If accounts payable is paying interest because the company is purchasing something on a deferred basis, “that would be ordinary course of business,” Arnold says.

On the other hand, Arnold says corporate treasury is likely to be responsible for payments of the type that require compliance with FATCA. For example, if the company has borrowed money and treasury is making interest payments, any payments made to overseas entities would be subject to FATCA.

“The treasury department is going to need to be collecting the information from the people to whom they're making the interest payments to see if they can get the documentation required under FATCA to make the payment without a withholding tax,” Arnold says.

FATCA exempts payments to nonfinancial foreign entities that are publicly traded, but treasury would still need to get documentation that the company is publicly traded.

Other treasury payments that could be subject to FATCA include the company's buying back its stock or bonds, or dividend payments, Arnold says. “Some multinationals do their own dividend payments,” she says. “That's going to be a pretty big burden. They need documentation from all shareholders that are foreign entities.”

The U.S. Treasury's proposed regulations are likely to have the biggest effect on foreign financial institutions.

“There certainly have been a lot of concerns raised about FATCA, from both the perspective of what would be involved in complying, the burdens that would be imposed in systems changes and new obligations, and also the potential for there to be a conflict between some of the requirements under FATCA and obligations under local law,” says Barbara Angus, a principal in the international tax services practice of Ernst & Young. “The proposed regulations, and it is a very big detailed package of proposed regulations, have made some significant refinements that address each of those areas.”

While previous IRS notices had discussed procedures that financial institutions would have to implement to investigate and document all their existing accounts and the account holders, Angus says, “the proposed regulations do a lot to try to focus that effort on relying on existing information, as opposed to needing to seek new information, and on larger accounts.” That sort of targeting “will allow institutions to focus their efforts on the accounts that have the greatest potential for concern,” she says.

And to alleviate concerns that banks' reporting data about accountholders to the Internal Revenue Service would violate local laws, Treasury last week announced an alliance with regulators in France, Germany, Italy, Spain and the U.K. to implement FATCA. In those countries, banks will report to their own regulators, which will relay the information to the U.S.

“Treasury is working directly with foreign governments to find a mechanism so that information that the IRS is seeking to obtain under FATCA could be delivered through the government-to-government mechanisms that exist under our tax treaties,” Angus says, calling the alliance “a significant step in addressing some of the concerns that there are laws in jurisdictions that would prevent an institution from being able to provide information directly to the IRS.”

The proposed regulations also phase in some of FATCA's deadlines, Angus says.

For an earlier article about the Foreign Account Tax Compliance Act, see FATCA Changes Ahead.