Foreign Account Tax Compliance Act and Hold All Mail

By now, most major financial institutions and service providers are winding up the review of their client base to ensure that undocumented US centric clients are properly identified as it relates to the Foreign Account Tax Compliance Act  (FATCA) and its regulations.

From our own experience, this exercise allowed us to reconfirm that our clients were still non U.S. persons by obtaining new W8-BEN forms.  However, we found examples of third party power holders and beneficiaries that were deemed US resident for FATCA purposes and these persons were properly documented by obtaining new W9 forms. 

In an attempt to cure all inferences of US indicia, we reviewed all of our customers mailing addresses. Many of whom had Hold All Mail (HAM) addresses in the U.S. to assist with the copious amounts of mail sent to each client monthly. This inference of U.S. residency had to be cured to eliminate any doubt of the client being a non U.S. person. The cure process involved sending a letter to the client to have them confirm that the U.S. HAM address was only being used to facilitate the management of mail.

As an alternative to a US HAM address, we recommended the FidPro Hold All Mail Service, one of few Hold All Mail providers not located in the U.S. FidPro Hold All Mail clients did not require a cure letter. This turned out to be a significant saving for the firm and our clients were not required to send followup confirmation.

If there is an indication that your client is a US person, this should be explained. In the absence of a plausible explanation for the US indicia, you may want to recommend to your client that they seek independent tax advice to confirm their status before the 17th of August 2015.

For all Bahamian Financial Institutions or BFI’s the local FATCA Portal can be accessed here.