Foreign Account Tax Compliance Act (FATCA)
Understand how FATCA helps identify U.S. tax residents and citizens holding accounts outside the United States, and ensures their compliance with U.S. tax obligations.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act focusing on U.S. tax residents and citizens holding accounts outside the United States.
Its central purpose is to identify U.S. taxpayers who hold financial assets in non-U.S. financial institutions and other offshore accounts, to ensure compliance with their U.S. tax obligations.
How does FATCA work?
FATCA creates a tax information reporting and withholding regime for payments made to certain foreign financial institutions (FFIs) and other foreign persons. U.S. Withholding Agents (USWAs) and participating FFIs are required to document account holders and payees, and withhold on certain undocumented or non-compliant accounts or payees.
Failure to comply with FATCA or provide required documentation will result in the imposition of a 30% withholding tax on U.S. source income payments made to applicable payees and counter-parties.
If you have any additional questions, please contact your tax advisor or visit the IRS FATCA website.
In This Section
- FATCA Glossary of Terms > Enhance your understanding of the Foreign Account Tax Compliance Act (FATCA) with this list of commonly used terms and definitions.
- FATCA Forms & Instructions > Get fast access to tax forms – like W-9, W-1042 and more – used to communicate between withholding agents, payees and the IRS regarding FATCA compliance.
- FATCA F A Qs > Get your questions about FATCA answered, like what it is, whether it affects you, what forms you may be required to fill out, and how M&T is addressing compliance.