What is FATCA?

What is FATCA?

  • FATCA is United States legislation which requires financial institutions based outside the US to report on the financial accounts (policies) held by customers who are either US citizens or individuals/entities resident in the US for tax purposes.
  • This includes those who do not live in the US. The requirement is to report their financial accounts held outside the US.
  • It does not relate to individuals who may have worked in the US for the summer on a J1 visa
  • FATCA legislation requires foreign institutions such as Irish Life to report their American clients to the IRS (Internal Revenue Service), via the Irish Revenue, from 1st July 2014.
  • Congress enacted FATCA to make it more difficult for US citizens/taxpayers to conceal assets held in offshore accounts

The impact of FATCA legislation

  • From 1st July 2014, Irish Life must register with the IRS, and report information to Revenue on accounts held by U.S. citizens, US tax residents (who have Irish Life policies) and certain US controlled foreign entities. Revenue will in turn report to the IRS.
  • The legislation only applies to savings, investment and unit-linked or whole of life products – it does not apply to pensions or non-unit-linked protection policies

What will change in Irish Life in terms of the new business process?

The following requirements relate to individual customers only. Requirements for entities are due at a later date and will be issued at that stage.

  • From 1st July 2014, all new customers will be asked at new business stage if they are resident in the US for tax purposes or if they are a US citizen. There will be a new question on the application form and on the EPOS online proposal system
  • If the customer indicates they are either resident in the US for tax purposes or are a US citizen, then they will be asked to provide their US tax identification number (equivalent of PPSN). From 1st January 2017 we will be unable to issue policies without this number.
  • When the policy issues to customers who have indicated their US citizenship or tax residency, a letter will be sent to them advising of Irish Life’s obligation to report the policies (and any other policies issued on or after 1st July 2014) to the IRS via Revenue. A form will be attached which the customer can complete and return to Irish Life, in the event that they are not a US citizen or US tax resident.

What happens in terms of old-style applications received before 1st July but issued on or after 1st July?

  • FATCA legislation applies to all business issued from 1st July so the FATCA question must be answered for all business issuing from this date, including “pipeline” applications
  • Irish Life is not permitted to ask the FATCA question prior to 1st July. This is for data protection reasons ("the data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they were collected or are further processed" - section 2(1)(c)(iii) of the Data Protection Act). Therefore, the new application form can only be used from 1st July and the FATCA question can only be asked from 1st July
  • Where an old-style application form has been received before 1st July but the policy is due to issue on or after 1st July, New Business will issue a supplementary form that must be completed and signed by the customer – this form will contain the FATCA question

What will change in Irish Life in terms of alterations to customer policies?

  • If at any stage after a policy issues, a request or query is received by Irish Life which makes reference to the United States or indicates that the customer may be a US citizen or US tax resident, this will be noted on our systems and a letter will be sent to the customer.
  • The letter will advise of Irish Life’s obligation to report the policies (and any other policies issued from 1st July 2014) to the IRS via Revenue. A form will be attached which the customer can complete and return to Irish Life, in the event that they are not a US citizen or US tax resident

Examples of queries or requests that might indicate that an individual is a US citizen or US tax resident:

  • Change of address
  • Change of other contact details such as e-mail address or phone number
  • Adding a customer to the policy by way of assignment
  • Top-ups and receipt of anti-money laundering requirements such as address verification documents or passport etc
NOTE: NEW APPLICATION FORMS FOR SAVINGS AND INVESTMENT PRODUCTS ARE AVAILABLE ON BLINE FROM 1ST JULY. THE SUPPLEMENTARY FORM WHICH MUST BE USED IN ADDITION TO OLD-STYLE FORMS IS ALSO AVAILABLE ON BLINE FROM 1ST JULY

Correct as of 1st July 2014