Table of contents:
What is a FATCA letter?
If you are a U.S. citizen or green card holder with a non-U.S. bank or financial account, you may receive a “FATCA letter” asking you to confirm your U.S. tax status. These letters usually request that you complete Form W-9 (for U.S. persons) or Form W-8BEN (for non-U.S. persons).
The request is part of the Foreign Account Tax Compliance Act (FATCA) — a U.S. law that requires foreign banks and financial institutions to identify and report U.S. account holders to the IRS. Over 130 countries now participate in FATCA, and their banks must collect written confirmation of each client’s U.S. tax status.
Why is the bank sending this letter?
Your bank likely found something in your records that suggests a U.S. connection, for example, a power of attorney (PoA) or third-party authority in favour of a person with a U.S. address, or your birthplace is in the United States (which automatically makes you a U.S. citizen). In these cases, to avoid severe penalties, the bank is required to confirm your U.S. tax status and report your financial account to the IRS if you are a U.S. taxpayer.
What are your options?
Your options depend on whether or not you are a U.S. person:
If you are a U.S. person (e.g., U.S. citizen, green card holder, or tax resident):
You must complete Form W-9 and send it to the bank.
This is not a request for proof of compliance from you. This confirms your U.S. tax residency. The bank will use your completed W-9 form to prove their compliance with FATCA.The bank will typically follow up by asking for proof of your compliance with the U.S. tax code.
If you are compliant, send them a copy of your tax compliance report downloaded from your IRS individual online account or business tax account.
If you are not currently compliant, the clock starts ticking:
✔️ If you are already working with us to file through the Streamlined Procedures (SP), we will prepare a formal letter (Preparer certification letter) for your bank once your SP package is ready, confirming your tax compliance.
❗ If you are delinquent, respond to the bank, let them know you are working on resolving your U.S. tax obligations and ask for a deadline extension (usually 30–45 days). They don’t want to lose a client but ignoring the bank’s request may result in account closure or your account being flagged and reported as “uncooperative” to the IRS. Next, hire TFX to take care of filing through the Streamlined Procedures program, which allows you to catch up penalty-free.
If you are not a U.S. person:
You must complete Form W-8BEN.
This form certifies that you are not subject to U.S. tax withholding. It is typically requested by U.S. payers or platforms (e.g., Amazon, PayPal) or foreign banks involved in FATCA.Tax treaty benefits:
If you are a resident of a country with a tax treaty with the U.S., Form W-8BEN may allow you to claim reduced tax withholding rates on U.S.-source income like royalties or dividends.No tax treaty?
You will eliminate or reduce tax withholding on certain U.S. income (like bank interest or capital gains from the disposition of U.S. stocks) simply by submitting Form W-8BEN.
What if you ignore the FATCA letter?
That is not advisable. Your account may be frozen or closed, and your information could still be reported to the IRS with a note that you were uncooperative. It is better to respond, get organized, and if needed, get help.