Short answer: an institution may send reminders, restrict services, close an account, or report information under the FATCA rules that apply to it. The response varies by institution, jurisdiction, intergovernmental agreement, and account facts.
Here are possible responses and the filing issues to consider if US filings are behind.
The Escalation Sequence
An unanswered documentation request can trigger an institution's compliance process:
- Reminders. The institution may send follow-up requests under its own deadlines.
- Restrictions. Its policies and local law may permit restrictions while documentation remains incomplete.
- Closure. The institution may exit the relationship under its account terms and applicable law. (Possible first steps are covered in what to do when your bank closes your account.)
- Reporting. Depending on the governing FATCA regime, the institution may report the account individually, through a local tax authority, or in an aggregate category for certain undocumented or non-consenting accounts. Model 1 and Model 2 agreements do not use identical reporting rules.
Does Ignoring the Letter Keep You Off the IRS Radar?
No general rule makes an unanswered letter invisible. The request itself may reflect US indicia, and FATCA rules can require reporting or additional documentation even when the customer does not respond.
If You Are Compliant: Just Respond
The correct response depends on tax status and the form requested. A US person is generally asked for Form W-9; a non-US person may be asked for Form W-8BEN or other documentation. The institution's deadline and instructions control its account process, while US returns, FBARs, and Form 8938 are separate filing obligations.
If You Are Behind: Respond AND Fix It
When filings are behind, the bank response and the US compliance analysis should be treated as related but separate matters:
- Address the institution's request. Determine which certification is accurate and ask the institution about its deadline or extension policy.
- Review US filing procedures. The Streamlined Foreign Offshore Procedures may apply if all eligibility, non-residency, and non-willfulness requirements are satisfied. An eligible SFOP submission includes three years of returns and six years of FBARs, with a 0% offshore penalty and specified penalty waivers. Tax and interest remain due. (Streamlined vs. the FBAR-only route the IRS withdrew in July 2026.)
- Keep the representations consistent with the facts. A bank certification does not itself cure a US filing gap or establish eligibility for a filing procedure.
A FATCA letter does not determine tax liability or Streamlined eligibility. Review the eligibility requirements or request an assessment based on the complete facts.