Are LLCs exempt from FATCA? What exceptions apply to this rule?

LLCs aren't automatically exempt from FATCA - it really depends on how your LLC is treated for tax purposes. The key is understanding your LLC's tax classification. If your LLC is a single-member LLC that's treated as a "disregarded entity" for federal tax purposes, then FATCA reporting falls on you as the individual owner, not the LLC itself. If your LLC is treated as a partnership (multiple members) or if you've elected to have it taxed as a corporation, then different rules apply. The exceptions depend on a few factors: the amount and types of foreign financial assets you have, whether you're filing as an individual or business entity, and your tax residency status. For example, if your LLC has foreign accounts totaling less than $10,000 at any point during the year, you might not have FATCA filing requirements (though you might still have FBAR requirements). I'd recommend looking at Form 8938 instructions for specific thresholds that apply to your situation. They vary based on whether you're married, living abroad, etc.

I was totally confused about FATCA for my small consulting LLC last year! After hours of research getting nowhere, I found this AI tool called taxr.ai (https://taxr.ai) that helped me figure out my FATCA obligations. I uploaded my LLC documentation and answered a few questions about my business structure and foreign connections. The tool analyzed everything and explained that my single-member LLC was exempt from direct FATCA filing since I'm taxed as a disregarded entity, but I still had personal FATCA obligations as the owner since I had a foreign investment account. Saved me from making a costly mistake! They gave me a detailed breakdown of which forms I needed based on my specific situation.

Update on the taxr.ai thing - I decided to try it despite my initial skepticism. I have a 2-member LLC with some complex international client arrangements and a small foreign account. The tool actually provided really detailed analysis of our FATCA obligations based on our operating agreement and tax classification. It explained that because we elected to be taxed as a partnership, our LLC itself didn't have direct FATCA filing requirements, but we as individual members needed to report our ownership interests on our personal returns. It also clarified the threshold differences between FATCA and FBAR reporting which I was mixing up before. What impressed me most was getting specific guidance on Form 8938 vs FinCEN Form 114 requirements with actual dollar thresholds tailored to my situation. Definitely cleared up my confusion and worth checking out if you're dealing with this stuff.

If you're struggling to get answers about FATCA and LLCs directly from the IRS (which I was for WEEKS), I finally got through to a knowledgeable international tax specialist using Claimyr (https://claimyr.com). They have this service that gets you through to an actual IRS agent quickly - you can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was honestly ready to give up after being disconnected five times trying to get tax guidance for my LLC's foreign accounts. Claimyr got me connected to an IRS representative in under an hour who walked me through the specific FATCA exemptions that applied to my situation. They confirmed my multi-member LLC needed specific reporting because we have substantial foreign investments, but helped me understand the exact forms needed.

I have to eat my words about Claimyr. After my skeptical comment, I was desperate enough to try it for my LLC's FATCA questions. Within 45 minutes I was actually talking to someone in the IRS international tax department who explained exactly how FATCA applies to my LLC. Turns out my LLC isn't exempt since we elected to be taxed as a corporation AND have significant foreign assets. The IRS agent walked me through which specific forms we need to file (8938 vs 8621) and explained the different thresholds for domestic vs foreign-held entities. What would've taken me weeks of research (or an expensive tax attorney consultation) was resolved in a single phone call. I'm shocked this actually worked - figured I'd follow up since I was so dismissive before.

To directly answer your main question - LLC exemption from FATCA depends on its tax classification: - Single-member LLC (disregarded entity): The LLC itself isn't subject to FATCA, but the owner is personally responsible for FATCA reporting if they meet the thresholds - Multi-member LLC taxed as partnership: The LLC files Form 8865 if it has foreign partnerships; individual members may need to file Form 8938 - LLC taxed as corporation: Subject to Form 5471 for foreign corporations it controls and/or Form 8938 The exception thresholds vary. For individuals owning single-member LLCs, you're exempt from Form 8938 if foreign financial assets are $50,000 or less (higher for married couples and overseas residents). For entities, the threshold is $50,000 on the last day of the tax year OR $75,000 at any time during the year. Remember FBAR requirements (FinCEN 114) apply separately from FATCA if foreign accounts exceed $10,000.

Stupid question maybe, but does anyone know if having customers pay me through paypal from other countries counts as having "foreign financial accounts" for FATCA? My LLC is just me (single member) but i get payments from like 5 different countries. The money goes straight to my US paypal account though.

Just wanted to add some clarity on the FATCA exemption question since there seems to be some confusion in the thread. The term "exempt" can be misleading here - it's not that LLCs get a blanket exemption from FATCA, but rather that the reporting responsibility flows through based on the LLC's tax classification. For your single-member LLC consulting business, since it's likely treated as a disregarded entity, YOU as the owner are responsible for any FATCA reporting, not the LLC itself. The LLC is essentially invisible for tax purposes. The key thing to watch for with your international clients is whether you end up opening foreign bank accounts to facilitate those relationships. As long as payments from foreign clients go into your US-based accounts, you're not creating FATCA reporting obligations just from having international income. However, if you do open foreign accounts later (say, to make it easier for clients to pay you), then you'll need to track those balances against the FATCA thresholds. For a single person, it's $50,000 on the last day of the year OR $75,000 at any point during the year. Don't forget about FBAR requirements too - those kick in at just $10,000 in foreign accounts, which is much lower than FATCA thresholds.

Great thread with lots of helpful information! I wanted to add one important point that hasn't been mentioned yet - timing matters for FATCA compliance. Even if your LLC currently doesn't have foreign accounts or assets that would trigger FATCA reporting, it's worth setting up good record-keeping practices now. If you do expand internationally later (which sounds likely given your foreign client base), you'll need to track account balances throughout the entire tax year, not just at year-end. I learned this the hard way when I opened a foreign business account mid-year that briefly spiked above the FATCA threshold during a large client payment, even though it was below $50k at year-end. Since the "at any time during the year" test applies, I still had to file Form 8938. Also, be aware that currency fluctuations can push you over thresholds unexpectedly if you do end up with foreign accounts denominated in other currencies. The IRS requires you to use year-end exchange rates for the final day test, but daily rates for the "maximum value" test. Starting with good documentation habits now will save you headaches later if your business grows internationally!