Interest Bearing Account

Posted By: JWills, CRCM

Interest Bearing Account - 06/09/21 05:46 PM

I have a scenario-I have an Amish customer who would like to open an Interest Bearing account, however they do not have a Social Security Number. My thoughts are that they would not be eligible for an interest bearing account as we would have no means to report any interest received to the IRS. Looking for any guidance or information, or has someone had this type of scenario in their bank?
Posted By: John Burnett

Re: Interest Bearing Account - 06/09/21 06:00 PM

Since October 1, 2003, banks have been required to obtain a taxpayer identification number from any U.S, person opening an account under the Customer Identification Program rules of FinCEN. Whether the prospective customer wants an interest-bearing account or not, the customer must provide a TIN. For a U.S,. individual, the TIN is the individual's SSN.

Amish individuals also need an SSN to file their federal tax returns.

Amish individuals do not need to participate in the Social Retirement Insurance program to apply for and use an SSN to open a bank account.
Posted By: John Burnett

Re: Interest Bearing Account - 06/09/21 06:10 PM

I will qualify my earlier response a bit. From the interagency FAQ on CIP requirements, question 2 under "Information required," reads:
2. Can a bank open an account for a U.S. person that does not have a taxpayer identification number? No, the bank cannot unless the customer has applied for a taxpayer identification number, the bank confirms that the application was filed before the customer opened the account, and the bank obtains the taxpayer identification number within a reasonable period of time after the account is opened. Note, however, that a bank does not need to obtain a taxpayer identification number when opening a new account for a customer that has an existing account, as long as the bank has a reasonable belief that it knows the true identity of the customer. A bank may also open an account for a person who lacks legal capacity with the identifying information, including taxpayer identification number, of an individual who opens an account for that person.

The bold text is an exception available only if the person has an existing account with you, and the bank reasonably believes it knows his true identity.

Without an SSN, however, you will be required to do backup withholding on any interest paid on the new account.