Glossary term
U.S. Person
Subject: Financial Crime, Tax Crime and Transparency
For FATCA, a U.S. person is mainly a US citizen or resident, or a US-organised entity such as a company, partnership or trust, whose foreign accounts must be reported to the US tax authority.
Explanation
The United States taxes its citizens and residents on income from anywhere in the world, wherever they live. FATCA therefore asks foreign banks to find customers who are U.S. persons. Individuals include US citizens (wherever they live or were born) and green card holders, as well as people who spend enough days in the country to be tax residents. Entities include those formed under US law. Banks look for indicators such as a US birthplace, address, telephone number, standing instructions to a US account or a power of attorney held by someone in the US. When indicators appear, the bank asks for a US tax form or evidence that the person is not a U.S. person. Specified U.S. persons exclude certain categories, such as listed companies and banks, which are not reported. The definition decides whose accounts are reported and which customers get questioned at onboarding.
Example
A customer of a bank outside the US was born in the US but left as a child. He has never filed a US return. The bank's review finds his birthplace and asks him to confirm his status. He holds a US passport, so the bank collects the required form and reports the account.
Not to be confused with
- Tax resident
- Tax residence turns on where someone lives. For FATCA, US citizenship alone can make a person a U.S. person.