Mexican FATCA Agreement Requires New Reporting By BOTH Mexican & US Banks!

We first posted Mexico Becomes the 3rd Country to Sign a FATCAAgreement on Tuesday, November 27, 2012. The Treasury Department has now posted this agreement on its Website.

This agreement sets out each Parties’ Obligations to Obtain and Exchange Information with Respect to Reportable Accounts which includes :

A.     MEXICO REPORTING TO THE US

WITH RESPECT TO EACH U.S. REPORTABLE ACCOUNT OF EACH REPORTING MEXICAN FINANCIAL INSTITUTION:
 

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and

(2) In the case of a Non-U.S. Entity that, after application of the due diligence procedures is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;

(2) The account number (or functional equivalent in the absence of an account number);

(3) The name and identifying number of the Reporting Mexican Financial Institution;

(4) The average monthly account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) during the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, the average monthly balance for the calendar year up to the time of closure;  

(5) In the case of any Custodial Account:

(A) The total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and

(B) The total gross proceeds from the sale or redemption of property paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder;

(6) In the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and

(7) In the case of any account not described in subparagraph (5) or (6) of this paragraph, the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period.

b) In the case of the United States, with respect to each Mexican Reportable Account of each Reporting U.S. Financial Institution:

(1)The name, address, and Mexican TIN of any person that is a resident of Mexico and is an Account Holder of the account;

(2) The account number (or the functional equivalent in the absence of an account number);

(3) The name and identifying number of the Reporting U.S. Financial Institution;

(4) The gross amount of interest paid on a Depository Account;

(5) The gross amount of U.S. source dividends paid or credited to the account; and

(6) The gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 or 61 of subtitle A of the U.S. Internal Revenue Code. 
 

B.     US REPORTING TO MEXICO 

WITH RESPECT TO EACH MEXICAN REPORTABLE ACCOUNT OF EACH REPORTING US FINANCIAL INSTITUTION:

(1) the name, address, and Mexican TIN of any person that is a resident of Mexico and is an Account Holder of the account;

(2) the account number (or the functional equivalent in the absence of an account number);

(3) the name and identifying number of the Reporting U.S. Financial Institution;

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the account; and

(6) the gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 or 61 of subtitle A of the U.S. Internal Revenue Code.

This will affect not only US taxpayers who have unreported Mexican bank income but it will equally adversely impact Mexicans who have unreported income from deposits with US Banks.
We discuss the adverse impact on US Banks in our post "Florida Banks Explain 2013 IRS Reporting Rule For Foreigners;" where we discuss that thse new reporting rules which go into effect Jan. 1, 2013 have raised privacy concerns among some international account holders which have cause many Foreign Depositors with US Banks, especially Banks in Florida,  to move several million dollars of Deposites to other jurisdictions, since the new regulation were passed in April.

Are you a US Person with a Foreign Bank Account???  


Are you a Mexican Person with a US Bank Account???
Have FATCA Problems???

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).