IRS Confirms Delay in Reporting Requirements for FTINs

The IRS yesterday formalized previously announced plans to allow withholding agents more time to meet requirements of obtaining foreign taxpayer identification numbers — or a reasonable explanation for not having one — and dates of birth on required documentation for foreign customers.

The American Bankers Association and other industry groups have been advocating for more time to comply with requirements that were announced in early January. These January regulations originally required withholding agents to treat customer documentation that did not have FTINs (absent a reasonable explanation) by Jan. 1, 2018, as invalid. If documentation is treated as invalid, withholding agents would have to withhold on payments made to those customers on or after Jan. 1, 2018. Bankers indicated that there was not adequate time to complete appropriate documentation by the original due date, with a likely effect of excess withholding on customers.

While withholding agents will still need to collect FTINs, the requirements generally now apply to forms that are collected after Jan. 1, 2018. In addition, withholding agents will have until 2020 to obtain FTINs or a reasonable explanation for not having an FTIN with respect to documentation collected prior to 2018. The notice also includes other favorable relief for foreign financial institutions and other background and definitions. For more information, contact ABA’s John Kinsella.