Against widespread speculation that the IRS might provide an additional delay to the Foreign Account Tax Compliance Act's (FATCA) withholding provisions by extending FATCA deadlines, FATCA withholding is confirmed to go into effect on July 1. Broadly, FATCA requires foreign entities to identify, document and report their U.S. account holders to the IRS or else face a 30 percent withholding tax applicable to certain U.S.-source payments made to the foreign entity. Under FATCA, each foreign entity is classified as either a Foreign Financial Institution (FFI) or a Nonfinancial Foreign Entity (NFFE). The classification determines the foreign entity's reporting, due diligence and withholding obligations with respect to its U.S. account holders.
Any FFI that is not exempt or deemed compliant must register with the IRS via an online portal by April 25 and obtain a global intermediary identification number (GIIN) to avoid withholding on post-June 30 payments of certain U.S.-source income.
All foreign trusts, foreign trustees and underlying foreign holding companies must act now to determine their FATCA classification. It is not at all uncommon for the foreign trustee, foreign trust and underlying foreign holding company each to be created in a different jurisdiction, and the presence or absence of an intergovernmental agreement (IGA) with that jurisdiction can further complicate matters. There are currently two types of IGAs, Model 1 and Model 2, and both modify the obligations of FFIs in the jurisdictions that have them.
Either registration as an FFI or self-certification as an NFFE may be required for (i) the trust; (ii) the trustee; and (iii) any underlying holding company. However, a foreign entity will be exempt from registration if it is a certified deemed-compliant FFI, such as a sponsored investment entity, a sponsored closely held investment vehicle or an owner-documented FFI, in each case by agreeing to have another entity do the FATCA reporting on its behalf.
These rules are complicated and replete with conditions and exceptions. Day Pitney is actively advising trustees regarding their ongoing compliance requirements and those for their foreign trusts and underlying holding companies. Please contact us if you have any questions.
Individual Clients Department Partner Dina Kapur Sanna spoke at the Family Office Leadership Program sponsored by Citi Private Bank titled, "Managing a Global Family: Cross Border Considerations and Other Key Trends," on June 7.
On May 13, Day Pitney International Trusts and Estates Partner Sarah B. Jacobson spoke on the panel, "Welcome to Miami, Bienvenidos a Miami!: Pre-Immigration Planning When Moving to the Magic City," at the STEP Miami Annual Summit.
Individual Clients Department Partner Dina Kapur Sanna Co-Chaired the 17th International Estate Planning Institute sponsored by STEP-NY and the New York State Bar Association Trusts & Estates Law Section, the International Section on March 31 and April 1 where Individual Clients Department Partner Carl Merino also spoke.
On March 12, Dina Kapur Sanna, an International Trusts and Estates Partner at Day Pitney, was a speaker at the American College of Trust and Estate Counsel (ACTEC) 2022 Annual Meeting in San Diego, CA, where she presented "Tricks and Tips on Navigating the Choppy Waters of International Estate/Succession Planning.
Individual Clients Attorneys Carl A. Merino, Dina Kapur Sanna and Sarah B. Jacobson co-authored an article for Trusts & Estates Magazine titled, "Pre-Residency Planning for Your Client's Trust."
Miami Partners Sarah B. Jacobson and Georgia A. Thompson's promotion to partnership were featured in Florida Bar News' On The Move Column.
Miami Partners Sarah B. Jacobson and Georgia A. Thompson's promotions to partnership were featured in the Sun Sentinel's People on the Move column.
Day Pitney LLP promoted 11 attorneys to partner in the firm's three core departments: Corporate and Business Law, Litigation, and Individual Clients.
New York Partner Dina Kapur Sanna from our firm's Individual Clients department has been recognized on Citywealth's Top 100 Private Lawyers 2021 List.
Day Pitney Press Release