November 14, 2019

Treasury has eased FATCA reporting pressure on Foreign Banks. What now?

We have reported previously about media accounts foretelling the closing of many thousands of foreign financial accounts held by American citizens living in France, the UK, in Europe generally and elsewhere by the end of this year.  In 2017 U.S. Treasury granted a FATCA filing extension to FFIs whose reports on the accounts of U.S. citizens had missing Tax Identification Numbers (TIN) or Social Security Numbers (SSNs); the “grace period” for obtaining the SSNs ends on 31 December 2019.  Without further guidance from Treasury providing relief, FFIs noted, they may have been forced to close the accounts of U.S. citizens with no TINs or SSNs.

In late October Treasury amended its FATCA reporting guidance to provide FFIs with as much as 18 months beyond 1 January 2020 to obtain TINs or SSNs for the financial accounts in their FATCA reports.  See below for more detail.

What that means for Americans abroad is a harder question.

We expect that many foreign banks will carry on with their outreach to account holders whose accounts are reportable under FATCA to obtain missing SSNs.  But it is equally possible that some will elect to cease such efforts, close reportable accounts without TINs or SSNs and eliminate the risk of suffering FATCA non-compliance penalties.

We will continue to follow this issue carefully.  We encourage Americans abroad whose foreign accounts are closed to contact their member of Congress.  We also encourage you to let us know, as we will be aggregating information on account closures for presentation to Congress and Treasury.

Please contact us at any time with comments or questions:  [email protected].



Treasury relief for FFIs reporting accounts without Tax Identification or Social Security Numbers.

The guidance is published in the form of Treasury’s FATCA Frequently Asked Questions for FFIs.  The relief is as follows, in brief –

  • A reporting Model 1[i] FFI is not required to immediately close or withhold on accounts that do not contain a TIN/SSN beginning January 1, 2020.
  • FFIs have a further 120 days to obtain the TINs.
  • If the TINs are not provided within that 120 day period, the IRS will not automatically conclude that the FFI is out of FATCA compliance.
  • The IRS will take account of the facts and circumstances leading to the absence of the TINs, such as the reasons why the TINs could not be obtained, whether the FFI has adequate procedures in place to obtain TINs and the efforts made by the FI to obtain them. 
  • If Treasury determines that the FFI is in significant non-compliance, it will provide notice and will work with the FFI over the next 18 months to address the non-compliance.The FI would have at least 18 months from the date of the notification of noncompliance to correct the TIN/SSN error before the IRS took any other further action, such as removing FFI from the list of FATCA compliant FFIs.
  • An FFI that is no longer FATCA compliant risks being subject to 30pc withholding on certain U.S. source payments made to the FFI.   

[i] In countries with Model 1 FATCA agreements financial account reports are made to the IRS by the Foreign Financial Institutions. In countries with Model 2 FATCA agreements financial account reports are made to the IRS by the country’s tax authority, which receives the reports from the FFIs.