United States

FATCA for Non-financials: Why Should Nonfinancial Companies Care About FATCA?


Kim Majure: Well, non-financial companies have to care because FATCA was very, very broadly drawn as a legislative regime. It's born from tax evasion. Right? There were big scandals and Congress had to respond. And so, while they were responding, they said, "Well, you know, as long as we're going to look for secret piggybanks around the world of Americans and try to figure out where they are and who is hiding them, we might as well ask everyone."

So, whereas FATCA really started with the financials, kind of on the hot seat, it pretty quickly expanded into the non-financials as well, and so, you know, the FATCA, what the regime does is it takes payments that start in the United States and get paid to foreign entities of some kind. Any entities, financial or nonfinancial that could house these secret piggybanks, and FATCA says, "Well, those payments are going to be tagged." And we need to know who is on the other end, and in particular, we need to ask the people on the other end, "Do you know where U.S. investors are?" 

So if they know where U.S. investors are, meaning if they either have significant U.S. investors in those entities, or those entities are holding U.S. accounts, or accounts owned by U.S. persons, then because those entities are really black boxes and the only ones who know, they have to help out the U.S. government, and they have to, you know, do the work of running around and identifying the U.S. owners or the U.S. account holders and disclosing where they are to the IRS.