By: Dave Olenzak. President and Founder of TWC.
Note that the Model 1 extension isn’t automatic. It simply gives Tax Authorities the ability to push their own deadlines farther out in the year. In a Model 1 (and Model 2) countries, the local tax authority agrees to pass local law to require Financial Institutions to provide the IRS’ requested information and the IRS agrees all local Financial Institutions are considered compliant, unless proven otherwise. Since the Financial Institutions are operating under local law, the IRS sets a minimum requirement, but the local authorities can create additional requirements (such as Nil Reports), set their own deadlines, and create their own penalties for failing to comply.