472–1(f)(2)(ii) and (iii),
(f)(3)(ii), (f)(4)(vii), and (g)(4)(i), (ii), and
(iii).
Special Analyses
The Administrator of the Office of
Information and Regulatory Affairs
(OIRA), Office of Management and
Budget, has waived review of this rule
in accordance with section 6(a)(3)(A) of
Executive Order 12866. This rule is an
E.O. 13771 regulatory action.
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545–
2246. The collection of information in
these final regulations is in §§ 1.1471–
4, 1.1471–5 and 1.1472–1. The
collection of information is on a
certification filed with the IRS regarding
the filer’s compliance with its chapter 4
requirements. This information is
required to enable the IRS to verify that
a taxpayer is complying with its
requirements under chapter 4.
Certifications are required from
compliance FIs, sponsoring entities, and
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trustees of trustee-documented trusts.
Information on the estimated number of
compliance FIs, sponsoring entities, and
trustees of trustee-documented trusts
required to submit a certification under
these final regulations is shown in
table 1.
TABLE 1
Number of
respondents
(estimated)
Compliance FIs ...............................
Sponsoring entities and trustees of
trustee-documented trusts ...........
5,000–10,000
10,000–15,000
Information on the number of
compliance FIs, sponsoring entities, and
trustees of trustee-documented trusts
shown in table 1 is from the IRS’s
FATCA registration data. Comments are
requested on the estimated number of
respondents.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number.
Books and records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
It is hereby certified that the
collection of information requirement in
these final regulations will not have a
significant economic impact on a
substantial number of small entities
within the meaning of section 601(6) of
the Regulatory Flexibility Act (5 U.S.C.
chapter 6). Although the Treasury
Department and IRS acknowledge that a
small entity could be a compliance FI
that is affected by these regulations, the
Treasury Department and IRS have
concluded this possibility is too small
and the potential effect is too minimal
to have a significant impact.
Additionally, acting as a compliance FI
is not required under the chapter 4
regulations. Furthermore, these
regulations do not increase the
regulatory burden on small entities
because they clarify existing chapter 4
regulations regarding a compliance FI’s
certification obligations. Therefore, a
Regulatory Flexibility Analysis is not
required. Pursuant to section 7805(f) of
the Code, the notice of proposed
rulemaking preceding these regulations
was submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on its
impact on small business.
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Drafting Information
The principal author of these
regulations is Charles Rioux, Office of
Associate Chief Counsel (International).
However, other personnel from the IRS
and the Treasury Department
participated in the development of these
regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *.
Par. 2. Section 1.1471–0 is amended
by:
■ 1. Adding entries for § 1.1471–
4(f)(2)(ii)(B)(1), (f)(2)(ii)(B)(1)(i) and (ii),
(f)(2)(ii)(B)(2), and (j)(1) and (2).
■ 2. Adding entries for § 1.1471–
5(f)(1)(iv), (f)(1)(iv)(A) and (B), (j)(1), (2),
and (3), (j)(3)(i), (j)(3)(i)(A) and (B),
(j)(3)(ii) through (vi), (j)(3)(vi)(A) and
(B), (j)(3)(vii), (j)(4), (j)(4)(i) through (iii),
(j)(5) and (6), (k)(1) through (4), (k)(4)(i)
through (v).
■ 3. Revising the entry for § 1.1471–5(l).
■ 4. Adding entries for § 1.1471–5(l)(1)
and (2), (l)(2)(i), (l)(2)(i)(A) and (B),
(l)(2)(ii) through (iv), (l)(3), (l)(3)(i) and
(ii), and (m).
■ 5. Adding entries for § 1.1472–1(f)(1)
and (2), (f)(2)(i), (f)(2)(i)(A) and (B),
(f)(2)(ii) through (iv), (f)(3), (f)(3)(i) and
(ii), (f)(4), (g)(1) through (g)(4), and
(g)(4)(i) through (iv).
The additions and revisions read as
follows:
■
§ 1.1471–0 Outline of regulation provisions
for sections 1471 through 1474.
*
*
*
*
*
§ 1.1471–4
FFI agreement.
*
*
*
*
*
(f) * * *
(2) * * *
(ii) * * *
(B) * * *
(1) Periodic certification.
(i) In general.
(ii) Late-joining electing FFIs.
(2) Preexisting account certification.
*
*
*
*
*
(j) * * *
(1) In general.
(2) Special applicability date.
§ 1.1471–5
1471.
Definitions applicable to section
*
*
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*
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*
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*
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(f) * * *
(1) * * *
(iv) IRS review of compliance by registered
deemed-compliant FFIs.
(A) General inquiries.
(B) Inquiries regarding substantial noncompliance.
*
*
*
*
*
(j) * * *
(1) In general.
(2) Compliance program.
(3) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification
period ending on December 31, 2017.
(ii) Late-joining sponsored FFIs.
(iii) Certification period.
(iv) Additional certifications or
information.
(v) Certifications regarding sponsoring
entity and sponsored FFI requirements.
(vi) Certifications regarding internal
controls.
(A) Certification of effective internal
controls.
(B) Qualified certification.
(vii) Material failures defined.
(4) IRS review of compliance.
(i) General inquiries.
(ii) Inquiries regarding substantial noncompliance.
(iii) Compliance procedures for a
sponsored FFI subject to a Model 2 IGA.
(5) Preexisting account certification.
(6) Sponsorship agreement.
(k) * * *
(1) Defined.
(2) Notice of event of default.
(3) Remediation of event of default.
(4) Termination.
(i) In general.
(ii) Termination of sponsoring entity.
(iii) Termination of sponsored FFI.
(iv) Reconsideration of notice of default or
notice of termination.
(v) Sponsoring entity of sponsored FFIs
subject to a Model 2 IGA.
(l) Trustee-documented trust verification.
(1) Compliance program.
(2) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification
period ending on December 31, 2017.
(ii) Late-joining trustee-documented trusts.
(iii) Certification period.
(iv) Certifications.
(3) IRS review of compliance by trustees of
trustee-documented trusts.
(i) General inquiries.
(ii) Inquiries regarding substantial noncompliance.
(m) Applicability date.
*
*
*
*
*
§ 1.1472–1
Withholding on NFFEs.
*
*
*
*
*
(f) * * *
(1) In general.
(2) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification
period ending on December 31, 2017.
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(ii) Late-joining sponsored direct reporting
NFFEs.
(iii) Certification period.
(iv) Certifications.
(3) IRS review of compliance.
(i) General inquiries.
(ii) Inquiries regarding substantial noncompliance.
(4) Sponsorship agreement.
(g) * * *
(1) Defined.
(2) Notice of event of default.
(3) Remediation of event of default.
(4) Termination.
(i) In general.
(ii) Termination of sponsoring entity.
(iii) Termination of sponsored direct
reporting NFFE.
(iv) Reconsideration of notice of default or
notice of termination.
*
*
*
*
*
Par. 3. Section 1.1471–1 is amended
by revising paragraphs (b)(116) and
(121) and (c) to read as follows:
■
§ 1.1471–1 Scope of chapter 4 and
definitions.
*
*
*
*
*
(b) * * *
(116) Responsible officer. The term
responsible officer means, with respect
to a participating FFI, an officer of any
participating FFI or reporting Model 1
FFI in the participating FFI’s expanded
affiliated group with sufficient authority
to fulfill the duties of a responsible
officer described in § 1.1471–4, which
include the requirement to periodically
certify to the IRS regarding the FFI’s
compliance with its FFI agreement. The
term responsible officer means, in the
case of a registered deemed-compliant
FFI, an officer of any deemed-compliant
FFI or participating FFI in the deemedcompliant FFI’s expanded affiliated
group with sufficient authority to ensure
that the FFI meets the applicable
requirements of § 1.1471–5(f). The term
responsible officer means, with respect
to a sponsoring entity, an officer of the
sponsoring entity or an officer of an
entity that establishes and maintains
policies and procedures for, and has
general oversight over, the sponsoring
entity, provided such officer has
sufficient authority to fulfill the duties
of a responsible officer described in
§ 1.1471–5(j) or § 1.1472–1(f) (as
applicable). If a participating FFI elects
to be part of a consolidated compliance
program, the term responsible officer
means an officer of the compliance FI
(as described in § 1.1471–4(f)) with
sufficient authority to fulfill the duties
of a responsible officer described in
§ 1.1471–4(f)(2) and (3) on behalf of
each FFI in the compliance group. In the
case of an FI or sponsoring entity that
is an investment entity, for purposes of
this paragraph (b)(116), the responsible
officer may be, in lieu of an officer of
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the investment entity, an individual
who is a director, managing member, or
general partner of the investment entity
or, if the general partner or managing
member of the investment entity is itself
an entity, an individual who is an
officer, director, managing member, or
general partner of such other entity.
*
*
*
*
*
(121) Sponsored FFI. The term
sponsored FFI means any entity
described in § 1.1471–5(f)(1)(i)(F)
(describing sponsored investment
entities and sponsored controlled
foreign corporations) or § 1.1471–
5(f)(2)(iii) (describing sponsored, closely
held investment vehicles). The term
sponsored FFI also means a sponsored
investment entity, a sponsored
controlled foreign corporation, or a
sponsored, closely held investment
vehicle treated as deemed-compliant
under an applicable Model 2 IGA.
*
*
*
*
*
(c) Applicability date. This section
generally applies beginning on January
6, 2017, except for paragraphs (b)(116)
and (121) of this section, which apply
beginning on March 25, 2019. However,
taxpayers may apply these provisions as
of January 28, 2013. (For the rules that
otherwise apply beginning on January 6,
2017, and before March 25, 2019, see
this section as in effect and contained in
26 CFR part 1 revised April 1, 2018. For
rules that otherwise apply beginning on
January 28, 2013, and before January 6,
2017, see this section as in effect and
contained in 26 CFR part 1 revised April
1, 2016.)
■ Par. 4. Section 1.1471–4 is amended
by:
■ 1. Revising paragraphs (f)(2)(ii)(A).
■ 2. Adding paragraphs (f)(2)(ii)(B)(1)
and (2).
■ 3. Revising paragraphs (f)(3)(i), (g)(2),
and (j)(1).
The revisions and additions read as
follows:
§ 1.1471–4
FFI agreement.
*
*
*
*
*
(f) * * *
(2) * * *
(ii) * * * (A) In general. A
participating FFI that is a member of an
expanded affiliated group that includes
one or more FFIs may elect to be part
of a consolidated compliance program
(and perform a consolidated periodic
review) under the authority of a
participating FFI, reporting Model 1 FFI,
or U.S. financial institution (compliance
FI) that is a member of the electing FFI’s
expanded affiliated group, regardless of
whether all such members so elect. In
addition, when an FFI elects to be part
of a consolidated compliance program,
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each branch that it maintains (including
a limited branch or a branch described
in § 1.1471–5(f)(1)), other than a branch
located in a Model 1 IGA jurisdiction,
must be subject to periodic review as
part of such program and included on
the periodic certification (described in
paragraph (f)(2)(ii)(B)(1) of this section).
To the extent that a compliance FI
satisfies the certification requirements
of paragraph (f)(2)(ii)(B) of this section
on behalf of an electing FFI, such
electing FFI does not have a certification
requirement under paragraph (f)(3) of
this section. See § 1.1471–5(j) for the
requirement of a sponsoring entity to
establish and implement a compliance
program for its sponsored FFIs.
(B) * * *
(1) Periodic certification—(i) In
general. On or before July 1 of the
calendar year following the end of the
certification period, the responsible
officer of the compliance FI must make
the certification described in either
paragraph (f)(3)(ii) or (iii) of this section
with respect to all electing FFIs for
which it acts during the certification
period on the form and in the manner
prescribed by the IRS. The certification
must be made on behalf of all electing
FFIs in the compliance group during the
certification period, except as otherwise
provided in paragraph (f)(2)(ii)(B)(1)(ii)
of this section. The first certification
period for a compliance group begins on
the later of the date the compliance FI
is issued a GIIN or June 30, 2014, and
ends at the close of the third full
calendar year following such date. Each
subsequent certification period is the
three-calendar-year period following the
previous certification period.
(ii) Late-joining electing FFIs. In
general, with respect to a certification
period, a compliance FI is not required
to make a certification for an electing
FFI that first elects to be part of the
consolidated compliance program of the
compliance FI during the six-month
period before the end of the certification
period, provided that the compliance FI
makes certifications for such electing
FFI for subsequent certification periods,
and the first such certification covers
both the subsequent certification period
and the portion of the prior certification
period of the compliance group during
which such FFI was an electing FFI in
the consolidated compliance program of
the compliance FI. However, the
preceding sentence does not apply to an
electing FFI that, immediately before the
electing FFI elects to be part of the
consolidated compliance program, was
a participating FFI or registered
deemed-compliant FFI. The compliance
FI may certify for an electing FFI
described in the preceding sentence for
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the portion of the certification period of
the compliance group before the date
that the electing FFI elects to be part of
the consolidated compliance program if
the compliance FI obtains from the FFI
(or the FFI’s former compliance FI, if
applicable) a written certification that
the FFI has complied with its applicable
chapter 4 requirements during such
portion of the certification period,
provided that: The compliance FI does
not know that such certification is
unreliable or incorrect; and the
certification for the electing FFI for the
subsequent certification period covers
both the subsequent certification period
and the portion of the prior certification
period during which such FFI was an
electing FFI in the consolidated
compliance program of the compliance
FI.
(2) Preexisting account certification.
The responsible officer of a compliance
FI must make the certification described
in paragraph (c)(7) of this section
(preexisting account certification of a
participating FFI) with respect to each
electing FFI that elects to be part of the
consolidated compliance program under
the compliance FI during the
certification period. However, a
preexisting account certification is not
required for an electing FFI if
immediately before electing to be part of
the consolidated compliance program
under the compliance FI the FFI was a
participating FFI or a registered
deemed-compliant FFI that is a local FFI
or restricted fund, and the FFI (or the
FFI’s former compliance FI, if
applicable) provides a written
certification to the compliance FI that
the FFI has made the preexisting
account certification required under
paragraph (c)(7) of this section or
§ 1.1471–5(f)(1)(i)(A)(7) or (f)(1)(i)(D)(6)
(as applicable), unless the compliance
FI knows that such written certification
is unreliable or incorrect. In addition, a
preexisting account certification is not
required for an electing FFI that elects
to be part of the consolidated
compliance program under the
compliance FI during the two year
period before the end of the certification
period, provided that the compliance FI
makes the preexisting account
certification for such FFI for the
subsequent certification period. The
certification required under this
paragraph (f)(2)(ii)(B)(2) for the
certification period must be submitted
by the due date of the FFI’s certification
of compliance required under paragraph
(f)(2)(ii)(B)(1)(i) of this section for the
certification period, on the form and in
the manner prescribed by the IRS.
(3) * * *
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(i) In general. In addition to the
certifications required under paragraph
(c)(7) of this section, on or before July
1 of the calendar year following the end
of each certification period, the
responsible officer must make the
certification described in either
paragraph (f)(3)(ii) or (iii) of this section
on the form and in the manner
prescribed by the IRS. The first
certification period begins on the
effective date of the FFI agreement and
ends at the close of the third full
calendar year following the effective
date of the FFI agreement. Each
subsequent certification period is the
three-calendar-year period following the
previous certification period, unless the
FFI agreement provides for a different
period. The responsible officer must
either certify that the participating FFI
maintains effective internal controls or,
if the participating FFI has identified an
event of default (defined in paragraph
(g) of this section) or a material failure
(defined in paragraph (f)(3)(iv) of this
section) that it has not corrected as of
the date of the certification, must make
the qualified certification described in
paragraph (f)(3)(iii) of this section. The
certification of compliance described in
paragraph (f)(3)(ii) or (iii) of this section
may be modified through an
amendment to the FFI agreement to
include any additional certifications or
information (such as quantitative or
factual information related to the FFI’s
compliance with the FFI agreement),
provided that any additional
information or certifications are
published at least 90 days before being
incorporated into the FFI agreement to
allow for public comment.
*
*
*
*
*
(g) * * *
(2) Notice of event of default.
Following an event of default known by
or disclosed to the IRS, the IRS will
deliver to the participating FFI a notice
of default specifying the event of
default. The IRS will request that the
participating FFI remediate the event of
default within 45 days (unless
additional time is requested and agreed
to by the IRS). The participating FFI
must respond to the notice of default
and provide information responsive to
an IRS request for information or state
the reasons why the participating FFI
does not agree that an event of default
has occurred. Taking into account the
terms of any applicable Model 2 IGA, if
the participating FFI does not provide a
response within the specified time
period, the IRS may, at its sole
discretion, deliver a notice of
termination that terminates the FFI’s
participating FFI status. If the FFI’s
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10981
participating FFI status is terminated, in
addition to the requirements in
§ 1.1471–3(c)(6)(ii)(E)(2), the FFI must,
within 30 days of the termination, send
notice of the termination to each
withholding agent from which it
receives payments and each financial
institution with which it holds an
account for which a withholding
certificate or other documentation was
provided. An FFI that has had its
participating FFI status terminated may
not reregister on the FATCA registration
website as a participating FFI or
registered deemed-compliant FFI unless
it receives written approval from the IRS
to register. A participating FFI may
request, within 90 days of a notice of
default or notice of termination,
reconsideration of a notice of default or
notice of termination by written request
to the IRS.
*
*
*
*
*
(j) * * * (1) In general. This section
generally applies beginning on January
6, 2017, except for paragraphs
(f)(2)(ii)(A), (f)(2)(ii)(B)(1) and (2),
(f)(3)(i), and (g)(2) of this section, which
apply March 26, 2019. However,
taxpayers may apply these provisions as
of January 28, 2013. (For the rules that
otherwise apply beginning on January 6,
2017, and before March 26, 2019, see
this section as in effect and contained in
26 CFR part 1 revised April 1, 2018. For
rules that apply beginning on January
23, 2013 and before January 6, 2017, see
this section as in effect and contained in
26 CFR part 1 revised April 1, 2016.)
*
*
*
*
*
■ Par. 5. Section 1.1471–5 is amended
by:
■ 1. Revising paragraph (f)(1)(i)(F)(3)(vi).
■ 2. Removing paragraph
(f)(1)(i)(F)(3)(vii).
■ 3. Redesignating paragraph
(f)(1)(i)(F)(3)(viii) as paragraph
(f)(1)(i)(F)(3)(vii).
■ 4. Revising paragraph (f)(1)(i)(F)(4).
■ 5. Adding paragraph (f)(1)(iv).
■ 6. Revising paragraph (f)(2)(iii)(D)(4).
■ 7. Removing paragraph (f)(2)(iii)(D)(5).
■ 8. Redesignating paragraph
(f)(2)(iii)(D)(6) as paragraph
(f)(2)(iii)(D)(5).
■ 9. Revising paragraph (f)(2)(iii)(E).
■ 10. Revising paragraphs (j) and (k).
■ 11. Redesignating paragraph (l) as
paragraph (m).
■ 12. Adding new paragraph (l).
■ 13. Revising newly redesignated
paragraph (m).
The revisions and additions read as
follows:
§ 1.1471–5 Definitions applicable to
section 1471.
*
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(f) * * *
(1) * * *
(i) * * *
(F) * * *
(3) * * *
(vi) Complies with the verification
procedures described in paragraph (j) of
this section; and
*
*
*
*
*
(4) The IRS may revoke a sponsoring
entity’s status with respect to one or
more sponsored FFIs based on the
provisions of paragraphs (k)(2), (3), and
(4) of this section (describing notice of
event of default, remediation, and
termination procedures) if there is an
event of default as defined in paragraph
(k)(1) of this section.
*
*
*
*
*
(iv) IRS review of compliance by
registered deemed-compliant FFIs—(A)
General inquiries. With respect to a
registered deemed-compliant FFI
described in paragraph (f)(1)(i)(A), (C),
or (D) of this section, the IRS, based
upon the information reporting forms
described in § 1.1471–4(d)(3)(v),
(d)(5)(vii), or (d)(6)(iv) filed with the IRS
for each calendar year (if applicable),
may request additional information with
respect to the information reported (or
required to be reported) on the forms,
the account statements described in
§ 1.1471–4(d)(4)(v), or confirmation that
the FFI has no reporting requirements
for the calendar year. The IRS may
request additional information from the
FFI to determine the FFI’s compliance
with § 1.1471–4 (if applicable) and to
assist the IRS with its review of account
holder compliance with tax reporting
requirements. For IRS review of
compliance with respect to a registered
deemed-compliant FFI described in
paragraph (f)(1)(i)(F) of this section
(describing sponsored investment
entities and controlled foreign
corporations), see paragraph (j)(4) of this
section.
(B) Inquiries regarding substantial
non-compliance. With respect to a
registered deemed-compliant FFI
described in paragraph (f)(1)(i)(A)
through (E) of this section, the IRS may
determine in its discretion that the FFI
may not have substantially complied
with the requirements of the deemedcompliant status claimed by the FFI.
This determination is based on the
information reporting forms described
in § 1.1471–4(d)(3)(v), (d)(5)(vii), or
(d)(6)(iv) filed with the IRS for each
calendar year (if applicable), the
certifications made by the responsible
officer described in paragraph
(f)(1)(ii)(B) of this section (or the
absence of such certifications), or any
other information related to the FFI’s
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compliance with the requirements of the
deemed-compliant status claimed by the
FFI. In such a case, the IRS may request
from the responsible officer (or
designee) information necessary to
verify the FFI’s compliance with the
requirements for the deemed-compliant
status claimed by the FFI. For example,
in the case of a local FFI under
paragraph (f)(1)(i)(A) of this section, the
IRS may request a description or copy
of the FFI’s policies and procedures for
identifying accounts held by specified
U.S. persons not resident in the
jurisdiction in which the FFI is
incorporated or organized, identifying
entities controlled or beneficially owned
by such persons, and identifying
nonparticipating FFIs. The IRS may also
request the performance of specified
review procedures by a person
(including an external auditor or thirdparty consultant) that the IRS identifies
as competent to perform such
procedures given the facts and
circumstances surrounding the FFI’s
potential failure to comply with the
requirements of the deemed-compliant
category claimed by the FFI. If the IRS
determines that the FFI has not
complied with the requirements of the
deemed-compliant status claimed by the
FFI, the IRS may terminate the FFI’s
deemed-compliant status. If the FFI’s
deemed-compliant status is terminated,
the FFI must send notice of the
termination to each withholding agent
from which it receives payments and
each financial institution with which it
holds an account for which a
withholding certificate or other
documentation was provided within 30
days after the termination. An FFI that
has had its deemed-compliant status
terminated may not reregister on the
FATCA registration website as a
registered deemed-compliant FFI or
register on the FATCA registration
website as a participating FFI unless it
receives written approval from the IRS.
A registered deemed-compliant FFI may
request, within 90 days of a notice of
termination, reconsideration of the
notice of termination by written request
to the IRS.
(2) * * *
(iii) * * *
(D) * * *
(4) Complies with the verification
procedures described in paragraph (j) of
this section; and
*
*
*
*
*
(E) The IRS may revoke a sponsoring
entity’s status as a sponsoring entity
with respect to one or more sponsored
FFIs based on the provisions of
paragraphs (k)(2), (3), and (4) of this
section (describing notice of event of
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default, remediation, and termination
procedures) if there is an event of
default as defined in paragraph (k)(1) of
this section. A sponsoring entity is not
liable for any failure to comply with the
obligations contained in paragraph
(f)(2)(iii)(D) of this section unless the
sponsoring entity is a withholding agent
that is separately liable for the failure to
withhold on or report with respect to a
payment made by the sponsoring entity
on behalf of the sponsored FFI. A
sponsored FFI will remain liable for any
failure of its sponsoring entity to
comply with the obligations contained
in paragraph (f)(2)(iii)(D) of this section
that the sponsoring entity has agreed to
undertake on behalf of the FFI, even if
the sponsoring entity is also a
withholding agent and is itself
separately liable for the failure to
withhold on or report with respect to a
payment made by the sponsoring entity
on behalf of the sponsored FFI. The
same tax, interest, or penalties,
however, shall not be collected more
than once.
*
*
*
*
*
(j) Sponsoring entity verification—(1)
In general. This paragraph (j) describes
the requirements for a sponsoring entity
of a sponsored FFI to establish and
implement a compliance program for
satisfying its requirements as a
sponsoring entity and to provide a
certification of compliance with its
requirements. This paragraph (j) also
describes the procedures for the IRS to
review the sponsoring entity’s
compliance with respect to each
sponsored FFI for purposes of satisfying
the requirements of paragraph (f)(1)(i)(F)
or (f)(2)(iii) of this section or an
applicable Model 2 IGA. For purposes of
a sponsoring entity’s certification of
compliance under this paragraph (j), a
sponsoring entity must have in place a
written sponsorship agreement
described in paragraph (j)(6) of this
section with each sponsored FFI. See
paragraph (j)(3)(v)(B) of this section for
the certification regarding a sponsoring
entity’s sponsorship agreement with
each sponsored FFI.
(2) Compliance program. The
sponsoring entity must appoint a
responsible officer to oversee the
compliance of the sponsoring entity
with respect to each sponsored FFI for
purposes of satisfying the requirements
of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2
IGA. The responsible officer must
(either personally or through designated
persons) establish a compliance
program that includes policies,
procedures, and processes sufficient for
the sponsoring entity to satisfy the
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requirements described in the preceding
sentence. The responsible officer (or
designee) must periodically review the
sufficiency of the sponsoring entity’s
compliance program, the sponsoring
entity’s compliance with respect to each
sponsored FFI for purposes of satisfying
the requirements of paragraph (f)(1)(i)(F)
or (f)(2)(iii) of this section or an
applicable Model 2 IGA, and the
compliance of each sponsored FFI with
the due diligence, withholding, and
reporting requirements of § 1.1471–4 or
an applicable Model 2 IGA during the
certification period described in
paragraph (j)(3)(iii) of this section. The
results of the periodic review must be
considered by the responsible officer in
making the periodic certifications
described in paragraph (j)(3) of this
section.
(3) Certification of compliance—(i)
Certification requirement—(A) In
general. In addition to the certification
required under paragraph (j)(5) of this
section (preexisting account
certification), and except as otherwise
provided in paragraph (j)(3)(i)(B) or
(j)(3)(ii) of this section, on or before July
1 of the calendar year following the
certification period, the responsible
officer of the sponsoring entity must
make the certification described in
paragraph (j)(3)(v) of this section and
either the certification described in
paragraph (j)(3)(vi)(A) of this section or
the certification described in paragraph
(j)(3)(vi)(B) of this section with respect
to all sponsored FFIs for which the
sponsoring entity acts during the
certification period on the form and in
the manner prescribed by the IRS. To
the extent that a sponsoring entity
satisfies the certification requirements
of paragraph (j)(3) of this section on
behalf of a sponsored FFI, the sponsored
FFI does not have a certification
requirement under paragraph (f)(1)(ii)(B)
of this section.
(B) Extension of time for the
certification period ending on December
31, 2017. The certifications required for
a certification period ending on
December 31, 2017, must be submitted
on or before March 31, 2019.
(ii) Late-joining sponsored FFIs. In
general, with respect to a certification
period, a sponsoring entity is not
required to make a certification for a
sponsored FFI that first agrees to be
sponsored by the sponsoring entity
during the six-month period before the
end of the sponsoring entity’s
certification period, provided that the
sponsoring entity makes certifications
for such sponsored FFI for subsequent
certification periods and the first such
certification covers both the subsequent
certification period and the portion of
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the prior certification period of the
sponsoring entity during which such
FFI was sponsored by the sponsoring
entity. However, the preceding sentence
does not apply to a sponsored FFI that,
immediately before the FFI agrees to be
sponsored by the sponsoring entity, was
a participating FFI, registered deemedcompliant FFI, or sponsored, closely
held investment vehicle of another
sponsoring entity. The sponsoring entity
may certify for a sponsored FFI
described in the preceding sentence for
the portion of the certification period of
the sponsoring entity before the date
that the FFI first agrees to be sponsored
by the sponsoring entity if the
sponsoring entity obtains from the FFI
(or the FFI’s sponsoring entity, if
applicable) a written certification that
the FFI has complied with its applicable
chapter 4 requirements during such
portion of the certification period,
provided that: the sponsoring entity
does not know that such certification is
unreliable or incorrect; and the
certification for the sponsored FFI for
the subsequent certification period
covers both the subsequent certification
period and the portion of the prior
certification period during which such
FFI was sponsored by the sponsoring
entity.
(iii) Certification period. The first
certification period of a sponsoring
entity begins on the later of the date the
sponsoring entity is issued a GIIN to act
as a sponsoring entity or June 30, 2014,
and ends at the close of the third full
calendar year following such date. Each
subsequent certification period is the
three-calendar-year period following the
previous certification period.
(iv) Additional certifications or
information. The certification of
compliance described in paragraph (j)(3)
of this section may be modified to
include additional certifications or
information (such as quantitative or
factual information related to the
sponsoring entity’s compliance with
respect to each sponsored FFI for
purposes of satisfying the requirements
of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2
IGA), provided that such additional
information or certifications are
published at least 90 days before being
made effective in order to allow for
public comment.
(v) Certifications regarding sponsoring
entity and sponsored FFI requirements.
The responsible officer of the
sponsoring entity must certify to the
following statements—
(A) The sponsoring entity meets all of
the requirements of a sponsoring entity
as described in paragraph (f)(1)(i)(F)(3)
or (f)(2)(iii)(D) of this section or an
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10983
applicable Model 2 IGA, including the
chapter 4 status required of such entity;
(B) The sponsoring entity has a
written sponsorship agreement in effect
with each sponsored FFI authorizing the
sponsoring entity to fulfill the
requirements of paragraph (f)(1)(i)(F) or
(f)(2)(iii) of this section or an applicable
Model 2 IGA with respect to each
sponsored FFI; and
(C) Each sponsored FFI treated as a
sponsored investment entity, a
sponsored controlled foreign
corporation, or a sponsored, closely
held investment vehicle by the
sponsoring entity meets the
requirements of its respective status.
(vi) Certifications regarding internal
controls—(A) Certification of effective
internal controls. The responsible
officer of the sponsoring entity must
certify to the following statements—
(1) The responsible officer of the
sponsoring entity has established a
compliance program that is in effect as
of the date of the certification and that
has been subject to the review as
described in paragraph (j)(2) of this
section;
(2) With respect to material failures
(defined in paragraph (j)(3)(vii) of this
section)—
(i) There are no material failures for
the certification period; or
(ii) If there were any material failures,
appropriate actions were taken to
remediate such failures and to prevent
such failures from reoccurring; and
(3) With respect to any failure to
withhold, deposit, or report to the
extent required under § 1.1471–4 or an
applicable Model 2 IGA with respect to
any sponsored FFI for any year during
the certification period, the sponsored
FFI has corrected such failure by paying
(or directing the sponsoring entity to
pay) any taxes due (including interest
and penalties) and filing (or directing
the sponsoring entity to file) the
appropriate return (or amended return).
(B) Qualified certification. If the
responsible officer of the sponsoring
entity has identified an event of default
(defined in paragraph (k)(1) of this
section) or a material failure (defined in
paragraph (j)(3)(vii) of this section) that
the sponsoring entity has not corrected
as of the date of the certification, the
responsible officer must certify to the
following statements—
(1) The responsible officer of the
sponsoring entity has established a
compliance program that is in effect as
of the date of the certification and that
has been subjected to the review as
described in paragraph (j)(2) of this
section;
(2) With respect to the event of default
or material failure—
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(i) The responsible officer (or
designee) has identified an event of
default; or
(ii) The responsible officer has
determined that there are one or more
material failures as defined in paragraph
(j)(3)(vii) of this section and that
appropriate actions will be taken to
prevent such failures from reoccurring;
(3) With respect to any failure to
withhold, deposit, or report to the
extent required under § 1.1471–4 or an
applicable Model 2 IGA with respect to
any sponsored FFI for any year during
the certification period, the sponsored
FFI will correct such failure by paying
(or directing the sponsoring entity to
pay) any taxes due (including interest
and penalties) and filing (or directing
the sponsoring entity to file) the
appropriate return (or amended return);
and
(4) The responsible officer (or
designee) will respond to any notice of
default under paragraph (k)(2) of this
section or will provide to the IRS a
description of each material failure and
a written plan to correct each such
failure when requested under paragraph
(j)(4) of this section.
(vii) Material failures defined. A
material failure is a failure of the
sponsoring entity with respect to each
sponsored FFI to satisfy the
requirements of paragraph (f)(1)(i)(F) or
(f)(2)(iii) of this section or an applicable
Model 2 IGA if the failure was the result
of a deliberate action on the part of one
or more employees of the sponsoring
entity or was an error attributable to a
failure of the sponsoring entity to
implement internal controls sufficient
for the sponsoring entity to meet its
requirements. A material failure will not
constitute an event of default unless
such material failure occurs in more
than limited circumstances when a
sponsoring entity has not substantially
complied with the requirements
described in the preceding sentence.
Material failures include the
following—
(A) With respect to any sponsored
FFI, the deliberate or systematic failure
of the sponsoring entity to report
accounts that such sponsored FFI was
required to treat as U.S. accounts,
withhold on passthru payments to the
extent required, deposit taxes withheld
to the extent required, accurately report
recalcitrant account holders (or nonconsenting U.S. accounts under an
applicable Model 2 IGA), or accurately
report with respect to nonparticipating
FFIs as required under § 1.1471–
4(d)(2)(ii)(F) or an applicable Model 2
IGA;
(B) A criminal or civil penalty or
sanction imposed on the sponsoring
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entity or any sponsored FFI (or any
branch or office of the sponsoring entity
or any sponsored FFI) by a regulator or
other governmental authority or agency
with oversight over the sponsoring
entity’s or sponsored FFI’s compliance
with the AML due diligence procedures
to which it (or any branch or office
thereof) is subject and that is imposed
based on a failure to properly identify
account holders under the requirements
of those procedures;
(C) A potential future tax liability of
any sponsored FFI related to its
compliance (or lack thereof) with the
due diligence, withholding, and
reporting requirements of § 1.1471–4 or
an applicable Model 2 IGA for which
such sponsored FFI has established, for
financial statement purposes, a tax
reserve or provision;
(D) A potential contractual liability
under the agreement described in
paragraph (j)(3)(v)(B) of this section of
the sponsoring entity to any sponsored
FFI related to such sponsoring entity’s
compliance (or lack thereof) with
paragraph (f)(1)(i)(F) or (f)(2)(iii) of this
section or an applicable Model 2 IGA for
which the sponsoring entity has
established, for financial statement
purposes, a reserve or provision; and
(E) Failure to register with the IRS as
a sponsoring entity or to register each
sponsored FFI required to be registered
under paragraph (f)(1)(i)(F)(3)(iii) of this
section or an applicable Model 2 IGA.
(4) IRS review of compliance—(i)
General inquiries. The IRS, based upon
the information reporting forms
described in § 1.1471–4(d)(3)(v),
(d)(5)(vii), or (d)(6)(iv) filed with the IRS
(or the absence of such reporting) by the
sponsoring entity for each calendar year
with respect to any sponsoring FFI, may
request additional information with
respect to the information reported (or
required to be reported) on the forms,
the account statements described in
§ 1.1471–4(d)(4)(v) with respect to one
or more sponsored FFIs, or confirmation
that the FFI has no reporting
requirements. The IRS may also request
any additional information from the
sponsoring entity (including a copy of
each sponsorship agreement the
sponsoring entity has entered into with
each sponsored FFI) necessary to
determine the compliance with the due
diligence, withholding, and reporting
requirements of § 1.1471–4 or an
applicable Model 2 IGA with respect to
each sponsored FFI and to assist the IRS
with its review of account holder
compliance with tax reporting
requirements.
(ii) Inquiries regarding substantial
non-compliance. The IRS may
determine in its discretion that a
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sponsoring entity may not have
substantially complied with the
requirements of paragraph (f)(1)(i)(F) or
(f)(2)(iii) of this section or an applicable
Model 2 IGA with respect to any
sponsored FFI. This determination is
based on the information reporting
forms described in § 1.1471–4(d)(3)(v),
(d)(5)(vii), or (d)(6)(iv) filed with the IRS
by the sponsoring entity for each
calendar year with respect to any
sponsored FFI (or the absence of
reporting), the certifications made by
the responsible officer described in
paragraphs (j)(3) and (5) of this section
(or the absence of such certifications), or
any other information related to the
sponsoring entity’s compliance with
respect to any sponsored FFI for
purposes of satisfying the requirements
of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2
IGA. In such a case, the IRS may request
from the responsible officer (or
designee) information necessary to
verify the sponsoring entity’s
compliance with such requirements.
The IRS may request, for example, a
description or copy of the sponsoring
entity’s policies and procedures for
fulfilling the requirements of paragraph
(f)(1)(i)(F) or (f)(2)(iii) of this section or
an applicable Model 2 IGA, a
description or copy of the sponsoring
entity’s procedures for conducting its
periodic review, or a copy of any
written reports documenting the
findings of such review. The IRS may
also request the performance of
specified review procedures by a person
(including an external auditor or thirdparty consultant) that the IRS identifies
as competent to perform such
procedures given the facts and
circumstances surrounding the
sponsoring entity’s potential failure to
comply with respect to each sponsored
FFI with the requirements of paragraph
(f)(1)(i)(F) or (f)(2)(iii) of this section or
an applicable Model 2 IGA.
(iii) Compliance procedures for a
sponsored FFI subject to a Model 2 IGA.
In the case of a sponsored FFI subject to
the requirements of an applicable Model
2 IGA, the procedures described in
paragraph (j)(4) of this section apply,
except as otherwise provided in the
applicable Model 2 IGA.
(5) Preexisting account certification.
The responsible officer of a sponsoring
entity must make the certification
described in § 1.1471–4(c)(7)
(preexisting account certification of a
participating FFI) with respect to each
sponsored FFI that enters into the
sponsorship agreement with the
sponsoring entity during the
certification period (as defined in
paragraph (j)(3)(iii) of this section).
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However, the preexisting account
certification is not required for a
sponsored FFI that, immediately before
the FFI first agrees to be sponsored by
the sponsoring entity, was a
participating FFI, a sponsored FFI of
another sponsoring entity, or a
registered deemed-compliant FFI that is
a local FFI or a restricted fund, if the FFI
(or the FFI’s former sponsoring entity, if
applicable) provides a written
certification to the sponsoring entity
that the FFI has made the preexisting
account certification required under
§ 1.1471–4(c)(7) or paragraph
(f)(1)(i)(A)(7) or (f)(1)(i)(D)(6) of this
section (as applicable), unless the
sponsoring entity knows that such
written certification is unreliable or
incorrect. In addition, the preexisting
account certification is not required for
a sponsored FFI that enters into the
sponsorship agreement with the
sponsoring entity during the two year
period before the end of the sponsoring
entity’s certification period, provided
that the sponsoring entity makes the
preexisting account certification for
such FFI for the subsequent certification
period. The certification described in
this paragraph (j)(5) for the certification
period must be submitted by the due
date of the sponsoring entity’s
certification of compliance required
under paragraph (j)(3)(i) of this section
for the certification period (or the
extended due date described in
paragraph (j)(3)(i)(B) of this section for
the certification period ending on
December 31, 2017), on the form and in
the manner prescribed by the IRS. With
respect to a sponsored FFI for which the
sponsoring entity makes a preexisting
account certification, a preexisting
obligation means any account,
instrument, or contract (including any
debt or equity interest) maintained,
executed, or issued by the sponsored
FFI that is outstanding on the earlier of
the date the FFI is issued a GIIN as a
sponsored FFI or the date the FFI first
agrees to be sponsored by the
sponsoring entity.
(6) Sponsorship agreement. A
sponsoring entity must have a written
sponsorship agreement (which may be
part of another agreement between the
sponsoring entity and the sponsored
FFI) that refers to the requirements of a
sponsored FFI under FATCA and that
must be in place with each sponsored
FFI for which the sponsoring entity acts
by the later of March 31, 2019, or the
date that the sponsoring entity begins
acting as a sponsoring entity for the
applicable sponsored FFI.
(k) Sponsoring entity event of
default—(1) Defined. An event of
default with regard to a sponsoring
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entity occurs if the sponsoring entity
fails to perform material obligations
required with respect to the due
diligence, withholding, and reporting
requirements of § 1.1471–4 or an
applicable Model 2 IGA with respect to
any sponsored FFI, to establish or
maintain a compliance program as
described in paragraph (j)(2) of this
section, or to perform a periodic review
described in paragraph (j)(2) of this
section. An event of default also
includes the occurrence of any of the
following—
(i) With respect to any sponsored FFI,
failure to obtain, in any case in which
foreign law would (but for a waiver)
prevent the reporting of U.S. accounts
required under § 1.1471–4(d), valid and
effective waivers from holders of U.S.
accounts or failure to otherwise close or
transfer such U.S. accounts as required
under § 1.1471–4(i);
(ii) With respect to any sponsored FFI,
failure to significantly reduce, over a
period of time, the number of account
holders or payees that such sponsored
FFI is required to treat as recalcitrant
account holders or nonparticipating
FFIs, as a result of the sponsoring entity
failing to comply with the due diligence
procedures set forth in § 1.1471–4(c);
(iii) With respect to any sponsored
FFI, failure to fulfill the requirements of
§ 1.1471–4(i) in any case in which
foreign law prevents or otherwise limits
withholding under § 1.1471–4(b);
(iv) Failure to take timely corrective
actions to remedy a material failure
described in paragraph (j)(3)(vii) of this
section after making a qualified
certification described in paragraph
(j)(3)(vi)(B) of this section;
(v) Failure to make the preexisting
account certification required under
paragraph (j)(5) of this section or the
periodic certification required under
paragraph (j)(3) of this section with
respect to any sponsored FFI within the
specified time period;
(vi) Making incorrect claims for
refund on behalf of any sponsored FFI;
(vii) Failure to cooperate with an IRS
request for additional information under
paragraph (j)(4) of this section;
(viii) Making any fraudulent
statement or misrepresentation of
material fact to the IRS or representing
to a withholding agent or the IRS its
status as a sponsoring entity for an
entity other than an entity for which it
acts as a sponsoring entity;
(ix) The sponsoring entity is no longer
authorized to perform the requirements
of a sponsoring entity with respect to
one or more sponsored FFIs; or
(x) Failure to have the written
sponsorship agreement described in
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10985
paragraph (j)(3)(v)(B) of this section in
effect with each sponsored FFI.
(2) Notice of event of default.
Following an event of default known by
or disclosed by the sponsoring entity to
the IRS, the IRS will deliver to the
sponsoring entity a notice of default
specifying the event of default and, if
applicable, identifying each sponsored
FFI to which the notice relates. The IRS
will request that the sponsoring entity
remediate the event of default within 45
days (unless additional time is
requested and agreed to by the IRS). The
sponsoring entity must respond to the
notice of default and provide
information responsive to an IRS
request for information or state the
reasons why the sponsoring entity does
not agree that an event of default has
occurred.
(3) Remediation of event of default. A
sponsoring entity will be permitted to
remediate an event of default to the
extent that it agrees with the IRS on a
remediation plan. Such a plan may, for
example, allow a sponsoring entity to
remediate an event of default described
in paragraph (k)(1) of this section with
respect to a sponsored FFI by providing
specific information regarding the U.S.
accounts maintained by such sponsored
FFI when the sponsoring entity has been
unable to report all of the information
with respect to such accounts as
required under § 1.1471–4(d) and has
been unable to close or transfer such
accounts. The IRS may, as part of a
remediation plan, require additional
information from the sponsoring entity
or the performance of the specified
review procedures described in
paragraph (j)(4)(ii) of this section.
(4) Termination—(i) In general. If the
sponsoring entity does not provide a
response to a notice of default within
the period specified in paragraph (k)(2)
of this section or does not remediate the
event of default as described in
paragraph (k)(3) of this section, the IRS
may deliver a notice of termination that
terminates the sponsoring entity’s
status, the status of one or more
sponsored FFIs as deemed-compliant
FFIs, or the status of both the
sponsoring entity and one or more
sponsored FFIs.
(ii) Termination of sponsoring entity.
If the IRS terminates the status of the
sponsoring entity, the sponsoring entity
must send notice of the termination
within 30 days after the date of
termination to each sponsored FFI for
which it acts, as well as to each
withholding agent from which each
sponsored FFI receives payments and
each financial institution with which
each sponsored FFI holds an account for
which a withholding certificate or other
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documentation was provided. A
sponsoring entity that has had its status
terminated cannot register on the
FATCA registration website to act as a
sponsoring entity for any sponsored FFI
or for any entity that is a sponsored
entity under a Model 1 IGA unless it
receives written approval from the IRS
to register. Unless the status of a
sponsored FFI has been terminated, the
sponsored FFI may register on the
FATCA registration website as a
participating FFI or registered deemedcompliant FFI (as applicable). However,
a sponsored FFI whose sponsoring
entity has been terminated may not
register or represent its status as a
sponsored FFI of a sponsoring entity
that has a relationship described in
section 267(b) or 707(b) with the
sponsoring entity that was terminated
without receiving written approval from
the IRS.
(iii) Termination of sponsored FFI. If
the IRS notifies the sponsoring entity
that the status of a sponsored FFI is
terminated (but not the sponsoring
entity’s status), the sponsoring entity
must remove the sponsored FFI from the
sponsoring entity’s registration account
on the FATCA registration website and
send notice of the termination within 30
days after the date of termination to
each withholding agent from which the
sponsored FFI receives payments and
each financial institution with which it
holds an account for which a
withholding certificate or other
documentation was provided with
respect to such sponsored FFI. A
sponsored FFI that has had its status as
a sponsored FFI terminated
(independent from a termination of
status of its sponsoring entity) may not
register on the FATCA registration
website as a participating FFI or
registered deemed-compliant FFI unless
it receives written approval from the
IRS.
(iv) Reconsideration of notice of
default or notice of termination. A
sponsoring entity or sponsored FFI may
request, within 90 days of a notice of
default or notice of termination,
reconsideration of the notice of default
or notice of termination by written
request to the IRS.
(v) Sponsoring entity of sponsored
FFIs subject to a Model 2 IGA. Subject
to the provisions of an applicable Model
2 IGA, the IRS may revoke the status of
a sponsoring entity with respect to one
or more sponsored FFIs subject to a
Model 2 IGA based on the provisions of
paragraphs (k)(2), (3), and (4) of this
section (describing notice of event of
default and termination procedures) if
there is an event of default as defined
in paragraph (k)(1) of this section.
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(l) Trustee-documented trust
verification—(1) Compliance program.
A trustee of a trust treated as a trusteedocumented trust under an applicable
Model 2 IGA must establish and
implement a compliance program for
purposes of satisfying the requirements
of an applicable Model 2 IGA with
respect to each such trust. The trustee
must appoint a responsible officer who
must (either personally or through
designated persons) establish policies,
procedures, and processes sufficient for
the trustee to implement the compliance
program. The responsible officer (or
designee) must periodically review the
sufficiency of the trustee’s compliance
program and the trustee’s compliance
with respect to each trust for purposes
of satisfying the requirements of an
applicable Model 2 IGA for each
certification period described in
paragraph (l)(2) of this section. The
results of the periodic review must be
considered by the responsible officer in
making the certification described in
paragraph (l)(2) of this section.
(2) Certification of compliance—(i)
Certification requirement—(A) In
general. Except as otherwise provided
in paragraph (I)(2)(i)(B) or (I)(2)(ii) of
this section, on or before July 1 of the
calendar year following the end of the
certification period, the responsible
officer of the trustee must make a
certification for the certification period
with respect to all trustee-documented
trusts described in paragraph (l)(1) of
this section on the form and in the
manner prescribed by the IRS.
(B) Extension of time for the
certification period ending on December
31, 2017. The certifications required for
a certification period ending on
December 31, 2017, must be submitted
on or before March 31, 2019.
(ii) Late-joining trustee-documented
trusts. In general, with respect to a
certification period, the responsible
officer of a trustee is not required to
make a certification for a trusteedocumented trust for which the trustee
first agreed to act as the trustee under
Annex II of an applicable IGA during
the six-month period before the end of
the trustee’s certification period,
provided that the responsible officer of
the trustee makes certifications for such
trustee-documented trust for subsequent
certification periods and the first such
certification covers both the subsequent
certification period and the portion of
the prior certification period of the
trustee during which the trustee acted as
the trustee of the trustee-documented
trust. However, the preceding sentence
does not apply to a trustee-documented
trust that, immediately before the
trustee first agrees to act as the trustee
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under Annex II of an applicable IGA,
was a trustee-documented trust of
another trustee. The trustee of a trusteedocumented trust may certify for a
trustee-documented trust described in
the preceding sentence for the portion of
the certification period of the trustee
before the date that the trustee first
agrees to act as the trustee under Annex
II of an applicable IGA if the trustee
obtains from the trustee-documented
trust (or the trust’s former trustee, if
applicable) a written certification that
the trust has complied with its
applicable chapter 4 requirements
during such portion of the certification
period, provided that: The trustee does
not know that such certification is
unreliable or incorrect; and the
certification for the trustee-documented
trust for the subsequent certification
period covers both the subsequent
certification period and the portion of
the prior certification period during
which the trustee acts as the trustee
under Annex II of an applicable IGA.
(iii) Certification period. The first
certification period of the trustee begins
on the later of the date the trustee is
issued a GIIN to act as a trustee of a
trustee-documented trust or June 30,
2014, and ends at the close of the third
full calendar year following such date.
Each subsequent certification period is
the three-calendar-year period following
the previous certification period.
(iv) Certifications. The responsible
officer of the trustee must certify to the
following statements—
(A) The responsible officer of the
trustee has established a compliance
program that is in effect as of the date
of the certification and has performed a
periodic review described in paragraph
(l)(1) of this section for the certification
period; and
(B) The trustee has reported to the IRS
on Form 8966, ‘‘FATCA Report’’ (or
such other form as the IRS may
prescribe), all of the information
required to be reported pursuant to the
applicable Model 2 IGA with respect to
all U.S. accounts of each trusteedocumented trust for which the trustee
acts during the certification period by
the due date of Form 8966 (including
extensions) for each year.
(3) IRS review of compliance by
trustees of trustee-documented trusts—
(i) General inquiries. Based upon the
information reporting forms filed with
the IRS (or the absence of such
reporting) by a trustee with respect to
any trustee-documented trust subject to
a Model 2 IGA for each calendar year,
and subject to the requirements of an
applicable Model 2 IGA, the IRS may
request from the trustee additional
information with respect to the
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information reported on the forms with
respect to any trustee-documented trust
or a confirmation that the trustee has no
reporting requirements with respect to
any trustee-documented trust. The IRS
may also request any additional
information to determine the trustee’s
compliance for purposes of satisfying
the trust’s requirements as a trusteedocumented trust under an applicable
Model 2 IGA or to assist the IRS with
its review of account holder compliance
with tax reporting requirements.
(ii) Inquiries regarding substantial
non-compliance. The IRS may
determine in its discretion that the
trustee may not have substantially
complied with the requirements
applicable to a trustee of a trusteedocumented trust. This determination is
based on the information reporting
forms filed with the IRS by a trustee
with respect to any trustee-documented
trust subject to a Model 2 IGA for each
calendar year (or the absence of such
reporting), the certification described in
paragraph (l)(2) of this section (or the
absence of such certification), or any
other information related to the trustee’s
compliance with respect to any trusteedocumented trust for purposes of
satisfying the trust’s applicable Model 2
IGA requirements. In such a case, the
IRS may request from the responsible
officer information necessary to verify
the trustee’s compliance with such
requirements. The IRS may also request
the performance of specified review
procedures by a person (including an
external auditor or third-party
consultant) that the IRS identifies as
competent to perform such procedures
given the circumstances surrounding
the trustee’s potential failure to comply
with the requirements of an applicable
Model 2 IGA with respect to one or
more trustee-documented trusts. The
IRS may notify the applicable Model 2
IGA jurisdiction that the trustee has not
complied with its requirements as a
trustee of one or more trusteedocumented trusts.
(m) Applicability date. This section
generally applies beginning on January
6, 2017, except for paragraphs
(f)(1)(i)(F)(3)(vi), (f)(1)(i)(F)(4), (f)(1)(iv),
(f)(2)(iii)(D)(4), (f)(2)(iii)(E), (j), (k), and
(l) of this section, which apply March
26, 2019. However, taxpayers may apply
these provisions as of January 28, 2013.
(For the rules that otherwise apply
beginning on January 6, 2017, and
before March 26, 2019, see this section
as in effect and contained in 26 CFR
part 1 revised April 1, 2018. For the
rules that otherwise apply beginning on
January 28, 2013, and before January 6,
2017, see this section as in effect and
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contained in 26 CFR part 1 revised April
1, 2016.)
■ Par. 6. Section 1.1472–1 is amended
by revising paragraphs (c)(5)(iii), (f), (g),
and (h) to read as follows:
§ 1.1472–1
Withholding on NFFEs.
*
*
*
*
*
(c) * * *
(5) * * *
(iii) Revocation of status as
sponsoring entity. The IRS may revoke
a sponsoring entity’s status as a
sponsoring entity with respect to all
sponsored direct reporting NFFEs if
there is an event of default as defined
in paragraph (g) of this section with
respect to any sponsored direct
reporting NFFE.
*
*
*
*
*
(f) Sponsoring entity verification—(1)
In general. This paragraph (f) describes
the requirements for a sponsoring entity
to provide a certification of compliance
with respect to each sponsored direct
reporting NFFE for purposes of
satisfying the requirements of paragraph
(c)(5) of this section and defines the
certification period for such
certifications. This paragraph (f) also
describes the procedures for the IRS to
review the sponsoring entity’s
compliance with such requirements
during the certification period. Finally,
this paragraph (f) describes the
requirement that a sponsoring entity
have in place a written sponsorship
agreement with each sponsored direct
reporting NFFE for which it acts and
specifies the terms of such agreement.
See paragraph (g)(1)(i) of this section,
describing an event of default for a
sponsoring entity that does not have a
sponsorship agreement with each
sponsored direct reporting NFFE for
which it acts as a sponsoring entity.
References in this paragraph (f) or
paragraph (g) of this section to a
sponsored direct reporting NFFE mean
a sponsored direct reporting NFFE for
which the sponsoring entity acts as a
sponsoring entity under paragraph
(c)(5)(ii) of this section.
(2) Certification of compliance—(i)
Certification requirement—(A) In
general. The sponsoring entity must
appoint a responsible officer to oversee
the sponsoring entity’s compliance with
respect to each sponsored direct
reporting NFFE for purposes of
satisfying the requirements of paragraph
(c)(5) of this section. Except as
otherwise provided in paragraph
(f)(2)(i)(B) or (f)(2)(ii) of this section, on
or before July 1 of the calendar year
following the certification period, the
responsible officer of the sponsoring
entity must make a certification for the
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10987
certification period with respect to all
sponsored direct reporting NFFEs for
which the sponsoring entity acts during
the certification period on the form and
in the manner prescribed by the IRS. To
the extent that a sponsoring entity
satisfies the certification requirements
of paragraph (f)(2) of this section on
behalf of a sponsored direct reporting
NFFE, the NFFE does not have a
certification requirement under
paragraph (c)(3)(vi) of this section.
(B) Extension of time for the
certification period ending on December
31, 2017. The certifications required for
a certification period ending on
December 31, 2017, must be submitted
on or before March 31, 2019.
(ii) Late-joining sponsored direct
reporting NFFEs. In general, with
respect to a certification period, a
sponsoring entity is not required to
make a certification for a sponsored
direct reporting NFFE that first agrees to
be sponsored by the sponsoring entity
during the six-month period before the
end of the sponsoring entity’s
certification period, provided that the
sponsoring entity makes certifications
for such sponsored direct reporting
NFFE for subsequent certification
periods, and the first such certification
covers both the subsequent certification
period and the portion of the prior
certification period of the sponsoring
entity during which the sponsored
direct reporting NFFE was sponsored by
the sponsoring entity. However, the
preceding sentence does not apply to a
sponsored direct reporting NFFE that,
immediately before the NFFE agrees to
be sponsored by the sponsoring entity,
was a direct reporting NFFE or
sponsored direct reporting NFFE of
another sponsoring entity. The
sponsoring entity may certify for a
sponsored direct reporting NFFE
described in the preceding sentence for
the portion of the certification period of
the sponsoring entity before the date
that the NFFE first agrees to be
sponsored by the sponsoring entity if
the sponsoring entity obtains from the
NFFE (or the NFFE’s sponsoring entity,
if applicable) a written certification that
the NFFE has complied with its
applicable chapter 4 requirements
during such portion of the certification
period, provided that: The sponsoring
entity does not know that such
certification is unreliable or incorrect;
and the certification for the sponsored
direct reporting NFFE for the
subsequent certification period covers
both the subsequent certification period
and the portion of the prior certification
period during which such NFFE was
sponsored by the sponsoring entity.
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(iii) Certification period. The first
certification period of a sponsoring
entity begins on the later of the date the
sponsoring entity is issued a GIIN to act
as a sponsoring entity or June 30, 2014,
and ends at the close of the third full
calendar year after such date. Each
subsequent certification period is the
three-calendar-year period following the
close of the previous certification
period.
(iv) Certifications. The certification
will require the responsible officer of
the sponsoring entity to certify to the
following statements—
(A) The sponsoring entity meets all of
the requirements of a sponsoring entity
described in paragraph (c)(5)(ii) of this
section;
(B) The sponsoring entity has the
written sponsorship agreement
described in paragraph (f)(4) of this
section in effect with each sponsored
direct reporting NFFE;
(C) There were no events of default (as
defined in paragraph (g) of this section)
with respect to the sponsoring entity, or,
to the extent there were any such events
of default, appropriate measures were
taken by the sponsoring entity to
remediate and prevent such events from
reoccurring; and
(D) With respect to any failure to
report to the extent required under
paragraph (c)(3)(ii) of this section with
respect to one or more sponsored direct
reporting NFFEs, the sponsoring entity
has corrected such failure by filing the
appropriate information returns.
(3) IRS review of compliance—(i)
General inquiries. The IRS, based upon
the information reporting forms
described in paragraph (c)(3)(ii) of this
section filed with the IRS (or the
absence of such reporting) by the
sponsoring entity for each calendar year
with respect to any sponsored direct
reporting NFFE, may request additional
information with respect to the
information reported (or required to be
reported) on the forms about any
substantial U.S. owner reported on the
form or the records for each direct
reporting NFFE described in paragraph
(c)(3)(iv) of this section. The IRS may
also request any additional information
from the sponsoring entity (including a
copy of each sponsorship agreement the
sponsoring entity has entered into with
each sponsored FFI) to determine its
compliance with paragraph (f) of this
section with respect to each sponsored
direct reporting NFFE and to assist the
IRS with its review of any substantial
U.S. owners’ compliance with tax
reporting requirements.
(ii) Inquiries regarding substantial
non-compliance. The IRS may
determine in its discretion that a
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15:47 Mar 22, 2019
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sponsoring entity may not have
substantially complied with the
requirements of a sponsoring entity with
respect to each sponsored direct
reporting NFFE for purposes of
satisfying the requirements of paragraph
(c)(5) of this section. This determination
is based on the information reporting
forms referenced in paragraph (c)(3)(ii)
of this section filed with the IRS by the
sponsoring entity for each calendar year
with respect to any sponsored direct
reporting NFFE (or the absence of such
reporting), the certification made by the
responsible officer described in
paragraph (f)(2) of this section (or the
absence of such certification), or any
other information related to the
sponsoring entity’s compliance with the
requirements of a sponsoring entity with
respect to each sponsored direct
reporting NFFE for purposes of
satisfying the requirements of paragraph
(c)(5) of this section. In such a case, the
IRS may request from the responsible
officer information necessary to verify
the sponsoring entity’s compliance with
such requirements. The IRS may also
request the performance of specified
review procedures by a person
(including an external auditor or thirdparty consultant) that the IRS identifies
as competent to perform such
procedures given the circumstances
surrounding the sponsoring entity’s
potential failure to comply with the
requirements of a sponsoring entity.
(4) Sponsorship agreement. The
sponsoring entity must have a written
sponsorship agreement (which may be
part of another agreement between the
sponsoring entity and the sponsored
direct reporting NFFE) in place with
each sponsored direct reporting NFFE
for which it acts by the later of March
31, 2019, or the date that the sponsoring
entity begins acting as a sponsoring
entity for the applicable sponsored
direct reporting NFFE, under which—
(i) The sponsored direct reporting
NFFE agrees to provide the sponsoring
entity access to the sponsored direct
reporting NFFE’s books and records
regarding each of its owners (including
AML/KYC documentation regarding the
sponsored direct reporting NFFE’s
owners provided by the sponsored
direct reporting NFFE with respect to
each financial account it holds) and
such other information sufficient for the
sponsoring entity to determine the
direct and indirect substantial U.S.
owners of the sponsored direct reporting
NFFE, including the information about
such owners required under paragraph
(c)(3)(ii) of this section to be reported on
Form 8966, ‘‘FATCA Report’’ (or such
other form as the IRS may prescribe);
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Frm 00018
Fmt 4700
Sfmt 4700
(ii) The sponsored direct reporting
NFFE obtains a valid and effective
waiver of any legal prohibitions on
reporting the information about its
direct and indirect substantial U.S.
owners required under paragraph
(c)(3)(ii) of this section to be reported on
Form 8966 (or such other form as the
IRS may prescribe);
(iii) The sponsored direct reporting
NFFE authorizes the sponsoring entity
to act on the sponsored direct reporting
NFFE’s behalf with respect to the
sponsored direct reporting NFFE’s
obligations as a sponsored direct
reporting NFFE (for example,
authorizing the sponsoring entity to file
Form 8966 on the sponsored direct
reporting NFFE’s behalf, responding to
the IRS inquiries described in paragraph
(f)(3) of this section, and providing the
certification described in paragraph
(f)(2) of this section);
(iv) The sponsored direct reporting
NFFE agrees to identify to the
sponsoring entity on request each
withholding agent and financial
institution to which the sponsored
direct reporting NFFE reports its status
as a sponsored direct reporting NFFE
and agrees to provide to the sponsoring
entity a copy of the withholding
certificate or written statement
prescribed in § 1.1471–3(d)(11)(x)(B) (as
applicable) that the sponsored direct
reporting NFFE provides to each such
withholding agent or financial
institution;
(v) The sponsored direct reporting
NFFE represents that it does not have
any formal or informal practices or
procedures to assist its substantial U.S.
owners with the avoidance of the
requirements of chapter 4;
(vi) The sponsored direct reporting
NFFE agrees to cooperate with the
sponsoring entity in responding to any
IRS inquiries under paragraph (f)(3) of
this section with respect to the
sponsored direct reporting NFFE; and
(vii) The sponsoring entity retains the
records described in paragraphs
(c)(3)(iii) and (iv) of this section for the
longer of six years or the retention
period under the sponsoring entity’s
normal business procedures. A
sponsoring entity may be required to
extend the retention period if the IRS
requests such an extension before the
expiration of the period.
(g) Sponsoring entity event of
default—(1) Defined. An event of
default by the sponsoring entity means
the occurrence of any of the following—
(i) Failure to have the written
sponsorship agreement described in
paragraph (f)(4) of this section in effect
with each sponsored direct reporting
NFFE;
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(ii) Failure to satisfy the requirements
of paragraph (c)(3)(iii) of this section
with respect to each sponsored direct
reporting NFFE that the NFFE would
have been required to satisfy as a direct
reporting NFFE;
(iii) Failure to report to the IRS on
Form 8966, ‘‘FATCA Report,’’ (or such
other form as the IRS may prescribe) all
of the information required under
paragraph (c)(3)(ii) of this section with
respect to each sponsored direct
reporting NFFE and each of its
substantial U.S. owners (or report to the
IRS on Form 8966 that the sponsored
direct reporting NFFE had no
substantial U.S. owners) by the due date
of the form (including any extensions);
(iv) Failure to make the certification
required under paragraph (f)(2) of this
section;
(v) Failure to cooperate with an IRS
request for additional information
described in paragraph (f)(3) of this
section, including requests for the
records described in paragraph (c)(3)(iv)
of this section and requests to extend
the retention period for these records as
described in (f)(4)(vii) of this section;
(vi) Making any fraudulent statement
or misrepresentation of material fact to
the IRS or representing to a withholding
agent or the IRS its status as a
sponsoring entity under paragraph (c)(5)
of this section for an entity other than
an entity for which it acts as a
sponsoring entity; or
(vii) Failure to obtain from each
sponsored direct reporting NFFE the
information required to report on Form
8966.
(2) Notice of event of default.
Following an event of default known by
or disclosed to the IRS, the IRS will
deliver to the sponsoring entity a notice
of default specifying the event of default
and, if applicable, identifying each
sponsored direct reporting NFFE to
which the notice relates. The IRS will
request that the sponsoring entity
remediate the event of default within 45
days (unless additional time is
requested and agreed to by the IRS). The
sponsoring entity must respond to the
notice of default and provide
information responsive to an IRS
request for information or state the
reasons why the sponsoring entity does
not agree that an event of default has
occurred.
(3) Remediation of event of default. A
sponsoring entity will be permitted to
remediate an event of default to the
extent that it agrees with the IRS on a
remediation plan. The IRS may, as part
of a remediation plan, require additional
information from the sponsoring entity,
remedial actions, or the performance of
the specified review procedures
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15:47 Mar 22, 2019
Jkt 247001
described in paragraph (f)(3)(ii) of this
section.
(4) Termination—(i) In general. If the
sponsoring entity does not provide a
response to a notice of default within
the period specified in paragraph (g)(2)
of this section, or if the sponsoring
entity does not satisfy the conditions of
the remediation plan within the time
period specified by the IRS, the IRS may
deliver a notice of termination that
terminates the sponsoring entity’s
status, the status of one or more
sponsored direct reporting NFFEs as a
direct reporting NFFE, or the status of
both the sponsoring entity and one or
more sponsored direct reporting NFFEs.
(ii) Termination of sponsoring entity.
If the IRS notifies the sponsoring entity
that its status is terminated, the
sponsoring entity must send notice of
the termination within 30 days after the
date of termination to each withholding
agent from which each sponsored direct
reporting NFFE receives payments and
each financial institution with which
each sponsored direct reporting NFFE
holds an account for which a
withholding certificate or written
statement prescribed in § 1.1471–
3(d)(11)(x)(B) (as applicable) was
provided. A sponsoring entity that has
had its status terminated cannot
reregister on the FATCA registration
website to act as a sponsoring entity for
any sponsored direct reporting NFFE
unless it receives written approval from
the IRS. Unless the status of the
sponsored direct reporting NFFEs has
been terminated, the sponsored direct
reporting NFFEs may register on the
FATCA registration website as direct
reporting NFFEs or as sponsored direct
reporting NFFEs of another sponsoring
entity, other than a sponsoring entity
that is related to the sponsoring entity
that was terminated (absent written
approval from the IRS allowing the
registration). An entity is related to the
terminated sponsoring entity if they
have a relationship with each other that
is described in section 267(b) or 707(b).
(iii) Termination of sponsored direct
reporting NFFE. If the IRS notifies the
sponsoring entity that the status of a
sponsored direct reporting NFFE is
terminated (but not the sponsoring
entity’s status), the sponsoring entity
must remove the sponsored direct
reporting NFFE from the sponsoring
entity’s registration account on the
FATCA registration website and send
notice of the termination within 30 days
after the date of termination to each
withholding agent from which the
sponsored direct reporting NFFE
receives payments and each financial
institution with which it holds an
account for which a withholding
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10989
certificate or written statement
prescribed in § 1.1471–3(d)(11)(x)(B) (as
applicable) was provided with respect
to such sponsored direct reporting
NFFE. A sponsored direct reporting
NFFE that has had its status as a
sponsored direct reporting NFFE
terminated (independent from a
termination of status of its sponsoring
entity) may not register on the FATCA
registration website as a direct reporting
NFFE or as a sponsored direct reporting
NFFE of another sponsoring entity
unless it receives written approval from
the IRS.
(iv) Reconsideration of notice of
default or notice of termination. A
sponsoring entity or sponsored direct
reporting NFFE may request, within 90
days of a notice of default or notice of
termination, reconsideration of the
notice of default or notice of termination
by written request to the IRS.
(h) Applicability date. This section
generally applies beginning on January
6, 2017, except for paragraphs (c)(5)(iii),
(f), and (g) of this section, which apply
March 26, 2019. However, taxpayers
may apply these provisions as of
January 28, 2013. (For the rules that
otherwise apply beginning on January 6,
2017, and before March 26, 2019, see
this section as in effect and contained in
26 CFR part 1 revised April 1, 2018. For
rules that otherwise apply beginning on
January 28, 2013, and before January 6,
2017, see this section as in effect and
contained in 26 CFR part 1 revised April
1, 2016.)
Kirsten Wielobob,
Deputy Commissioner for Services and
Enforcement.
Approved: February 27, 2019.
David J. Kautter,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2019–05527 Filed 3–21–19; 4:15 pm]
BILLING CODE 4830–01–P
DEPARTMENT OF THE INTERIOR
Bureau of Safety and Environmental
Enforcement
30 CFR Part 250
[Docket ID: BSEE–2019–0001; 190E1700D2
ETISF0000.EAQ000 EEEE500000]
RIN 1014–AA42
Oil and Gas and Sulfur Operations on
the Outer Continental Shelf—Civil
Penalty Inflation Adjustment
Bureau of Safety and
Environmental Enforcement, Interior.
ACTION: Final rule.
AGENCY:
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]]>Agencies
[Federal Register Volume 84, Number 57 (Monday, March 25, 2019)]
[Rules and Regulations]
[Pages 10976-10989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05527]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9852]
RIN 1545-BL96
Chapter 4 Regulations Relating to Verification and Certification
Requirements for Certain Entities and Reporting by Foreign Financial
Institutions
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document finalizes (with limited revisions) certain
proposed regulations. The final regulations provide compliance
requirements and verification procedures for sponsoring entities of
foreign financial institutions (FFIs) and certain non-financial foreign
entities (NFFEs), trustees of certain trustee-documented trusts,
registered deemed-compliant FFIs, and financial institutions that
implement consolidated compliance programs (compliance FIs). These
final regulations affect certain financial institutions and NFFEs.
DATES:
Effective date: These regulations are effective on March 25, 2019.
Applicability dates: For dates of applicability, see Sec. Sec.
1.1471-1(c), 1.1471-4(j), 1.1471-5(m), and 1.1472-1(h).
FOR FURTHER INFORMATION CONTACT: Charles Rioux, at (202) 317-6942 (not
a toll free number).
SUPPLEMENTARY INFORMATION:
Background
This Treasury decision contains amendments to 26 CFR part 1. On
January 6, 2017, a notice of proposed rulemaking (REG-103477-14)
proposing regulations under chapter 4 of Subtitle A (sections 1471
through 1474) of the Internal Revenue Code of 1986 (Code) relating to
verification requirements for certain entities was published in the
Federal Register (82 FR 1629). The notice of proposed rulemaking also
included proposed regulations, unrelated to these verification
requirements, by cross-reference to temporary regulations that were
published in the same issue of the Federal Register (82 FR 2124; TD
9809). On September 15, 2017, a correction to the notice of proposed
rulemaking was published in the Federal Register (82 FR 43314). No
public hearing was requested or held. Written comments were received,
and are available at www.regulations.gov or upon request. After
consideration of the comments received, the proposed regulations
relating to verification requirements for certain entities under
chapter 4 are adopted (with limited modifications) by this Treasury
decision. This Treasury decision does not finalize the proposed
regulations in the notice of proposed rulemaking that cross-reference
the temporary regulations. Those proposed regulations (REG-132857-17)
will be adopted as final regulations at a later date. Hereinafter, the
term ``proposed regulations'' when used in this preamble means the
proposed regulations (REG-103477-14) relating to verification
requirements for certain entities under chapter 4.
The existing chapter 4 regulations permit certain FFIs and NFFEs to
be sponsored by other entities (sponsoring entities) for purposes of
satisfying their chapter 4 requirements. Generally, a sponsoring entity
is an entity that agrees to perform chapter 4 due diligence,
withholding, and reporting requirements on behalf of certain FFIs
(sponsored FFIs) or chapter 4 due diligence and reporting obligations
on behalf of certain direct reporting NFFEs (sponsored direct reporting
NFFEs). An FFI that is a sponsored FFI is a deemed-compliant FFI, and a
NFFE that is a sponsored direct reporting NFFE is an excepted NFFE. The
proposed regulations provide verification requirements (including
certifications of compliance) and events of default for sponsoring
entities. The proposed regulations also provide certification
requirements and procedures for the IRS's review of trustees of certain
trustee-documented trusts and procedures for the IRS's review of
periodic certifications provided by registered deemed-compliant FFIs.
In addition, the proposed regulations describe the procedures for
future modifications to the requirements for certifications of
compliance for participating FFIs. The proposed regulations also
clarify the requirements in the chapter 4 regulations for periodic
certifications of compliance for consolidated compliance programs of
participating FFIs and provide requirements for preexisting account
certifications for these programs.
Summary of Comments and Explanation of Revisions
After consideration of all the comments, the proposed regulations
are adopted as amended by this Treasury decision. The comments and
revisions are discussed below.
Definition of Responsible Officer
The proposed regulations require a sponsoring entity of a sponsored
FFI to appoint a responsible officer to oversee the compliance of the
sponsoring entity with respect to each sponsored FFI. Proposed Sec.
1.1471-1(b)(116) defines the term responsible officer with respect to a
sponsoring entity as an officer of the sponsoring entity with
sufficient authority to fulfill the duties of a responsible officer
described in Sec. 1.1471-5(j) or Sec. 1.1472-1(f) (as applicable). A
comment requested that the definition of responsible officer be
expanded to include an officer of an FFI in the sponsoring entity's
expanded affiliated group that has responsibility for ensuring the
compliance of the sponsoring entity. The comment noted that in some
cases an investment manager that is a sponsoring entity is a member of
an affiliated group in which one member of the group is designated to
oversee the compliance of all members with their chapter 4
requirements.
The proposed regulations require the responsible officer of a
sponsoring entity to be an individual who is an officer of the
sponsoring entity because the certifications required under these
regulations should be made by the individual in the best position to
know and represent whether the sponsoring entity is complying with its
obligations.
[[Page 10977]]
The Department of the Treasury (Treasury Department) and the IRS
understand that in practice, the person in the best position to know
and represent if the sponsoring entity is complying with its
obligations under these regulations may be an individual other than an
officer of the sponsoring entity given industry practices established
by managers and administrators of investment funds and similar vehicles
for both chapter 4 and operational purposes. Therefore, these final
regulations define responsible officer with respect to a sponsoring
entity to include an officer of an entity that establishes and
maintains policies and procedures for, and has general oversight over,
the sponsoring entity, provided such individual has sufficient
authority to fulfill the duties of a responsible officer described in
Sec. 1.1471-5(j) or Sec. 1.1472-1(f) (as applicable).
A comment noted that many investment entities do not appoint
officers but may appoint directors for corporate governance purposes
who would be able to fulfill the requirements of responsible officers.
The comment further noted that in many cases in which investment
entities are partnerships, the general partner or managing member has
authority to act on behalf of the partnership, and the general partner
or managing member may be an entity rather than an individual. The
comment requested that the definition of a responsible officer of an
investment entity be expanded to include these persons. In response to
these comments, these final regulations revise the definition of a
responsible officer of a financial institution or sponsoring entity
that is an investment entity to include, in addition to an officer of
such entity, an individual who is a director, managing member, or
general partner of such entity, or, if the general partner or managing
member of the investment entity is itself an entity, an individual who
is an officer, director, managing member, or general partner of such
other entity.
The comment also requested that the term responsible officer be
expanded to include, with respect to a participating FFI, an officer of
a U.S. financial institution (USFI) in the participating FFI's expanded
affiliated group (in addition to an officer of a participating FFI or
reporting Model 1 FFI in the participating FFI's expanded affiliated
group). This comment is not adopted because Sec. 1.1471-4(f) already
permits a USFI to act as a compliance FI for purposes of establishing a
consolidated compliance program and making a consolidated certification
on behalf of one or more participating FFIs in an expanded affiliated
group.
Coordination of Certification Requirements for Compliance FIs and
Sponsoring Entities of Sponsored FFIs or Sponsored Direct Reporting
NFFEs
A comment requested clarification that a certification of a
compliance FI or sponsoring entity on behalf of an electing FFI,
sponsored FFI, or sponsored direct reporting NFFE would satisfy the
certification requirements of the electing FFI, sponsored FFI, or
sponsored direct reporting NFFE. These final regulations clarify that
to the extent a compliance FI or sponsoring entity satisfies the
certification requirements in Sec. 1.1471-4(f)(2)(ii), Sec. 1.1471-
5(j)(2) and (3), or Sec. 1.1472-1(f)(2) on behalf of an electing FFI,
sponsored FFI, or sponsored direct reporting NFFE, then the electing
FFI, sponsored FFI, or sponsored direct reporting NFFE will not have a
separate certification requirement under Sec. 1.1471-4(f)(3), Sec.
1.1471-5(f)(1)(ii)(B), or Sec. 1.1472-1(c)(3)(vi). For example, if a
participating FFI agrees to be a sponsored FFI, the FFI is not required
to submit any certification with respect to its participating FFI
status after it is registered as a sponsored FFI by its sponsoring
entity provided its sponsoring entity certifies on behalf of the FFI to
the extent required under Sec. 1.1471-5(j)(3).
The comment also requested that the certification period of a
participating FFI that is a member of the expanded affiliated group
that includes a compliance FI but is not an electing FFI under such
compliance FI be aligned with the certification period of the
compliance FI. The comment stated that coordinating the certification
due dates of all FFIs in the expanded affiliated group would provide
administrative benefits to the group. However, the comment did not
explain why all FFIs could not join the consolidated compliance
program. The Treasury Department and the IRS have decided not to revise
the regulations in response to this request because a participating FFI
already has the option of joining the consolidated compliance program
under the compliance FI in order to align its certification period with
that of the compliance FI.
Requirement for a Written Sponsorship Agreement
The proposed regulations require a responsible officer of a
sponsoring entity to certify that the sponsoring entity is compliant
with the requirements of a sponsoring entity and maintains effective
internal controls with respect to all sponsored FFIs for which it acts
(or provide a qualified certification). One of the statements to which
the responsible officer must certify is that the sponsoring entity has
a written sponsorship agreement in effect with each sponsored FFI
authorizing the sponsoring entity to fulfill the requirements of Sec.
1.1471-5(f)(1)(i)(F) or (f)(2)(iii) or an applicable Model 2 IGA.
A comment requested the elimination of the requirement that the
sponsoring entity have a written sponsorship agreement in effect with
each sponsored FFI. The comment stated that this requirement would
increase administrative burden for sponsored FFIs. Another comment
requested clarification of whether the sponsorship agreement must be a
separate agreement between a sponsoring entity and a sponsored FFI that
specifically refers to the requirements of a sponsoring entity with
respect to a sponsored FFI under Sec. 1.1471-5(f)(1)(i)(F) or
(f)(2)(iii) or an applicable Model 2 IGA. The comment stated that many
sponsoring entities already have managerial agreements in place with
sponsored FFIs that would allow the sponsoring entity to fulfill these
requirements even without explicitly referring to them.
These final regulations retain the requirement that a sponsoring
entity have a written sponsorship agreement in place with each
sponsored FFI. A written sponsorship agreement memorializes the
agreement between the parties, which helps to ensure compliance.
However, in response to the comments and to reduce burden, the Treasury
Department and the IRS have decided that it is not necessary for the
sponsorship agreement to be a standalone agreement, and that a
sponsorship agreement between a sponsoring entity and a sponsored FFI
can refer generally to the obligations of the parties under FATCA.
Accordingly, these final regulations provide that the written
sponsorship agreement may be part of another agreement between the
sponsoring entity and the sponsored FFI provided it refers to the
requirements of a sponsored FFI under FATCA. For example, a provision
in a fund manager agreement that states that the sponsoring entity
agrees to satisfy the sponsored FFI's FATCA obligations would be
sufficient. Additionally, the proposed regulations do not specify when
a sponsorship agreement must be in place for purposes of a sponsoring
entity's certification requirements. To allow sufficient time for a
sponsoring entity to enter into sponsorship agreements (or revise
existing agreements), these final regulations
[[Page 10978]]
provide that a sponsoring entity of a sponsored FFI must have the
written sponsorship agreement in place with such sponsored FFI by the
later of March 31, 2019, or the date when the sponsoring entity begins
acting as a sponsoring entity for such sponsored FFI. See Sec. 1.1471-
5(j)(6). These final regulations include similar rules for a sponsoring
entity of a sponsored direct reporting NFFE regarding the date by which
the written sponsorship agreement must be in place and that it need not
be a standalone agreement. See Sec. 1.1472-1(f)(4).
Extension of Time for Certifications for the Certification Period
Ending on December 31, 2017, for Sponsoring Entities of Sponsored FFIs
or Sponsored Direct Reporting NFFEs and Trustees of Trustee-Documented
Trusts
The proposed regulations provide that a sponsoring entity of a
sponsored FFI or sponsored direct reporting NFFE and a trustee of a
trustee-documented trust must make the certifications of compliance
described in Sec. 1.1471-5(j)(3), Sec. 1.1471-5(l)(2), or Sec.
1.1472-1(f)(2), as applicable, on or before July 1 of the calendar year
following the end of the certification period. The proposed regulations
also provide that a sponsoring entity of a sponsored FFI must submit
the preexisting account certification described in Sec. 1.1471-4(c)(7)
by the due date of the sponsoring entity's certification of compliance
for the certification period. The earliest certification period for a
sponsoring entity or trustee of a trustee-documented trust ends on
December 31, 2017, under the proposed regulations, making the earliest
certification due date July 1, 2018. One comment requested that the
certifications required of sponsoring entities be deferred to apply
only for certification periods ending after 2018 in order to have
sufficient time to prepare the certifications. The Treasury Department
and the IRS understand that sponsoring entities need time to prepare
for the certifications in light of the timing of the publication of
these regulations. However, the Treasury Department and the IRS do not
agree that sponsoring entities should not make certifications for the
certification period ending December 31, 2017, because sponsoring
entities have already had sufficient notice of their substantive
requirements and because of the compliance value of certifications
covering this period. These final regulations address the comment by
providing additional time for sponsoring entities to make
certifications that would otherwise be due on July 1, 2018. Under these
final regulations, certifications by sponsoring entities and trustees
of trustee-documented trusts for the certification period ending on
December 31, 2017, must be submitted on or before March 31, 2019.
Registration by a Sponsored FFI or Sponsored Direct Reporting NFFE
After Termination of the Sponsoring Entity by the IRS
The proposed regulations provide that if a sponsoring entity of a
sponsored FFI is terminated by the IRS, the sponsored FFI of the
terminated sponsoring entity may not register as a sponsored FFI of a
sponsoring entity that has a relationship described in section 267(b)
with the terminated sponsoring entity unless the sponsored FFI obtains
written approval from the IRS. The proposed regulations provide a
similar rule regarding a terminated sponsoring entity of a sponsored
direct reporting NFFE, but do not permit the sponsored direct reporting
NFFE to obtain written approval from the IRS to register as a sponsored
direct reporting NFFE of a section 267(b)-related sponsoring entity.
Section 267(b) describes certain relationships among individuals,
corporations, trusts, tax-exempt organizations, and S corporations. The
rules described in this paragraph are intended to prevent a sponsored
FFI or sponsored direct reporting NFFE from registering under an entity
that is related to the terminated sponsoring entity, such as an entity
under common control with the terminated sponsoring entity. However,
the proposed regulations inadvertently omitted certain relationships
between sponsoring entities that are partnerships. These final
regulations correct this omission by providing that the rules described
in this paragraph generally prohibit registration by a sponsored FFI or
sponsored direct reporting NFFE under a sponsoring entity that has a
relationship described in section 267(b) or 707(b) to the terminated
sponsoring entity. Thus, for example, a sponsored FFI of a terminated
sponsoring entity that is a partnership may not register under another
sponsoring entity that is a partnership if the same person owns,
directly or indirectly, more than 50 percent of capital interests or
profits interests of both sponsoring entities. Additionally, these
final regulations conform the rule for sponsored direct reporting NFFEs
with the rule for sponsored FFIs by allowing a sponsored direct
reporting NFFE to register under a sponsoring entity, notwithstanding
that there is the impermissible relationship described in this
paragraph, if the sponsored direct reporting NFFE obtains written
approval from the IRS.
Sponsored Entities Located in a Model 1 IGA Jurisdiction
The preamble to the proposed regulations provides that a financial
institution covered by a Model 1 IGA that chooses to qualify as a
sponsored FFI under Sec. 1.1471-5(f) instead of Annex II of the Model
1 IGA must satisfy all of the requirements of the regulations
applicable to such an entity. 82 FR 1629 at 1631. Comments requested
that a financial institution located in a jurisdiction with a Model 1
IGA that does not include a sponsored entity as a type of nonreporting
financial institution in Annex II be allowed to comply with local
guidance on sponsored entities or the Model 1 IGA Annex II rather than
the regulations. The Treasury Department and the IRS are open to
discussing the issue with the competent authorities of affected
jurisdictions.
Nonsubstantive Changes
These final regulations include several minor nonsubstantive
changes to the proposed regulations. Section 1.1471-4(f)(2)(ii)(B)(1)
was reorganized for clarity. Minor clarifying edits were made in
Sec. Sec. 1.1471-4(f)(3)(i), 1.1471-5(f)(1)(i)(F)(4), (f)(1)(iv)
introductory text, (f)(1)(iv)(A) and (B), (f)(2)(iii)(E), (j)(3)(ii)
and (iii), (j)(4)(ii), (j)(5) and (6), (k)(4)(i), (ii), (iii), and (v),
and (l)(2)(ii) and (iii), and 1.1472-1(f)(2)(ii) and (iii), (f)(3)(ii),
(f)(4)(vii), and (g)(4)(i), (ii), and (iii).
Special Analyses
The Administrator of the Office of Information and Regulatory
Affairs (OIRA), Office of Management and Budget, has waived review of
this rule in accordance with section 6(a)(3)(A) of Executive Order
12866. This rule is an E.O. 13771 regulatory action.
The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-2246. The collection of information
in these final regulations is in Sec. Sec. 1.1471-4, 1.1471-5 and
1.1472-1. The collection of information is on a certification filed
with the IRS regarding the filer's compliance with its chapter 4
requirements. This information is required to enable the IRS to verify
that a taxpayer is complying with its requirements under chapter 4.
Certifications are required from compliance FIs, sponsoring entities,
and
[[Page 10979]]
trustees of trustee-documented trusts. Information on the estimated
number of compliance FIs, sponsoring entities, and trustees of trustee-
documented trusts required to submit a certification under these final
regulations is shown in table 1.
Table 1
------------------------------------------------------------------------
Number of
respondents
(estimated)
------------------------------------------------------------------------
Compliance FIs.......................................... 5,000-10,000
Sponsoring entities and trustees of trustee-documented 10,000-15,000
trusts.................................................
------------------------------------------------------------------------
Information on the number of compliance FIs, sponsoring entities,
and trustees of trustee-documented trusts shown in table 1 is from the
IRS's FATCA registration data. Comments are requested on the estimated
number of respondents.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
Books and records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
It is hereby certified that the collection of information
requirement in these final regulations will not have a significant
economic impact on a substantial number of small entities within the
meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C.
chapter 6). Although the Treasury Department and IRS acknowledge that a
small entity could be a compliance FI that is affected by these
regulations, the Treasury Department and IRS have concluded this
possibility is too small and the potential effect is too minimal to
have a significant impact. Additionally, acting as a compliance FI is
not required under the chapter 4 regulations. Furthermore, these
regulations do not increase the regulatory burden on small entities
because they clarify existing chapter 4 regulations regarding a
compliance FI's certification obligations. Therefore, a Regulatory
Flexibility Analysis is not required. Pursuant to section 7805(f) of
the Code, the notice of proposed rulemaking preceding these regulations
was submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Drafting Information
The principal author of these regulations is Charles Rioux, Office
of Associate Chief Counsel (International). However, other personnel
from the IRS and the Treasury Department participated in the
development of these regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *.
0
Par. 2. Section 1.1471-0 is amended by:
0
1. Adding entries for Sec. 1.1471-4(f)(2)(ii)(B)(1),
(f)(2)(ii)(B)(1)(i) and (ii), (f)(2)(ii)(B)(2), and (j)(1) and (2).
0
2. Adding entries for Sec. 1.1471-5(f)(1)(iv), (f)(1)(iv)(A) and (B),
(j)(1), (2), and (3), (j)(3)(i), (j)(3)(i)(A) and (B), (j)(3)(ii)
through (vi), (j)(3)(vi)(A) and (B), (j)(3)(vii), (j)(4), (j)(4)(i)
through (iii), (j)(5) and (6), (k)(1) through (4), (k)(4)(i) through
(v).
0
3. Revising the entry for Sec. 1.1471-5(l).
0
4. Adding entries for Sec. 1.1471-5(l)(1) and (2), (l)(2)(i),
(l)(2)(i)(A) and (B), (l)(2)(ii) through (iv), (l)(3), (l)(3)(i) and
(ii), and (m).
0
5. Adding entries for Sec. 1.1472-1(f)(1) and (2), (f)(2)(i),
(f)(2)(i)(A) and (B), (f)(2)(ii) through (iv), (f)(3), (f)(3)(i) and
(ii), (f)(4), (g)(1) through (g)(4), and (g)(4)(i) through (iv).
The additions and revisions read as follows:
Sec. 1.1471-0 Outline of regulation provisions for sections 1471
through 1474.
* * * * *
Sec. 1.1471-4 FFI agreement.
* * * * *
(f) * * *
(2) * * *
(ii) * * *
(B) * * *
(1) Periodic certification.
(i) In general.
(ii) Late-joining electing FFIs.
(2) Preexisting account certification.
* * * * *
(j) * * *
(1) In general.
(2) Special applicability date.
Sec. 1.1471-5 Definitions applicable to section 1471.
* * * * *
(f) * * *
(1) * * *
(iv) IRS review of compliance by registered deemed-compliant
FFIs.
(A) General inquiries.
(B) Inquiries regarding substantial non-compliance.
* * * * *
(j) * * *
(1) In general.
(2) Compliance program.
(3) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification period ending on
December 31, 2017.
(ii) Late-joining sponsored FFIs.
(iii) Certification period.
(iv) Additional certifications or information.
(v) Certifications regarding sponsoring entity and sponsored FFI
requirements.
(vi) Certifications regarding internal controls.
(A) Certification of effective internal controls.
(B) Qualified certification.
(vii) Material failures defined.
(4) IRS review of compliance.
(i) General inquiries.
(ii) Inquiries regarding substantial non-compliance.
(iii) Compliance procedures for a sponsored FFI subject to a
Model 2 IGA.
(5) Preexisting account certification.
(6) Sponsorship agreement.
(k) * * *
(1) Defined.
(2) Notice of event of default.
(3) Remediation of event of default.
(4) Termination.
(i) In general.
(ii) Termination of sponsoring entity.
(iii) Termination of sponsored FFI.
(iv) Reconsideration of notice of default or notice of
termination.
(v) Sponsoring entity of sponsored FFIs subject to a Model 2
IGA.
(l) Trustee-documented trust verification.
(1) Compliance program.
(2) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification period ending on
December 31, 2017.
(ii) Late-joining trustee-documented trusts.
(iii) Certification period.
(iv) Certifications.
(3) IRS review of compliance by trustees of trustee-documented
trusts.
(i) General inquiries.
(ii) Inquiries regarding substantial non-compliance.
(m) Applicability date.
* * * * *
Sec. 1.1472-1 Withholding on NFFEs.
* * * * *
(f) * * *
(1) In general.
(2) Certification of compliance.
(i) Certification requirement.
(A) In general.
(B) Extension of time for the certification period ending on
December 31, 2017.
[[Page 10980]]
(ii) Late-joining sponsored direct reporting NFFEs.
(iii) Certification period.
(iv) Certifications.
(3) IRS review of compliance.
(i) General inquiries.
(ii) Inquiries regarding substantial non-compliance.
(4) Sponsorship agreement.
(g) * * *
(1) Defined.
(2) Notice of event of default.
(3) Remediation of event of default.
(4) Termination.
(i) In general.
(ii) Termination of sponsoring entity.
(iii) Termination of sponsored direct reporting NFFE.
(iv) Reconsideration of notice of default or notice of
termination.
* * * * *
0
Par. 3. Section 1.1471-1 is amended by revising paragraphs (b)(116) and
(121) and (c) to read as follows:
Sec. 1.1471-1 Scope of chapter 4 and definitions.
* * * * *
(b) * * *
(116) Responsible officer. The term responsible officer means, with
respect to a participating FFI, an officer of any participating FFI or
reporting Model 1 FFI in the participating FFI's expanded affiliated
group with sufficient authority to fulfill the duties of a responsible
officer described in Sec. 1.1471-4, which include the requirement to
periodically certify to the IRS regarding the FFI's compliance with its
FFI agreement. The term responsible officer means, in the case of a
registered deemed-compliant FFI, an officer of any deemed-compliant FFI
or participating FFI in the deemed-compliant FFI's expanded affiliated
group with sufficient authority to ensure that the FFI meets the
applicable requirements of Sec. 1.1471-5(f). The term responsible
officer means, with respect to a sponsoring entity, an officer of the
sponsoring entity or an officer of an entity that establishes and
maintains policies and procedures for, and has general oversight over,
the sponsoring entity, provided such officer has sufficient authority
to fulfill the duties of a responsible officer described in Sec.
1.1471-5(j) or Sec. 1.1472-1(f) (as applicable). If a participating
FFI elects to be part of a consolidated compliance program, the term
responsible officer means an officer of the compliance FI (as described
in Sec. 1.1471-4(f)) with sufficient authority to fulfill the duties
of a responsible officer described in Sec. 1.1471-4(f)(2) and (3) on
behalf of each FFI in the compliance group. In the case of an FI or
sponsoring entity that is an investment entity, for purposes of this
paragraph (b)(116), the responsible officer may be, in lieu of an
officer of the investment entity, an individual who is a director,
managing member, or general partner of the investment entity or, if the
general partner or managing member of the investment entity is itself
an entity, an individual who is an officer, director, managing member,
or general partner of such other entity.
* * * * *
(121) Sponsored FFI. The term sponsored FFI means any entity
described in Sec. 1.1471-5(f)(1)(i)(F) (describing sponsored
investment entities and sponsored controlled foreign corporations) or
Sec. 1.1471-5(f)(2)(iii) (describing sponsored, closely held
investment vehicles). The term sponsored FFI also means a sponsored
investment entity, a sponsored controlled foreign corporation, or a
sponsored, closely held investment vehicle treated as deemed-compliant
under an applicable Model 2 IGA.
* * * * *
(c) Applicability date. This section generally applies beginning on
January 6, 2017, except for paragraphs (b)(116) and (121) of this
section, which apply beginning on March 25, 2019. However, taxpayers
may apply these provisions as of January 28, 2013. (For the rules that
otherwise apply beginning on January 6, 2017, and before March 25,
2019, see this section as in effect and contained in 26 CFR part 1
revised April 1, 2018. For rules that otherwise apply beginning on
January 28, 2013, and before January 6, 2017, see this section as in
effect and contained in 26 CFR part 1 revised April 1, 2016.)
0
Par. 4. Section 1.1471-4 is amended by:
0
1. Revising paragraphs (f)(2)(ii)(A).
0
2. Adding paragraphs (f)(2)(ii)(B)(1) and (2).
0
3. Revising paragraphs (f)(3)(i), (g)(2), and (j)(1).
The revisions and additions read as follows:
Sec. 1.1471-4 FFI agreement.
* * * * *
(f) * * *
(2) * * *
(ii) * * * (A) In general. A participating FFI that is a member of
an expanded affiliated group that includes one or more FFIs may elect
to be part of a consolidated compliance program (and perform a
consolidated periodic review) under the authority of a participating
FFI, reporting Model 1 FFI, or U.S. financial institution (compliance
FI) that is a member of the electing FFI's expanded affiliated group,
regardless of whether all such members so elect. In addition, when an
FFI elects to be part of a consolidated compliance program, each branch
that it maintains (including a limited branch or a branch described in
Sec. 1.1471-5(f)(1)), other than a branch located in a Model 1 IGA
jurisdiction, must be subject to periodic review as part of such
program and included on the periodic certification (described in
paragraph (f)(2)(ii)(B)(1) of this section). To the extent that a
compliance FI satisfies the certification requirements of paragraph
(f)(2)(ii)(B) of this section on behalf of an electing FFI, such
electing FFI does not have a certification requirement under paragraph
(f)(3) of this section. See Sec. 1.1471-5(j) for the requirement of a
sponsoring entity to establish and implement a compliance program for
its sponsored FFIs.
(B) * * *
(1) Periodic certification--(i) In general. On or before July 1 of
the calendar year following the end of the certification period, the
responsible officer of the compliance FI must make the certification
described in either paragraph (f)(3)(ii) or (iii) of this section with
respect to all electing FFIs for which it acts during the certification
period on the form and in the manner prescribed by the IRS. The
certification must be made on behalf of all electing FFIs in the
compliance group during the certification period, except as otherwise
provided in paragraph (f)(2)(ii)(B)(1)(ii) of this section. The first
certification period for a compliance group begins on the later of the
date the compliance FI is issued a GIIN or June 30, 2014, and ends at
the close of the third full calendar year following such date. Each
subsequent certification period is the three-calendar-year period
following the previous certification period.
(ii) Late-joining electing FFIs. In general, with respect to a
certification period, a compliance FI is not required to make a
certification for an electing FFI that first elects to be part of the
consolidated compliance program of the compliance FI during the six-
month period before the end of the certification period, provided that
the compliance FI makes certifications for such electing FFI for
subsequent certification periods, and the first such certification
covers both the subsequent certification period and the portion of the
prior certification period of the compliance group during which such
FFI was an electing FFI in the consolidated compliance program of the
compliance FI. However, the preceding sentence does not apply to an
electing FFI that, immediately before the electing FFI elects to be
part of the consolidated compliance program, was a participating FFI or
registered deemed-compliant FFI. The compliance FI may certify for an
electing FFI described in the preceding sentence for
[[Page 10981]]
the portion of the certification period of the compliance group before
the date that the electing FFI elects to be part of the consolidated
compliance program if the compliance FI obtains from the FFI (or the
FFI's former compliance FI, if applicable) a written certification that
the FFI has complied with its applicable chapter 4 requirements during
such portion of the certification period, provided that: The compliance
FI does not know that such certification is unreliable or incorrect;
and the certification for the electing FFI for the subsequent
certification period covers both the subsequent certification period
and the portion of the prior certification period during which such FFI
was an electing FFI in the consolidated compliance program of the
compliance FI.
(2) Preexisting account certification. The responsible officer of a
compliance FI must make the certification described in paragraph (c)(7)
of this section (preexisting account certification of a participating
FFI) with respect to each electing FFI that elects to be part of the
consolidated compliance program under the compliance FI during the
certification period. However, a preexisting account certification is
not required for an electing FFI if immediately before electing to be
part of the consolidated compliance program under the compliance FI the
FFI was a participating FFI or a registered deemed-compliant FFI that
is a local FFI or restricted fund, and the FFI (or the FFI's former
compliance FI, if applicable) provides a written certification to the
compliance FI that the FFI has made the preexisting account
certification required under paragraph (c)(7) of this section or Sec.
1.1471-5(f)(1)(i)(A)(7) or (f)(1)(i)(D)(6) (as applicable), unless the
compliance FI knows that such written certification is unreliable or
incorrect. In addition, a preexisting account certification is not
required for an electing FFI that elects to be part of the consolidated
compliance program under the compliance FI during the two year period
before the end of the certification period, provided that the
compliance FI makes the preexisting account certification for such FFI
for the subsequent certification period. The certification required
under this paragraph (f)(2)(ii)(B)(2) for the certification period must
be submitted by the due date of the FFI's certification of compliance
required under paragraph (f)(2)(ii)(B)(1)(i) of this section for the
certification period, on the form and in the manner prescribed by the
IRS.
(3) * * *
(i) In general. In addition to the certifications required under
paragraph (c)(7) of this section, on or before July 1 of the calendar
year following the end of each certification period, the responsible
officer must make the certification described in either paragraph
(f)(3)(ii) or (iii) of this section on the form and in the manner
prescribed by the IRS. The first certification period begins on the
effective date of the FFI agreement and ends at the close of the third
full calendar year following the effective date of the FFI agreement.
Each subsequent certification period is the three-calendar-year period
following the previous certification period, unless the FFI agreement
provides for a different period. The responsible officer must either
certify that the participating FFI maintains effective internal
controls or, if the participating FFI has identified an event of
default (defined in paragraph (g) of this section) or a material
failure (defined in paragraph (f)(3)(iv) of this section) that it has
not corrected as of the date of the certification, must make the
qualified certification described in paragraph (f)(3)(iii) of this
section. The certification of compliance described in paragraph
(f)(3)(ii) or (iii) of this section may be modified through an
amendment to the FFI agreement to include any additional certifications
or information (such as quantitative or factual information related to
the FFI's compliance with the FFI agreement), provided that any
additional information or certifications are published at least 90 days
before being incorporated into the FFI agreement to allow for public
comment.
* * * * *
(g) * * *
(2) Notice of event of default. Following an event of default known
by or disclosed to the IRS, the IRS will deliver to the participating
FFI a notice of default specifying the event of default. The IRS will
request that the participating FFI remediate the event of default
within 45 days (unless additional time is requested and agreed to by
the IRS). The participating FFI must respond to the notice of default
and provide information responsive to an IRS request for information or
state the reasons why the participating FFI does not agree that an
event of default has occurred. Taking into account the terms of any
applicable Model 2 IGA, if the participating FFI does not provide a
response within the specified time period, the IRS may, at its sole
discretion, deliver a notice of termination that terminates the FFI's
participating FFI status. If the FFI's participating FFI status is
terminated, in addition to the requirements in Sec. 1.1471-
3(c)(6)(ii)(E)(2), the FFI must, within 30 days of the termination,
send notice of the termination to each withholding agent from which it
receives payments and each financial institution with which it holds an
account for which a withholding certificate or other documentation was
provided. An FFI that has had its participating FFI status terminated
may not reregister on the FATCA registration website as a participating
FFI or registered deemed-compliant FFI unless it receives written
approval from the IRS to register. A participating FFI may request,
within 90 days of a notice of default or notice of termination,
reconsideration of a notice of default or notice of termination by
written request to the IRS.
* * * * *
(j) * * * (1) In general. This section generally applies beginning
on January 6, 2017, except for paragraphs (f)(2)(ii)(A),
(f)(2)(ii)(B)(1) and (2), (f)(3)(i), and (g)(2) of this section, which
apply March 26, 2019. However, taxpayers may apply these provisions as
of January 28, 2013. (For the rules that otherwise apply beginning on
January 6, 2017, and before March 26, 2019, see this section as in
effect and contained in 26 CFR part 1 revised April 1, 2018. For rules
that apply beginning on January 23, 2013 and before January 6, 2017,
see this section as in effect and contained in 26 CFR part 1 revised
April 1, 2016.)
* * * * *
0
Par. 5. Section 1.1471-5 is amended by:
0
1. Revising paragraph (f)(1)(i)(F)(3)(vi).
0
2. Removing paragraph (f)(1)(i)(F)(3)(vii).
0
3. Redesignating paragraph (f)(1)(i)(F)(3)(viii) as paragraph
(f)(1)(i)(F)(3)(vii).
0
4. Revising paragraph (f)(1)(i)(F)(4).
0
5. Adding paragraph (f)(1)(iv).
0
6. Revising paragraph (f)(2)(iii)(D)(4).
0
7. Removing paragraph (f)(2)(iii)(D)(5).
0
8. Redesignating paragraph (f)(2)(iii)(D)(6) as paragraph
(f)(2)(iii)(D)(5).
0
9. Revising paragraph (f)(2)(iii)(E).
0
10. Revising paragraphs (j) and (k).
0
11. Redesignating paragraph (l) as paragraph (m).
0
12. Adding new paragraph (l).
0
13. Revising newly redesignated paragraph (m).
The revisions and additions read as follows:
Sec. 1.1471-5 Definitions applicable to section 1471.
* * * * *
[[Page 10982]]
(f) * * *
(1) * * *
(i) * * *
(F) * * *
(3) * * *
(vi) Complies with the verification procedures described in
paragraph (j) of this section; and
* * * * *
(4) The IRS may revoke a sponsoring entity's status with respect to
one or more sponsored FFIs based on the provisions of paragraphs
(k)(2), (3), and (4) of this section (describing notice of event of
default, remediation, and termination procedures) if there is an event
of default as defined in paragraph (k)(1) of this section.
* * * * *
(iv) IRS review of compliance by registered deemed-compliant FFIs--
(A) General inquiries. With respect to a registered deemed-compliant
FFI described in paragraph (f)(1)(i)(A), (C), or (D) of this section,
the IRS, based upon the information reporting forms described in Sec.
1.1471-4(d)(3)(v), (d)(5)(vii), or (d)(6)(iv) filed with the IRS for
each calendar year (if applicable), may request additional information
with respect to the information reported (or required to be reported)
on the forms, the account statements described in Sec. 1.1471-
4(d)(4)(v), or confirmation that the FFI has no reporting requirements
for the calendar year. The IRS may request additional information from
the FFI to determine the FFI's compliance with Sec. 1.1471-4 (if
applicable) and to assist the IRS with its review of account holder
compliance with tax reporting requirements. For IRS review of
compliance with respect to a registered deemed-compliant FFI described
in paragraph (f)(1)(i)(F) of this section (describing sponsored
investment entities and controlled foreign corporations), see paragraph
(j)(4) of this section.
(B) Inquiries regarding substantial non-compliance. With respect to
a registered deemed-compliant FFI described in paragraph (f)(1)(i)(A)
through (E) of this section, the IRS may determine in its discretion
that the FFI may not have substantially complied with the requirements
of the deemed-compliant status claimed by the FFI. This determination
is based on the information reporting forms described in Sec. 1.1471-
4(d)(3)(v), (d)(5)(vii), or (d)(6)(iv) filed with the IRS for each
calendar year (if applicable), the certifications made by the
responsible officer described in paragraph (f)(1)(ii)(B) of this
section (or the absence of such certifications), or any other
information related to the FFI's compliance with the requirements of
the deemed-compliant status claimed by the FFI. In such a case, the IRS
may request from the responsible officer (or designee) information
necessary to verify the FFI's compliance with the requirements for the
deemed-compliant status claimed by the FFI. For example, in the case of
a local FFI under paragraph (f)(1)(i)(A) of this section, the IRS may
request a description or copy of the FFI's policies and procedures for
identifying accounts held by specified U.S. persons not resident in the
jurisdiction in which the FFI is incorporated or organized, identifying
entities controlled or beneficially owned by such persons, and
identifying nonparticipating FFIs. The IRS may also request the
performance of specified review procedures by a person (including an
external auditor or third-party consultant) that the IRS identifies as
competent to perform such procedures given the facts and circumstances
surrounding the FFI's potential failure to comply with the requirements
of the deemed-compliant category claimed by the FFI. If the IRS
determines that the FFI has not complied with the requirements of the
deemed-compliant status claimed by the FFI, the IRS may terminate the
FFI's deemed-compliant status. If the FFI's deemed-compliant status is
terminated, the FFI must send notice of the termination to each
withholding agent from which it receives payments and each financial
institution with which it holds an account for which a withholding
certificate or other documentation was provided within 30 days after
the termination. An FFI that has had its deemed-compliant status
terminated may not reregister on the FATCA registration website as a
registered deemed-compliant FFI or register on the FATCA registration
website as a participating FFI unless it receives written approval from
the IRS. A registered deemed-compliant FFI may request, within 90 days
of a notice of termination, reconsideration of the notice of
termination by written request to the IRS.
(2) * * *
(iii) * * *
(D) * * *
(4) Complies with the verification procedures described in
paragraph (j) of this section; and
* * * * *
(E) The IRS may revoke a sponsoring entity's status as a sponsoring
entity with respect to one or more sponsored FFIs based on the
provisions of paragraphs (k)(2), (3), and (4) of this section
(describing notice of event of default, remediation, and termination
procedures) if there is an event of default as defined in paragraph
(k)(1) of this section. A sponsoring entity is not liable for any
failure to comply with the obligations contained in paragraph
(f)(2)(iii)(D) of this section unless the sponsoring entity is a
withholding agent that is separately liable for the failure to withhold
on or report with respect to a payment made by the sponsoring entity on
behalf of the sponsored FFI. A sponsored FFI will remain liable for any
failure of its sponsoring entity to comply with the obligations
contained in paragraph (f)(2)(iii)(D) of this section that the
sponsoring entity has agreed to undertake on behalf of the FFI, even if
the sponsoring entity is also a withholding agent and is itself
separately liable for the failure to withhold on or report with respect
to a payment made by the sponsoring entity on behalf of the sponsored
FFI. The same tax, interest, or penalties, however, shall not be
collected more than once.
* * * * *
(j) Sponsoring entity verification--(1) In general. This paragraph
(j) describes the requirements for a sponsoring entity of a sponsored
FFI to establish and implement a compliance program for satisfying its
requirements as a sponsoring entity and to provide a certification of
compliance with its requirements. This paragraph (j) also describes the
procedures for the IRS to review the sponsoring entity's compliance
with respect to each sponsored FFI for purposes of satisfying the
requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of this section
or an applicable Model 2 IGA. For purposes of a sponsoring entity's
certification of compliance under this paragraph (j), a sponsoring
entity must have in place a written sponsorship agreement described in
paragraph (j)(6) of this section with each sponsored FFI. See paragraph
(j)(3)(v)(B) of this section for the certification regarding a
sponsoring entity's sponsorship agreement with each sponsored FFI.
(2) Compliance program. The sponsoring entity must appoint a
responsible officer to oversee the compliance of the sponsoring entity
with respect to each sponsored FFI for purposes of satisfying the
requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of this section
or an applicable Model 2 IGA. The responsible officer must (either
personally or through designated persons) establish a compliance
program that includes policies, procedures, and processes sufficient
for the sponsoring entity to satisfy the
[[Page 10983]]
requirements described in the preceding sentence. The responsible
officer (or designee) must periodically review the sufficiency of the
sponsoring entity's compliance program, the sponsoring entity's
compliance with respect to each sponsored FFI for purposes of
satisfying the requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2 IGA, and the compliance of each
sponsored FFI with the due diligence, withholding, and reporting
requirements of Sec. 1.1471-4 or an applicable Model 2 IGA during the
certification period described in paragraph (j)(3)(iii) of this
section. The results of the periodic review must be considered by the
responsible officer in making the periodic certifications described in
paragraph (j)(3) of this section.
(3) Certification of compliance--(i) Certification requirement--(A)
In general. In addition to the certification required under paragraph
(j)(5) of this section (preexisting account certification), and except
as otherwise provided in paragraph (j)(3)(i)(B) or (j)(3)(ii) of this
section, on or before July 1 of the calendar year following the
certification period, the responsible officer of the sponsoring entity
must make the certification described in paragraph (j)(3)(v) of this
section and either the certification described in paragraph
(j)(3)(vi)(A) of this section or the certification described in
paragraph (j)(3)(vi)(B) of this section with respect to all sponsored
FFIs for which the sponsoring entity acts during the certification
period on the form and in the manner prescribed by the IRS. To the
extent that a sponsoring entity satisfies the certification
requirements of paragraph (j)(3) of this section on behalf of a
sponsored FFI, the sponsored FFI does not have a certification
requirement under paragraph (f)(1)(ii)(B) of this section.
(B) Extension of time for the certification period ending on
December 31, 2017. The certifications required for a certification
period ending on December 31, 2017, must be submitted on or before
March 31, 2019.
(ii) Late-joining sponsored FFIs. In general, with respect to a
certification period, a sponsoring entity is not required to make a
certification for a sponsored FFI that first agrees to be sponsored by
the sponsoring entity during the six-month period before the end of the
sponsoring entity's certification period, provided that the sponsoring
entity makes certifications for such sponsored FFI for subsequent
certification periods and the first such certification covers both the
subsequent certification period and the portion of the prior
certification period of the sponsoring entity during which such FFI was
sponsored by the sponsoring entity. However, the preceding sentence
does not apply to a sponsored FFI that, immediately before the FFI
agrees to be sponsored by the sponsoring entity, was a participating
FFI, registered deemed-compliant FFI, or sponsored, closely held
investment vehicle of another sponsoring entity. The sponsoring entity
may certify for a sponsored FFI described in the preceding sentence for
the portion of the certification period of the sponsoring entity before
the date that the FFI first agrees to be sponsored by the sponsoring
entity if the sponsoring entity obtains from the FFI (or the FFI's
sponsoring entity, if applicable) a written certification that the FFI
has complied with its applicable chapter 4 requirements during such
portion of the certification period, provided that: the sponsoring
entity does not know that such certification is unreliable or
incorrect; and the certification for the sponsored FFI for the
subsequent certification period covers both the subsequent
certification period and the portion of the prior certification period
during which such FFI was sponsored by the sponsoring entity.
(iii) Certification period. The first certification period of a
sponsoring entity begins on the later of the date the sponsoring entity
is issued a GIIN to act as a sponsoring entity or June 30, 2014, and
ends at the close of the third full calendar year following such date.
Each subsequent certification period is the three-calendar-year period
following the previous certification period.
(iv) Additional certifications or information. The certification of
compliance described in paragraph (j)(3) of this section may be
modified to include additional certifications or information (such as
quantitative or factual information related to the sponsoring entity's
compliance with respect to each sponsored FFI for purposes of
satisfying the requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2 IGA), provided that such
additional information or certifications are published at least 90 days
before being made effective in order to allow for public comment.
(v) Certifications regarding sponsoring entity and sponsored FFI
requirements. The responsible officer of the sponsoring entity must
certify to the following statements--
(A) The sponsoring entity meets all of the requirements of a
sponsoring entity as described in paragraph (f)(1)(i)(F)(3) or
(f)(2)(iii)(D) of this section or an applicable Model 2 IGA, including
the chapter 4 status required of such entity;
(B) The sponsoring entity has a written sponsorship agreement in
effect with each sponsored FFI authorizing the sponsoring entity to
fulfill the requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of
this section or an applicable Model 2 IGA with respect to each
sponsored FFI; and
(C) Each sponsored FFI treated as a sponsored investment entity, a
sponsored controlled foreign corporation, or a sponsored, closely held
investment vehicle by the sponsoring entity meets the requirements of
its respective status.
(vi) Certifications regarding internal controls--(A) Certification
of effective internal controls. The responsible officer of the
sponsoring entity must certify to the following statements--
(1) The responsible officer of the sponsoring entity has
established a compliance program that is in effect as of the date of
the certification and that has been subject to the review as described
in paragraph (j)(2) of this section;
(2) With respect to material failures (defined in paragraph
(j)(3)(vii) of this section)--
(i) There are no material failures for the certification period; or
(ii) If there were any material failures, appropriate actions were
taken to remediate such failures and to prevent such failures from
reoccurring; and
(3) With respect to any failure to withhold, deposit, or report to
the extent required under Sec. 1.1471-4 or an applicable Model 2 IGA
with respect to any sponsored FFI for any year during the certification
period, the sponsored FFI has corrected such failure by paying (or
directing the sponsoring entity to pay) any taxes due (including
interest and penalties) and filing (or directing the sponsoring entity
to file) the appropriate return (or amended return).
(B) Qualified certification. If the responsible officer of the
sponsoring entity has identified an event of default (defined in
paragraph (k)(1) of this section) or a material failure (defined in
paragraph (j)(3)(vii) of this section) that the sponsoring entity has
not corrected as of the date of the certification, the responsible
officer must certify to the following statements--
(1) The responsible officer of the sponsoring entity has
established a compliance program that is in effect as of the date of
the certification and that has been subjected to the review as
described in paragraph (j)(2) of this section;
(2) With respect to the event of default or material failure--
[[Page 10984]]
(i) The responsible officer (or designee) has identified an event
of default; or
(ii) The responsible officer has determined that there are one or
more material failures as defined in paragraph (j)(3)(vii) of this
section and that appropriate actions will be taken to prevent such
failures from reoccurring;
(3) With respect to any failure to withhold, deposit, or report to
the extent required under Sec. 1.1471-4 or an applicable Model 2 IGA
with respect to any sponsored FFI for any year during the certification
period, the sponsored FFI will correct such failure by paying (or
directing the sponsoring entity to pay) any taxes due (including
interest and penalties) and filing (or directing the sponsoring entity
to file) the appropriate return (or amended return); and
(4) The responsible officer (or designee) will respond to any
notice of default under paragraph (k)(2) of this section or will
provide to the IRS a description of each material failure and a written
plan to correct each such failure when requested under paragraph (j)(4)
of this section.
(vii) Material failures defined. A material failure is a failure of
the sponsoring entity with respect to each sponsored FFI to satisfy the
requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of this section
or an applicable Model 2 IGA if the failure was the result of a
deliberate action on the part of one or more employees of the
sponsoring entity or was an error attributable to a failure of the
sponsoring entity to implement internal controls sufficient for the
sponsoring entity to meet its requirements. A material failure will not
constitute an event of default unless such material failure occurs in
more than limited circumstances when a sponsoring entity has not
substantially complied with the requirements described in the preceding
sentence. Material failures include the following--
(A) With respect to any sponsored FFI, the deliberate or systematic
failure of the sponsoring entity to report accounts that such sponsored
FFI was required to treat as U.S. accounts, withhold on passthru
payments to the extent required, deposit taxes withheld to the extent
required, accurately report recalcitrant account holders (or non-
consenting U.S. accounts under an applicable Model 2 IGA), or
accurately report with respect to nonparticipating FFIs as required
under Sec. 1.1471-4(d)(2)(ii)(F) or an applicable Model 2 IGA;
(B) A criminal or civil penalty or sanction imposed on the
sponsoring entity or any sponsored FFI (or any branch or office of the
sponsoring entity or any sponsored FFI) by a regulator or other
governmental authority or agency with oversight over the sponsoring
entity's or sponsored FFI's compliance with the AML due diligence
procedures to which it (or any branch or office thereof) is subject and
that is imposed based on a failure to properly identify account holders
under the requirements of those procedures;
(C) A potential future tax liability of any sponsored FFI related
to its compliance (or lack thereof) with the due diligence,
withholding, and reporting requirements of Sec. 1.1471-4 or an
applicable Model 2 IGA for which such sponsored FFI has established,
for financial statement purposes, a tax reserve or provision;
(D) A potential contractual liability under the agreement described
in paragraph (j)(3)(v)(B) of this section of the sponsoring entity to
any sponsored FFI related to such sponsoring entity's compliance (or
lack thereof) with paragraph (f)(1)(i)(F) or (f)(2)(iii) of this
section or an applicable Model 2 IGA for which the sponsoring entity
has established, for financial statement purposes, a reserve or
provision; and
(E) Failure to register with the IRS as a sponsoring entity or to
register each sponsored FFI required to be registered under paragraph
(f)(1)(i)(F)(3)(iii) of this section or an applicable Model 2 IGA.
(4) IRS review of compliance--(i) General inquiries. The IRS, based
upon the information reporting forms described in Sec. 1.1471-
4(d)(3)(v), (d)(5)(vii), or (d)(6)(iv) filed with the IRS (or the
absence of such reporting) by the sponsoring entity for each calendar
year with respect to any sponsoring FFI, may request additional
information with respect to the information reported (or required to be
reported) on the forms, the account statements described in Sec.
1.1471-4(d)(4)(v) with respect to one or more sponsored FFIs, or
confirmation that the FFI has no reporting requirements. The IRS may
also request any additional information from the sponsoring entity
(including a copy of each sponsorship agreement the sponsoring entity
has entered into with each sponsored FFI) necessary to determine the
compliance with the due diligence, withholding, and reporting
requirements of Sec. 1.1471-4 or an applicable Model 2 IGA with
respect to each sponsored FFI and to assist the IRS with its review of
account holder compliance with tax reporting requirements.
(ii) Inquiries regarding substantial non-compliance. The IRS may
determine in its discretion that a sponsoring entity may not have
substantially complied with the requirements of paragraph (f)(1)(i)(F)
or (f)(2)(iii) of this section or an applicable Model 2 IGA with
respect to any sponsored FFI. This determination is based on the
information reporting forms described in Sec. 1.1471-4(d)(3)(v),
(d)(5)(vii), or (d)(6)(iv) filed with the IRS by the sponsoring entity
for each calendar year with respect to any sponsored FFI (or the
absence of reporting), the certifications made by the responsible
officer described in paragraphs (j)(3) and (5) of this section (or the
absence of such certifications), or any other information related to
the sponsoring entity's compliance with respect to any sponsored FFI
for purposes of satisfying the requirements of paragraph (f)(1)(i)(F)
or (f)(2)(iii) of this section or an applicable Model 2 IGA. In such a
case, the IRS may request from the responsible officer (or designee)
information necessary to verify the sponsoring entity's compliance with
such requirements. The IRS may request, for example, a description or
copy of the sponsoring entity's policies and procedures for fulfilling
the requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of this
section or an applicable Model 2 IGA, a description or copy of the
sponsoring entity's procedures for conducting its periodic review, or a
copy of any written reports documenting the findings of such review.
The IRS may also request the performance of specified review procedures
by a person (including an external auditor or third-party consultant)
that the IRS identifies as competent to perform such procedures given
the facts and circumstances surrounding the sponsoring entity's
potential failure to comply with respect to each sponsored FFI with the
requirements of paragraph (f)(1)(i)(F) or (f)(2)(iii) of this section
or an applicable Model 2 IGA.
(iii) Compliance procedures for a sponsored FFI subject to a Model
2 IGA. In the case of a sponsored FFI subject to the requirements of an
applicable Model 2 IGA, the procedures described in paragraph (j)(4) of
this section apply, except as otherwise provided in the applicable
Model 2 IGA.
(5) Preexisting account certification. The responsible officer of a
sponsoring entity must make the certification described in Sec.
1.1471-4(c)(7) (preexisting account certification of a participating
FFI) with respect to each sponsored FFI that enters into the
sponsorship agreement with the sponsoring entity during the
certification period (as defined in paragraph (j)(3)(iii) of this
section).
[[Page 10985]]
However, the preexisting account certification is not required for a
sponsored FFI that, immediately before the FFI first agrees to be
sponsored by the sponsoring entity, was a participating FFI, a
sponsored FFI of another sponsoring entity, or a registered deemed-
compliant FFI that is a local FFI or a restricted fund, if the FFI (or
the FFI's former sponsoring entity, if applicable) provides a written
certification to the sponsoring entity that the FFI has made the
preexisting account certification required under Sec. 1.1471-4(c)(7)
or paragraph (f)(1)(i)(A)(7) or (f)(1)(i)(D)(6) of this section (as
applicable), unless the sponsoring entity knows that such written
certification is unreliable or incorrect. In addition, the preexisting
account certification is not required for a sponsored FFI that enters
into the sponsorship agreement with the sponsoring entity during the
two year period before the end of the sponsoring entity's certification
period, provided that the sponsoring entity makes the preexisting
account certification for such FFI for the subsequent certification
period. The certification described in this paragraph (j)(5) for the
certification period must be submitted by the due date of the
sponsoring entity's certification of compliance required under
paragraph (j)(3)(i) of this section for the certification period (or
the extended due date described in paragraph (j)(3)(i)(B) of this
section for the certification period ending on December 31, 2017), on
the form and in the manner prescribed by the IRS. With respect to a
sponsored FFI for which the sponsoring entity makes a preexisting
account certification, a preexisting obligation means any account,
instrument, or contract (including any debt or equity interest)
maintained, executed, or issued by the sponsored FFI that is
outstanding on the earlier of the date the FFI is issued a GIIN as a
sponsored FFI or the date the FFI first agrees to be sponsored by the
sponsoring entity.
(6) Sponsorship agreement. A sponsoring entity must have a written
sponsorship agreement (which may be part of another agreement between
the sponsoring entity and the sponsored FFI) that refers to the
requirements of a sponsored FFI under FATCA and that must be in place
with each sponsored FFI for which the sponsoring entity acts by the
later of March 31, 2019, or the date that the sponsoring entity begins
acting as a sponsoring entity for the applicable sponsored FFI.
(k) Sponsoring entity event of default--(1) Defined. An event of
default with regard to a sponsoring entity occurs if the sponsoring
entity fails to perform material obligations required with respect to
the due diligence, withholding, and reporting requirements of Sec.
1.1471-4 or an applicable Model 2 IGA with respect to any sponsored
FFI, to establish or maintain a compliance program as described in
paragraph (j)(2) of this section, or to perform a periodic review
described in paragraph (j)(2) of this section. An event of default also
includes the occurrence of any of the following--
(i) With respect to any sponsored FFI, failure to obtain, in any
case in which foreign law would (but for a waiver) prevent the
reporting of U.S. accounts required under Sec. 1.1471-4(d), valid and
effective waivers from holders of U.S. accounts or failure to otherwise
close or transfer such U.S. accounts as required under Sec. 1.1471-
4(i);
(ii) With respect to any sponsored FFI, failure to significantly
reduce, over a period of time, the number of account holders or payees
that such sponsored FFI is required to treat as recalcitrant account
holders or nonparticipating FFIs, as a result of the sponsoring entity
failing to comply with the due diligence procedures set forth in Sec.
1.1471-4(c);
(iii) With respect to any sponsored FFI, failure to fulfill the
requirements of Sec. 1.1471-4(i) in any case in which foreign law
prevents or otherwise limits withholding under Sec. 1.1471-4(b);
(iv) Failure to take timely corrective actions to remedy a material
failure described in paragraph (j)(3)(vii) of this section after making
a qualified certification described in paragraph (j)(3)(vi)(B) of this
section;
(v) Failure to make the preexisting account certification required
under paragraph (j)(5) of this section or the periodic certification
required under paragraph (j)(3) of this section with respect to any
sponsored FFI within the specified time period;
(vi) Making incorrect claims for refund on behalf of any sponsored
FFI;
(vii) Failure to cooperate with an IRS request for additional
information under paragraph (j)(4) of this section;
(viii) Making any fraudulent statement or misrepresentation of
material fact to the IRS or representing to a withholding agent or the
IRS its status as a sponsoring entity for an entity other than an
entity for which it acts as a sponsoring entity;
(ix) The sponsoring entity is no longer authorized to perform the
requirements of a sponsoring entity with respect to one or more
sponsored FFIs; or
(x) Failure to have the written sponsorship agreement described in
paragraph (j)(3)(v)(B) of this section in effect with each sponsored
FFI.
(2) Notice of event of default. Following an event of default known
by or disclosed by the sponsoring entity to the IRS, the IRS will
deliver to the sponsoring entity a notice of default specifying the
event of default and, if applicable, identifying each sponsored FFI to
which the notice relates. The IRS will request that the sponsoring
entity remediate the event of default within 45 days (unless additional
time is requested and agreed to by the IRS). The sponsoring entity must
respond to the notice of default and provide information responsive to
an IRS request for information or state the reasons why the sponsoring
entity does not agree that an event of default has occurred.
(3) Remediation of event of default. A sponsoring entity will be
permitted to remediate an event of default to the extent that it agrees
with the IRS on a remediation plan. Such a plan may, for example, allow
a sponsoring entity to remediate an event of default described in
paragraph (k)(1) of this section with respect to a sponsored FFI by
providing specific information regarding the U.S. accounts maintained
by such sponsored FFI when the sponsoring entity has been unable to
report all of the information with respect to such accounts as required
under Sec. 1.1471-4(d) and has been unable to close or transfer such
accounts. The IRS may, as part of a remediation plan, require
additional information from the sponsoring entity or the performance of
the specified review procedures described in paragraph (j)(4)(ii) of
this section.
(4) Termination--(i) In general. If the sponsoring entity does not
provide a response to a notice of default within the period specified
in paragraph (k)(2) of this section or does not remediate the event of
default as described in paragraph (k)(3) of this section, the IRS may
deliver a notice of termination that terminates the sponsoring entity's
status, the status of one or more sponsored FFIs as deemed-compliant
FFIs, or the status of both the sponsoring entity and one or more
sponsored FFIs.
(ii) Termination of sponsoring entity. If the IRS terminates the
status of the sponsoring entity, the sponsoring entity must send notice
of the termination within 30 days after the date of termination to each
sponsored FFI for which it acts, as well as to each withholding agent
from which each sponsored FFI receives payments and each financial
institution with which each sponsored FFI holds an account for which a
withholding certificate or other
[[Page 10986]]
documentation was provided. A sponsoring entity that has had its status
terminated cannot register on the FATCA registration website to act as
a sponsoring entity for any sponsored FFI or for any entity that is a
sponsored entity under a Model 1 IGA unless it receives written
approval from the IRS to register. Unless the status of a sponsored FFI
has been terminated, the sponsored FFI may register on the FATCA
registration website as a participating FFI or registered deemed-
compliant FFI (as applicable). However, a sponsored FFI whose
sponsoring entity has been terminated may not register or represent its
status as a sponsored FFI of a sponsoring entity that has a
relationship described in section 267(b) or 707(b) with the sponsoring
entity that was terminated without receiving written approval from the
IRS.
(iii) Termination of sponsored FFI. If the IRS notifies the
sponsoring entity that the status of a sponsored FFI is terminated (but
not the sponsoring entity's status), the sponsoring entity must remove
the sponsored FFI from the sponsoring entity's registration account on
the FATCA registration website and send notice of the termination
within 30 days after the date of termination to each withholding agent
from which the sponsored FFI receives payments and each financial
institution with which it holds an account for which a withholding
certificate or other documentation was provided with respect to such
sponsored FFI. A sponsored FFI that has had its status as a sponsored
FFI terminated (independent from a termination of status of its
sponsoring entity) may not register on the FATCA registration website
as a participating FFI or registered deemed-compliant FFI unless it
receives written approval from the IRS.
(iv) Reconsideration of notice of default or notice of termination.
A sponsoring entity or sponsored FFI may request, within 90 days of a
notice of default or notice of termination, reconsideration of the
notice of default or notice of termination by written request to the
IRS.
(v) Sponsoring entity of sponsored FFIs subject to a Model 2 IGA.
Subject to the provisions of an applicable Model 2 IGA, the IRS may
revoke the status of a sponsoring entity with respect to one or more
sponsored FFIs subject to a Model 2 IGA based on the provisions of
paragraphs (k)(2), (3), and (4) of this section (describing notice of
event of default and termination procedures) if there is an event of
default as defined in paragraph (k)(1) of this section.
(l) Trustee-documented trust verification--(1) Compliance program.
A trustee of a trust treated as a trustee-documented trust under an
applicable Model 2 IGA must establish and implement a compliance
program for purposes of satisfying the requirements of an applicable
Model 2 IGA with respect to each such trust. The trustee must appoint a
responsible officer who must (either personally or through designated
persons) establish policies, procedures, and processes sufficient for
the trustee to implement the compliance program. The responsible
officer (or designee) must periodically review the sufficiency of the
trustee's compliance program and the trustee's compliance with respect
to each trust for purposes of satisfying the requirements of an
applicable Model 2 IGA for each certification period described in
paragraph (l)(2) of this section. The results of the periodic review
must be considered by the responsible officer in making the
certification described in paragraph (l)(2) of this section.
(2) Certification of compliance--(i) Certification requirement--(A)
In general. Except as otherwise provided in paragraph (I)(2)(i)(B) or
(I)(2)(ii) of this section, on or before July 1 of the calendar year
following the end of the certification period, the responsible officer
of the trustee must make a certification for the certification period
with respect to all trustee-documented trusts described in paragraph
(l)(1) of this section on the form and in the manner prescribed by the
IRS.
(B) Extension of time for the certification period ending on
December 31, 2017. The certifications required for a certification
period ending on December 31, 2017, must be submitted on or before
March 31, 2019.
(ii) Late-joining trustee-documented trusts. In general, with
respect to a certification period, the responsible officer of a trustee
is not required to make a certification for a trustee-documented trust
for which the trustee first agreed to act as the trustee under Annex II
of an applicable IGA during the six-month period before the end of the
trustee's certification period, provided that the responsible officer
of the trustee makes certifications for such trustee-documented trust
for subsequent certification periods and the first such certification
covers both the subsequent certification period and the portion of the
prior certification period of the trustee during which the trustee
acted as the trustee of the trustee-documented trust. However, the
preceding sentence does not apply to a trustee-documented trust that,
immediately before the trustee first agrees to act as the trustee under
Annex II of an applicable IGA, was a trustee-documented trust of
another trustee. The trustee of a trustee-documented trust may certify
for a trustee-documented trust described in the preceding sentence for
the portion of the certification period of the trustee before the date
that the trustee first agrees to act as the trustee under Annex II of
an applicable IGA if the trustee obtains from the trustee-documented
trust (or the trust's former trustee, if applicable) a written
certification that the trust has complied with its applicable chapter 4
requirements during such portion of the certification period, provided
that: The trustee does not know that such certification is unreliable
or incorrect; and the certification for the trustee-documented trust
for the subsequent certification period covers both the subsequent
certification period and the portion of the prior certification period
during which the trustee acts as the trustee under Annex II of an
applicable IGA.
(iii) Certification period. The first certification period of the
trustee begins on the later of the date the trustee is issued a GIIN to
act as a trustee of a trustee-documented trust or June 30, 2014, and
ends at the close of the third full calendar year following such date.
Each subsequent certification period is the three-calendar-year period
following the previous certification period.
(iv) Certifications. The responsible officer of the trustee must
certify to the following statements--
(A) The responsible officer of the trustee has established a
compliance program that is in effect as of the date of the
certification and has performed a periodic review described in
paragraph (l)(1) of this section for the certification period; and
(B) The trustee has reported to the IRS on Form 8966, ``FATCA
Report'' (or such other form as the IRS may prescribe), all of the
information required to be reported pursuant to the applicable Model 2
IGA with respect to all U.S. accounts of each trustee-documented trust
for which the trustee acts during the certification period by the due
date of Form 8966 (including extensions) for each year.
(3) IRS review of compliance by trustees of trustee-documented
trusts--(i) General inquiries. Based upon the information reporting
forms filed with the IRS (or the absence of such reporting) by a
trustee with respect to any trustee-documented trust subject to a Model
2 IGA for each calendar year, and subject to the requirements of an
applicable Model 2 IGA, the IRS may request from the trustee additional
information with respect to the
[[Page 10987]]
information reported on the forms with respect to any trustee-
documented trust or a confirmation that the trustee has no reporting
requirements with respect to any trustee-documented trust. The IRS may
also request any additional information to determine the trustee's
compliance for purposes of satisfying the trust's requirements as a
trustee-documented trust under an applicable Model 2 IGA or to assist
the IRS with its review of account holder compliance with tax reporting
requirements.
(ii) Inquiries regarding substantial non-compliance. The IRS may
determine in its discretion that the trustee may not have substantially
complied with the requirements applicable to a trustee of a trustee-
documented trust. This determination is based on the information
reporting forms filed with the IRS by a trustee with respect to any
trustee-documented trust subject to a Model 2 IGA for each calendar
year (or the absence of such reporting), the certification described in
paragraph (l)(2) of this section (or the absence of such
certification), or any other information related to the trustee's
compliance with respect to any trustee-documented trust for purposes of
satisfying the trust's applicable Model 2 IGA requirements. In such a
case, the IRS may request from the responsible officer information
necessary to verify the trustee's compliance with such requirements.
The IRS may also request the performance of specified review procedures
by a person (including an external auditor or third-party consultant)
that the IRS identifies as competent to perform such procedures given
the circumstances surrounding the trustee's potential failure to comply
with the requirements of an applicable Model 2 IGA with respect to one
or more trustee-documented trusts. The IRS may notify the applicable
Model 2 IGA jurisdiction that the trustee has not complied with its
requirements as a trustee of one or more trustee-documented trusts.
(m) Applicability date. This section generally applies beginning on
January 6, 2017, except for paragraphs (f)(1)(i)(F)(3)(vi),
(f)(1)(i)(F)(4), (f)(1)(iv), (f)(2)(iii)(D)(4), (f)(2)(iii)(E), (j),
(k), and (l) of this section, which apply March 26, 2019. However,
taxpayers may apply these provisions as of January 28, 2013. (For the
rules that otherwise apply beginning on January 6, 2017, and before
March 26, 2019, see this section as in effect and contained in 26 CFR
part 1 revised April 1, 2018. For the rules that otherwise apply
beginning on January 28, 2013, and before January 6, 2017, see this
section as in effect and contained in 26 CFR part 1 revised April 1,
2016.)
0
Par. 6. Section 1.1472-1 is amended by revising paragraphs (c)(5)(iii),
(f), (g), and (h) to read as follows:
Sec. 1.1472-1 Withholding on NFFEs.
* * * * *
(c) * * *
(5) * * *
(iii) Revocation of status as sponsoring entity. The IRS may revoke
a sponsoring entity's status as a sponsoring entity with respect to all
sponsored direct reporting NFFEs if there is an event of default as
defined in paragraph (g) of this section with respect to any sponsored
direct reporting NFFE.
* * * * *
(f) Sponsoring entity verification--(1) In general. This paragraph
(f) describes the requirements for a sponsoring entity to provide a
certification of compliance with respect to each sponsored direct
reporting NFFE for purposes of satisfying the requirements of paragraph
(c)(5) of this section and defines the certification period for such
certifications. This paragraph (f) also describes the procedures for
the IRS to review the sponsoring entity's compliance with such
requirements during the certification period. Finally, this paragraph
(f) describes the requirement that a sponsoring entity have in place a
written sponsorship agreement with each sponsored direct reporting NFFE
for which it acts and specifies the terms of such agreement. See
paragraph (g)(1)(i) of this section, describing an event of default for
a sponsoring entity that does not have a sponsorship agreement with
each sponsored direct reporting NFFE for which it acts as a sponsoring
entity. References in this paragraph (f) or paragraph (g) of this
section to a sponsored direct reporting NFFE mean a sponsored direct
reporting NFFE for which the sponsoring entity acts as a sponsoring
entity under paragraph (c)(5)(ii) of this section.
(2) Certification of compliance--(i) Certification requirement--(A)
In general. The sponsoring entity must appoint a responsible officer to
oversee the sponsoring entity's compliance with respect to each
sponsored direct reporting NFFE for purposes of satisfying the
requirements of paragraph (c)(5) of this section. Except as otherwise
provided in paragraph (f)(2)(i)(B) or (f)(2)(ii) of this section, on or
before July 1 of the calendar year following the certification period,
the responsible officer of the sponsoring entity must make a
certification for the certification period with respect to all
sponsored direct reporting NFFEs for which the sponsoring entity acts
during the certification period on the form and in the manner
prescribed by the IRS. To the extent that a sponsoring entity satisfies
the certification requirements of paragraph (f)(2) of this section on
behalf of a sponsored direct reporting NFFE, the NFFE does not have a
certification requirement under paragraph (c)(3)(vi) of this section.
(B) Extension of time for the certification period ending on
December 31, 2017. The certifications required for a certification
period ending on December 31, 2017, must be submitted on or before
March 31, 2019.
(ii) Late-joining sponsored direct reporting NFFEs. In general,
with respect to a certification period, a sponsoring entity is not
required to make a certification for a sponsored direct reporting NFFE
that first agrees to be sponsored by the sponsoring entity during the
six-month period before the end of the sponsoring entity's
certification period, provided that the sponsoring entity makes
certifications for such sponsored direct reporting NFFE for subsequent
certification periods, and the first such certification covers both the
subsequent certification period and the portion of the prior
certification period of the sponsoring entity during which the
sponsored direct reporting NFFE was sponsored by the sponsoring entity.
However, the preceding sentence does not apply to a sponsored direct
reporting NFFE that, immediately before the NFFE agrees to be sponsored
by the sponsoring entity, was a direct reporting NFFE or sponsored
direct reporting NFFE of another sponsoring entity. The sponsoring
entity may certify for a sponsored direct reporting NFFE described in
the preceding sentence for the portion of the certification period of
the sponsoring entity before the date that the NFFE first agrees to be
sponsored by the sponsoring entity if the sponsoring entity obtains
from the NFFE (or the NFFE's sponsoring entity, if applicable) a
written certification that the NFFE has complied with its applicable
chapter 4 requirements during such portion of the certification period,
provided that: The sponsoring entity does not know that such
certification is unreliable or incorrect; and the certification for the
sponsored direct reporting NFFE for the subsequent certification period
covers both the subsequent certification period and the portion of the
prior certification period during which such NFFE was sponsored by the
sponsoring entity.
[[Page 10988]]
(iii) Certification period. The first certification period of a
sponsoring entity begins on the later of the date the sponsoring entity
is issued a GIIN to act as a sponsoring entity or June 30, 2014, and
ends at the close of the third full calendar year after such date. Each
subsequent certification period is the three-calendar-year period
following the close of the previous certification period.
(iv) Certifications. The certification will require the responsible
officer of the sponsoring entity to certify to the following
statements--
(A) The sponsoring entity meets all of the requirements of a
sponsoring entity described in paragraph (c)(5)(ii) of this section;
(B) The sponsoring entity has the written sponsorship agreement
described in paragraph (f)(4) of this section in effect with each
sponsored direct reporting NFFE;
(C) There were no events of default (as defined in paragraph (g) of
this section) with respect to the sponsoring entity, or, to the extent
there were any such events of default, appropriate measures were taken
by the sponsoring entity to remediate and prevent such events from
reoccurring; and
(D) With respect to any failure to report to the extent required
under paragraph (c)(3)(ii) of this section with respect to one or more
sponsored direct reporting NFFEs, the sponsoring entity has corrected
such failure by filing the appropriate information returns.
(3) IRS review of compliance--(i) General inquiries. The IRS, based
upon the information reporting forms described in paragraph (c)(3)(ii)
of this section filed with the IRS (or the absence of such reporting)
by the sponsoring entity for each calendar year with respect to any
sponsored direct reporting NFFE, may request additional information
with respect to the information reported (or required to be reported)
on the forms about any substantial U.S. owner reported on the form or
the records for each direct reporting NFFE described in paragraph
(c)(3)(iv) of this section. The IRS may also request any additional
information from the sponsoring entity (including a copy of each
sponsorship agreement the sponsoring entity has entered into with each
sponsored FFI) to determine its compliance with paragraph (f) of this
section with respect to each sponsored direct reporting NFFE and to
assist the IRS with its review of any substantial U.S. owners'
compliance with tax reporting requirements.
(ii) Inquiries regarding substantial non-compliance. The IRS may
determine in its discretion that a sponsoring entity may not have
substantially complied with the requirements of a sponsoring entity
with respect to each sponsored direct reporting NFFE for purposes of
satisfying the requirements of paragraph (c)(5) of this section. This
determination is based on the information reporting forms referenced in
paragraph (c)(3)(ii) of this section filed with the IRS by the
sponsoring entity for each calendar year with respect to any sponsored
direct reporting NFFE (or the absence of such reporting), the
certification made by the responsible officer described in paragraph
(f)(2) of this section (or the absence of such certification), or any
other information related to the sponsoring entity's compliance with
the requirements of a sponsoring entity with respect to each sponsored
direct reporting NFFE for purposes of satisfying the requirements of
paragraph (c)(5) of this section. In such a case, the IRS may request
from the responsible officer information necessary to verify the
sponsoring entity's compliance with such requirements. The IRS may also
request the performance of specified review procedures by a person
(including an external auditor or third-party consultant) that the IRS
identifies as competent to perform such procedures given the
circumstances surrounding the sponsoring entity's potential failure to
comply with the requirements of a sponsoring entity.
(4) Sponsorship agreement. The sponsoring entity must have a
written sponsorship agreement (which may be part of another agreement
between the sponsoring entity and the sponsored direct reporting NFFE)
in place with each sponsored direct reporting NFFE for which it acts by
the later of March 31, 2019, or the date that the sponsoring entity
begins acting as a sponsoring entity for the applicable sponsored
direct reporting NFFE, under which--
(i) The sponsored direct reporting NFFE agrees to provide the
sponsoring entity access to the sponsored direct reporting NFFE's books
and records regarding each of its owners (including AML/KYC
documentation regarding the sponsored direct reporting NFFE's owners
provided by the sponsored direct reporting NFFE with respect to each
financial account it holds) and such other information sufficient for
the sponsoring entity to determine the direct and indirect substantial
U.S. owners of the sponsored direct reporting NFFE, including the
information about such owners required under paragraph (c)(3)(ii) of
this section to be reported on Form 8966, ``FATCA Report'' (or such
other form as the IRS may prescribe);
(ii) The sponsored direct reporting NFFE obtains a valid and
effective waiver of any legal prohibitions on reporting the information
about its direct and indirect substantial U.S. owners required under
paragraph (c)(3)(ii) of this section to be reported on Form 8966 (or
such other form as the IRS may prescribe);
(iii) The sponsored direct reporting NFFE authorizes the sponsoring
entity to act on the sponsored direct reporting NFFE's behalf with
respect to the sponsored direct reporting NFFE's obligations as a
sponsored direct reporting NFFE (for example, authorizing the
sponsoring entity to file Form 8966 on the sponsored direct reporting
NFFE's behalf, responding to the IRS inquiries described in paragraph
(f)(3) of this section, and providing the certification described in
paragraph (f)(2) of this section);
(iv) The sponsored direct reporting NFFE agrees to identify to the
sponsoring entity on request each withholding agent and financial
institution to which the sponsored direct reporting NFFE reports its
status as a sponsored direct reporting NFFE and agrees to provide to
the sponsoring entity a copy of the withholding certificate or written
statement prescribed in Sec. 1.1471-3(d)(11)(x)(B) (as applicable)
that the sponsored direct reporting NFFE provides to each such
withholding agent or financial institution;
(v) The sponsored direct reporting NFFE represents that it does not
have any formal or informal practices or procedures to assist its
substantial U.S. owners with the avoidance of the requirements of
chapter 4;
(vi) The sponsored direct reporting NFFE agrees to cooperate with
the sponsoring entity in responding to any IRS inquiries under
paragraph (f)(3) of this section with respect to the sponsored direct
reporting NFFE; and
(vii) The sponsoring entity retains the records described in
paragraphs (c)(3)(iii) and (iv) of this section for the longer of six
years or the retention period under the sponsoring entity's normal
business procedures. A sponsoring entity may be required to extend the
retention period if the IRS requests such an extension before the
expiration of the period.
(g) Sponsoring entity event of default--(1) Defined. An event of
default by the sponsoring entity means the occurrence of any of the
following--
(i) Failure to have the written sponsorship agreement described in
paragraph (f)(4) of this section in effect with each sponsored direct
reporting NFFE;
[[Page 10989]]
(ii) Failure to satisfy the requirements of paragraph (c)(3)(iii)
of this section with respect to each sponsored direct reporting NFFE
that the NFFE would have been required to satisfy as a direct reporting
NFFE;
(iii) Failure to report to the IRS on Form 8966, ``FATCA Report,''
(or such other form as the IRS may prescribe) all of the information
required under paragraph (c)(3)(ii) of this section with respect to
each sponsored direct reporting NFFE and each of its substantial U.S.
owners (or report to the IRS on Form 8966 that the sponsored direct
reporting NFFE had no substantial U.S. owners) by the due date of the
form (including any extensions);
(iv) Failure to make the certification required under paragraph
(f)(2) of this section;
(v) Failure to cooperate with an IRS request for additional
information described in paragraph (f)(3) of this section, including
requests for the records described in paragraph (c)(3)(iv) of this
section and requests to extend the retention period for these records
as described in (f)(4)(vii) of this section;
(vi) Making any fraudulent statement or misrepresentation of
material fact to the IRS or representing to a withholding agent or the
IRS its status as a sponsoring entity under paragraph (c)(5) of this
section for an entity other than an entity for which it acts as a
sponsoring entity; or
(vii) Failure to obtain from each sponsored direct reporting NFFE
the information required to report on Form 8966.
(2) Notice of event of default. Following an event of default known
by or disclosed to the IRS, the IRS will deliver to the sponsoring
entity a notice of default specifying the event of default and, if
applicable, identifying each sponsored direct reporting NFFE to which
the notice relates. The IRS will request that the sponsoring entity
remediate the event of default within 45 days (unless additional time
is requested and agreed to by the IRS). The sponsoring entity must
respond to the notice of default and provide information responsive to
an IRS request for information or state the reasons why the sponsoring
entity does not agree that an event of default has occurred.
(3) Remediation of event of default. A sponsoring entity will be
permitted to remediate an event of default to the extent that it agrees
with the IRS on a remediation plan. The IRS may, as part of a
remediation plan, require additional information from the sponsoring
entity, remedial actions, or the performance of the specified review
procedures described in paragraph (f)(3)(ii) of this section.
(4) Termination--(i) In general. If the sponsoring entity does not
provide a response to a notice of default within the period specified
in paragraph (g)(2) of this section, or if the sponsoring entity does
not satisfy the conditions of the remediation plan within the time
period specified by the IRS, the IRS may deliver a notice of
termination that terminates the sponsoring entity's status, the status
of one or more sponsored direct reporting NFFEs as a direct reporting
NFFE, or the status of both the sponsoring entity and one or more
sponsored direct reporting NFFEs.
(ii) Termination of sponsoring entity. If the IRS notifies the
sponsoring entity that its status is terminated, the sponsoring entity
must send notice of the termination within 30 days after the date of
termination to each withholding agent from which each sponsored direct
reporting NFFE receives payments and each financial institution with
which each sponsored direct reporting NFFE holds an account for which a
withholding certificate or written statement prescribed in Sec.
1.1471-3(d)(11)(x)(B) (as applicable) was provided. A sponsoring entity
that has had its status terminated cannot reregister on the FATCA
registration website to act as a sponsoring entity for any sponsored
direct reporting NFFE unless it receives written approval from the IRS.
Unless the status of the sponsored direct reporting NFFEs has been
terminated, the sponsored direct reporting NFFEs may register on the
FATCA registration website as direct reporting NFFEs or as sponsored
direct reporting NFFEs of another sponsoring entity, other than a
sponsoring entity that is related to the sponsoring entity that was
terminated (absent written approval from the IRS allowing the
registration). An entity is related to the terminated sponsoring entity
if they have a relationship with each other that is described in
section 267(b) or 707(b).
(iii) Termination of sponsored direct reporting NFFE. If the IRS
notifies the sponsoring entity that the status of a sponsored direct
reporting NFFE is terminated (but not the sponsoring entity's status),
the sponsoring entity must remove the sponsored direct reporting NFFE
from the sponsoring entity's registration account on the FATCA
registration website and send notice of the termination within 30 days
after the date of termination to each withholding agent from which the
sponsored direct reporting NFFE receives payments and each financial
institution with which it holds an account for which a withholding
certificate or written statement prescribed in Sec. 1.1471-
3(d)(11)(x)(B) (as applicable) was provided with respect to such
sponsored direct reporting NFFE. A sponsored direct reporting NFFE that
has had its status as a sponsored direct reporting NFFE terminated
(independent from a termination of status of its sponsoring entity) may
not register on the FATCA registration website as a direct reporting
NFFE or as a sponsored direct reporting NFFE of another sponsoring
entity unless it receives written approval from the IRS.
(iv) Reconsideration of notice of default or notice of termination.
A sponsoring entity or sponsored direct reporting NFFE may request,
within 90 days of a notice of default or notice of termination,
reconsideration of the notice of default or notice of termination by
written request to the IRS.
(h) Applicability date. This section generally applies beginning on
January 6, 2017, except for paragraphs (c)(5)(iii), (f), and (g) of
this section, which apply March 26, 2019. However, taxpayers may apply
these provisions as of January 28, 2013. (For the rules that otherwise
apply beginning on January 6, 2017, and before March 26, 2019, see this
section as in effect and contained in 26 CFR part 1 revised April 1,
2018. For rules that otherwise apply beginning on January 28, 2013, and
before January 6, 2017, see this section as in effect and contained in
26 CFR part 1 revised April 1, 2016.)
Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
Approved: February 27, 2019.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2019-05527 Filed 3-21-19; 4:15 pm]
BILLING CODE 4830-01-P
