WASHINGTON (6/5/14)--The Credit Union National Association has written a letter to the Internal Revenue Service Office of General Counsel outlining concerns with the Foreign Account Tax Compliance Act (FATCA), particularly the broad reach of the act's coordinating regulations issued in March.
"CUNA urges the IRS to issue guidance specifically for U.S. financial institutions that do not transact business with foreign financial institutions or nonfinancial foreign entities. The several hundred pages of FATCA-related regulations, both Chapters 3 and 4, are complex," reads the letter, signed by Colleen Kelly, federal compliance counsel at CUNA. "The majority of the rules do not apply to domestic U.S. financial institutions, but important compliance information could be buried anywhere in all of these regulations."
In addition to a request for written guidance, CUNA expressed concern with new procedures addressing Forms W-8BEN and W-9.
W-8BEN forms are obtained by credit unions from their nonresident alien members who claim exception for deposit interest income. Under the new rules, the form could be considered incorrect if the form contains "U.S. indicia," such as a current U.S. mailing address.
As for the changes to the Form W-9, to avoid confusion, CUNA believes that FATCA language that does not apply to U.S. accounts should not be required on U.S. account documentation.