The IRS has announced that, in conjunction with the Department of Treasury, it will amend regulations under Internal Revenue Code Sections 1471-1474 to extend the time that certain FATCA transitional rules will apply. 

The amendments will extend:

• The date for when withholding on gross proceeds and foreign passthru payments will begin;
• The use of limited branches and limited foreign financial institutions (limited FFIs); and
• The deadline for a sponsoring entity to register its sponsored entities and redocument such entities with withholding agents.

In addition the notice announces that Treasury and the IRS intend to amend the regulations under chapter 4 (FATCA vs. chapter 3 for Non-Resident Alien reporting rules involving payments of U.S. sourced income) to modify the rules for grandfathered obligations in relation to collateral.

This provides additional time for withholding agents to modify their systems to address the phase-out of the transitional rules consistent with the information reporting and compliance objectives of FATCA.