FATCA – FOREIGN ACCOUNT TAX COMPLIANCE ACT
On 18 March 2010, the US government enacted FATCA, to combat tax evasion by US persons holding investment (i.e. Savings and Investment) outside the United States. FATCA requires FFIs (Foreign Financial Institutions) to report directly to the U.S IRS (Internal Revenue Service), information on assets held by US taxpayer.
From July 1, 2014, Foreign Financial Institutions (FFIs) are expected to comply with FATCA. West Coat Co-operative Credit Union Limited like other financial institutions has registered with the U.S IRS.
What is a U.S PERSON?
- All US citizens. An individual is a citizen if that person was born in the United States or if the individual has been naturalized as a US citizen.
- A lawful resident of the U.S. (including a U.S. green card holder).
- Standing instructions to transfer funds to an account maintained in the U.S. or directions regularly received from a U.S. address.
- An “in care of address or a ”hold mail” address that is the sole address with respect to the client or
- Power of Attorney or signatory authority granted to a person with a U.S. address.
- A partnership created or organized in the United States or under the law of the United States or of any State.
- A corporation created or organized in the United States or under the law of the United States or of any State.
You are a ‘tax resident’ of the United States. You can become a tax resident under two rules:
- 1) The ‘substantial presence test’. This is a ‘day count test and based on the number of days you are in the US over a three year period.
- 2) The ‘green card’ test. A person who has obtained a ‘green card’ has been granted the right to lawful permanent residence in the United States.
Accounts of U.S PERSONS to be reported
WCCCU is responsible to identify members, depositors and entities who are U.S. persons and to report annually to the IRS individual US persons with accounts balance of US$50,000 and over,and U.S entity with accounts balance of US$250,000 and over.
HOW WILL WCCCU BE AFFECTED IF IT FAILS TO COMPLY?
If WCCCU fail to comply, it will be taxed and unable to conduct transactions with U.S Banks through correspondent banks (i.e. sending and receiving money through wire transfers and drafts) will be affected. Also, WCCCU may be faced with legal and reputational risks and penalties.
INDIVIDUALS AND ENTITIES WHO FAIL TO COMPLY
If members, depositors or entities who are US account holder refuses consent for WCCCU to pass its information to the IRS, it will be a ‘recalcitrant account holder’ and payments made by it, and accounts held by it, will be subject to a 30% withholding tax.
Source Income is defined as:
- Interest payments, dividends, rents, salaries, wages etc.
- Gross proceeds from the sale of U.S property that produces interest or dividends
- Interest paid by foreign branches of U.S. Banks.
On Wednesday 28th May 2014, the West Coast Co-operative Credit Union Ltd will be holding it’s 9th Annual General Meeting under the theme “Co-operating ways to greater financial responsibility”.The AGM will be held in the community of St. Joseph at the Matthews Hall at 6pm. Come listen to the way forward with your Credit Union.
The West Coast Co-operative Credit Union Ltd. (WCCCU) has successful pull of its first farmers training. The training was held on Tuesday December 16th, 2013 at the Salisbury Government School on the topic “How records are kept and it’s importance” The farmers at the training expressed their gratitude and were very satisfied. The facilitator explained in detail how to go about preparing records and the different types of methods that can be utilized. The participants were taught how to;
- Appreciate the importance of accurate record keeping.
- Identify the basic resources needed for accurate record keeping.
- Be confident in their ability to do record keeping.
- Use the best practices in record keeping.
The WCCCU Ltd. hopes that the farmers will practice what was taught at the training session.
The WCCCU Ltd. also launched a new revolving facility just for the farmers “new farm Plus”. This loan was developed to assist the farmers to increase in production. It is expected that the WCCCU’s “new Farm Plus” initiative will bring relief to farmers, to provide inputs, plants, animals and farm labour for their farms. All farmers, farmers groups and prospective farmers who are ready to invest at any level will be able to access the funds which will be offered at easy terms with very basic requirements for accessing the facility.
The officers of the loans department at the West Coast Cooperative Credit Union says, they are excited in the launching of this venture which is expected to provide our farmers with the confidence of knowing that they can readily access the resources that is needed as they will need it to ensure that their investment do not suffer.
The WCCCU helps you plan for your future.
We can officially boast of a 7% interest rate on our Member Pension Plan account.