In the 21st Century, the most interesting thing about a person is where he is a tax resident: "So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer" https://t.co/w3LtUfyt3H via @expatriationlaw
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) December 28, 2019
For U. S. tax filing purposes the following are consider U. S. persons
A citizen of the U.S., including someone born in the U.S. but living in another country, who has not renounced or otherwise relinquished their U. S. citizenship.
A lawful resident of the U.S., including a U.S. green card holder
A person residing in the U. S.
Someone spending a specified amount of time in the U.S., potentially including “snowbirds” who spend winters in the Florida or other warm climes.
A green card holder who never formally handed in their green card upon leaving the U.S. (even though the green card in no longer valid for U. S. immigration purposes).
The child of a U. S. citizen provided a parent lived in the U. S. period for a specified time period (with some exceptions, see T Dott comment)
All of the above would be affected by FATCA. Financial Institutions will also look for indicia including:
A U. S. place of birth
A current U.S. residence or mailing address ( including a U.S. PO Box)
A current U.S. telephone number
Standing instructions to pay amounts from a foreign (meaning non U.S.) account to an account maintained in the United States
A current power of attorney or signatory authority granted to a person with a U.S. address
A U.S. “in-care-of” or “hold mail” address that is the sole address with respect to the account holder
Others affected by FATCA include any non U.S. person who shares a joint account with a U.S. person or otherwise allows a U.S. person to have signatory authority on the account.
Any business or not for profit organization that allows a U.S. person to have signatory authority on a financial account.
53 thoughts on “Who is a U. S. person ( or has U.S. indicia) according to the IRS”
Note that for the last case, “child of a U. S. citizen provided a parent lived in the U. S. period for a specified time period”, there are a few more restrictions when the child is born out of wedlock to a USC father and non-USC mother.
– A blood relationship between the person and the father is established by clear and convincing evidence
– The father (unless deceased) has agreed in writing to provide financial support for the person until the person reaches the age of 18 years, and
– While the person is under the age of 18 years —
– the person is legitimated under the law of his/her residence or domicile,
– the father acknowledges paternity of the person in writing under oath, or
– the paternity of the person is established by adjudication of a competent court.
For all the details, see: http://travel.state.gov/law/citizenship/citizenship_5199.html
Canadian only spouses of ‘US slaves’ are effectively prevented from having joint accounts with their spouses if they wish to avoid FATCA reporting. In the case where the Canadian-only spouse is the main bread winner, the money in the joint accounts was never taxable by USA in the first place. Should the Canadian-only spouse refuse to remove the US slave from their account, then banks will be reporting the accounts of the Canadian-only spouse which will then be heavily penalized by IRS.
How the heck are the Canadian government and banks going to get around this one? Even if they can argue legally that the US slave is reportable (doubtful due to the Charter), there is no way they can say that the Canadian only person is subject to FATCA. Where I am going with this, as I know this issue has been talked about and is nothing new, is whether there will be class action lawsuits by Canadian-only people who are in effect discriminated against by not being allowed to have joint accounts with their spouses without having their account balances sent to IRS. Just think of all the different ways that banks and the Canadian government can be sued. Why should a Canadian-only person, not be able to protect his/her spouse by having joint accounts with him/her without subjecting themselves to reporting to a foreign government?
I can see myself involved in at least one class action suit based on discrimination due to my place of birth, and my spouse involved in a completely different (though FATCA related) class action law suit based on discrimination with respect to choice of marriage partner.
This is particularly ironic for me, because my grandmother hated French Catholic people, and left me some money in her will on the stipulation that I did not marry a French Catholic. Of course, I did, and had to fight it, and ended up winning based on discrimination. This time around, it is my husband who is being discriminated against based on his choice of marriage partner. I wonder if any precedent was set in my earlier lawsuit.
Good organization and good thinking towards new visitors. You have some synergy also with the right sider “Have you just learned you are a US person?” Maybe they could be set next to each other.
An issue to bring forth is also “US indicia”, which are those elements that banks MUST query in their systems if they follow FATCA rules (it is not stated what they CAN query in order to initiate the forced signing of a W-9.
Thanks Mark. I will suggest to Outraged that she co-ordinate the two threads closer together.
Are you suggesting a separate post for U.S. indicia or do you think we should incorporate it into one of these threads?
@Hazy: Are you willing to do what Mark Twain suggested and add US Indica as part of this thread or in a separate thread?
Yes, I’ll change the posting to include U.S. indicia
Thanks so much!!
I think I’ve found what I need for a plugin for this. I’ll test it out over the next couple of days. There are several options, so it’s just a matter of finding the right one for our needs.
FWIW and out of idle curiosity, I just checked the application form for new accounts with QTrade (Vancouver-HQ’d investment firm) to see what if anything they’re doing about identifying USPs in their new accounts. As far as I can tell, it’s relatively innocuous and self-reporting:
you’re asked to identify your citizenship (blank line to fill in) but there is a footnote saying if you’re a US citizen, to open an account with them you must also submit an IRS form W9 and a waiver on disclosure of confidential information. That I believe has been fairly standard practice for brokerage and investment firms in Canada under the Qualifying Intermediary agreements that have been around for about the last ten years. It might be a Charter violation, at least arguably (they aren’t asking for national origin, they’re asking for citizenship), but the good news is they aren’t asking for birthplace and it’s self-report and up to your conscience, I suppose, what you report if you’re a dual citizen. I don’t see anywhere that says you can be prosecuted for omitting information; I suspect if they find out you’re a USC and didn’t say so, they might close your account. Given they are an investment house and not a bank, I’m not clear on whether there’s anything in current law in Canada to prevent them from doing that (banks definitely can’t close your account unless you’ve been convicted of drug-trafficking, money-laundering or other criminal stuff, AFAIK).
Certain USPs aren’t covered by what they’re doing, notably people still holding US Green Cards, but I suspect a US residence or mailing address will be a trigger for attention (if they even accept applications from persons not residing in Canada).
They ask for a photocopy of either your passport or your driver’s license, for identification. AFAIK no province in Canada lists place of birth on a driver’s license, and it’s your choice which you submit. You only need to submit one of them.
The Qualified Intermediary (QI) rules have been around since 2001. Since that time I have opened (and closed) a number of investment accounts. I don’t recall ever being asked the citizenship question.
I believe the citizenship question has recently been added. Let’s call it FATCA creep.
Under QI, Financial Institutions (FIs) generally would send investors a W8-Ben only if they had U.S. source investments in their accounts. There may also be a letter or a W-9 form included with an explanation that U.S. citiizens should complete the W-9 instead.
By completing a W8-Ben, the investor would be subject to a 15% withholding instead of the default 30% withholding on U.S. source income.
QIs (FIs who signed a QI agreement with the IRS), would be generally be the the withholding agent. QIs would remit the tax deducted. Details on individual account holders would not be submitted (unlike FATCA).
Due to FATCA creep, RBC DS Private Investment Management (for high value clients) recently sent all account holders a W8-Ben and a letter, whether or not the account holder had any U.S. source investments. I was told that this was a change from the past.
Regarding providing incorrect information to an FI about citizenship, I also have looked for possible consequences and couldn’t find any. That doesn’t mean they don’t exist. I have heard of a person who spoke to a U.S. immigration lawyer several years ago and was told that knowingly completing a W8-Ben when they should have completed a W-9 was perjury and punishable in the U.S. by up to 5 years in jail. That person never went back to that lawyer again!
I left USA 35 years ago after getting a green card. will filling out an I-407 cause the us government to send me a bunch of tax request. I will not send anything to them. I do not plan to go across the border or buy US investments. I am a Canadian only citizen all the banks and financial house ask for is if you are a dual citizen.
On the previous post would the revenue rule prevent extradition of a Canadian citizen.
I don’t think any Canadian living in Canada, who happens to be a ‘US person’ needs to worry about extradition for not filing US tax returns or FBARS. That doesn’t mean we think its OK for our government to hand over our account details to a foreign government though, and this is why we are fighting FATCA in Canada.
@Kool: I don’t know what the implications are of completing that form.
However, I personally don’t think you have anything to worry about. You were born in Canada. You’re a Canadian citizen.
If CRA won’t collect any tax liability for IRS from a Canadian citizen, I very much doubt if Canada would allow US to extradite a Canadian citizen over tax issues.
In theory, if you did not hand in your green card, you are still classified as a
U. S. person. I believe many people who worked in the States, but came back to Canada years ago,were unaware that they had to formally hand in their green card. After all, one would naturally assume that when a green card expired, that was the end of the matter.
I spoke to the IRS on a number of occasions about the filing obligations of former green card holders and was told repeatedly that there was no obligation to file a 1040 However, in recent years, I learned that I was told the wrong information (or there was a clarification of policy) The obligation to file has been enforced and is being mentioned in a IRS publication.
The obligation to file has been enforced for persons who had been filing 1040s all along and have significant U.S. income-usually a work pension.
If someone chooses to ignore a demand to file, there is little the IRS can do in Canada to a Canadian citizen. I just wouldn’t go to the States.
Having said all this, if you have not filed a 1040 in many, many years, and have no U.S. source income, I would not be concerned. There’s also no reason for a Canadian Financial Institution to know about your long ago green card and almost no reason why the IRS should be interested in you.
My statement on extradition was about lying on a W8 or W9
Only reason for doing I-407 is I can respond to w8 if ever sent a request. Look at Royal PS investing., I also own shares that having enoromous capital gains that have decent dividend (because of FED reserves policies stock market and bond value are too high). I do not plan to ever sell them. Is Computershares Canada (transfer agent) considered a FI? What questions do they ask if you receive physical certificates?
Any experiences with them?
Are shares in a Canadian financial institution held at a different FI included in the various value calculation of the latter total net worth.
Example You have equity and bonds at TD worth $900K.
You own $200K of TD stock held at a non TD brokerage account.
Will TD count the $200K with the $900K.
Remember Obama want to limit pension fund to $2 million. You get 2.5% interest on Government long bond maybe 2.5% on dividend 2 million dollar does not give you a lot of income and this does not consider inflation. A government pension will give you a lot more.
The revenue rule protect Canadian from IRS rules
“In United States of America v. Harden (1963), 41 D.L.R. (2d) 721,  S.C.R. 366, [**8] 44 W.W.R. 630 (S.C.C.), the law was discussed and, in my view, settled by the Supreme Court of Canada in a judgment delivered for the court by Cartwright J. Maclean J., of the Supreme Court in British Columbia, set aside a writ of summons in an action to enforce a foreign judgment for income taxes [30 D.L.R. (2d) 566, 35 W.W.R. 654]. The appeal from that judgment was dismissed by the British Columbia Court of Appeal [36 D.L.R. (2d) 602, 40 W.W.R. 428,  C.T.C. 91], and the Supreme Court of Canada dismissed the appeal from that court.
At p. 723 it was stated that during the course of the action no one questioned the well-established rule that a foreign state is precluded from suing in Canada for taxes due under the law of that foreign state, and that in a foreign judgment there is no merger of the original cause of action.”
I would assume they would include failing to file or a false statement to IRS
Regarding the Revenue Rule, you may want to click on the link to the Canadian Tax Journal under the heading “Privacy Concerns in Canada”
This will take you to an article written by lawyer Andrew Bonham.
The recalcitrant rule only applies to USA based income if passed. Canadian Mutual funds with US holding and USA dividend income held in Canada account is already subject to this amount. Be a proud Canadian, invest here the double taxation of dividend income is reduced in Canada, especially if your income is not high. Double taxation of dividend is the fact that corporate taxes do not have a deduction when they pay a dividend. You pay taxes on the corporate level and on the individual individual. The top dividend tax rate in USA is 40% 7 20% on qualified dividend. That does not include state taxes.
I talk to lawyer to see if he could process a postdated I-407. I had previously paid for a visit and I told him he could charge me a couple thousand dollars if he could get the I-407 processed. He said go to consulate and meet hope to meet a friendly officer.
What about a person born in Canada with one American parent, who has never lived in the US, had US income, or had US accounts or assets. But who in a misguided fit of family fealty obtained a US passport as a teenager.
Is such a person seriously required to file US taxes?
From my understanding, technically you are a US citizen, thus a US taxpayer. However, practically, unless you voluntarily tell your bank you are a US citizen, they will never know. You have a Canadian birthplace, thus are able to fly under the radar. Lucky you!
Please don’t forget those of us born in USA, and be sure NOT to vote Conservative in the next election (and please pass this message on to all your family and friends 🙂 )
@Rob: We don’t know about that one for certain. However, if I were that person, I would not do anything. A lawyer might advise differently.
You were born in Canada to one Canadian parent and one American one. Your birth certificate is Canadian. Even if your bank asks where you were born, you were born in Canada, never lived in U.S, never had income or assets there. You have absolutely no U.S. indicia for your bank to question.
In terms of the US passport, were you over or under the age of 18? I know you said as a teenager, but teenage years go to age 19. If under, that was a decision made for you when you were a minor, but it seems to indicate your American parent registered you as a U.S. citizen.
You are way off the IRS radar. In your situation, I personally would keep it that way–forever. Not only do I think that they would not care about you, I think they don’t have the resources to go after you.
Plus, Canada Revenue Agency (CRA) does not and will not collect taxes or penalties for IRS on any Canadian citizen if the liability arose when the person was a Canadian citizen. You’ve been a Canadian citizen your entire life, so CRA would not collect. Canadian courts–to date–have been unwilling to allow IRS to enforce their revenue laws in Canada. That includes a decision from the Supreme Court of Canada.
If you now have only a Canadian passport, it shows a Canadian place of birth,so there should be no reason for a border guard to question you about US citizenship if you travel to US.
My situation is similar to Rob’s – ie, born in Canada with one U.S. parent, have never lived in the U.S., nor had US income, accounts or assets. I was so relieved to read Blaze’s comments (thank you so much 🙂 which helped put my mind at ease. I do, however, have two differences: 1) My U.S. mother registered both my siblings and myself at the U.S. consulate. 2) I applied for and obtained a U.S. passport which I frequently used for business travel between Canada & the U.S. The passport expired about five years ago.
I am now married to a Canadian born/citizen and together we own our own business.
What are the chances of the U.S. passport office going through all their records to sift out U.S. persons with U.S. passports?
Also, Is it too risky
o for me to have my name on our business
o To have any joint accounts with my husband?
And, do you think the IRA will be able to force Canadian Financial Institutions to close or freeze the bank accounts of U.S. persons if they deem we owe tax money or have not filed returns? I know the CRA has said they will not collect taxes on behalf of the IRA, but isn’t a plausible next step for the IRA to impose a 30% withholding fee on banks if they don’t close or freeze accounts of U.S.citizens? If the Harper gov’t rolled over under the last threat, what’s to stop them from doing so again?
I would greatly appreciate any comments / thoughts community members might have concerning the above.
Sasha. You need not worry. Don’t do anything. One of the good things about the IGA is that banks are not permitted to close accounts. Not sure if the IRA can do anything but certainly the IRS won’t . It isn’t plausible.
You need to read between the lines. Actually, the IGA goes a long way towards protecting Canadians living in Canada. Canada has built a lot of protection for you into the agreement. The US must have known what Canada had in mind (little exposure for dual citizens). The US will go after the easy and lucrative victims-not you. P.S. If your bank asks ( they probably won’t) you don’t tell them you are a dual citizen.
You could renounce with all that that entails. You would not be subject to exit taxes but you would be supposed to file 5 yrs. of returns.
@Sasha I think the possibility of US passport office going through their old records to find a Canadian born in Canada to report to IRS is extremely unlikely.
The fear people have is very real, but I agree with Kal that there is a lot of read between the lines in the IGA.
I also personally think it’s significant that the IGA news release contained a statement from the Minister of National Revenue that the IRS won’t collect for IRS for any Canadian citizen and won’t collect penalties for IRS for any Canadian citizen or resident. This reconfirmed a long standing practice in the tax treaty.
Thanks KalC and Blaze. You have really put my mind at ease. I shall be able to sleep much better now 🙂
Sasha: You and Rob also might want to read Canadian Protections from the IRS
Subject : Day trips to the US and residency status
I was thinking of sending an email about FATCA to a popular francophone columnist who lives close to the US border and has family in the US. He is a bicycling fan and frequently crosses over into Vermont on his bike. I came across an article on line not long ago by a tax expert that warned people about cross border shopping trips being added to the days already spent in the US as a snowbird. He says that each day you cross over to shop counts as a day of residence. I can’t find that article now, but would like to know if anyone else can confirm or deny this. If it’s true, we have a possible whole new category of Canadians with US person problems. Apparently in some small towns on or near the border, crossing is almost daily.
@Petit Suisse, I know it’s a cumulative number of days. We have the info somewhere, I’ll go look for it, unless someone answers in the meantime.
Here are two good writings on this subject:
“Canadian snowbirds beware! Border crossing rules for 2014 increase stakes for “day count.” November 25, 2013, by Roy A. Berg JD, LLM (US Tax). http://www.moodysgartner.com/canadian-snowbirds-beware-2014-border-crossing-rules-increase-stakes-for-day-count/
“Beware of the US ‘Snowbird Visa TAX BOMB!’” May 15, 2013, by Roy A. Berg JD, LLM (US Tax). http://www.moodysgartner.com/beware-of-the-us-snowbird-visa-tax-bomb/
The articles are not really clear about day trippers. I mean, if you cross at 10 am and come back at 2pm, would that count as a day of presence in the US or in Canada? Can you imagine Windsor / Detroit in this stuation, or truck drivers who cross regularly!?
@Petit Suisse: There is a convoluted formula which is described in this post from Roy Berg at Moodys.
Now that you have raised this, I am going to add it as a link under Canadian Information and Resources.
Besides the convoluted formula, there is also the statement:
“You will be considered to have been present in the US on any day that you were physically in the US, whether you are present for the entire day or only part of the day.”
What does happen for truck drivers that cross regularly? Good question!
…and with the “Entry/Exit Initiative” beginning June 30, 2014, both Canada and the US will implement the final phase of the Entry/Exit Initiative of the Perimeter Security and Economic Competitiveness Action Plan in which both countries will share information on people entering and leaving the respective country.
In other words both countries will, for the first time, be able to independently determine the number of days spent in each country. What this means for Canadian snowbirds is that they must be much more vigilant than they have in the past about counting and reporting their days in and out of each country. Starting next year, both Canada and the US will both know, in real time, which country snowbirds have been in and for how long.
The “lax” count of one country counting those crossing one way and the other country counting those crossing the other way is over — it, as all else we are seeing at the border, is getting more and more automated. Data collection supreme.
@Calgary: The United States won’t be happy until they have declared the whole world “US persons” for tax, data collection and control–but not for immigration.
The only way a bank will know not to report on a person will be to verify their birth place. Thus Canadian banks will be compelled to collect the birth information of ALL customers.
The cost to financial institutions and other organizations will be massive: collecting, storing and safeguarding personal information in a manner that complies with Canadian privacy laws; periodically (annually) updating customers’ ID information; and answering Access to Information requests from the (hopefully) great many customers who ask their bank to disclose whether, when and to whom the bank disclosed customer information. Of course the cost will be passed on to bank customers; and all taxpayers will also foot the bill for the tax department to receive, sift through, and report Canadians’ information to the US.
If a bank asks your place of birth, tell them you are going to file a complaint with the privacy commissioner.
@Duke: One could also say they are going to file a Human Rights complaint under the Human Rights Commission.
The problem is the Implementation Act prevails over all other laws except the Income Tax Act. The Interim Privacy Commissioners said at Finance Committee “it is (her) view) that the Privacy Act would prevail, but Keddy insists the Privacy Commissioner gave the “green light” to FATCA.
There will soon be a new Privacy Commissioner who does not seem to consider privacy very important. I will try to do another post on that later.
But Lynne, there is no requirement for them to ask your place of birth in the IGA or the Bank Act. Therefore no reason for the birth place question to be there. Therefore an invasion of privacy
Hi Duke, Your point is the same question I’ve raised with RBC. Regarding the question of birthplace on the W-8BEN form, the reply I received was that it’s an outdated form– blame was pushed onto the IRS (“the IRS asked for it”). I still don’t have a response to why they’re asking for the country of birth on the new acct application (for a RBC Direct Investment account). If/when I do, I’ll post the response. I’m with you– I consider them asking to be an invasion of my privacy.
I don’t get it. There is no place for birth place on the current W8-Ben.
That’s the issue– RBC DI added a section onto the W-8BEN asking for city and country of birth. They are overreaching.
@Duke: There is a difference between “not required to ask” and “must not ask.” As BC Doc pointed out, RBC is already asking city and country of birth on applications for an investment account.
Is anyone willing to do an application, see if you are denied and file a privacy or human rights complaint if you are? You don’t need a lawyer for that. I would do it, but I really need to focus my attention on the legal challenge right now.
Someone told me last week RBC is asking the same question on applications for mortgages, but I have not checked that out. Could someone do that and post it here?
I keep reading that non US citizen souses of US citizens are US Persons solely because they are married to a US citizen, even if both reside abroad.
Can anyone direct me to the legislation, rule, instuction or practice of this?
Additionally, last year I ran across an IRS form (electronic) that asked for all sorts of financial, emplyment and other personal information of those residing with a US citizen abroad. I was not then able to abtain a copy of this questionnaire. Anyone familiar with this?
A person doesn’t become a US person automatically by marriage (thank goodness!) Here’s IRS’ list of who is a US person.
“United States Persons
The term ”United States person” means:
A citizen or resident of the United States
A domestic partnership
A domestic corporation
Any estate other than a foreign estate
Any trust if:
A court within the United States is able to exercise primary supervision over the administration of the trust, and
One or more United States persons have the authority to control all substantial decisions of the trust
Any other person that is not a foreign person.
A foreign person includes:
Nonresident alien individual
A foreign estate
Any other person that is not a U.S. person”
I have been told this before and have also been told that within the FATCA legislation itself non US citizen spouses are to be concidered US Persons. Having not yet been able to find that in the legislation, I am prepared to conceed that my spouse is not a US Person.
Yet, there are many references to such persons being US Persons. Is this just panic talk?
Another question. In The Japan Times this past Wednesday there was an article on the requirement to file income tax returns to the IRS. The article stated that as long as the US citizen spouse did not have a joint account with their Japanese spouse, then the US citizen was not required to report their Japanese spouses financial information. This contradicts much of what I have read and especially the IRS questionnaire I read last year. Can you help me clarify this?
@ Japan T,
(1) Re non-citizen spouses and FATCA, here’s a link to the “Statement of Mutual Cooperation and Understanding between the US Department of the Treasury and the Authorities of Japan to Improve International Tax Compliance and to Facilitate Implementation of FATCA.”
The definition of US person is on page 5 and does not include spouse of a US person.
(2) Re “The article stated that as long as the US citizen spouse did not have a joint account with their Japanese spouse, then the US citizen was not required to report their Japanese spouses financial information.”
That sounds correct to me. You do not report an account held by your Japanese (non-US) spouse – except if your spouse holds the account jointly with you (US person). Here’s the link to the FBAR instructions:
“BSA Electronic Filing Requirements for Report of Foreign Bank and Financial Accounts (FinCEN Form 114)”
Here’s a couple of excerpts about who has to file:
Page 4 “Who Must File an FBAR. A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the caldndar year. See General Definitions, to determine who is a United States person.”
page 5 “General Definitions … United States Person. United States person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability.”
(3) I’ve not seen or heard of (prior to your comment) an IRS questionnaire such as you describe, so I can’t shed any light on that.
I am a tourist in USA but own a house lot in Oregon. I have a US driver’s license. I visit every 4 to 5 months with an average stay of 1 month and 2 weeks per year. I have been doing this for the last 4 to 5 years. Do I qualify for US person status? If yes, will I be subjected to paying taxes from the income I earn in my country ? How do I apply for this status? Thank you very much. Isagani Buenaflor
Had anyone on this website ever taken the time to see how they’re using the definition of “U.S.” in this context?
Isn’t “U.S.” simply a synonym for D.C.? How could anyone not born in D.C. be considered a U.S. citizen?
I’m not sure I understand your question. Anyone born in the U.S. Has American citizenship–even if they don’t want it. The only exception is children of diplomats.
US short for United States of America while DC is short for District of Columbia a district of the United States which coincides exactly with the city of Washington. It is a district and not part of any state.
Perhaps confusion arises because the name “Columbia” (not district of columbia) was, in the eighteenth century a synonym of the United States.
@Johnnb: It’s good to have you post here again.
i did not know U.S. Was called Columbia long ago. I don’t remember that from American History classes.
I hope Sansnom will clarify the question so we can answer.