Sapient rolls out FATCA compliance service
Sapient Global Markets has released a suite of software and services designed to help companies meet FATCA, the controversial new US regulation that obliges banks to report their US customers so that they can be taxed.
Under FATCA, which was passed into law in 2010, banks are required to report details of any US customers to the IRS so that they can be properly assessed for tax. The rules include an obligation for financial institutions to screen their electronic account data for indicia (indicators) suggesting whether a client might have a responsibility to pay taxes according to any agreement with a relevant nation. Such information could include citizenship or residency status, birthplace, correspondence address or telephone number. The rules are controversial, partly because of the burden they impose on banks and partly because the US rules are extra-territorial and apply regardless of jurisdiction, so long as US citizens are or US corporations are involved. The penalty for failing to comply with FATCA is a 30% tax on all US income.
Sapient’s new rollout is designed to provide back office identification, reporting and consulting services to banks. These include collecting transaction data in the required formats, and feeding it to the IRS through Sapient’s compliance management and reporting system. The firm has also said it aims to reduce the data burden on its customers by helping firms to quickly and accurately identify relevant accounts and transactions.
“With the final FATCA regulations in place since January 2013, US withholding agents and foreign financial institutions continue to seek IRS clarification on registration, client classification, withholding and reporting,” said Chris Collins, director, Sapient Global Markets. “The six-month delay to some elements of FATCA to 2014 has given firms time to revisit their FATCA solution design, develop synergies with other regulatory projects and optimise their program spend on tax operations and other regulatory reporting. Our understanding the regulatory landscape and the specific needs of FATCA and related tax and regulatory change initiatives improves the ability of firms to identify the best course of action and deliver software and services that help meet the revised FATCA deadlines.”
The deadline for firms to register on the IRS portal and obtain an ID number for their firm was originally July 2013, but was later pushed back to mid-August. However, the obligation to provide customer details to the IRS was been set back six months, to July 2014. The delay was attributed by the US Treasury to the need to allow more time for banks to comply – and to allow time for more deals to be reached with foreign governments over sharing tax details.
The UK government is currently working towards its own version of FATCA, which will encompass the overseas territories of the UK such as the Cayman Islands and the Falklands.