SS&C GlobeOp’s FATCA Service
What is FATCA?
FATCA is far reaching U.S. legislation signed into law on March 18, 2010 as part of the Hiring Incentives to Restore Employment Act (HIRE). FATCA applies to global banks and institutions that have U.S. clients with more than $50,000 USD in an account. The legislation applies to any entity which has U.S. clients on its books which includes banks, fund managers, custody banks, etc. It was passed into law in order to compel foreign financial institutions to disclose U.S. account holders’ information to the Internal Revenue Service (IRS). It is intended to increase transparency for the IRS with respect to U.S. persons that may be earning income through non-U.S. institutions.
Under FATCA, all financial institutions - U.S. domestic and foreign – must classify account holders as either U.S. or non-U.S. based. The act will also require foreign financial institutions (FFIs) to report directly to the United States Internal Revenue Service (or indirectly report this information to their own country’s government which will then share it with the IRS) specific information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As part of the compliance process, FFIs are required to enter into a special agreement with the IRS. Under this agreement, FFIs must:
- Undertake identification and due diligence procedures regarding account holders; and
- Report annually to the IRS on account holders who are U.S. persons or foreign entities with substantial U.S. ownership.
For FFIs who do not enter into an agreement with the IRS to reveal their U.S. clients’ accounts, all relevant U.S. sourced payments, such as dividends and interest paid by U.S. corporations, will be subject to a 30% withholding tax. The same 30% withholding tax will also apply to gross sale proceeds from the sale of relevant U.S. property.
Final regulations regarding FATCA were issued on January 17, 2013 by the Treasury Department (the IRS reserves the right to add, amend, change or delete portions of this Chapter 4 legislation at any time, so although it states Final it is not Final) and the IRS and can be found here (http://www.irs.gov/PUP/businesses/corporations/TD9610.pdf). Key provisions of FATCA will be phased into law over a period of a few years starting on January 1, 2013.
About SS&C GlobeOp’s FATCA Service
The SS&C GlobeOp’s FATCA Service Offering goal is to make sure our clients are positioned to be able to timely and accurately respond to FATCA compliance for US and Foreign funds. SS&C GlobeOp will:
- assist with this regulatory challenge by offering a comprehensive investor-based FATCA compliance and implementation service
- assist in the classification of your “pre-existing” investors and implements classification of “new investors” in-line with FATCA compliant policies and procedures
- include a necessary investor classification modeling of pre-existing investors along with a risk assessment of that classification
- enrich the data collection process as required to make a more definitive classification
- provide a gap analysis review of data your fund administrator collects today and what you may need tomorrow
- enable a download of information for the client to report to the IRS, as well as continue to meet all the imposed IRS deadlines from an administrator and investor’s perspective. SS&C GlobeOp proprietary FATCA modeling technology enables the client to provide transparency to the investor to provide data directly into a system that is secure and tested to on a yearly basis for accuracy of data.
At SS&C GlobeOp we believe an integrated solution is best suited for all the IRS requirements, as well as to provide dynamic data enhancements that will be needed in the future. We work with our clients to help interpret the regulations, to assist in a structured path for compliance, and ensure the best solution for this regulatory task with emphasis on functionality, transparency and cost-effectiveness.