Did I misunderstood anything about the laws (both US and Swiss sides), or should I do anything to correct this?
I recently moved from the US to Switzerland due to a new job, and I opened up a bank account with UBS two days ago. There was a part that I found extremely confusing. I am not a US citizen, and my stay in the US were exempted from the Substantial Presence Test due to having an "F" visa (within their exempted length of 5 years). Therefore I was not even a resident for tax purposes in the US. No matter how I explained this to the bank staff, he insisted I should sign W-9 before opening up the account. Eventually I was forced to sign the paper because I definitely need a bank account. But technically, the W-9 form is actually putting me under perjury because W-9 says that, by signing it, I certify that I am a US person, whose definition does not apply to any period of my life.
Never sign anything that is not the truth.
If the form says: "I declare that I am a citizen of the USA," and you are not, in fact, a citizen of the USA, then your signing it does not reflect the truth.
I suggest you write to the bank, immediately, by registered letter (that means in an envelope, with a Fr.6 "eingeschrieben" surcharge paid at the post office counter) stating that you are not a citizen of the USA. Include a photocopy of your passport, to show your nationality.
If you have never, at any stage, ever been a citizen of the USA, then state that, too, in your letter.
Specifically request that the bank confirm to you, in writing, that they have taken note of your nationality, and noted in their records that you are not a citizen of the USA.
Keep the slip from the post office, and a physical copy of your letter as, together, they constitute proof that you sent the letter.
If you do not receive a written reply within one week, write again, registered. If still no reply, take all your documents (including copies of your letters and their corresponding registered post office slips) and go to the bank. There, ask to see an advisor, and if at all possible do not just get the matter settled over the counter. Try to get something IN WRITING, as requested in your letter.
Do you have a green card?
Did you also fill in and sign UBS’s “Declaration of Status of the Account Holder as a Non-US or a US Person”?
Questions are:
- Are you a US citizen?
- Were you born in the US (or a US territory)?
- Are you a US Green Card Holder (irrespective of expiry date)?
- Are you a resident of the US for US tax purposes?
- Irrespective of the Substantial Physical Presence Test above, are you still domiciled in the US?
If you answered one of those with “yes” then you have to sign a W-9.
These are the questions I saw before signing the paper. All of the answers were No's except the 4th question. The "Substantial Physical Presence Test" was listed under that question 4, but it didn't say anything about exempt persons (I guess because it's a long list). I tried hard to explain the laws to the bank person, but because they don't see these exempt person regulations on their paperwork, in order to cover their ass I still have to sign it. He repeatedly said it will be okay and I was feeling tired (and probably getting stupid), which leads to me signing this form.
By the way, I have always been advised to use 1040NR-EZ (non-resident form, easy version) to file my previous US tax returns. But people have experience with US tax return probably know that if you pass the Substantial Physical Presence Test, you are required to use 1040 resident form.
No.
There was one thing I didn't explain clearly in my post. W-9 says that, by signing it, I declare that I am a "US person". It defines "US person" as either US citizen or US resident alien of tax purposes. I have not been qualified for any of them because of a fine print in the law that gives me the exemption. The exemption rules are not documented in any files that was given to me. I myself wouldn't have known about this, it I were not a person who is curious and careful enough to look up the details of the tax law.
Thank you for your (and other people's) detailed reply. It's a very good point to have something in writing. Can I just go there in person the first time, and demanding the resolution is reflected in writing? Besides the possibility to explain clearer, I might also have the choice to close my account before the account is set up to receive my salary. Otherwise I have to do more paperwork with my employer to change the payment method.
By the way, here is a link to the substantial presence test. What I have been referring to is the 3rd item under "Exempt Individual". Maybe I should go to the bank, request to meet a different guy and hopefully correct my answer to the 4th question into a "No"?
W8 NEB is the equivalent form for non US persons.
UBS has a special department that handles all its American clients. See if you can arrange to speak with whoever will be handling your account there and try and resolve it that way. However, I’m not sure it will make any difference. If you were paying tax in the US then as far as the bank is concerned that makes you a US person. The document you linked to makes it clear you’re not exempt from US tax.
" Exempt Individual
Do not count days for which you are an exempt individual. The term “exempt individual” does not refer to someone exempt from U.S. tax , but to anyone in the following categories:"
It may be that for this first year you’ll be stuck with the US tag, but can sign a W8-BEN next year as I assume you’ll not have to pay any US taxes now that you’ve left the country.
Anyway, try and speak with the person who’ll be handling your account there and see what they say.
Changing to another Swiss bank will simply land you in the same problem and most won’t even touch someone who’s labelled as an American. Only UBS, Credit Suisse and PostFinance will take American clients these days.
Thanks for the reply! Yes I was paying taxes. It might not be a big deal for the bank to label me as a US person because I don't use those fancy things like investment account, etc. My only concern is the US side. If IRS sees my W-9 and wants to screw me up, they can charge me for perjury. Although I don't think they have the energy to go after a poor student like me, it is still not good idea to leave something that could possibly be messed up with on goverment record. I will try to talk to the bank after the break.
I would be more concerned about the FBARs and filling em out if you have over 10K in non US assets. Deadline is tomorrow.
But if I just opened up the account this year (actually last week), should I file it in 2018 (assuming I were a US resident alien)?
FBAR has an automatic extension until Oct 15. And yes, you only need to file it for years during which your foreign accounts exceed $10k.
There is also a statement on who must file the FBAR on that page. I'm not sure how to interpret it in your situation. If you were a resident of the US (not clear to me in what sense) for part of 2017, maybe you do need to file for 2017.
Yes, I assume you’ll have some US tax filing obligation for last year and this year. So the bank is probably correct in having you down as a US person as far as FATCA is concerned. Once you clear your US tax obligations next year then you can tell the bank and ask for the W8-BEN form to sign instead. Note that they may want to see your tax filings as there’s no other way to prove you’ve cleared your tax obligations since you aren’t required to file an 8854, being neither a US citizen or a Green Card holder, so make sure you keep copies. And send everything to the States by registered post so you can track its delivery progress and yes, make a copy of that too to prove they’ve been delivered.
I would still speak to the person handling your account to make sure you’re both on the same page regarding your status and how to deal with it to the bank’s satisfaction.
I doubt the IRS will come after you for perjury. They’re being bombarded by this FATCA whale so heavily that they can’t really keep up with it all. As a minnow so long as your filings are up to date they won’t care. They’re trying to find the bigger fish that will actually bring them in some money. You’re not a big enough fish.
I dropped by UBS today, and they tore up my W-9 even before I started to explain. The bank person confirmed my status and the procedure with some kind of authority before we were face-to-face, and I was really impressed by their efficiency.
Probably got told when the document went up to their American department that it was wrong. So good outcome for you then.
An exempt individual which meets the substantial presence test has to file Form 8843. This is the "proof" one is not an US tax person.
Its is best to keep copies of each years 8843 with proof of mailing to the IRS.