In a welcome announcement, certain transitional rules to implement aspects of the Foreign Account Tax Compliance Act (FATCA) have been extended. Issued on September 18, 2015, this notice announces that the Department of Treasury and the Internal Revenue Service intend to amend the regulations to extend the period of time the transitional rules will apply. Until this amendment officially occurs, taxpayers may rely on the current provisions.
So what, exactly, was extended? Here are a few of the key, widely applicable, extensions:
- Gross proceeds withholding to payments occurring after December 31, 2018.
- Time for sponsored entities to get their own registration completed to December 31, 2016.
- Deadlines for compliance in countries still developing procedures to implement intergovernmental agreements to September 30, 2016.
Our international tax team can assist in compliance with FATCA requirements. Please reach out to us if you have general questions about FATCA or if you believe specific items in this this notice may be applicable to you.
Although some U.S. companies have a history of changing audit firms, many have developed long-term relationships with their auditors. After all, we’re known for adding life to any party—what’s not to love?
These relationships may be cut short, however, due to the audit rotation rules governing a company’s foreign parent.
Most countries have developed their own audit standards. While there are similarities among countries in many key areas, one area that’s maddeningly inconsistent pertains to audit firm rotation requirements. While public companies in the United States are required to rotate audit partners periodically, nothing has been addressed regarding audit firms. (There are currently no rotation requirements for nonpublic U.S. companies). This is not the case for many foreign countries, however.
While most foreign auditing standards aren’t clear as to whether subsidiaries outside the home country must rotate audit firms to match their parents’ rotation schedules, foreign subsidiaries and their audit firms are more likely to be impacted when they make up a much larger portion of the consolidated group. And both audit firms and audit partners may be affected.
Don’t be caught off guard. If audit rotation could be an issue for your subsidiary, address it with your parent company’s finance team. This will allow you to better understand the group auditor’s viewpoint and, if necessary, plan ahead to reduce any unforeseen disruptions. After all, communication is the cornerstone of any successful relationship.