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  • Elizabeth A. McMorrow

Which U.S. Persons Are Exempt from FATCA Reporting?

Foreign Financial Institutions (FFIs) participating in FATCA through an IGA or as a Participating FFI are required to undertake annual FATCA reporting on certain U.S. Persons. The FFI documents U.S. Persons by obtaining a U.S. Internal Revenue Service (IRS) Form W-9 or substitute Form W-9 from its customer. However, some U.S. Persons are exempt from being reported and may use the Form W-9 to document their exemption.


Line 4


Line 4 of the Form W-9 is where a U.S. Person may list its exemption code for its account that is maintained outside the U.S. Line 4 may only be completed by an entity because individuals are not exempt from reporting.


Exemption Code List

The codes used to populate Line 4 come from the below list. The following are not Specified U.S. Persons and are thus exempt from FATCA reporting:

A. An organization exempt from tax under section 501(a), or any individual retirement plan as defined in section 7701(a)(37); B. The United States or any of its agencies or instrumentalities; C. A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions, agencies, or instrumentalities; D. A corporation the stock of which is regularly traded on one or more established securities markets, as described in Regulations 1.1472-1(c)(1)(i); E. A corporation that is a member of the same expanded affiliated group as a corporation described in Regulations 1.1472-1(c)(1)(i); F. A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any State; G. A real estate investment trust; H. A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940; I. A common trust fund as defined in section 584(a); J. A bank as defined in section 581; K. A broker; L. A trust exempt from tax under section 664 or described in section 4947; or M. A tax-exempt trust under a section 403(b) plan or section 457(g) plan.


Reliance on FATCA Exemption Code


An FFI may rely on its customer’s FATCA exemption claim unless the FFI knows or has reason to know the person is actually a Specified U.S. Person. If the FFI determines the FATCA exemption code selected is not valid, the FFI may still rely on the Form W-9 for purposes of obtaining the customer’s TIN and treating the person as a Specified U.S. Person.


USFIs


A U.S. Financial Institution (USFI) maintaining an account in the U.S. does not need to collect a FATCA exemption code from its customer.


For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.


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