The goal of the Federal Account Tax Compliance Act (FATCA) is to prevent U.S.-based companies from hiding income overseas and failing to pay taxes on that income. FATCA authorizes the IRS to implement a 30 percent withholding tax on foreign companies in cases where it believes income should be taxed.
Many know that FATCA places a burden on banks to report on overseas accounts to the IRS. However, it also puts a reporting burden on insurance brokers, who are now required to collect IRS paperwork, as U.S. insurance premiums are among the payments subject to FATCA regulations. As the Council of Insurance Agents and Brokers (CIAB) explains: “The FATCA regime requires that each recipient of premium dollars from a U.S. source be documented with IRS Form W-9 (for companies that are U.S. taxpayers), W-8BEN-E (for companies that are not U.S. taxpayers) or W-8IMY (for foreign intermediaries). As a general matter, a U.S. broker will need to collect one of these forms from each payee to which you remit premium.”
To make it easier for brokers to comply with the FATCA guidelines, the CIAB has developed a portal that houses both carrier data and broker data, including Forms W-9, W-8BEN-E and W-8IMY. The idea is to help expedite the FATCA compliance process for brokers. The Plexus Groupe is a member of the CIAB, the top advocacy group for insurance agents and brokers.
If you would like more information on FATCA compliance, or would like to know about the many strategic insurance solutions Plexus provides, contact a Plexus client representative at 847-307-6100 (Chicago/Deer Park) or 972-770-5010 (Dallas/Oklahoma City), or reach out to us via the Web at plexusgroupe.com.
References
Hoffman, Mark. “Council portal to help insurance brokers comply with FATCA rules”. Business Insurance, May 14, 2014.
FATCA Portal FAQ. Council of Insurance Agents & Brokers
