Congress enacted the Foreign Account Tax Compliance Act (FATCA) as part of the Hiring Incentives to Restore Employment (HIRE) Act in March 2010. Aimed at ensuring that individuals and companies are paying U.S. tax on their global income — regardless of where their accounts reside — FATCA represents the most substantial change to the rules governing payments to non-U.S. individuals since 2001, and it will have far-reaching consequences for many financial services institutions around the world.

FATCA will have significant commercial and operational implications and could affect firms' customers as well as their product and services strategies. But much about FATCA is still uncertain — and what is known about the rules is often misunderstood.

What follow are some of the more common myths and misconceptions about FATCA, as well as some hidden challenges that financial service firms might encounter on the road to compliance.