The question of who is a U.S. person has always been relevant
for tax purposes because it determines who is subject to (a) U.S.
income, gift and estate tax, (b) filing Foreign Bank Account
Reports (FBARs), and (c) the ''exit tax'' under
what is now Section 877A of the Internal Revenue Code (the
''Code'' or ''I.R.C.''). The
inquiry has become increasingly relevant, however, in the context
of the Foreign Account Tax Compliance Act
(''FATCA''), as foreign banks and other financial
institutions must make determinations as to the identity of the
beneficial owners of accounts.
Under FATCA, foreign banks, brokerage firms, investment firms, and
other ''foreign financial institutions'' must agree
to report certain information on their U.S. account holders or else
face withholding on certain payments made from U.S. sources
beginning in July 2014. In many cases, the institutions' own
governments (through intergovernmental agreements signed with the
United States that implement FATCA) may require the determination
in order to report on U.S. accounts.
To continue reading Henry Bubel and Jenny Longman's article
from the March 2014 edition of Bloomberg BNA's Tax Planning
International Review, please
click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.