Papers – Mackrell International – The International Law Network

Entering the United States Market: Business Entity Selection, Location and Formation

Entering the United States market is an important business strategy and consideration for foreign companies in the high technology, life sciences and green energy industries. The United States market is large and a traditional leader in technology and pharmaceutical products. Successfully establishing a presence in the United States can substantially help a foreign business increase its market share both in the United States market and in its home market.
Authors: Kimberly Ward Burns and Elizabeth M. Ziegler

Thorp Reed & Armstrong, LLP | 12th April 2012

SEC Reporting Requirements for Advisers to Private Funds

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) establishes the Financial Stability Oversight Council (“FSOC”) for the purpose of monitoring risks to the stability of the U.S. financial system. Section 404 of the Dodd-Frank Act directed the Securities and Exchange Commission (“SEC”) to collect information from advisers to private funds to assist the FSOC with its monitoring responsibilities.

In the last quarter of fiscal 2011, the SEC adopted Rule 204(b)-1 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which requires registered investment advisers with at least $150 million in private fund assets under management to report systemic risk information to the SEC on Form PF. A copy of the SEC’s adopting release is here and the effective date of the final rules is March 30, 2012. A copy of Form PF is here.

The information collected on Form PF will be used by the FSOC to gain insight in the activities of advisers, enhance its risk monitoring of the financial markets and assess systemic risk in the U.S. financial system. Form PF filings will be made on a confidential basis, and the information collected through Form PF by the SEC and used by the FSOC generally is required to be kept confidential. Information filed on Form PF will supplement the information the SEC collects from registered investment advisers on the recently revised and expanded Form ADV.

Who Must File Form PF

An investment adviser must file a Form PF it is (i) registered or required to register with the SEC, (ii) advises one or more “private funds” and (iii) had at least $150 million in regulatory assets under management (“AUM”) attributable to private funds at the end of its most recently completed fiscal year. A “private fund” is defined as an issuer that would be an investment company but for the exceptions contained in Sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940. As a result, private issuers with not more than 100 investors, and private issuers owned exclusively by “qualified purchasers” (generally defined as a person or company with not less than $5,000,000 in investments), which may not be covered by the Investment Company Act of 1940, may be treated as a private fund and investment advisers to these funds may be required to file Form PF under the final rules.

State registered advisers (generally advisers with less than $100 million in AUM) and advisers that are exempt from registration with the SEC, including exempt reporting advisers, are not required to file Form PF. Exempt reporting advisers are advisers solely to venture capital funds or private funds that in the aggregate have less than $150 million in AUM in the United States (pursuant to Sections 203(l) and 203(m) of the Advisers Act, respectively).

Categories of Advisers

Investment advisers that are required to file Form PF are divided into two broad groups – large private fund advisers and small private fund advisers. “Large Private Fund Advisers” are:

“Large Hedge Fund Advisers”: Advisers with at least $1.5 billion in AUM attributable to hedge funds, which are generally defined as any private fund with one or more of (a) a performance fee based on market value instead of only realized gains, (b) high leverage, or (c) short-selling;
“Large Liquidity Fund Advisers”: Advisers with at least $1 billion in AUM attributable to liquidity funds and registered money market funds;
“Large Private Equity Advisers”: Advisers with at least $2 billion in AUM attributable to private equity funds, which are generally defined as any private fund that is not a hedge fund, real estate fund, securitized asset fund or venture capital fund and does not provide investors with redemption rights in the ordinary course.
All other advisers are considered “Small Private Fund Advisers.” The amount of information reported and the frequency of reporting is substantially different for Large Private Fund Advisers and Small Private Fund Advisers.

The SEC anticipates that most private fund advisers will be regarded as Small Private Fund Advisers, but that the relatively limited number of Large Private Fund Advisers providing more detailed information will represent a substantial portion of industry assets under management. For example, the SEC staff estimates that 155 private equity fund advisers in the U.S. exceed the $2 billion assets threshold, and collectively represent about 75% of the U.S. private equity fund industry’s total committed capital. As a result, these thresholds will allow the FSOC to monitor a significant portion of private fund assets while reducing the reporting burden for many private fund advisers.

In determining whether an adviser meets a particular reporting threshold, the adviser will be required to calculate the value of its AUM in accordance with the instructions to Form ADV and to aggregate certain assets, in accordance with the instructions to Form PF. Advisers generally only need to test whether their private equity, liquidity, hedge fund or other assets meet the relevant $150 million AUM reporting threshold at the end of each fiscal year. However, an adviser that may qualify as (a) a Large Hedge Fund Adviser with AUM of $1.5 billion attributable to hedge funds or (b) a Large Liquidity Fund Adviser with AUM of $1 billion in liquidity funds and registered money market funds, must test its AUM on a monthly basis. Among other things, to determine if it meets the $150 million threshold, an adviser must aggregate the assets of private funds advised by any “related persons,” other than related persons that are separately operated and the value of parallel managed accounts, unless the value of those accounts exceed the value of private funds which are managed.

Information Reported on Form PF and Filing

Form PF has four Sections. All reporting advisers must complete Section 1 of Form PF, which is divided into three parts, which provides certain basic information about the adviser. Section 1(a) contains information regarding the adviser’s identity, its gross and net assets under management and the amount of assets attributable to certain types of funds. Section 1(b) requires advisers to provide information about each private fund that it manages, including the private fund’s name, whether it is part of a master-feeder or parallel fund structure, the gross and net asset value, borrowings and leverage, investor concentration and a summary of performance. In addition, advisers that manage hedge funds must complete Section 1(c) which requires information about each hedge fund advised and includes general identifying information about the hedge fund, a description of the fund’s investment strategy as a percentage of the hedge fund’s net asset value, counterparty exposure, credit risk and use of trading and clearing mechanisms.

A Large Hedge Fund Adviser will be required to complete Section 2 of Form PF. Section 2 requests aggregate information relating to the advised hedge funds, including the types and market value of securities, commodities, and derivatives that advised hedge funds hold on a long or short basis, portfolio turnover and a geographic breakdown of investments. If a Large Hedge Fund Adviser manages a hedge fund with a net asset value of at least $500 million (a “Qualifying Hedge Fund”), it is required to provide more detail concerning exposure, leverage, risk profile and liquidity relating to each Qualifying Hedge Fund. However, Large Hedge Fund Advisers are not required to report position-level information.

A Large Liquidity Fund Adviser will be required to complete Section 3 of Form PF for each liquidity fund. Section 3 of Form PF requires that a Large Liquidity Fund Adviser provide information on the type of assets in each of the liquidity fund’s portfolios, its portfolio valuation method, compliance with the SEC’s money market rule, net asset value of each liquidity fund’s assets, information regarding the amount of assets invested in different type of instruments broken down by maturity, and investor information, including concentration of investor base, redemption policies and investor liquidity.

A Large Private Equity Adviser will be required to complete Section 4 of Form PF for each private equity fund that it advises and the portfolio investments made by each fund. This requires information about the indebtedness of each portfolio company, whether the private equity fund guarantees the obligations of any portfolio companies, the gross asset value of the controlled portfolio companies, maturity information regarding controlled portfolio companies, the identities of all persons who have provided any part of a bridge loan to a controlled portfolio company, the occurrence of an event of default under any indenture or other indebtedness by a fund or its controlled portfolio companies, and investments in financial entities and an industry and geographic breakdown of portfolio companies.

Filing Requirements and Timeframes

Advisers will be required to file Form PFelectronically through the Investment Adviser Registration Depository under a process substantially similar to the current process of filing Form ADV. There is a $150 filing fee associated with each Form PF filing, which will be used to the finance the maintenance and development of the new filing system. Filings will be allowed either through a fillable form on the website or through a batch filing process utilizing the eXtensible Markup Language (“XML”) tagged data format.

Large Private Equity Advisers and Small Private Fund Advisers will be required to file Form PF annually within 120 days of the end of such adviser’s fiscal year end. In contrast, Large Hedge Fund Advisers and Liquidity Fund Advisers must File Form PF on a quarterly basis, and must file within 60 days and 15 days, respectively, of the end of each such adviser’s fiscal quarter. Advisers are not required to file Form PF with respect to any period that ended prior to the effective date of their registrations.

Confidentiality

The SEC will not make the information disclosed in Form PF publicly available in a way that identifies particular investment advisers or private funds; although, the SEC will be permitted to use Form PF information in examinations, investigations or enforcement actions. In addition, information collected on Form PF may be shared with other federal agencies, organizations or self-regulatory bodies, although such entities would be required to represent to the SEC that they have sufficient controls in place to use and handle the information in a manner consistent with the protections established under the Dodd-Frank Act.

Initial Filing Deadlines

Implementation of Form PF will be phased-in over two stages. For private fund advisers with AUM of less than $5 billion, the initial Form PF filing would be due following their first fiscal quarter or year, as applicable, ending on or after December 15, 2012. For Small Private Fund Advisers with a calendar year end, the first Form PF filing would be due by April 30, 2013 (i.e., 120 days after December 31, 2012).

However, private fund advisers with $5 billion or more in AUM must file their initial Form PF after the fiscal year or fiscal quarter, as applicable, ending or after June 15, 2012. For most Large Hedge Fund Advisers, this means that the first Form PF filing would be due by August 29, 2012 (i.e, 60 days following June 30, 2012). For most Large Private Equity Fund Advisers, the first Form PF would be due by April 30, 2013 (i.e., 120 days following December 31, 2012).

For additional information about the new Form PF reporting requirements for registered investment advisers that have AUM of at least $150 million, and other rules impacting private funds, please feel free to contact the authors of this Practice Update or your Akerman advisor.

Akerman Senterfitt | 9th April 2012

The Pursuit of International Tax Compliance; IRS Reopens Offshore Voluntary Disclosure Program

On January 9, 2012, the IRS announced IR-2012-5 that it has “reopened” the Offshore Voluntary Disclosure Program (“OVDP”). The IRS opened a new OVDP due to the continued and vast interest by U.S. citizens, other persons, residents and their representatives to have a vehicle in place to disclose the inadvertent or intentional concealment of offshore financial accounts or assets.

The new OVDP is substantially similar to the 2011 Program whose deadline recently passed but for the following key differences:

The new OVDP is open-ended with no current submission deadline announced;
The terms of the OVDP including penalties could be changed at any time by the IRS;
The base line penalty under the OVDP is now 27.5% of the highest aggregate balance of the undisclosed foreign financial accounts and/or assets during the eight (8) full tax years prior to the submission. Under the 2011 Program, the penalty was 25% of the highest aggregate balance of the undisclosed foreign financial accounts and/or assets during tax years 2003 through 2010.
The new OVDP still provides for a reduced penalty of 12.5% if the value of the foreign financial accounts and/or assets is under $75,000 for every tax year or 5% under certain exceptions including that of a U.S. citizen residing outside the U.S.
As with the 2011 Program, IRS Commissioner Douglas Shulman continues to urge compliance by stating, “as we’ve said all along, people need to come in and get right with us before we find you.” Commissioner Shulman goes on to state that, “we are following more leads and the risk for people who do not come in continues to increase.”

The OVDP comes at a crucial time in IRS offshore scrutiny and compliance. With the recent finalization of the Form 8938, Statement of Specified Foreign Financial Assets, and the issuance of the corresponding temporary and proposed regulations (see our update on the Form 8938 here and on the regulations here), along with the fact that the U.S. Government is attempting to settle with eleven (11) foreign banks in Switzerland, Liechtenstein and Israel to obtain information on U.S. citizen and resident account holders (see our update of the attempted settlement here), now is a key time for U.S. citizens and residents to determine the best avenue to become compliant prior to an IRS examination.

Additionally, and perhaps most importantly, with the implementation of the Foreign Account Tax Compliance Act (“FATCA”) rapidly approaching along with the expectation of the release of the guidance on FATCA any day now (see our updates on the implementation of FATCA and the release of FATCA guidance here and here), the reopening of the OVDP is essential. The OVDP provides a soft landing spot for U.S. citizens and resident account holders of foreign financial institutions moving towards FATCA compliance. Under FATCA, foreign financial institutions will need to provide information regarding any accounts held by U.S. citizens and residents. Accordingly, if any of those financial accounts have not been disclosed, the OVDP provides a more economical and more convenient resolution than an actual IRS examination.

The IRS will be providing additional details and Frequently Asked Questions in the near future with respect to the OVDP along with specific program details.

In addition to the announcement of the reopening of the OVDP, Commissioner Shulman also confirmed that under the 2009 and 2011 amnesty programs, over 33,000 U.S. citizens and residents have participated. This has resulted in approximately $3.4 billion collected by the IRS to date.

Finally, the IRS has resolved the open-ended question regarding the individuals who have submitted voluntary disclosures since the closure of the 2011 Program. Such individuals will be included in the new OVDP.

The advantages and disadvantages of the OVDP and how it applies to each U.S. citizen and resident should be carefully analyzed based upon each person’s facts and circumstances. Akerman’s International Taxation Practice has a continued history of dealing with the amnesty programs and handled over thirty (30) disclosures in accordance with the 2011 Program. If you or anyone you know has an undisclosed foreign asset or you are concerned about the recent IRS offshore scrutiny, we strongly suggest you acquire immediate assistance.

Akerman Senterfitt | 9th April 2012

Florida Supreme Court Issues Opinion Broadly Interpreting Scope of Amendment 7

The Florida Supreme Court issued its opinion in West Florida Regional Medical Center, Inc. v. See. Of greatest importance is the broad reading the Court gives to Amendment 7 in finding that:

1. a blank application for medical staff privileges is a record of an adverse medical incident and therefore not protected from discovery under sections 766.101(5) and 395.0191(8) and is discoverable under Amendment 7,

2. section 381.028(7)(b)1, Florida Statutes, is invalid because the Amendment 7 disclosure requirements are not limited to only incident reports such as Code 15 reports and AHCA annual reports listed in sections 395.0197(5) and (7) (the hospital risk management statute), and

3. the federal Health Care Quality Improvement Act (“HCQIA”) does not preempt Amendment 7 because HCQIA and Amendment 7 each address different concerns and do not conflict with each other.

As a result of this opinion, the range of documents and types of “adverse incidents” subject to disclosure under Amendment 7 is broader than the Code 15 reports and annual reports and “severe injuries” described in sections 395.0197(5) and (7) and includes documents such as blank applications for medical staff privileges.

West Florida Hospital was sued for the negligent grant of medical staff privileges to two physicians. The plaintiff sought discovery of the blank application for privileges. The Court said that only a completed application which contains information necessary to the credentialing process is a document considered by a hospital in its decision-making process and therefore protected by sections 766.101(5) and 395.1091(8). While the protections of sections 766.101(5) and 395.1091(8), which govern hospital peer review and credentialing processes respectively, apply to any document considered by the committee or board as part of its decision-making process, a blank application contains no information and therefore is not a document considered by a hospital committee or board in its decision-making process and therefore is not privileged under the credentialing statutes.

In its broadening interpretation of Amendment 7, the Court said that even if a blank application falls within the parameters of sections 766.101(5) and 395.1091(8), Amendment 7 requires its disclosure because in See’s action for negligent credentialing, the blank application is a record of an adverse medical incident. The Court said that Amendment 7’s definition of “adverse medical incidents” includes “medical negligence, intentional misconduct, and any other act, neglect, or default of a health care facility or health care provider that caused or could have caused injury or death of a patient. (Emphasis added.)” The Court said that part of the conduct or act by the hospital that led to the alleged negligent grant of medical staff privileges to the physicians are the questions that the hospital posed on its application for medical staff privileges. If the questions asked by the hospital on its application for staff privileges failed to lead to a proper inquiry into the qualifications of the physicians, which in turn led to the grant of privileges to the possibly unqualified physicians, that blank application is evidence pertaining to potential negligent conduct by the hospital, i.e., granting privileges to unqualified physicians.

The Court continued its evisceration of the Florida Legislature’s effort to limit Amendment 7 by finding that section 381.028(7)(b)1 impermissibly attempts to limit disclosure of matters pursuant to Amendment 7 to those incident reports defined in sections 395.0197(5) and (7), i.e., Code 15 reports and annual reports to AHCA. The definition of “adverse medical incident” in Amendment 7 does not place a such a boundary on matters to be disclosed to patients. The Court previously invalidated subsections (3)(j) and (5)-(7) because they violated the broad right of access to adverse medical reports granted by Amendment 7. See Florida Hospital Waterman v. Buster, 984 So.2d 478 (Fla.2008).

Finally, the Court held that the Health Care Quality Improvement Act of 1986 (“HCQIA”) does not preempt Amendment 7 because the purposes of HCQIA and Amendment 7 are achieved without conflict and because Congress, through the express language of HCQIA “clearly demonstrated an intent that state law is not preempted by the HCQIA.” The goal of Amendment 7 is to require disclosure of reports containing adverse medical incidents involving a physician. The goal of HCQIA is to provide for effective peer review by immunizing peer review bodies and those providing information to such bodies from civil damages. HCQIA does not make peer review materials confidential and privileged from discovery and Amendment 7 does not deprive physicians of immunity in the peer review process so there is no conflict between the federal law and the Florida constitutional amendment.

Hospitals currently involved in discovery disputes related to Amendment 7 requests should revisit their strategy in light of this new guidance from the Florida Supreme Court.

The Florida Supreme Court previously determined that Amendment 7 does not apply to nursing homes. Nothing in the See opinion changes that.

Akerman Senterfitt | 9th April 2012

U.S. Government Issues FATCA Proposed Guidance & Approach to Automatic Exchange of FATCA Information

On February 8, 2012, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued the long-awaited Proposed Regulations with respect to the Foreign Account Tax Compliance Act (“FATCA”). FATCA is part of the Hiring Incentives to Restore Employment (HIRE) Act enacted in March 2010. These extremely comprehensive Proposed Regulations implement the information reporting and withholding tax provisions of FATCA.

The areas where the IRS has revised the previous guidance on FATCA include: expanding the scope of grandfathered obligations; extending the transition period for phasing in FATCA; including additional categories of deemed compliant foreign financial institutions; and modifying due diligence requirements.

The Proposed Regulations lay out a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents.

The Proposed Regulations implement FATCA’s obligations in stages to minimize burdens and costs consistent with achieving FATCA’s overall objectives of reporting. The rules and implementation schedule are also adjusted to allow time for resolving local law limitations to which some FFIs may be subject.

The Proposed Regulations are intended to do the following:

Reduce the administrative burdens associated with identifying U.S. accounts by calibrating due diligence requirements based on the value and risk profile of the accounts and, in many cases, by permitting FFIs to rely on information they already collect, including information received in compliance with anti-money laundering/”know your customer” rules;

Expand the categories of FFIs which are deemed to comply with FATCA without the need to enter into an agreement with the IRS in order to focus the application of FATCA on higher-risk financial institutions that provide services to the global investment community; and

Phase-in the reporting and withholding obligations of FATCA over an extended transition period in order to provide sufficient lead time for financial institutions to develop necessary systems and maximize the number of financial institutions that will be able to comply with FATCA.

FFIs will be able to register through an online system which will become available by January 1, 2013. FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to U.S. investments.

In conjunction with the proposed regulations on FATCA, the Treasury issued a news release and joint statement indicating that the Treasury had reached an agreement with the governments of France, Germany, Italy, Spain and the United Kingdom for designing a framework to implement the information reporting and withholding provisions by FFIs under FATCA. The Treasury’s news release states that the governments of France, Germany, Italy, Spain and the United Kingdom are supportive of the underlying reporting goal of FATCA and the governments expressed their “mutual intent to pursue a government-to-government framework for implementing FATCA – an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations.”

The joint statement offers a framework for information sharing pursuant to existing bilateral income tax treaties and allows FFIs to report the necessary information to their respective governments rather than to the IRS. The joint statement does not contemplate an exemption from FATCA for any specific jurisdiction.

The U.S., France, Germany, Italy, Spain and the United Kingdom agree that an intergovernmental approach to FATCA implementation would address compliance, practical implementation, lowering compliance costs and achievement of the reporting objective of FATCA.

In light of these considerations, the U.S., France, Germany, Italy, Spain and the United Kingdom have agreed to explore a common approach to FATCA implementation through domestic reporting and reciprocal automatic exchange based on existing bilateral tax treaties.

Under the proposed framework currently being considered for the intergovernmental approach, the U.S. and a partner country (the “FATCA partner”) would enter into an agreement under which, subject to certain terms and conditions, the FATCA partner would agree to: (i) pursue the necessary implementing legislation to require FFIs in its jurisdiction to collect and report to the authorities of the FATCA partner any required information; (ii) enable FFIs established in the FATCA partner, unless otherwise exempt under FATCA, to apply the necessary diligence to identify U.S. accounts; and (iii) transfer to the U.S., on an automatic basis, the information reported by the FFIs.

In exchange, the U.S. would agree to: (i) eliminate the obligation of each FFI established in the FATCA partner to enter into a separate comprehensive FFI agreement directly with the IRS; (ii) allow FFIs established in the FATCA partner to comply with their reporting obligations under FATCA by reporting information to the FATCA partner rather than reporting it directly to the IRS; (iii) eliminate U.S. withholding under FATCA on payments to FFIs established in the FATCA partner; (iv) identify in the agreement specific categories of FFIs established in the FATCA partner that would be deemed compliant or presenting a low risk of tax evasion; and (v) commit to reciprocity with respect to collecting and reporting on an automatic basis to the authorities of the FATCA partner information on the U.S. accounts of residents of the FATCA partner.

Lastly, as a result of the agreement with the FATCA partner described above, FFIs established in the FATCA partner would not be required to: (i) terminate the account of a recalcitrant account holder; (ii) impose pass-through payment withholding on payments to recalcitrant account holders; and (iii) impose pass-through payment withholding on payments to other FFIs organized in the FATCA partner or in another jurisdiction with which the United States has a FATCA implementation agreement.

Under the intergovernmental approach, the U.S., France, Germany, Italy, Spain and the United Kingdom would commit to working with other potential FATCA partners, the OECD, and, where appropriate, the EU, adapting FATCA into a common model for automatic exchange of information, including the development of reporting and due diligence standards.

In an effort to provide taxpayers with unreported foreign assets the opportunity to comply, the IRS has re-opened the Offshore Voluntary Disclosure Program (OVDP). The OVDP provides a soft landing spot for U.S. citizens and resident account holders of FFIs moving towards FATCA compliance. The OVDP provides a more economical and more convenient resolution for taxpayers to report undisclosed financial accounts than an actual IRS examination (see our updates on the implementation of FATCA and the release of FATCA guidance here and here). With FATCA rapidly approaching, information pertaining to taxpayers will soon become available to the IRS.

The IRS will be providing additional details and Frequently Asked Questions in the near future with respect to the OVDP along with specific program details.

We will continue to provide updates with respect to developments with the OVDP, and FATCA. If you have foreign financial assets, you may contact our FATCA team to discuss your particular facts and circumstances.

Akerman Senterfitt | 9th April 2012

U.S. Government Issues FATCA Proposed Guidance & Approach to Automatic Exchange of FATCA Information

On February 8, 2012, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued the long-awaited Proposed Regulations with respect to the Foreign Account Tax Compliance Act (“FATCA”). FATCA is part of the Hiring Incentives to Restore Employment (HIRE) Act enacted in March 2010. These extremely comprehensive Proposed Regulations implement the information reporting and withholding tax provisions of FATCA.

The areas where the IRS has revised the previous guidance on FATCA include: expanding the scope of grandfathered obligations; extending the transition period for phasing in FATCA; including additional categories of deemed compliant foreign financial institutions; and modifying due diligence requirements.

The Proposed Regulations lay out a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents.

The Proposed Regulations implement FATCA’s obligations in stages to minimize burdens and costs consistent with achieving FATCA’s overall objectives of reporting. The rules and implementation schedule are also adjusted to allow time for resolving local law limitations to which some FFIs may be subject.

The Proposed Regulations are intended to do the following:

Reduce the administrative burdens associated with identifying U.S. accounts by calibrating due diligence requirements based on the value and risk profile of the accounts and, in many cases, by permitting FFIs to rely on information they already collect, including information received in compliance with anti-money laundering/”know your customer” rules;
Expand the categories of FFIs which are deemed to comply with FATCA without the need to enter into an agreement with the IRS in order to focus the application of FATCA on higher-risk financial institutions that provide services to the global investment community; and
Phase-in the reporting and withholding obligations of FATCA over an extended transition period in order to provide sufficient lead time for financial institutions to develop necessary systems and maximize the number of financial institutions that will be able to comply with FATCA.
FFIs will be able to register through an online system which will become available by January 1, 2013. FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to U.S. investments.