Who is a U. S. person ( or has U.S. indicia) according to the IRS

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A green card holder who never formally handed in their green card upon leaving the U.S. (even though the green card in no longer valid for U. S. immigration purposes).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

Special note

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

  1. kool

    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.

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  2. kool

    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.

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  3. Hazy

    @ Kool

    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.

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  4. Blaze

    @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.

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  5. WhiteKat

    @Kool,

    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.

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  6. Kool

    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.

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  7. Hazy

    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!

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  8. Schubert

    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.

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  9. OutragedCanadian

    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.

    Reply
  10. Blaze

    @Hazy: Are you willing to do what Mark Twain suggested and add US Indica as part of this thread or in a separate thread?

    Thanks.

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  11. Blaze

    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?

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  12. Mark Twain

    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.

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  13. WhiteKat

    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.

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  14. T Dott

    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

    Reply

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