The IRS has finalized regulations (T.D. 9808 and T.D. 9809) under the Foreign Account Tax Compliance Act (FATCA, also known as "Chapter 4"), as well as Chapters 3 and 61 of the Internal Revenue Code (i.e., the Section 1441 rules applicable to withholding and reporting on payments made to nonresident aliens and the Form 1099 reporting and backup withholding requirements imposed on payments to US persons). The final regulations generally adopt the proposed and temporary regulations issued by the IRS in 2014 that "conformed" Chapters 3 and 61 to Chapter 4. Some modifications, however, were made in response to comments received by the IRS over the last two years.

Along with the final regulations, the IRS also issued related temporary and proposed regulations under Chapters 3 and 4. The temporary and proposed regulations under Chapter 3 (T.D. 9808 and REG-134247-16) revise some of the withholding requirements for certain US-source income paid to foreign persons, and outline the requirements foreign persons must satisfy to claim withholding tax refunds. The temporary and proposed regulations under Chapter 4 (T.D. 9809 and REG-103477-14) outline the requirements that a "sponsor" of a foreign financial institution (FFI) must meet to assume responsibility for performing due diligence on the FFI’s behalf.

The final and temporary regulations are effective January 6, 2017. A Tax Alert on the regulations is forthcoming.