Foreign Account Tax Compliance Act Solution (FATCA)

The Foreign Account Tax Compliance Act (FATCA), which comes into effect on September 30, 2015 is intended to reduce the levels of tax avoidance by U.S. citizens and entities through Foreign Financial Institutions (FFIs).

Challenge

Provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010 :

  • FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts.
    FATCA focuses on reporting:

i. By U.S. taxpayers about certain foreign financial accounts and offshore assets.

ii. By Foreign Financial Institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.

iii. The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.

  • Address challenges of customer identification, reporting and withholding.

Solution

Key Capabilities

  • Assess entire customer base against FATCA indicia to identify customers as US persons, non-US persons or recalcitrant.
  • Annual reporting on identified US persons –to include name, address, tax payer identification number, account balance and details of the transaction.
  • Withhold 30% tax on certain US sourced payments paid to recalcitrant account holders and non participating Financial Institutions.

RCI’s FATCA solution can help companies automate creating, printing, auditing and distributing the complete range of W-9, W-8BEN and W-8BEN-E forms.

Benefits

  • Address challenges of customer identification, reporting and withholding.
  • Achieving a single view of customers is a key benefit of implementing this solution.

Features

Predefined Rules Conduct a detailed review for Account Balance of $ 250,000 or more (For Entity)
Account Balance of $ 1,000,000 or more (High Value Individual Account) and Customer whose Relationship Type is Private Banking only
Account Balance between $ 50,000 to $ 1,000,000
Account Balance of $ 50,000 or more with account documented as U.S.
Alert Manager Provides ability to review the alerts generated and determine if further investigation is required or dismiss an alert. Includes ability to Track source of alerts and issues tracking, review alerts
OFAC Check (check against three OFAC lists – ADD, ALT & SDN)
US Indicia check (check if account has “Indicia” of U.S status, such as a U.S. mailing address)
Case Due Diligence Provides ability to further research alerts converted to case
Identity Verification (IDV) check using Experian Authentication Level 1
Manage IRS Forms (W-8BEN, W-8BEN-E & W-9), save and print forms in PDF
Attach Questionnaire / Surveys as part of research for High Value Accounts
Manage Evidences related to research
Classify account as US, Disclosed-US, Non-US or Recalcitrant
Withholding For all Recalcitrant accounts, withhold taxes on yearly basis based on tax withholding formula to calculate Passthru percentage and total tax amount
Data Warehouse Process data file from multiple internal sources
Process data file from multiple external sources
Process data stream from multiple internal sources
Process data stream from multiple external sources
Other Common Security Module
Integration of SmartyStreets Third Party API for US Address Verification
Audit Manager to log all user actions

Agency Compliance

Internal Revenue Service (IRS)
http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA/

For IRS compliance, data for use by the following will be generated:

  • IRS Form W-9
  • IRS Form W-8BEN
  • IRS Form W-8BEN-E

Reports

Data Warehouse provides enhanced reporting. Key out of box report includes:

Title
Customers who match rule criteria
No Substantial US Owners
Substantial US Owners
List of Recalcitrant accounts and Total taxes withheld
List of FATCA Classification Status for Accounts
Alert Lifecycle
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FATCA_Large - This feature highlights high level FATCA Solution process flow.
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