The IRS Forges Ahead with FATCA: Draft Forms and Registration Process

On June 6, the Internal Revenue Service (IRS) released draft versions (as of 5/31/12) of revised Form W-8BEN and new Form W-8BEN-E, which are designed to conform to new Chapter 4 of the Internal Revenue Code, effective 1/1/13. The IRS is also working on its system for the online registration process that will enable foreign financial institutions (FFIs) to become FATCA compliant as described below, since the IRS expects FFIs to register during the period 1/1/13-6/30/13 in order to ensure that U.S. withholding agents making payments to them will treat them as properly registered by 1/1/14 when FATCA withholding generally begins. We share below important aspects and key insights regarding both of these developments.


The Foreign Account Tax Compliance Act (FATCA) added Chapter 4 to the Internal Revenue Code, which generally provides that an FFI (e.g., a foreign hedge fund, private equity fund, etc.) will need to be registered as a Participating FFI (PFFI) (or a Deemed-Compliant FFI) in order to avoid a 30% withholding tax on withholdable payments (generally U.S. source passive income (FDAP) and gross proceeds from the sale of U.S. securities). On 2/8/12, the Treasury Department issued proposed regulations for FATCA implementation which require foreign persons to document their Chapter 4 status (e.g., foreign individual, PFFI, non-participating FFI, nonfinancial foreign entity, etc.) to their U.S. withholding agents. The proposed regulations are modeled after the familiar Chapter 3 regulations, under which U.S. withholding agents are required to document the status of foreign beneficial owners of payments on U.S. source income, which they make generally by obtaining Forms W-8BEN, W-8IMY, etc. (referred to below as the “old forms”).

New Draft W-8BEN Forms

Form W-8BEN is used by the foreign beneficial owner of U.S. source income to certify its status as foreign and, if applicable, claim a reduced rate of withholding pursuant to a treaty. The old Form W-8BEN was used by an individual, corporation, or other beneficial owner that was not a pass-through entity (which instead uses Form W8-IMY). Chapter 4 establishes many new withholding categories for foreign entities, prompting the IRS to create a new six-page Form W-8BEN-E for entities, while making some revisions to the one-page Form W-8BEN  (which henceforth is to be used only by foreign individuals). The new forms are designed to address both Chapter 3 and Chapter 4 status so that withholding agents will not have to maintain two separate forms. The draft forms are expected to be finalized in December 2012, six months after which withholding agents will not be able to accept a prior version of the form. Draft instructions to the forms have not yet been released.

One of the most significant changes in the new draft forms is that a foreign tax identifying number is now required. This is especially significant, not only because foreign persons may be reluctant to provide it, but also because the withholding agent may have certain responsibilities to validate this information. The instructions are expected to address these requirements in detail.

Observation:  If you anticipate difficulty in obtaining a foreign tax identifying number, you may consider not soliciting the new version of the form until you have to (assuming you have a valid version of the old form which did not require it).

Draft Form W-8BEN-E requires a foreign entity to (i) certify its Chapter 3 status (e.g., corporation, tax-exempt entity, etc.), (ii) certify its Chapter 4 status (e.g., Participating FFI,  Nonparticipating FFI, etc.), and (iii) complete a short special section tailored to the status checked in (ii) above. Participating FFIs will have to provide their FFI EIN (line 7), as discussed below, so that the withholding agent will be able to validate it by reference to the list that the IRS will publish, as well as their FATCA ID (line 13) which will be a different, more confidential, number that a PFFI will use for FATCA reporting.

FATCA Registration Process for Foreign Financial Institutions

As of today, the IRS is in the process of reviewing and considering over 200 comment letters it received on the proposed regulations. While the proposed regulations are expected to be finalized in the coming months, the IRS has started designing the registration process based on the proposed regulations so that it can be in a position to have the final online process in place by 1/1/13. Below we set forth highlights of the registration process as the IRS currently envisions it. Please note that the information set forth below is subject to change, as a result of changes that might be made to the proposed regulations before they are finalized. 

How will an FFI register online to become a Participating FFI?

The process starts by logging on to  (a page that already exists) and under the “Information for Foreign Financial Institutions” section, clicking on a link (to be added) entitled “Login or Create FATCA Account”.

Who participates in the registration process?

There are three types of individuals who can potentially participate:

  1. Responsible Officer (RO) - Individual officer of the FFI in a position to register and sign the FFI agreement.
  2.  Point of Contact (POC) - Listed individuals (up to 5 per FFI) selected by the RO (or by an ATP, see 3 below) to help complete all aspects of the registration process except signing. The FFI must have one in-house POC and also may designate certain qualified local or U.S. third parties.
  3. Authorized Third Party (ATP) - Certain in-house individuals and certain types of U.S.-licensed tax professionals designated (through power of attorney procedures) by the RO to perform all registration duties, including signing the FFI agreement/certification. (The standards for eligible individuals are still under development.) While an ATP may sign the agreement, the RO still remains responsible.

Observation:  FFIs should start considering who in their organizations will fulfill these roles and, if necessary, educate them on FATCA

How will the IRS verify the identity of the individual who will sign the FFI agreement [or the annual certification of compliance?
Positive ID verification is required for the individual who will sign the FFI agreement/certification, which is accomplished as follows:

Electronic: The RO may provide his/her SSN or ITIN in the registration system
Paper: The RO may provide new Form 8956 and appropriate documentation
(The process for ATPs is still being developed.)

A FATCA Individual Identification Number (FIIN) will be issued to the RO or ATP once his/her identity is verified. The FIIN is then used by the individual who signs the FFI agreement/certification.

The registration process includes an affirmative statement that the person signing has the authority to act for the FFI.


  • For many FFIs, the RO or ATP may not have a SSN or ITIN. The process to apply for an ITIN or to file Form 8956 (which will probably be similar) can take several weeks. ROs might consider applying for an ITIN now or filing Form 8956 when available, so that they will be able to register without delay when the registration system is available.
  • Some ROs may not want to apply for a U.S. ITIN or go through a similar process by filing Form 8956. Accordingly, they may consider designating by power of attorney an ATP to sign the agreement/certification, since it appears that this will avoid having to apply personally with the IRS. These ROs should start thinking now about who they may designate to act as an ATP and discuss it with them, so as to avoid a delay in their ability to register online when the registration system is available. 

What type of information will be required to be submitted as part of the registration process?

  • The specific type of FFI (e.g., PFFI, Deemed-Compliant, etc.)
  • Types of accounts maintained by the FFI (e.g., for investors in an FFI which is a fund)
  • Mailing and physical address of the FFI
  • Date and country of incorporation or organization
  • FFI country of residence for tax purposes
  • List of all registering members of the lead FFI’s Expanded Affiliated Group
  • Designation of RO and POC, including name, title, address, telephone, and e-mail address

What happens after the agreement/certification is signed and submitted?

  • For a single FFI, after signing the agreement/certification the FFI will be notified when it is approved by the IRS and will receive an FFI EIN. 
  • For an Expanded Affiliated Group, each registering FFI in the group must sign the agreement/certification and, after each FFI in the group has done so, the group will be approved and each FFI will receive an FFI EIN.
  • PFFIs and registered Deemed-Compliant FFIs will be placed on a publicly available list.
  • Once the online application is signed and submitted, the approval is expected to happen “quickly” according to IRS representatives.

Can a PFFI access its own FATCA-related information online?

Yes, FATCA registration will create a user-maintained account which can be edited or modified by the user. Similar to a private online account, it is intended that every time a change is made an e-mail will be sent to the POC(s).

The FFI’s account will have a home page showing:

  • key information, such as status as PFFI, RO, ATP, FIIN, POC, FATCA ID, and FFI EIN
  • next steps (for FATCA compliance)
  • a message board, through which the IRS will communicate with the FFI regarding its FATCA account.


FFIs and those dealing with them should begin now to prepare for use of revised Form W-8BEN and new Form W-8BEN-E and for the registration process outlined above.

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