Regulatory Priorities

WSJ: PEGCC Issues Comment Letter on FATCA

By Michael Wursthorn

The Private Equity Growth Capital Council’s letter to regulators urging changes to the Foreign Account Tax Compliance Act should open a dialogue regarding several hurdles the industry would have to clear to comply, according to tax experts.

The 12-page letter sent Monday to the U.S. Treasury Department and the Internal Revenue Service calls for a more efficient process for private equity firms with foreign funds or non-U.S. investors required to register as foreign financial institutions, as well as some leeway when dealing with foreign investors unwilling to comply.

“Changes to the proposed regulation remain possible,” according to Ken Spain, the vice president for public affairs and communications at the PEGCC. “The ultimate objective of the PEGCC is to make the compliance process more efficient and effective for both the regulators and the regulated entities without impacting the substantive goals.”

Signed into law in 2010, FATCA requires foreign financial institutions to have a signed agreement with the IRS by 2014 to avoid a 30% withholding tax on all U.S.-sourced income, such as dividends and sales proceeds. Foreign financial institutions could include foreign funds as well as domestic funds with international investors.

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