Revised Timeline and Other Guidance Regarding the Implementation of
FATCA
Notice 2013-43
I. PURPOSE
This notice provides: (i) revised timelines for implementation of the
requirements of sections 1471 through 1474 of the Internal Revenue Code
(Code), commonly referred to as the Foreign Account Tax Compliance Act, or
FATCA; and (ii) additional guidance concerning the treatment of financial
institutions located in jurisdictions that have signed intergovernmental
agreements for the implementation of FATCA (IGAs) but have not yet brought
those IGAs into force. The Department of the Treasury (Treasury) and the
Internal Revenue Service (IRS) intend to amend the regulations under sections
1471 through 1474 to adopt these rules. Prior to the issuance of those
amendments, taxpayers may rely on the provisions of this notice regarding
expected amendments to the regulations.
II. BACKGROUND
 A. FATCA Regulations
 On March 18, 2010, the Hiring Incentives to Restore Employment Act of
2010, Pub. L. 111-147 (H.R. 2847), added chapter 4 (sections 1471 through
1474) to Subtitle A of the Code. Chapter 4 requires withholding agents to
withhold 30 percent of certain payments to a foreign financial institution (FFI)
unless the FFI has entered into an agreement (FFI agreement) with the IRS to,
among other things, report certain information with respect to U.S. accounts.
Chapter 4 also imposes on withholding agents certain withholding, 2
documentation, and reporting requirements with respect to certain payments
made to certain non-financial foreign entities (NFFEs).
On February 15, 2012, Treasury and the IRS published proposed
regulations under chapter 4 in the Federal Register (REG-121647-10, 77 Fed.
Reg. 9022) (proposed regulations). On January 17, 2013, Treasury and the IRS
published final regulations under chapter 4 (TD 9610, 78 Fed. Reg. 5873) (final
regulations). The final regulations provided for a phased implementation of the
requirements of FATCA, beginning on January 1, 2014, and continuing through
2017. In particular, the final regulations provided that withholding agents
(including participating FFIs (PFFIs), qualified intermediaries (QIs) that assume
withholding responsibility, withholding foreign partnerships (WPs), and
withholding foreign trusts (WTs)) would be required to begin withholding with
respect to withholdable payments made after December 31, 2013 (with an
exception for “grandfathered obligations” outstanding on January 1, 2014, and
associated collateral). Due diligence for documenting payees and account
holders by U.S. withholding agents and PFFIs would be phased in during 2014
and 2015. Annual reporting by PFFIs would be phased in starting in 2015 (with
respect to information related to the 2013 and 2014 calendar years), with
reporting of the full scope of FATCA information required beginning in 2017.
B. Model IGAs
On July 26, 2012, Treasury released a model (Model 1) for bilateral
agreements with other jurisdictions (in both reciprocal and nonreciprocal
versions) under which FFIs (reporting Model 1 FFIs) would satisfy their chapter 4 3
requirements by reporting information about U.S. accounts to their respective tax
authorities, followed by the automatic exchange of that information on a
government-to-government basis with the United States. On November 14,
2012, Treasury released a second model agreement (Model 2), under which FFIs
(reporting Model 2 FFIs) would report specified information directly to the IRS in
a manner consistent with the final regulations, supplemented by government-togovernment exchange of information on request. Treasury has concluded a
number of bilateral IGAs based on the model agreements (Model 1 IGAs and
Model 2 IGAs, respectively). Treasury has periodically updated the model IGAs
since their initial release, including an update to both model IGAs on May 9,
2013, to incorporate certain modifications arrived at through intergovernmental
discussions, as well as modifications to the due diligence procedures to reflect
improvements adopted in the final regulations following the initial release of the
model IGAs.
The model IGAs outline time frames for FFIs in jurisdictions with IGAs in
force (partner jurisdictions) to complete the necessary due diligence to identify
U.S. accounts and to perform reporting on U.S. accounts that are identified. The
timelines and other provisions contained in the model IGAs interact with the final
regulations in various ways. The model IGAs, and all IGAs that have been
concluded to date, contain a provision, colloquially referred to as the “mostfavored nation” provision, providing that, with respect to certain terms of the IGA,
including the due diligence rules applicable to reporting Model 1 FFIs and
reporting Model 2 FFIs, a partner jurisdiction is entitled to the benefit of any more