16. FATCA

This chapter describes the framework Title V of the Hiring Incentives to Restore Employment Act (2010), usually referred to as FATCA. FATCA imposes obligations on all non-US financial institutions to report accounts held by US Persons (or presumed US persons). The FATCA framework is enforced using intergovernmental agreements (IGAs) and has had a significant impact on the ability of Americans to open or maintain financial accounts outside the US. FATCA includes due diligence rules for financial institutions to establish. Reportable accounts, IGA terms that establish what data is to be collected and how it is to be transmitted to the IRS. The nexus to withholding tax is created by the enforcement and deterrence component of the regulation that forces financial institutions to penalise anyone not complying with FATCA by withholding 30% of USA-sourced income paid to such accountholders and reporting such through the US tax system.