FATCA Status

The Foreign Account Tax Compliance Act (FATCA) went into effect on July 1, 2015, with the intent to target and ultimately close illegal offshore tax shelters. The law requires that any U.S. entity conducting business with a Foreign Financial Institution (FFI) demonstrate that the institution is not holding untaxed U.S. dollars by collecting certification forms. If the certification cannot be acquired, then the U.S. company conducting the transaction is required to withhold 30 percent of the payment. When the law went into effect, it applied to non-cash value property/casualty insurance premiums sent overseas. However, on December 13, 2018, the U.S. Treasury issued draft regulations excluding non-cash value property/casualty insurance premiums. The regulations are retroactive and applies to all open tax years. The notice can be viewed here.

This is a major victory for The Council and was the result of advocacy efforts since FATCA’s inception in 2010. We have long argued that non-cash value insurance premium payments made to overseas insurers cannot be used for the purposes of tax evasion. Their inclusion under the law’s purview was clear regulatory overreach. FATCA regulations have long been a regulatory headache for the global commercial insurance and reinsurance industry. The compliance acrobatics that our members pursued to comply with the law served no purpose – as property/casualty insurance premiums have no cash value to them.

While the U.S. Treasury was able to issue updated guidelines without legislative instruction, we are incredibly grateful to our legislative champions in seeing this issue through to the finish line. Senator Tim Scott (R-SC), Congressman John Larson (D-CT), Congressman Jason Smith (R-MO), and former Congressman Ed Royce (R-CA) were generous in working this issue to the end, seeking sound regulations and limiting the mindless and expensive overreach that hampered the commercial insurance brokerage industry for no public good.

FATCA in Leader’s Edge

The Good, the Bad and…the Potentially Ugly?

By Scott Sinder
March 2017

Don’t Get Busted

By Mike Patten
December 2014

Council’s Portal Eases Compliance

By Scott Sinder
November 2014

Good Form?

By Scott Sinder
October 2014