Round Two – Catch 22 of Opening a Bank Account in Your Own Country – for USCs and LPRs

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A prior post explained how opening a bank account (for USCs) in their home country of residence, is increasingly complex now that FATCA is in full force,  See, The Catch 22 of Opening a Bank Account in Your Own Country – for USCs and LPRs.Deutsche  Sample W-9 p2

The financial institution (“FFI”) is generally required to have an IRS Form W-9 completed by the USC; or a substitute W-9 form as provided for in the regulations.  Identifying the elusive “U.S. person” under U.S. federal tax law is the goal of the law.  USCs are “U.S. persons” and LPRs generally are “U.S. persons”

Some samples of substitute W-9 forms are set out in this post, including those in different languages, as is the case with the Deutsche Kreditbank AG substitute form:

The U.S. laws now obligate FFIs throughout the world to collect this information, whether it is Deutsche Bank in Germany, HSBC, Bank of Singapore, Oversea-Chinese Banking Corporation Limited, Banco Comercial Português in Portugal,  Société Générale in France, Banco Nacional de Panamá, Skandinaviska Enskilda Banken in Sweden, Helsinki OP Bank in Finland, Banco Santander, etc.  Importantly, many of these documents and forms will be provided in a substitute format in the language of the country where the principle operations of the bank are located. Deutsche  Sample W-9

The many “Catch 22s” is that under U.S. law, the only U.S. taxpayer identification number (“TIN”) that may be used by an individual is a U.S. social security number (“SSN”).  To repeat, a U.S. citizen (e.g., someone who was born in the U.S. or obtained it through a U.S. citizen parent – via derivative citizenship) has no choice but to obtain a U.S. Social Security Number (“SSN”) as their taxpayer identification number (“TIN”), in accordance with U.S. tax law.  See 26 U.S. Code § 6109 – Identifying numbers and the regulations thereunder.

Every individual, who was born to a parent who was a U.S. citizen must consider whether they too are also a U.S. citizen by the concept known as “derivative citizenship“; i.e., “derived” from a U.S. citizen parent.   The U.S. Citizenship and Immigration Services (USCIS) has a “Nationality Chart 1, for Children Born Outside U.S.” to help determine if the individual was a U.S. citizen at birth.

Importantly, a USC, even if they have never lived a day in the U.S. (e.g., because they have derivative citizenship via a parent), cannot legally sign an IRS Form W-8 certifying they are a non-resident of the U.S.

There are two completely different concepts of residency; (1) physical residence in the U.S. on contrast with (2)  “tax residence” via USC or LPR status.  A USC who has never lived in the U.S., or who has not lived for many years, nevertheless is treated as a U.S. income tax resident, i.e., a “U.S. person.”  See, US Citizenship Based Taxation

W8-BEN 2014 VersionAny U.S. individual income tax resident who intentionally signs a false IRS Form W-8, would be filing a false document that would fall under the purview of Filing a False Return or Other Document – Perjury (IRC Section 7206(1) ).  See, What could be the focal point of IRS Criminal Investigations of Former U.S. Citizens and Lawful Permanent Residents?

The complexities of obtaining a SSN by USCs who reside overseas will be explained in a later post; which is itself another “Catch 22”.

Unfortunately, these round about requirements imposed under U.S. law for USCs and LPRs who reside outside the U.S. can become discouraging (to say the least) for individuals who would like to comply with their legal obligations; but practically speaking, may have no real means by which to properly comply, depending upon their particular circumstances.


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