Revenue Note for Guidance

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Revenue Note for Guidance

891E Implementation of the Agreement to Improve Tax Compliance and Provide for Reporting and Exchange of Information concerning Tax Matters

Summary

The Foreign Accounts Tax Compliance Act (FATCA) forms part of the US Hiring Incentives to Restore Employment Act of 2010. The overall aim of this legislation is to combat tax evasion by improving exchange of information between tax authorities in relation to US citizens and residents who hold assets off-shore. FATCA obliges all US paying agents to withhold tax of 30% from payments of US source income that are made to any non-U.S. financial institution unless that institution has entered into an agreement with the US Internal Revenue Service (‘ad IRS’) to directly report certain information on their US account holders.

The Minister for Finance, on behalf of the Government, signed an Intergovernmental Agreement (IGA) with the United States on 21 December 2012. The Agreement provides for the automatic reporting and exchange of information on an annual basis in relation to accounts held in Irish financial institutions by U.S. persons, and the reciprocal exchange of information regarding U.S. financial accounts held by Irish residents.

Section 31 of the Finance Act 2013 inserted Section 891E into the Taxes Consolidation Act 1997. This section enables the Revenue Commissioners to make detailed regulations to implement the IGA.

Details

(1) Subsection (1) provides that the section applies for the purpose of implementing the Agreement to Improve Tax Compliance and Provide for Reporting and Exchange of Information concerning Tax Matters (United States of America) Order 2013 (S.I. No 33 of 2013).

Definitions

(2) “Agreement” is defined as the Agreement Between the Government of Ireland and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA done at Dublin on 21 December 2012;

“competent authority” means the Secretary of the Treasury in the United States of America or his or her delegate;

“register” means to register with such body of persons, agency or authority as is specified in regulations under this section;

“registered financial institution” means a financial institution that has registered in accordance with the regulations;

“tax reference number” means a U. S. Tax Identification Number (TIN).

(3) Subsection (3) provides that, unless otherwise provided for in section 891E or in the regulations made under section 891E, or unless the context otherwise requires, a word or expression used in the section or in the regulations (or in both) that is also used in the Agreement has the same meaning as in the Agreement.

Regulations

(4) Subsection (4) provides that the Revenue Commissioners with the consent of the Minister for Finance, may make regulations—

  1. (4)(a) requiring financial institutions to register in circumstances specified in the regulations,
  2. (4)(b) as regards the return by a registered financial institution of information on accounts held, managed or administered by the financial institution,
  3. (4)(c) relating to the return by a registered financial institution of payments made to a non-participating financial institution.

(5) Subsection (5) states that the regulations may include provisions—

  1. (5)(a) specifying the time limits within which the financial institutions must register
  2. (5)(b) requiring registered financial institutions to make a return of information in relation to U.S reportable accounts,
  3. (5)(c) setting out the circumstances in which a financial institution will not be required to make a return,
  4. (5)(d) setting out the circumstances in which financial institutions will be treated as non-participating financial institutions,
  5. (5)(e) setting out the date by which financial institutions will have to make the returns required under the regulations,
  6. (5)(f) prescribing the format of the return,
  7. (5)(g) specifying the accounts that are not treated as financial accounts,
  8. (5)(h) specifying the accounts that are U.S. reportable accounts,
  9. (5)(i) specifying the information to be included in a return,
  10. (5)(j) specifying the currency in which the financial institutions is required to report as well as the rules for conversion of amounts denominated in a different currency,
  11. (5)(k) requiring financial institutions to identify the financial accounts held by U.S. persons who fall within categories to be specified in the regulations,
  12. (5)(l) specifying the records and documents to be examined and obtained by the financial institution to enable the institution to identify the financial accounts referred to in paragraph (k),
  13. (5)(m) specifying additional requirements in relation to the identification and documentation of high value accounts,
  14. (5)(n) specifying the records and documents used to identify the holder of a U.S. reportable account that must be retained by the financial institution,
  15. (5)(o) specifying the financial accounts in respect of which the financial institution is not required to identify the account holder,
  16. (5)(p) setting the circumstances in which a financial institution is required to aggregate all financial accounts held by the same individual or entity for the purpose of reporting those accounts,
  17. (5)(q) specifying the actions to be taken by a registered financial institution where there is a change in circumstances in regard to the account holder,
  18. (5)(r) setting out the conditions under which a financial institution may appoint a third party as its agent to carry out the duties and obligations imposed on it by the regulations,
  19. (5)(s) setting out the circumstances in which an account held by an NFFE (Non-Financial Foreign Entity) will be a U. S. reportable account,
  20. (5)(t) setting out the circumstances in which a registered financial institution may make a nil return,
  21. (5)(u) specifying the information to be reported by the registered financial institution in relation to payments to non-participating financial institutions,
  22. (5)(v) imposing an obligation on, and setting out the circumstances and time in which, a financial institution is obliged to obtain, and a customer is obliged to provide, a tax reference number,
  23. (5)(w) defining “books” and “records” for the purposes of the regulations,
  24. (5)(x) determining the manner of keeping records and setting the period for retention of records so kept,
  25. (5)(y) enabling the authorisation of Revenue officers, for the purpose of such officers
    1. requiring—
      1. (5)(v)(i) the production of books, records or other documents,
      2. the provision of information, explanations and particulars
      3. persons to give all such assistance as may reasonably required and as is specified in regulations

      2. in relation to financial accounts within such time as may be specified in the regulations
    2. (5)(v)(ii) enabling the officers to make extracts from or copies of books, records or other documents or requiring that copies of such books, records and documents be made available,
  26. (5)(z) specifying such supplemental and incidental matters as appears to the Revenue Commissioners to be necessary—
    1. to enable any person to fulfill their obligations under the regulations
    2. for the general administrations and implementation of the regulations.

(6) Subsection (6) provides that every regulation made under the section must be laid before the Dáil as soon as may be after it is made and if a resolution annulling the regulation is passed by the Dáil within the next 21 days on which the Dáil has sat after the regulation has been laid before it, the regulation shall be so annulled but without prejudice to the validity of anything previously done thereunder.

(7) Subsection (7) provides that a Revenue officer authorised under the regulations may enter any premises or place of business of a financial institution for the purposes of

  1. (7)(a) determining whether information
    1. included in a return was correct
    2. not included in a return was correctly not included
  2. (7)(b) examining the procedures put in place by the financial institution for the purposes of complying with its obligations under the regulations.

(8) Subsection (8) provides that a person who does not comply with

  1. (8)(a) the requirements of a Revenue officer in the exercise of the officer’s powers or duties under section 891E or the regulations
  2. (8)(b) with any requirements of the regulations

will be liable to a penalty of €1,265.

(9) Subsection (9) provides that section 4 of the Post Office Savings Bank Act 1861 will not apply to the disclosure of information required to be included in a return made under the regulations.

(10) Subsection (10) enables the Revenue Commissioners to exchange the information received from registered financial institutions with the U.S. competent authority within 9 months of the end of the tax year to which the information relates.

(11) Subsection (11) is an anti avoidance provision that provides that where arrangements are entered into by any person and the main purpose or one of the main purposes of the arrangements is the avoidance of any of the obligations imposed by section 891E or the regulations, then the section and the regulations shall apply as if those arrangements had not been entered into.

Relevant Date: Finance Act 2021