Financial organizations expect to exceed their original budget for compliance under the Foreign Account Tax Compliance Act (FATCA), according to a survey by Thomson Reuters.
Thomson Reuters conducted a survey of approximately 300 financial institutions during a recent webinar and found that 55% expect to exceed their original budgets, compared with 35% that say they expect to remain on budget. Some 27% expect their spending on FATCA compliance in 2015 to cost between $100,000 and $1 million, compared with only 16% in January 2014.
This demonstrates an increase of 11 percentage points and suggests that financial institutions are only now beginning to appreciate the complexity and significant burden of FATCA.
A heavier burden ahead
The timing of the online survey is of particular importance, coming immediately following the announcement by the Organisation for Economic Co-operation and Development that 51 countries had signed up to the Common Reporting Standard (CRS), which will require increased reporting on a greater number of customers.
Observers say CRS is a game-changer. It dramatically widens the reporting scope and this puts massive strain on budgets. A financial institution needs to be able to identify the tax residence of each of its customers and have the ability to report this to the relevant authorities. This increase in the scope, depth and complexity of reporting is a very significant challenge.
FATCA reporting deadlines begin on March 31, 2015, and financial organizations are turning their attention to how to manage their reporting obligations.
FATCA form instructions updated
In other FATCA news, the IRS issued an update (http://www.irs.gov/Businesses/Corporations/Update-to-the-Instructions-for-Form-8966-For-2014) to the instructions for Form 8966, “FATCA Report.”
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