FATCA Compliance Software

The Foreign Account Tax Compliance Act (FATCA) is a US federal law enacted in 2010 requiring foreign financial institutions worldwide to identify and report US account holders to the IRS. Non-compliance triggers a 30% withholding tax on all US-source income.

FATCA requires foreign financial institutions to identify account holders who are US persons and report those accounts to the IRS, directly or through their local tax authority under an intergovernmental agreement. The IRS says that if you set up a new account with a foreign financial institution, it may ask for information about your citizenship. If you are a US person the bank usually asks for Form W-9; otherwise Form W-8BEN (individuals) or W-8BEN-E (entities), or its own self-certification form. Without the form, US-source payments can face 30% withholding. TaxDo guides this collection and routes each account to the correct form.

Foreign financial institutions (banks, custodians, investment entities, insurance companies), non-financial foreign entities with substantial US owners, and withholding agents making US-source payments.

FATCA is not a single filing, so it depends who you are. Foreign financial institutions that report to the IRS file Form 8966 for their US accounts by March 31 of the following year; institutions in Model 1 IGA jurisdictions report to their local tax authority instead. US taxpayers who must file an income tax return and hold foreign financial assets above a threshold attach Form 8938. For an unmarried filer living in the US that is more than $50,000 at year end or $75,000 at any time; abroad it is $200,000 and $300,000. Joint filers have higher thresholds. TaxDo supports dual-track FATCA XML reporting for institutions.

A passive NFFE is a foreign non-financial entity that is not an active NFFE or another excepted type, such as a publicly traded company. An entity is active when less than 50 percent of its gross income is passive income, such as dividends, interest, rents, royalties and annuities, and less than 50 percent of its assets produce or are held to produce passive income. A passive NFFE gives the institution a Form W-8BEN-E that either certifies it has no substantial US owners or lists each one with name, address and TIN. A substantial US owner is generally a US person holding more than 10 percent. TaxDo performs controlling person look-through for passive NFFEs.

A 30% tax withheld from US-source income — dividends, interest, and gross proceeds — paid to non-compliant FFIs or recalcitrant account holders who fail to provide valid documentation.

Indicators of US person status that must be detected during due diligence: US address, US phone number, US birthplace, standing instructions to transfer funds to a US account, power of attorney to a US person, and c/o or hold-mail address.

Model 1 IGAs require the FFI to report to its local tax authority, which exchanges data with the IRS. Model 2 IGAs require direct reporting to the IRS. 113 jurisdictions have signed or agreed IGAs (US Treasury).

A Global Intermediary Identification Number issued by the IRS to registered FFIs. A revoked GIIN triggers 30% withholding on all US-source payments. TaxDo verifies GIINs in real time against the official IRS FFI List.

W-8BEN for foreign individuals, W-8BEN-E for foreign entities, W-8IMY for partnerships and trusts, W-8EXP for governments and tax-exempt organisations, and W-9 for US persons. TaxDo auto-routes every account type to the correct form with real-time TIN validation.

FATCA is US-specific; CRS is the OECD global equivalent. Both require self-certification, TIN validation, and annual reporting. TaxDo handles both through one OS — shared identity infrastructure, regime-specific output.