IRS and Treasury issue Proposed Regulations Reducing Burden under FATCA and Chapter 3

On 13 December 2018, the U.S. Internal Revenue Service (“IRS”) released Issue 2018-17 to clarify the recent publication of proposed regulations reducing burden under the Foreign Account Tax Compliance Act (“FATCA”) and Chapter 3. The IRS and the Department of the Treasury are issuing proposed regulations (Link) under sections 1441, 1461, 1471, 1472, 1473, and 1474 of the Internal Revenue Code (“Code”). The proposed regulations provide rules that aim to reduce taxpayer burden with respect to certain requirements under Chapter 3 and Chapter 4 of the Code.

Written or electronic comments and requests for a public hearing on this proposed regulation must be received within 60 days of publication in the Federal Register, which is forthcoming.

Specifically, the proposed regulations eliminate withholding on payments of gross proceeds, defer withholding on foreign pass-through payments, eliminate withholding on certain insurance premiums, and clarify the definition of investment entities. The proposed regulations also include guidance on certain due diligence requirements of withholding agents and clarify procedures for refunds and credits of amounts withheld.

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