Don’t ruin your customer relationship to meet FATCA requirements.sad
Jeffrey S. Freeman, J.D., LL.M
Step back from all the changes your financial institution has undertaken in the past year – Did you do the changes to increase customer satisfaction or to make the IRS happy? Chances are your organization has been in a scramble and has forgotten the key part of your business. It is possible to strengthen your client relationship and meet FATCA requirements, it just takes some planning.
1. Assign a Responsible Officer
The IRS requires that a Responsible Officer be named that can verify that all deadlines have been met. Personally liable for the institutions compliance, this C-level officer sets the tone for the FATCA approach.
2. Document Customer Contacts
Having a strong line of communication with your client will make the compliance process smoother. Keeping thorough documentation of every reach out to the customer and when the customer provides contact back will provide a strong audit trail as a proactive defense against possible regulatory scrutiny, fines, and reputational damage.
3. Withhold where necessary
You can work harder, or you can work smarter. FATCA requires institutions to terminate a client relationship or impose a 30% tax withholding on Non-Participating FFIs and Recalcitrant Account Holders in Non-IGA Countries. You could spend your time developing a complex withholding scheme in order to be FATCA and IRS compliant.
But, even with the technological capabilities you would be spending unnecessary time and resources to complete this for FATCA. Instead, establish a systematic and client focused communication program. Through understanding the client population you will know which clients should be off boarded, place a priority based on IGA statuses, and spend your resources to educate and outreach to the right clients. This will shrink the client population that needs withholding, making it easier to manage. Most important, you can focus on activities that will drive your business like positive client connections while meeting compliance for FATCA and the IRS.
About Freeman Tax Law
Freeman Tax Law is equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.
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