A FATCA letter asks for one form, and it is easy to sign, return, and forget. What matters is what the bank does next. Once it classifies your account as a U.S. account, the bank generally reports it every year, whether or not you respond, and the IRS compares that data with your returns and foreign account filings.
A FATCA letter is a written request from a financial institution asking you to confirm whether you are a U.S. person for tax purposes, usually by returning a Form W-9 or a Form W-8BEN. Banks also call it a FATCA notice, a FATCA compliance letter, or a self-certification request.
The letter exists because of the Foreign Account Tax Compliance Act. Under 26 U.S.C. § 1471(a), payers must withhold 30 percent of certain U.S.-source payments to a foreign financial institution that does not meet the law’s reporting requirements. Rather than absorb that, foreign banks identify their U.S. account holders and report them.
The bank found something in your file that suggests a U.S. connection. Banks call these U.S. indicia, and they include U.S. citizenship or residence, a U.S. place of birth, a U.S. mailing or residence address, a U.S. telephone number, standing instructions to transfer funds to a U.S. account, a power of attorney or signature authority held by someone with a U.S. address, and an “in care of” or “hold mail” address that is the only address on file.
A flag means the bank needs documentation, and taxpayers who filed every return and every FBAR correctly receive these letters too.
The request may arrive by mail or as a secure message in the bank’s online portal, and it asks for a form plus supporting documents.
Two details to watch for:
Not necessarily from the letter itself. The letter is the bank’s own due diligence, which happens before anything is transmitted. Reporting generally starts once the bank classifies your account as a U.S. account.
How it travels depends on the country. Under a Model 1 intergovernmental agreement, the bank reports to its own tax authority, which forwards the information to the IRS. Under a Model 2 agreement, the bank reports directly to the IRS. Treasury publishes the full list of partner jurisdictions and the model each one signed. A U.K. bank, for example, reports through HMRC under the U.K. agreement, so the letter may reference HMRC rules and ask for documents an IRS form does not.
Returning a Form W-9 to your bank does not open an IRS examination. It is not an IRS filing and nothing about it goes on your tax return.
The audit risk comes from the bank’s report. The IRS receives account balances and account holder details from the institution and compares them against what you reported. A foreign account that appears in the bank’s data but is missing from a required FBAR or Form 8938 is the kind of mismatch that draws attention. Several categories of foreign assets that commonly trigger an IRS audit workthe same way.
If you are a U.S. person, you send Form W-9, certifying your U.S. status and taxpayer identification number. If you are not, you send Form W-8BEN as an individual, certifying your foreign status and any treaty benefit, or Form W-8BEN-E as an entity. Determine your status first, then pick the form. If you are not a U.S. person and the bank flagged you because of stale information, such as an old U.S. address, send the documentation that corrects it with your W-8BEN. If you spent substantial time in the United States, for example, on a work visa, run the substantial presence test before you certify foreign status.
A U.S. person under 26 U.S.C. § 7701(a)(30) includes U.S. citizens, lawful permanent residents, and individuals who meet the substantial presence test under § 7701(b)(1)(A).
Signing a Form W-8BEN while you are in fact a U.S. person is a false certification made under penalties of perjury, so get legal advice before you sign anything.
No statute gives the account holder a deadline to respond. The bank sets its own response date, and the letter states it.
You can ask the bank for more time before that date, though approval is not guaranteed.
The bank can classify the account as undocumented and report it on that basis. Depending on the institution and the country, the account may be restricted, subjected to withholding, or closed.
Closing an account does not send the funds to the U.S. government. The bank returns the balance under its own procedures, subject to any other restrictions on the account. Ignoring the letter can cost you access to banking and the ability to control your timeline.
These are two separate projects, and the compliance review can start before the form goes back. Sending the form does not waive anything.
The timing that matters most runs on the IRS side. Eligibility for IRS compliance programs generally ends once the IRS begins an examination or criminal investigation. Getting a correction underway while you still qualify is worth more than the few weeks you might gain by stalling the bank.
Work in this order.
The paper trail from step six carries weight later. If willfulness is ever at issue, what you did and when you did it is the record.
A taxpayer with foreign accounts may have to file both. They are separate obligations under separate bodies of law, and filing one does not satisfy the other. The IRS publishes a side-by-side comparison of Form 8938 and FBAR requirements.
| Question | FBAR (FinCEN Form 114) | Form 8938 |
|---|---|---|
| Who requires it | FinCEN, under the Bank Secrecy Act | The IRS, under the Internal Revenue Code |
| Where it goes | Filed separately through the BSA E-Filing System | Attached to your income tax return |
| What triggers it | Foreign financial accounts exceeding $10,000 in the aggregate at any point in the year | Specified foreign financial assets above a threshold that varies by filing status and residence |
| Authority | 31 U.S.C. 5314; 31 CFR 1010.350 | 26 U.S.C. 6038D |
| Deadline | April 15, with an automatic six-month extension to October 15 | The due date of your income tax return, extensions included |
Form 8938 thresholds depend on filing status and where you live. For an unmarried taxpayer living in the U.S., the form is required above $50,000 on the last day of the year or $75,000 at any time during it, and the figures rise for joint filers and taxpayers living abroad. Meeting either the year-end figure or the any-time figure triggers the filing requirement. Our page on foreign account reporting thresholds lists every filing status and covers the FBAR aggregation rules.
FBAR and Form 8938 are the two best-known filings. A foreign account is often attached to something else that also had to be reported, and the same review should check for a foreign trust or a foreign gift on Forms 3520 and 3520-A, an interest in a foreign corporation on Form 5471, a foreign partnership on Form 8865, a passive foreign investment company on Form 8621, and transfers of property to a foreign corporation on Form 926.
Foreign pensions, annuities, and foreign life insurance policies are easy to overlook, and their reporting treatment depends on the product and how it is owned. An account in your name that holds someone else’s money is also easy to miss, because it can create an FBAR obligation even where no income is yours to report.
The figures below are maximums. The compliance programs covered later offer defined terms in their place. The FBAR amounts replace the $10,000 and $100,000 figures in 31 U.S.C. § 5321 with the inflation adjustments at 31 CFR § 1010.821, which FinCEN updates periodically.
| Failure | Maximum penalty | Authority |
|---|---|---|
| FBAR, non-willful | $16,536 per annual report, for penalties assessed on or after January 17, 2025 | 31 U.S.C. 5321(a)(5)(B); 31 CFR 1010.821 |
| FBAR, willful | The greater of $165,353 or 50 percent of the account balance at the time of the violation, generally assessed per account, per year | 31 U.S.C. 5321(a)(5)(C) and (D) |
| FBAR, willful, criminal | Up to $250,000, five years, or both, with higher limits when the violation is tied to other federal crimes or a pattern of illegal activity | 31 U.S.C. 5322(a) and (b) |
| Form 8938 not filed | $10,000, plus $10,000 for each 30-day period beginning 90 days after IRS notice, continuation capped at $50,000, for a $60,000 maximum | 26 U.S.C. 6038D(d) |
| Underpayment tied to an undisclosed foreign asset | 40 percent, double the ordinary 20 percent accuracy-related rate | 26 U.S.C. 6662(j)(3) |
Per report. In Bittner v. United States, 598 U.S. 85 (2023), the Supreme Court held that the non-willful penalty accrues once per report, regardless of how many accounts the report covers.
Twelve unreported accounts across five unfiled years produce five penalties. A per-account count would produce sixty. The government sought $2.72 million from the taxpayer in that case, $10,000 for each of 272 accounts, before the Court reversed. Bittner addressed non-willful penalties only.
Further than the ordinary three years, in two situations that foreign accounts can create.
The assessment period runs six years under 26 U.S.C. § 6501(e)(1)(A)(ii) when more than $5,000 of omitted gross income is attributable to a foreign asset reportable under § 6038D, even if the asset falls below the Form 8938 filing threshold.
Separately, under § 6501(c)(8), failing to file an international information return such as Form 8938, 5471, 3520, or 8865 keeps the assessment period open until three years after the IRS receives it. When the failure had reasonable cause, only the related items stay open.
Which route fits depends on one question above all others: was the failure to report non-willful, or not? That determination drives eligibility, cost, and risk, and it is the part of the analysis that needs a lawyer.
| Route | Who it is for | Offshore penalty |
|---|---|---|
| Streamlined Foreign Offshore Procedures | Non-willful conduct, taxpayers living outside the United States | None |
| Streamlined Domestic Offshore Procedures | Non-willful conduct, U.S. residents who already filed original returns for the covered years | 5 percent |
| Late FBAR filing | FBARs missed, income reported and tax paid, no IRS contact yet | No IRS.gov no-penalty assurance since the Delinquent FBAR Submission Procedures page came down on July 1, 2026; reasonable cause review |
| Delinquent international information return procedures | International information returns, such as Forms 5471, 3520, 3520-A, or 8865, missed with no unreported income, no examination, and no IRS contact | No separate offshore penalty; information return penalties may be assessed before an attached reasonable cause statement is considered, except for Forms 3520 and 3520-A |
| Criminal Investigation Voluntary Disclosure Practice | Willful conduct or realistic criminal exposure | Highest cost of the available routes |
Both streamlined tracks require three years of returns, six years of FBARs, and a signed certification of non-willfulness that includes a narrative statement of facts. Our guide to the IRS streamlined filing compliance procedures walks through the penalty calculation and eligibility tests for both tracks.
No. The 2014 OVDP closed on September 28, 2018, as announced in IR-2018-52. The IRS Criminal Investigation Voluntary Disclosure Practice took its place, entered through Form 14457 preclearance.
The IRS proposed changes to the Voluntary Disclosure Practice in December 2025, so the terms in effect when you come forward may differ from earlier guidance.
Quiet disclosure means fixing the problem on your own, outside an approved procedure. It takes two forms: starting to file correctly this year and saying nothing about prior years, or mailing in a stack of back-year FBARs and amended returns without entering a program.
Both leave the taxpayer exposed to ordinary penalties without the defined terms an IRS procedure offers. The IRS also states that penalties already assessed on an earlier quiet filing will not be abated if the taxpayer later enters the streamlined procedures. A quiet disclosure that draws attention can be read as evidence of what you knew, the opposite of what you want on the record if you’re arguing non-willfulness.
Some account holders checked a box at account opening years ago without understanding it. Some were told by a bank employee that their U.S. birth did not matter. Some knew exactly what they were doing.
Those are three different legal positions, and the reason behind a prior certification bears on whether the non-willful programs remain open to you. If you returned a Form W-8BEN and you are in fact a U.S. person, the fix is a corrected Form W-9 and the underlying reporting, handled together. The bank’s file keeps both the new form and the earlier statement.
Talk to a tax attorney before you send the correction. What you tell the bank can be used in the willfulness determination.
You are a U.S. person, and the filing obligations are the same.
People born in the United States who left as children, and dual citizens who never lived in the country, can receive these letters because a U.S. birthplace is a flag a bank can see on the face of a passport.
Three common beliefs about this situation are mistaken. Income earned abroad is still taxable, because U.S. persons are taxed on worldwide income. A local account in your home country is reportable too, because FBAR and Form 8938 apply specifically to foreign accounts. Foreign tax already paid may generate foreign tax credits or treaty relief that reduces or eliminates U.S. tax owed, but the filing obligation remains, and reporting penalties can apply even when no tax is due. A genuine lack of awareness of U.S. filing obligations can support a non-willfulness position for the streamlined procedures, though eligibility depends on the full facts.
No. Your bank sends it to meet its own reporting obligations under FATCA. The IRS is not a party to the request, though the account information the bank collects can reach the IRS through the bank’s annual reporting.
No statute requires an account holder to respond, but the bank can classify the account as undocumented, report it on that basis, and restrict or close it. Returning the correct form lets the bank document the account accurately.
If every return and every FBAR is filed, returning the form is administrative, though it is still worth confirming that the accounts the bank flagged match the accounts on your FBARs. If there are gaps, the letter is notice that the data is moving and that your window to correct things on favorable terms is finite.
Ayar Law handles foreign account disclosure, FBAR and Form 8938 compliance, and IRS examinations involving offshore assets for clients throughout the United States. Confidential legal advice from an attorney can be privileged, while the narrower privilege for CPAs and enrolled agents under 26 U.S.C. § 7525 does not reach criminal matters or routine return preparation.
To discuss a FATCA letter with our team, call (248) 262-3400 or request a case review.
This article is general information about federal tax reporting requirements and is not legal advice. Reading it does not create an attorney-client relationship. Penalty amounts are subject to inflation adjustments, and IRS program terms change. Every situation depends on its own facts, and prior results do not guarantee or predict the outcome of any other matter. Consult a licensed tax attorney about your circumstances.
