French gov’t assuages banks’ concerns over FATCA

French Finance Minister Bruno Le Maire has attempted to reassure French banks that they would not face immediate penalties for failing to report clients who are US taxpayers by the 31 Dec. 2019 deadline mandated under the US Foreign Account Tax Compliance Act.

The matter has attracted particular attention in France, where politicians, industry officials and civic groups expressed widespread concern that up to 40,000 bank accounts of French citizens would have to be closed if the banks did not obtain the tax identification numbers from clients with a US connection.

In a letter to the president of the European Banking Federation, Frédéric Oudéa, Le Maire expressed sympathy for the cases of so-called “accidental Americans”, typically French citizens who were born in the US to French parents and have long since returned to live in France.

Anyone born in the US remains a citizen with US tax obligations unless that citizenship is formally renounced. Many accidental Americans, however, do not have either a US tax identification or social security number.

Le Maire said banks and their clients affected by the tax identification number requirement were legitimately concerned. However, even after the deadline had passed, the non-transmission of the TIN by the banks would not automatically constitute a breach of their obligations under FATCA.

Banks face significant penalties in their transactions involving the US or the US dollar for violations under this act.

The US Internal Revenue Service responded to the concerns in October 2019 by issuing a clarification stating that banks would not face immediate financial sanctions for the failure to report the tax identification numbers of their US clients.

The updated IRS FATCA FAQs webpage notes that banks would have at least 18 months to correct any errors with regard to TINs before further action is taken.

Support local journalism. Subscribe to the all-access pass for the Cayman Compass.

Subscribe now