Several months into the new Foreign Account Tax Compliance Act (FATCA) regime, some new developments have surfaced that should ease your compliance burden.

We expect the IRS and the Department of the Treasury will soon clarify that no FATCA-related reporting to the IRS is required with respect to a premium subject to the federal excise tax if no FATCA withholding was required (because the recipient was documented as FATCA-compliant).

The IRS has issued FATCA transition rules largely relieving new policy placements from FATCA for the balance of this year. Meanwhile, Lloyd’s has obtained the status of “Qualified Intermediary,” which will greatly ease brokers’ FATCA compliance burdens associated with Lloyd’s placements. Finally, to really ease your pain, The Council has launched its FATCA compliance Internet portal—W8BENE.com—which allows for one-stop collection of compliance forms from all participating carriers.

Effective July 1, FATCA regulations generally require a person (known as a “withholding agent”) to withhold 30% of a premium payment unless the person gathers documentation showing that the payee is either a U.S. taxpayer (with an IRS W-9 form), FATCA compliant or FATCA exempt (usually with an IRS W-8BEN-E form).

All U.S. brokers (or their clients) making premium payments are subject to this regime (subject to transition rules). If the premiums pass through a foreign broker, then the U.S. broker must collect IRS Form W-8IMY from the foreign intermediary. That form essentially requires information similar to the IRS Form W-8BEN-E. However, the foreign intermediary also must provide a transaction-specific disclosure or schedule that lists any downstream premium recipients (i.e., the foreign carriers) and provides documentation indicating the FATCA status of those recipients.

As a practical matter, almost all insurers to which premium payments are made either will be U.S. taxpayers or foreign insurers that are exempt from FATCA compliance obligations (other than documenting their exemption). Moreover, it is unlikely a broker will remit any premium to a foreign insurer that does not qualify for a withholding exemption unless the prospective insured is willing to pay a 30% surcharge to secure the coverage. Why? The foreign insurer is likely to take the position that the coverage is not valid absent payment of the full premium.

The Council has launched its FATCA compliance Internet portal - W8BENE.com -which allows for one-stop collection of compliance forms from all participating carriers.

The IRS clarification makes it clear: Brokers generally will not be required to do any FATCA reporting to the IRS. The rules generally require any payment covered by FATCA that is made to a foreign financial institution or non-financial foreign entity to be reported to the IRS on Form 1042-S. The Council has been pressing Treasury on this issue because of the enormous burden it creates on our sector. We’re told Treasury and the IRS do intend to issue guidance clarifying that FATCA premium payments subject to the federal insurance excise tax are exempt from the Form 1042-S reporting obligation if withholding is not required. In other words, as long as the foreign carrier demonstrates it is FATCA compliant or FATCA exempt, we should be relieved of filing Form 1042-S. This is a significant victory. It should greatly reduce compliance costs and streamline compliance obligations.

The transition rules essentially allow new business to be put into place for the balance of this year without adhering to FATCA compliance requirements (provided the payer does not know the foreign recipient will not be FATCA compliant). This is not, however, a complete pass. Brokers still have to collect any W-8BEN-E forms for 2014 transactions by July 2016.

The IRS has also announced it will take into account good-faith efforts to comply for the next two years when evaluating potential breaches. The bottom line: You need not worry about getting everything perfect from the get-go, and the removal of the 1042-S reporting requirements should make your compliance efforts much easier.

Meanwhile, Lloyd’s has informed us (and Treasury verified) it has been granted “Qualified Intermediary” status. As a result, Lloyd’s will bear the FATCA compliance obligations to collect Form W-8BEN-E from Lloyd’s syndicates. Thus a broker can effectively treat all of Lloyd’s as a single entity for FATCA purposes.

The Council’s FATCA compliance portal, W8BENE.com, is up and running. The goal is to serve as a repository of all carrier W-8BEN-E and W-9 forms as well as to house foreign intermediary W-8IMY forms (but without the transaction-specific schedules that have to be supplied directly). Lloyd’s W-8IMY form is available on the site for all subscribing brokers, and we are working to have as many foreign carrier W-8BEN-E forms included in the repository as possible.

Carriers also will have the ability to update their forms. The portal will track which brokers have reviewed which forms and will notify brokers whenever a form they have reviewed has been modified or removed. The portal includes materials to assist your compliance efforts: a general background memo, a more detailed legal memo and a set of frequently asked questions that we will continue to update.

We are still working feverishly to secure a complete FATCA exemption for property-casualty placements, but for now we are hopeful these recent developments at least will make your compliance burdens more bearable.