Have You Received a Letter From Your Foreign Bank About FATCA and US Tax Compliance?

FATCA Tax – Have You Received a FATCA Tax Letter From Your Foreign Bank?

  • A ‘FATCA letter’ is a letter from your foreign bank requesting certain information about your US tax status (and typically requesting you complete either a W-9 or W-8BEN form (or the bank’s self-created form essentially obtaining the same information as those two Forms). The letter usually also offers an incomplete discussion of the Foreign Account Tax Compliance Act (FATCA) legislation which requires the bank to review its records for potential US depositors, and upon identifying such individuals, take steps which could ultimately result in the bank sharing your name, address, and other account details with the IRS.
  • If you’ve received a letter from your foreign bank about FATCA compliance, you have already been identified as a likely US resident and/or taxpayer and your name will soon be revealed to the IRS. The time for hiding is over – your goal should now be to make the appropriate IRS voluntary disclosure to come clean and resolve your FATCA foreign account problem.

Experienced FATCA Tax Attorney Andrew L. Jones Can Help – Call (858) 480-1110 for An Immediate and Free Consultation

Your bank’s FATCA compliance letter is a clear signal that it is time to consult with an FBAR attorney. An experienced IRS voluntary disclosure attorney will determine whether you have committed certain common US reporting violations, which might include:

  • Failure to report a foreign financial account via FinCEN Form 114 (‘Report of Foreign Bank and Financial Accounts,’ also known generally as the  Foreign Bank Account Report or ‘FBAR’)
  • Failure to file the Form 3520 (‘Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts and Inheritances’)
  • Failure to file the Form 3520-A (‘Annual Information Return of Foreign Trust With a U.S. Owner’)
  • Failure to file the Form 5471 (‘Information Return of U.S. Persons With Respect To Certain Foreign Corporations’)
  • Failure to file the Form 8865 (‘Return of U.S. Persons With Respect to Certain Foreign Partnerships’)
  • Failure to file the Form 8938 (‘Statement of Specified Foreign Financial Assets’)
  • Failure to report the income from one or more foreign financial accounts or assets on your US income tax return (typically, Form 1040)

Your FATCA tax attorney will also outline for you the options for making a voluntary disclosure – either through the Streamlined Foreign Offshore Procedures – or, in rare instances, a non-program disclosure arguing reasonable cause as a defense to all penalties.

FATCA Tax Requirements

In short summary, if you are a US person who has a foreign financial account, the earnings of that account are taxable by the US.  However, millions of US persons (many of whom do not even reside in the US) concluded – logically but incorrectly – that if they were not resident in the US, their foreign account earnings could not be subject to US tax.  Similarly, some US residents concluded – logically but incorrectly – that since their account was physically located outside the US, their foreign account’s earnings could not be subject to US tax.

For these and US persons in a wide variety of related situations, the FATCA letter is a wake-up call to the reality that their account was, is, and always will be both reportable (in terms of informational forms like the FBAR, Form 8938 and others) and taxable (if the account produces earnings, as determined by US tax laws, not by the tax laws of the country where the asset is located).

If you count yourself among those individuals discovering your error for the first time through a FATCA compliance letter from your foreign bank, there is still time to act – not much time, but time enough to put together a compliance plan that protects your assets and your personal freedom.

The IRS voluntary disclosure programs reward proactivity. Don’t wait for the IRS to find you; coming forward before you are contacted by the IRS allows you to manage the timeline and consequences of your prior errors.


Want to Understand More? Keep Reading!

FATCA Reporting and FATCA Requirements

FATCA – the Foreign Account Tax Compliance Act – is a US law that has made the world’s financial system the reporting and enforcement agent of the IRS.

It accomplishes that goal by forcing tens of thousands of foreign banks (in over one hundred cooperating countries) to annually review their client records.

If the bank’s records for an account-holder contain indications of US status (‘US indices’), the bank will write to inquire about the account-holder’s US tax and residence status and usually provide either a Form W-9 or a Form W-8BEN, one of which the bank requests be completed and signed under penalty of perjury.  Less frequently, and sometimes additionally, the bank will instead include its own self-created form essentially obtaining the same information as those two Forms.

If you have received this FATCA letter, it means that under the FATCA regulations, your bank has detected “US indices” on your account which identify you as a likely US account-holder.

If you are a US person (again, US citizen, permanent resident or work visa holder) and have failed to report your foreign accounts on the Foreign Bank Account Report (FBAR), or failed to file the Form 8938 (or, less commonly, Forms 3520, 3520-A, 5471 or 8865), or failed to report your income from these foreign accounts on your US tax return, then you have likely violated US law.

Thankfully, there is a limited time to take action to resolve your violations of the US tax law. A skilled IRS voluntary disclosure attorney like Andrew L. Jones can assist in understanding your exposure and resolving it through the appropriate IRS program – usually either the Streamlined Foreign Offshore Procedures which would result in no penalty, or if the non-resident spent too many days inside the borders of the US in each of the last three post-filing deadline years, the Streamlined Domestic Offshore Procedures.  (Less commonly, but still a viable for option for a non-resident US person who exceeded the days-inside-the-US metric of Streamlined Foreign would be the a non-program disclosure arguing reasonable cause as a defense to all penalties.)

FATCA Compliance Letter

A FATCA compliance letter will usually begin with a summary of why the foreign bank is writing the individual – often with a clumsy or difficult-to-understand summary of the FATCA legislation and, to varying degrees of specificity accuracy, an explanation of the ‘due diligence’ that the bank must undertake about your identity and connections to the US.

The letter will then turn to the bank’s actual goals: requiring the client to clarify his/her US tax status by either:

– Supplying a completed and signed Form W-9 conceding the client is a US taxpayer (or doing the same via a bank-created document equivalent to a Form W-9)
– Supplying a completed and signed Form W-8BEN, which declares the client is not a US taxpayer (or doing the same via a  bank-created document equivalent to a Form W-8BEN), or,
– Supplying nothing, in which case the bank warns that the client will be reported to the US anyway, and/or have his/her account closed or frozen.

Do not be tempted to ignore the letter, or to commit a federal crime by falsely telling the bank that you are not a US resident and/or taxpayer.

The FATCA letter means that a window for protective action is open – call The Law Offices of Andrew L. Jones now at (858) 480-1110.

FATCA Forces Foreign Banks to Provide Your Information to the IRS

US taxpayers who received a FATCA compliance letter must understand that the banks are following the FATCA agreement between the US and the relevant country in which the bank is located or does business. At this point, the bank has no interest in protecting you – they want to protect themselves.  Their FATCA compliance letter, asking you to give them private, US-tax-related information, proves that.

The bank is looking out for itself – isn’t it time you protected yourself from your foreign bank?

FBAR Tax Attorney Andrew L. Jones Can Help You Understand Your Foreign Bank’s FATCA Letter and Your US Tax Obligations

The truth is that you shouldn’t spend a significant amount of time trying to understand your FATCA letter. Your bank’s explanation of FATCA regulations or the impact of their FATCA letter on your US tax reporting obligations is difficult to understand, if not impossible.

One call to (858) 480-1110 for a free consultation with IRS voluntary disclosure attorney Andrew L. Jones can help you understand what this FATCA letter means, and more specifically, what it means for you personally.

For now, there is only one clear truth: your foreign bank’s FATCA tax compliance means that your foreign account cannot stay invisible and you must take action. Call now!

The 113 Countries Which Have Made FATCA Agreements Forcing Their Countries’ Banks to Disclose US Depositors’ Information to the IRS

​Jurisdiction​StatusJurisdiction ​Status ​Intergovernmental Agreement (IGA) & Related Agreements, Arrangements, or CorrectionDate Jurisdiction is Treated as having an IGA in Effect
​Algeria​In Force (1-18-2017)​Model 1​6-30-2014
​Angola​In Force (10-2-2017)Model 1​11-30-2014
​AnguillaSignedModel 1​6-30-2014
​Antigua and Barbuda​In Force (6-7-2017)Model 1​6-30-2014
​ArmeniaSignedModel 2​6-30-2014
​Australia​In Force (6-30-2014)​Model 1​6-30-2014
​Austria​In Force (12-9-2014)​Model 2​6-30-2014
​Azerbaijan​In Force (11-5-2015)​Model 1​6-30-2014
​Bahamas​In Force (9-17-2015)​Model 1 ​6-30-2014
Correction
​Bahrain​​In Force (3-5-2018)​Model 1​6-30-2014
​Barbados​In Force (9-25-2015)​Model 1 ​​6-30-2014
Correction
​Belarus​In Force (7-29-2015)​Model 1​6-30-2014
​Belgium​In Force (12-23-2016)​Model 1 ​6-30-2014
Related Agreement
​Bermuda​In Force (8-19-2014)​Model 2​6-30-2014
​Brazil​In Force (6-26-2015)​Model 1​6-30-2014
​British Virgin Islands​In Force (7-13-2015)​Model 1​6-30-2014
​Bulgaria​In Force (6-30-2015)​Model 1​6-30-2014
​Cabo Verde​Agreement in Substance​Model 1​6-30-2014
​Cambodia​In Force (12-23-2016)​Model 1​11-30-2014
​Canada​In Force (6-27-2014)​Model 1​6-30-2014
​Cayman Islands​In Force (7-1-2014)​Model 1​6-30-2014
​Chile​Signed​Model 2​​6-30-2014
​China​Agreement in Substance​Model 1​6-30-2014
​Colombia​In Force (8-27-2015)​Model 1​6-30-2014
​Costa Rica​Signed​Model 1​​6-30-2014
​Croatia​In Force (12-27-2016)​Model 1 ​6-30-2014
Related Agreement
​Curaçao​In Force (8-3-2016)​Model 1​6-30-2014
Related Agreement
​Cyprus​In Force (9-21-2015)​Model 1​6-30-2014
​Czech Republic​In Force (12-18-2014)​Model 1​6-30-2014
​Denmark​In Force (9-30-2015)​Model 1​6-30-2014
​Dominica​Signed​Model 1​6-30-2014
​Dominican Republic​Signed​Model 1​6-30-2014
​Estonia​In Force (7-9-2014)​Model 1 ​6-30-2014
​Finland​In Force (2-20-2015)​Model 1​6-30-2014
​France​In Force (10-14-2014)​Model 1​6-30-2014
​Georgia​In Force (9-18-2015)​Model 1​6-30-2014
​Germany​In Force (12-11-2013)​Model 1​6-30-2014
​Gibraltar​In Force (9-17-2015)​Model 1​6-30-2014
​Greece​​In Force (12-13-2017)​Model 1​11-30-2014
​Greenland​In Force (11-30-2018)Model 1​​​6-30-2014
​GrenadaIn Force (4-6-2018)Model 1​​6-30-2014
​Guernsey​In Force (8-26-2015)​Model 1​6-30-2014
​Guyana​In Force (9-29-2017)Model 1​​6-30-2014
​Haiti​Agreement in Substance​Model 1​6-30-2014
​Holy See​In Force (6-10-2015)​Model 1########
​Honduras​In Force (2-19-2015)​Model 1​6-30-2014
​Hong Kong​In Force (7-6-2016)Model 2​​6-30-2014
​Hungary​In Force (7-16-2014)​Model 1​6-30-2014
​Iceland​In Force (9-22-2015)​Model 1########
​India​In Force (8-31-2015)​Model 1​6-30-2014
​Indonesia​Agreement in Substance​Model 1​6-30-2014
​Iraq​Agreement in Substance​Model 2​6-30-2014
​Ireland​In Force (4-2-2014)​Model 1​6-30-2014
​Isle of Man​In Force (8-26-2015)​Model 1​6-30-2014
​Israel​In Force (8-29-2016)​Model 1​6-30-2014
Related Agreement
​Italy​In Force (8-17-2015)​Model 1​6-30-2014
​Jamaica​In Force (9-24-2015)​Model 1​6-30-2014
​Japan​In Effect (6-11-2013)​Model 2 ​​6-30-2014
Related Arrangement
​Jersey​In Force (10-28-2015)​Model 1​6-30-2014
​KazakhstanSigned​Model 1​​11-30-2014
​Kosovo​In Force (11-4-2015)​Model 1​6-30-2014
​Kuwait​In Force (1-28-2016)​Model 1​6-30-2014
​Latvia​In Force (12-15-2014)​Model 1​6-30-2014
​Liechtenstein​In Force (1-22-2015)​Model 1​6-30-2014
​Lithuania​In Force (10-7-2014)​Model 1​6-30-2014
​Luxembourg​In Force (7-29-2015)​Model 1 ​6-30-2014
Related Agreement
​Macao​Signed​Model 2​11-30-2014
​Malaysia​Agreement in Substance​Model 1​6-30-2014
​Malta​In Force (6-26-2014)​Model 1​6-30-2014
​Mauritius​In Force (8-29-2014)​Model 1​6-30-2014
​Mexico​In Force (4-10-2014)​Model 1​6-30-2014
​Moldova​In Force (1-21-2016)​Model 2​​6-30-2014
​Montenegro​In Force (3-28-2018)​Model 1​6-30-2014
​Montserrat​In Force (10-28-2016)​Model 1​11-30-2014
​Netherlands​In Force (4-9-2015)​Model 1 ​6-30-2014
​New Zealand​In Force (7-3-2014)​Model 1​6-30-2014
​Nicaragua​​Agreement in Substance​Model 2​6-30-2014
​Norway​In Force (1-27-2014)​Model 1​6-30-2014
​PanamaIn Force (10-25-2016)​Model 1​6-30-2014
​Paraguay​​Agreement in Substance​Model 2​6-30-2014
​Peru​Agreement in Substance​Model 1​​6-30-2014
​Philippines​Signed​Model 1​11-30-2014
​Poland​In Force (7-1-2015)​Model 1 ​6-30-2014
Correction
​Portugal​In Force (8-10-2016)​Model 1​6-30-2014
​Qatar​In Force (6-23-2015)​Model 1​6-30-2014
​Romania​In Force (11-3-2015)​Model 1​6-30-2014
​San Marino​In Force (8-30-2016)​Model 2​6-30-2014
​Saudi Arabia​In Force (2-28-2017)​Model 1​6-30-2014
​Serbia​Agreement in Substance​Model 1​6-30-2014
​Seychelles​Agreement in SubstanceModel 1​​6-30-2014
​Singapore​In Force (3-28-2015)​Model 1​6-30-2014
SignedSuperseding Model 1
​Slovak Republic​In Force (11-9-2015)​Model 1​6-30-2014
​Slovenia​In Force (7-1-2014)​Model 1​6-30-2014
​South Africa​In Force (10-28-2014)​Model 1​6-30-2014
​South Korea​In Force (9-8-2016)​Model 1​6-30-2014
​Spain​In Force (12-9-2013)​Model 1​6-30-2014
​St. Kitts and Nevis​In Force (4-28-2016)​Model 1​6-30-2014
​St. Lucia​In Force (9-1-2016)​Model 1​6-30-2014
​St. Vincent and the Grenadines​In Force (5-13-2016)​Model 1​6-30-2014
​Sweden​In Force (3-1-2015)​Model 1​6-30-2014
​Switzerland​In Force (6-2-2014)​Model 2 ​6-30-2014
Related Agreement 1 
Correction 1 
Related Agreement 2 
Correction 2
​Taiwan*​​SignedModel 2​​6-30-2014
​Thailand​Signed​Model 1​6-30-2014
​Trinidad and Tobago​In Force (9-22-2017)​Model 1​​11-30-2014
​Tunisia​Agreement in Substance​Model 1​11-30-2014
​Turkey​Signed​Model 1​6-30-2014
​TurkmenistanIn Force (11-6-2017)​Model 1​​6-30-2014
​Turks and Caicos Islands​In Force (7-25-2016)​Model 1​​6-30-2014
​Ukraine​Signed​Model 1​6-30-2014
​United Arab Emirates​In Force (2-19-2016)​Model 1​6-30-2014
​United Kingdom​In Force (8-11-2014)​Model 1 ​6-30-2014
Related Agreement
​UzbekistanIn Force (7-7-2017)​Model 1​6-30-2014
​Vietnam​In Force (7-7-2016)​Model 17/7/2016