Understanding FATCA

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a new regulation enacted by the U.S. Government, which will require foreign financial institutions to report specific information on accounts held by U.S. persons to the Internal Revenue Service (IRS). It aims to prevent U.S. taxpayers from using accounts held outside of the U.S. to evade taxes.

A Foreign Financial Institution (FFI) which does not comply with FATCA may be subjected to a 30% withholding tax on U.S. source payments. In addition, an FFI may be required to withhold 30% on certain payments to foreign payees if such payees fail to comply with FATCA.

What does this mean for Victoria Mutual and our Members and customers?

As a participating FFI, Victoria Mutual Group intends to meet all obligations imposed under FATCA in accordance with the relevant banking and tax laws. In line with this, we have identified a team within our organisation which will undertake the planning and implementation process, to ensure that we are compliant.

Our expectation is that FATCA will have little impact on most of our Members and customers. However, for those who will be affected, we will:

  • provide detailed information regarding why the Member’s/customer’s account may be affected
  • and support the Member/customer with becoming compliant

As we seek to be compliant with FATCA, Victoria Mutual assures our Members and customers that we will maintain the highest levels of security, confidentiality and privacy regarding the collection and use of your personal information.

When will FATCA become effective?

FATCA will become effective on July 1, 2014.

How will Members and customers be kept informed?

As part of our commitment to keeping our Members and customers informed, we will communicate with you via mail, and will also post updates on our website and other channels.

Do You Need More Information?

Click here to view a list of Frequently Asked Questions.
Visit the IRS website http://www.irs.gov/FATCA

FATCA FAQs

Where can I find more information on FATCA?

The IRS provides additional information on FATCA. You may visit their website at: http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA)

Is there a penalty for not implementing FATCA?

An FFI which fails to register with the IRS faces a penalty of 30% withholding on payments from U.S. sources. For example, VMBS has bank accounts and investments in the U.S.; interest payments on these accounts/investments may be subject to the penalty of 30% withholding tax, if we are not registered as a participating FFI.

I am unsure of my U.S. tax status. What should I do?

If you are unsure of your U.S. tax status, please contact your tax advisor or an attorney with expertise on tax matters. Further information may be obtained from the IRS web site. http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA)

How will FATCA change the interaction with me as a customer of the VM Group of companies?

The Victoria Mutual Group will continue to serve you with the highest level of member/client care that you have come to expect. The Victoria Mutual Group will be required to address FATCA requirements for account identification, documentation, and reporting and will make information regarding any changes to our procedures available to you.

Does FATCA apply to remittances, loan payments or foreign exchange transactions?

No. Remittances, loan payments and foreign exchange transactions will not be affected by FATCA.

If I have a joint account with a U.S. person, will VMBS be expected to report on my account?

Yes, a joint account that has one or more U.S. person(s) is treated as a U.S. account, and the entire account is subject to reporting, regardless of which member funds the account.

Does FATCA impact VMBS members living in the United Kingdom or Canada?

The accounts owned by our Members living in the U.K. or Canada will be impacted if it is confirmed that they are U.S. Persons.

Does FATCA have a threshold amount to start reporting?

The FATCA threshold is US$50,000 for individuals and US$250,000 for corporations. However, if there is U.S. indicia (such as citizenship, nationality, telephone number et al) on your account then further examination will have to be made of that account. The threshold of US$50,000 and US$250,000 (or their equivalent in other currencies) is applicable per account holder, which means that it is across accounts and the accumulated amount per account holder. This threshold may change in the future.

I am a U.S. citizen but I have not lived in the U.S. for years and I do not pay U.S. taxes. Does FATCA apply to me?

Yes. A U.S. citizen who lives outside the U.S. falls within the definition of a U.S. person for U.S. tax purposes. VMBS will be required to identify the accounts of U.S. persons and report them annually to Tax Administration Jamaica. You should consult with a tax advisor to understand your U.S. reporting obligations and discuss your options.

Do I need to prove that I am not a U.S. person?

No, unless there is an indication/ indicia on your account that says you are a U.S. person. However, if these indications are on your account and you are not a U.S. person, a VMBS representative will ask you to provide evidence and sign a waiver, indicating that you are not. Once VMBS has conducted the relevant due diligence checks and is sufficiently convinced that you are not a U.S. person, no reporting on your account will be necessary. If the proof requested is not provided, reporting on the account will be done.

What does FATCA mean for me if I have an account that has U.S. indicia?

If an account has U.S. indicia, the account holder must provide documentation to establish the status (U.S. or non-U.S.). If documentation is not obtained the account will be reported to the IRS as recalcitrant, and may be subject to withholding tax. A recalcitrant account holder is any account holder that:

  • fails to comply with reasonable requests for information necessary to determine if the account is a United States account;
  • fails to provide the name, address, and TIN of each “specified United States person” and each substantial United States owner of a United States owned foreign entity; or
  • fails to provide a waiver of any foreign law that would prevent a foreign financial institution from reporting information required under FATCA

I am a U.S. person. What does FATCA mean for me?

If you are a U.S. person, you will be asked to identify yourself and complete the relevant documentation required. You may also be asked to provide additional information, such as the completed Internal Revenue Service (IRS) Form and W-9 (Request for Taxpayer Identification Number (TIN) and Certification). Information about you and your account will be reported on an annual basis to the local tax authority, subject to signing of the Intergovernmental Agreement (IGA). You should consult your personal tax advisor for further guidance.

Am I only affected if I am a U.S. citizen?

No. If an individual’s account holds any of the following seven criteria/U.S. indicia, VMBS may request further information/documentation to determine if you are a U.S. person under FATCA.

  • U.S. citizenship or U.S. residence
  • U.S. place of birth
  • U.S. address including U.S. PO boxes
  • U.S. telephone number
  • Repeating payment instructions to pay amounts to a U.S. address or an account maintained in the U.S.A.
  • Current Power of Attorney or signatory authority granted to a person with a U.S. address
  • ‘In care of’ or ‘hold mail’ address which is the sole address for the account holder

What is U.S. indicia?

The following information is used to determine U.S. indicia:

  • U.S. citizenship or U.S. residence
  • U.S. place of birth
  • U.S. address including U.S. PO boxes
  • U.S. telephone number
  • Repeating payment instructions to pay amounts to a U.S. address or an account maintained in the U.S.
  • Current Power of Attorney or signatory authority granted to a person with a U.S. address
  • ‘In care of’ or ‘hold mail’ address which is the sole address for the account holder

Who is a U.S. person?

  • Under U.S. tax law, you are considered a U.S. person/entity if you are:
  • A citizen of the U.S. (including an individual born in the U.S. but resident in another country, who has not renounced U.S. citizenship);
  • A lawful resident of the U.S. (including a U.S. green card holder);
  • A person who resides in the U.S.;
  • A person who resides in the U.S. or spends a significant amount of time during the calendar year in the U.S.; or
  • A U.S. corporation, estate and/or trust.
  • If you are unsure of your U.S. tax status, please contact your tax advisor for further details. Reporting on your account will be necessary.

Who does FATCA affect?

FATCA may apply to both financial and non-financial operating companies, as well as U.S. persons. FATCA may impact non-U.S. entities, directly or indirectly, once there is proof of receiving U.S. source income, including gross proceeds from the sale or disposition of U.S. property, which can produce interest or dividends.

When will FATCA apply?

FATCA took effect on July 1, 2014, and will affect new and existing clients of Foreign Financial Institutions (FFI).

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act, which is a United States law aimed at identifying U.S. persons who may not have met their U.S. tax obligations, by investing through foreign (non-U.S.) accounts – either directly or indirectly using foreign entities such as corporations and trusts. FATCA legislation was passed in March 2010 to focus on tax non-compliance by U.S. taxpayers with foreign accounts.

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