Foreign Account Tax Compliance Act (FATCA)

COMPLIANCE NOTE: On December 13, 2018 the IRS and Treasury proposed regulations intended to reduce unnecessary regulatory burdens associated with FATCA compliance. Since FATCA was passed, the P&C industry, including WSIA, has asked for relief from FATCA reporting due to its unnecessary and burdensome application to our industry. Ultimately, FATCA is directed at foreign financial institutions and financial intermediaries and aims to prevent tax evasion by U.S. citizens, U.S. residents and corporations through the use of offshore accounts, but the application to the law cast a wide net, including P&C non-cash value premiums, that are not in a position to commit the type of tax evasion the law intended to curtail.

WSIA is pleased with the proposed regulations since, in line with what the industry has consistently requested, they will eliminate withholding requirements for non-cash value insurance premiums under FATCA, thereby eliminating the concerning reporting requirement as well. While there is a 60-day comment period on the proposed regulation, and then time for the IRS to issue a formal version of the final regulation, the release indicates that taxpayers can rely on the proposed regulation immediately for all open years until the final regulation is issued. WSIA expects the final rule will be issued by mid-2019.

Surplus lines brokers and insurers’ compliance obligations related to the Foreign Account Tax Compliance Act (FATCA) took effect on July 1, 2014.  WSIA has compiled a number of helpful resources and updates related to FATCA reporting requirements. This page provides links and information that will help you as you develop your own compliance program. To learn more about FATCA we recommend starting with our Executive Summary and Legal Memorandum linked below.

Since FATCA was passed, WSIA and many other members of the P&C industry have asked for relief from FATCA reporting due to its unnecessary and burdensome application to our industry. Ultimately, FATCA is directed at foreign financial institutions and financial intermediaries and aims to prevent tax evasion by U.S. citizens, U.S. residents and corporations through the use of offshore accounts, but the application to the law cast a wide net, include groups like our industry that is not in a position to commit the type of tax evasion the law intended to curtail.

Legislative has twice been introduced in the House to eliminate the P&C industry’s requirement to report non-cash-value premiums under FATCA in H.R. 871 (2017) and H.R. 6159 (2016). Although no action has been taken on the legislation, work continues to educate Congress and the Treasury Department on the industry’s concerns in hopes of granting relief; however, until such time that legislation is passed or a regulation is issued providing the relief, industry members must continue to maintain FATCA compliance. 

WSIA Issued Resources

Helpful Resources

WSIA closely monitors developments related to FATCA. We encourage you to reach out to us with questions or concerns that we may be able to help you with or direct you to proper resources.

WSIA FATCA contact: Keri Kish, Director of Government Relations, at keri@wsia.org.