Presentation on theme: "FATCA Basics for Foreign Account Holders"— Presentation transcript:
1FATCA Basics for Foreign Account Holders Allison Christians
2FATCA Facts US law, in force, US Treasury implementing, can choose to delay, restrict, tone down; orforge ahead, expand, ratchet upAimed at non-US third parties who hold customers’ money and financial assetsWill punish these third parties with penalties if they do not eitherensure their customers are not ‘US persons’, orIf they are US persons, tell the IRS about their assets and gross income.
3So, we want to know: who are these third parties? how will they ensure their customers are not US persons?; andwhat will they have to do if they think their customers are US persons?; andwhat do I have to do as a customer?
41. Who are these third parties? the main one is FFI: foreign financial institution.An FFI is any non-US entity thataccepts deposits (e.g. a bank)holds financial assets for others (e.g. a custodian, some trusts)invests or trades financial assets as a business (e.g. a mutual fund)an insurance companythere are other third parties but we will focus on FFIs
52. How will FFIs ensure their customers are not US persons? Ask new customers to sign documents saying they are not US personsSearch existing accounts for ‘indicia’ of US person statusOnly have to do this once account exceeds $50k for individuals, $250k for entities; $250k for life insurancebut can search all accountsUnder IGA, may not have to search certain govt-sponsored accounts (e.g. retirement, education savings plans)If they find indicia, ask customers to provide documents showing or stating that they are not US persons
6What the FFI is looking for account holder identified as a U.S. citizen or residentbirthplace in the U.S.a U.S. telephone numbera U.S. residence or mailing addressstanding instructions to transfer funds to a U.S. based accountIndications of a power of attorney over the account to a person with a U.S. addressa “care of” or hold mail address as the sole addressFor individuals with account 50k to 1m, FFI only has to search electronic recordsFor individuals with accounts > 1m, FFI must search paper records as well
9What the FFI will do if they find these indicia WHC: withholding certificatePFC: proof of foreign citizenship via govt issued IDCLN: certificate of loss of nationalityPCFS: proof of claim of foreign statusA: Cert of Residence from tax authorityB: Govt-issued IDC: approved similar certificateWhat the FFI will do if they find these indiciaFFI can rely on valid documentation unless actual knowledge or reason to know the info is unreliable or wrongIndiciaDocument requestU.S. citizen or residentBirthplace in the U.S.U.S. telephone number aloneU.S. telephone # + non-US telephone #U.S. residence or mailing addressstanding instructions to transfer funds to a U.S. based accountIndications of a power of attorney over the account to a person with a U.S. address“care of” or hold mail address as sole addressWHC + PFCPFC + CLN or WHC + PFC + reasonable explanationWHC and PCFSWHC or PCFS
10What will FFIs do if they think their customers are US persons? If no IGA in effect:request waiver of any right that would prevent FFI from sending info to IRSOnce received, report name, account numbers & amounts, TIN, gross proceeds, etc to the IRS (assume open book)If not received: close accountIf IGA is implemented:report name, account numbers & amounts, TIN, gross proceeds, etc to the tax authority (e.g. CRA) for delivery to IRS
11What do I have to do as a customer? Upon receipt of a request for documentation:Check to make sure it is the required documentationRespond accordingly; orChoose not to respond, close account; orChoose not to respond, await account closure