Question about FATCA requirement

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oakweather
Posts: 27
Joined: Thu Oct 15, 2020 1:00 pm

Question about FATCA requirement

Post by oakweather »

U.S. citizen holding minority (~23%) share in a foreign (e.g. Canadian) corporation. Filed 5471 the year the share was acquired.

The foreign company has had bank accounts in USD and local currency (e.g. CAD). Recently the foreign company attempted to open an EUR account and was advised that, since I am a U.S. citizen with 23% ownership, a W-9 form is required.

What informational reporting requirements (e.g. FBAR) do I have to the IRS regarding the bank accounts held by the foreign company? I do not believe I have signing power over these company accounts as the minority shareholder. I am not a board member or director of the company.

Please advise.
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Re: Question about FATCA requirement

Post by ND »

I suggest you rename your question to: Question about FBAR requirement on 23% owned foreign (non-director) account without signing authority.

That said, it appears you need to complete the Part III Joint Accounts of 114 for a financial account type listed below owned jointly by two or more persons:

A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).

Items 15-23. Enter the information about the account and the financial institution in which the account is held. See Part II for instructions on Items 15-23. Each joint owner must report the entire value of the account as determined under Item 15.

Item 24. Enter the number of joint owners for the account. If the exact number is not known, provide an estimate. Do not count the filer when determining the number of joint owners.

Items 25-33. Use the identifying information of the principal joint owner (excluding the filer) to complete Items 25-33. Leave blank items for which no information is available.

25. Taxpayer Identification Number (TIN) of principle joint owner, if known.
Item 25. Taxpayer Identification Number (TIN) of Principle Joint Owner. Enter the TIN of the principle joint owner on the account; this can be either an SSN (individual) or EIN (entity) or foreign. Numbers should be entered as a single number string without formatting or special characters such as parentheses, spaces, or hyphens.

25a. TIN type. Select the appropriate entry to indicate the type on number entered in item 25. 26-28 Joint owner name
26. Last name or organization name of principle joint owner
27. First name of principle joint owner, if known
28. Middle initial, if known
28a. Suffix

Items 26-28a. Enter the name of the organization/individual of the principle joint owner. If the principle joint owner is an individual, enter the individual’s last name in Item 26, first name in Item 27, middle initial in Item 28 and name suffix in 28a. If there is no middle initial, leave Item 28 blank. If there is no suffix leave item 28a blank.

29-33. Principle joint owner mailing address
29. Mailing address (number, street, suite number) of principal joint owner, if known
30. City, if known
31. State, if known
32. ZIP/Postal Code, if known
33. Country

Items 29-33. Enter the address of the principal joint owner. If the principal joint owner resides in the United States, enter the street address of the joint owner’s United States residence, not a post office box. If the principal joint owner resides outside the United States, enter the joint owner’s United States mailing address. If the principal joint owner has no U.S. mailing address the filer may provide a foreign address. Enter an organization joint owner’s United States mailing address.
oakweather
Posts: 27
Joined: Thu Oct 15, 2020 1:00 pm

Re: Question about FBAR and other IRS requirement on minority owned foreign (non-director) corporate account

Post by oakweather »

Thank you ND.

It seems to me that Part III applies to foreign bank accounts jointly owned by individuals (e.g. married couples). Does it also apply to cases where the foreign bank account is owned by a foreign corporation, whose shares are then owned in minority by a U.S. citizen who is not a director and does not have signing authority over the said bank account?

Are there other reporting requirements beyond FBAR in this case to watch out for?
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Re: Question about FATCA requirement

Post by ND »

Even you did not say - It seems to me that Part III applies ONLY to foreign bank accounts jointly owned by individuals (e.g. married couples). Does it also apply to cases
oakweather
Posts: 27
Joined: Thu Oct 15, 2020 1:00 pm

Re: Question about FATCA requirement

Post by oakweather »

ND: I am afraid that I do not understand your second post. Perhaps it was truncated?
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Re: Question about FATCA requirement

Post by ND »

even you did NOT say: It seems to me that Part III applies to foreign bank accounts jointly owned by individuals (i.e., ONLY married couples). Does it also apply to cases where the foreign bank account is owned by a foreign corporation, whose shares are then owned in minority by a U.S. citizen who is not a director and does not have signing authority over the said bank account?
laurenttrevino
Posts: 1
Joined: Fri Feb 24, 2023 6:47 pm

Re: Question about FATCA requirement

Post by laurenttrevino »

It's always a good idea to ensure you comply with all necessary reporting requirements. Regarding your question, it sounds like you may not have any reporting requirements for these bank accounts if you don't have signing authority and you're not a director of the company. However, I'm not a tax expert, so it might be a good idea to consult with a professional who can provide more specific guidance.
On a related note, I recently stumbled upon a great resource for improving financial literacy in the workplace https://financialmosaic.com/employees/education/ . It's called employee financial literacy, and it offers a variety of tools and resources to help individuals understand and manage their finances more effectively.
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