On June 1, the Internal Revenue Service (IRS) announced several updates to the Foreign Account Tax Compliance Act (FATCA) Registration System. In particular, FATCA News & Information Issue No. 2020-05 provides guidance applicable to sponsoring entities that manage their sponsored entities via the “manage sponsored entities” link on the registration system home page. This new guidance, which is incorporated into the latest version of Publication 5118, FATCA Registration System User Guide, instructs that sponsoring entities must cancel approved sponsored entities that require removal within the system instead of just deleting them.
As outlined in the updated FATCA Online Registration User Guide (Rev. May 2020), a sponsoring entity can only cancel a sponsored entity if it is in approved status. Sponsored entities in a submitted status should be deleted instead.
A sponsoring entity can cancel sponsored entities in approved status from the sponsored entities table on the “manage sponsored entities” page of the system. In order to cancel the sponsored entity, the following steps should be followed:
Once the sponsored entity is cancelled through this process, the sponsored entity will remain in the sponsored entities table for that particular sponsoring entity with a status of “canceled.”
For Your Reference:
An IRS overview of these FATCA registration system updates can be found and reviewed on the IRS website here.
For more information on the FATCA Online Registration process, Publication 5118 (FATCA Online Registration User Guide) can be located here.
KPMG Luxembourg’s comments:
In certain circumstances, limited industry guidelines were used to determine internal FATCA and CRS policies. As a result, many entities registered for a GIIN when they actually qualified for a certified compliant FFI status.
In light of the above changes, it is recommended to review the FATCA status of the management companies and administered funds and deregister their GIIN where applicable in order to reduce compliance cost.
© 2020 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.