The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions and US persons who hold certain foreign accounts to report these accounts to the US. One of the most common types of account that must reported is the depository account. However, the definition of depository account changed significantly from the proposed regulations to the final regulations.

The definition in both the proposed and final regulations is located in §1.1471-5(b)(3)(i) of the regulations. While both definitions start off describing accounts such as “checking, savings, time, or thrift account…”, the final regulations expand on this definition and specify that any account in the custody of a bank or “similar business which involves the obligation of credit” is considered a depository account. As the final regulations make clear, depository accounts include items such as credit balances on a credit cards. In addition, the final regulations clarify that “amount[s] held by an insurance company under a guaranteed investment contract” are considered depository accounts unless the cash value of the insurance contract(s) have an aggregate value of $50,000 or less.

The final regulations do throw US taxpayers a small bone. Negotiable debt instruments that are “traded on a regulated market or over-the-count market” are excluded from the definition of depository accounts. While the final regulations clarifies much of the uncertainty regarding what is a depository accounts, it does not do much to ease the regulatory burden imposed by FATCA on US taxpayers.