Michael Mundaca works at Ernst & Young in Washington, DC, as co-leader of the Americas Tax Center and the National Tax Department. Having previously served as U.S. Treasury Department assistant secretary for tax policy, Michael Mundaca has extensive experience in diverse aspects of the U.S. and global tax systems.
The January 17 weekly roundup of the Americas Tax Center featured the release by the IRS and Treasury Department of additional guidance on the Foreign Account Tax Compliance Act (FATCA). Among other functions, FATCA ensures that U.S. and foreign financial institutions, or FFIs, that act as withholding agents are identifying their payees.
U.S. withholding agents are obligated to withhold taxes on specified payments to nonparticipating FFIs that do not report information to the IRS pertaining to U.S. accounts. This withholding extends to nonfinancial foreign entities that do not provide required information on substantial U.S. owners.
The final FATCA regulations make a number of changes, including a relaxation of the documentary evidence that certain entities are required to provide. Additional revisions encompass reason-to-know rules for payments made by withholding agents to branches, and the definition of nonreporting foreign financial institutions under intergovernmental agreements.
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