Summary of Chapter 4 and Related Matters

Under chapter 4 of the Internal Revenue Code (Code) (sections 1471–1474 and Treasury Regulations (Regulations), commonly referred to as the Foreign Account Tax Compliance Act or FATCA), a withholding agent is generally required to deduct and withhold tax equal to 30% of a withholdable payment made to a foreign financial institution (FFI) unless the FFI has entered into an FFI agreement with the IRS to be treated as a participating FFI (PFFI). Pursuant to the FFI agreement, a PFFI agrees to satisfy, among other things, certain reporting obligations for each calendar year concerning its U.S. accounts, accounts held by owner-documented FFIs (ODFFI), and certain aggregate information concerning accounts held by recalcitrant account holders. An FFI may also be excepted from chapter 4 withholding if it is deemed to comply with the provisions of section 1471(b) under Regulations section 1.1471-5(f) or is otherwise exempt from withholding if it is an exempt beneficial owner for chapter 4 purposes under Regulations section 1.1471-6. Chapter 4 also requires a withholding agent to deduct and withhold tax equal to 30% of a withholdable payment made to a passive non-financial foreign entity (NFFE) unless the passive NFFE certifies to the withholding agent that it does not have any substantial U.S. owners or provides certain identifying information with respect to its substantial U.S. owners. A withholding agent is also required to report information about substantial U.S. owners of a passive NFFE and specified U.S. persons holding certain equity or debt interests in a payee that the withholding agent has agreed to treat as an ODFFI.

To facilitate FATCA implementation for FFIs operating in jurisdictions with laws that would prevent the FFIs from complying with the terms of the FFI agreement, the Treasury Department developed two alternative model intergovernmental agreements (IGAs) (Model 1 IGA and Model 2 IGA) that would allow FFIs operating in such jurisdictions to perform due diligence and reporting on their account holders to achieve the objectives of FATCA. FFIs reporting under a Model 1 IGA (Reporting Model 1 FFIs) report certain information about their U.S. reportable accounts and certain payees, as required under the applicable IGA to their respective tax authorities. Reporting Model 1 FFIs do not file Form 8966 directly to the IRS. FFIs reporting under a Model 2 IGA (Reporting Model 2 FFIs) report directly to the IRS on Form 8966 certain information about their U.S. accounts and certain aggregate information concerning account holders who do not waive legal restrictions for the FFI to report this

Instructions for Form 8966 (2025) Catalog Number 59612Q Apr 16, 2025 Department of the Treasury Internal Revenue Service www.irs.gov

information (non-consenting U.S. accounts). Trustee-Documented Trusts subject to a Model 2 IGA are reported by the trustee of the Trustee-Documented Trust.