Have you collected a U.S. tax identification number (TIN) from each of your U.S. account holders? If you were not able to, the U.S. Internal Revenue Service (IRS) wants to know the reason and has created reporting codes to use on your Y2020 FATCA reporting.
FATCA TIN Reporting
As part of a Foreign Financial Institution’s (FFI’s) FATCA obligations, it must report the U.S. TIN for each specified U.S. person who is an account holder or a controlling person. The IRS extended the time frame for FFIs to obtain U.S. TINs from account holders through December 31, 2019. This means that Y2020 data reporting was to be the first year since the IRS transitional relief ended.
The IRS appears to be acknowledging the difficulty some Model 1 FFIs have had in obtaining U.S. TINs through its creation of a new series of reporting codes to be used in the TIN data field when the U.S. TIN is missing.
New TIN Codes
Previously, a Model 1 FFI would use a string of 9 As in the U.S. TIN data field if it did not have the account holder’s U.S. TIN. Now, the Model 1 FFI has the option to use one of the following codes in place of a missing U.S. TIN:
222222222 To be used for a pre-existing individual account when the only U.S. indicia is a U.S. place of birth.
333333333 To be used for a new individual account with indicia of a U.S. place of birth, and either:
Had a change in circumstances which results in the self-certification obtained at account opening to be incorrect or unreliable, and a new self-certification has not been obtained; or
At the time of account opening was below the threshold for documenting and reporting the account but subsequently exceeded the threshold, and a self-certification has not been obtained.
444444444 To be used for a pre-existing individual or entity account with U.S. indicia other than a U.S. place of birth, and either:
Had a change in circumstances which results in the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained; or
At the time of account opening was below the threshold for documenting and reporting the account but subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.
555555555 To be used for a new individual or entity account with U.S. indicia other than a U.S. place of birth, and either:
Had a change in circumstances which results in the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained; or
At the time of account opening was below the threshold for documenting and reporting the account but subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.
666666666 To be used for a pre-existing entity account with account balance exceeding US$1,000,000 held by a passive NFFE and the FFI has not obtained self-certifications but no U.S. indicia have been identified in relation to the passive NFFE’s controlling persons.
Failure to Use New Codes
If the FFI’s reason for not obtaining the missing U.S. TIN does not match any of the new code explanations or the FFI is unable to implement the new codes into its reporting system, it should use the AAAAAAAAA code in the TIN data field. It is important to realize the IRS will notify the Model 1 jurisdiction tax authority of a reporting error for each missing U.S. TIN not using the new codes. The local tax authority will contact the FFI to request an explanation for the missing U.S. TIN.
Non-Compliance & Account Closures
A reporting Model 1 FFI is not required to immediately close or withhold on an account due to a missing U.S. TIN. The FFI must correct its account reporting within 120 days (unless the particular jurisdiction has established a shorter period) of receiving an error notice for failure to include an account holder’s TIN.
If the FFI does not meet that deadline, the IRS will evaluate the data received and determine through a consideration of the facts and circumstances if there is significant non-compliance. If significant non-compliance is determined, the FFI will have at least 18 months from the date of the notification of non-compliance to correct the TIN error before the IRS takes any other further action, such as removing the FFI’s GIIN from the IRS FFI List.
L’Association des Américains Accidentels has made progress recently in its efforts to obtain relief for Accidental Americans who do not have a U.S. TIN. I recommend FIs follow this progress to make an educated decision whether to close accounts of valued customers who happen to be Accidental Americans. To read more on this topic:
Accidental American website: https://www.americains-accidentels.fr/
Follow Fabien Lehagre on LinkedIn: https://www.linkedin.com/in/fabienlehagre/
See my December 10, 2018 post: Don’t Let Your Employees Become Accidental Americans.
For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.
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