Baker Tilly Helps Asset Management Companies Understand New PFIC Regulations and FATCA Deadlines

CHICAGO – The Internal Revenue Service and Treasury Department have issued new, temporary regulations impacting passive foreign investment company (PFIC) shareholders, which have the potential to bring better than expected outcomes for many individuals. Accounting and advisory firm Baker Tilly Virchow Krause, LLP (Baker Tilly) has reviewed these regulations, and provides insight in a new whitepaper, Good news for passive foreign investment company shareholders.

"The temporary PFIC regulations have clarified questions about who is required to report excess distributions, share disposal, or purging of stock," said Christine Anderson, CPA, CITP, Financial Services Industry Leader at Baker Tilly. “As a result, the determination of ownership and filing requirements exempts more individuals than originally anticipated.”

Good news for passive foreign investment company shareholders is available online and addresses:

  • Determination of ownership of a PFIC
  • Annual filing requirements
  • Exceptions to the filing requirements

Additionally, the Foreign Account Tax Compliance Act (FATCA) registration deadline for avoiding a 30 percent withholding is fast approaching. Baker Tilly recommends foreign financial institutions (FFIs) register before April 25, 2014, even if they are in a jurisdiction entered in a Model 1 intergovernmental agreement (IGA). Registering will help FFIs avoid potential withholding issues if a Global Intermediary Identification Number cannot be provided by June 30, 2014.

“Foreign financial institutions must register with the IRS and comply with investor due diligence and verification procedures to identify US account holders,” added Anderson. "It’s important that asset management organizations stay informed of international tax requirements related to passive foreign investment companies and the Foreign Account Tax Compliance Act.”

For more information, including a complete list of companies that have entered into Model 1 IGAs, visit Deadlines approaching for Foreign Account Tax Compliance Act registration.


The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely.  The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

About Baker Tilly Virchow Krause, LLP (bakertilly.com)

Baker Tilly Virchow Krause, LLP (Baker Tilly) is a nationally recognized, full-service accounting and advisory firm whose specialized professionals connect with clients and their businesses through refreshing candor and clear industry insight. With approximately 2,700 employees across the United States, Baker Tilly is ranked as one of the 15 largest accounting and advisory firms in the country. Headquartered in Chicago, Baker Tilly is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 147 countries, with 30,000 professionals. The combined worldwide revenue of independent member firms is $3.2 billion.