Comment Letter to IRS Re: Notice 2010-60, Submitted October 12th, 2010 [.pdf]
We are pleased to provide you with the following comments to the Foreign Account Tax Compliance Act (“FATCA”) provisions of the Hiring Incentives to Restore Employment Act. Our comments focus particularly on the potential application of the FATCA provisions, in light of the preliminary guidance provided in Notice 2010-60 (“Notice”),1 to foreign pension and retirement funds.
I. Overview
The substantive FATCA rules of section 1471 apply to foreign financial institutions (“FFIs”). An FFI is broadly defined2 and generally appears to encompass foreign retirement accounts including pension funds. Accordingly, absent specific guidance to the contrary the obligations of section 1471 can apply to most types of foreign retirement funds. Section 1471 does not apply, however, to the extent that the beneficial owner of a subject payment is part of a class of persons posing a low risk of tax evasion as identified by the Secretary.3
A foreign entity that is not an FFI is a nonfinancial foreign entity (“NFFE”). NFFEs are subject to substantive FATCA provisions found principally in section 1472.4 Similar to the section 1471 provisions, the section 1472 provisions do not apply to the extent that the beneficial owner is part of a class of persons identified by the Secretary as posing a low risk of tax evasion.5
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