You are onboarding a new customer. Their self-certification states that they are a tax resident of the UK and their mailing address is in America, but they have stated they are not a tax resident in the US.
The self-certification is also missing some of the mandatory fields.
What would be appropriate curing documentation to resolve the FATCA mismatch?
Please select the correct answers and click submit.
A. A reasonable explanation of why the customer has a US mailing address
B. Supporting documentation (e.g. UK ID) to indicate tax residency in the UK, including a UK TIN
C. Backdated payslips showing which jurisdiction the customer has been paying tax to
D. A certificate of loss of US nationality
Answer (1)
To resolve the FATCA (Foreign Account Tax Compliance Act) mismatch described, appropriate curing documentation is important to ensure compliance and correct identification of tax residency. Here's a step-by-step explanation of the suitable documents and rationale for their use:
A reasonable explanation of why the customer has a US mailing address:
It is essential to provide a reasonable explanation to address why the UK tax resident has a US mailing address. This could include reasons such as temporary work assignments, long-term travel, or maintaining a vacation home in the US. Providing this explanation helps clarify the connection to the US while affirming UK tax residency.
Supporting documentation (e.g., UK ID) to indicate tax residency in the UK, including a UK TIN (Tax Identification Number):
Presenting a valid UK identification, such as a passport or national ID card, along with a UK Tax Identification Number, supports the claim of being a UK tax resident. These documents are crucial in confirming residency status and align with FATCA requirements.
A certificate of loss of US nationality:
If the individual previously held US nationality, a certificate showing the loss of US nationality can be crucial. This certificate clearly demonstrates that the individual is no longer a US national and supports the claim that they are not a US tax resident.
These documents provide substantial evidence to clarify and rectify any discrepancies in the provided self-certification. The combination of a reasonable explanation, supporting UK documentation, and evidence of the loss of US nationality, if applicable, should effectively cure the mismatch for FATCA compliance.
It is important to note that backdated payslips showing which jurisdiction the customer has been paying tax to, are not entirely suitable in this scenario. While they might provide some insight into the tax payments, they do not directly address the tax residency or mailing address issues as effectively as the other options.
