The Amish & Non-Interest Bearing Accounts

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Question:

Acknowledging the existing CIP (BSA Manual-8/2007) rules, there appears room within the regulations to enroll Amish families into non-interest bearing accounts with an IRS tax waiver (Form 4029) as long as other forms of positive identity are provided such as birth certificate, marriage license, a tax/property deed or baptism papers. I’m looking for verification in this matter.

Answer:

IRS waivers address obligations to file tax returns. They don't address a bank's obligations under the amendments made by the USA PATRIOT Act. The Amish are U.S. citizens and fit into the definition of "U.S. person" in 31 CFR Part 103, Section 103.121. Banks are required by law and the same section of the regulation to obtain a valid taxpayer identification number from any customer who is a U.S. person opening an account. For a U.S. citizen, that number would ordinarily be a Social Security number.

My understanding has always been that Amish individuals (and members of certain other religious groups, such as Mennonites) are permitted to opt out of participation in Social Security insurance and don't pay FICA employment taxes. They file an exemption request form (Form 4029) with the IRS to obtain that exemption, but must have a Social Security number in order to complete that filing (see the instructions on Form 4029). Accordingly, your CIP procedure should not permit the opening of an account for a member of the Amish or Mennonite communities (or other individuals claiming exemption from participation in the Social Security program) unless the individuals who wish to open the account provide Social Security numbers.

First published on BankersOnline.com 9/29/08