NS&I direct saver

I am trying to determine if the NS&I  direct saver account will or won’t attract IRS penalties as a foreign entity.  I know that I have to pay UK tax on the interest.  I know that I have to report its existence to the IRS on FBAR, 8938, etc.

If no one here can answer this question, then a pointer to a resource would be really appreciated. Thank you.

There are no prohibitions in US or UK law to holding any NS&I account. Historically NS&I refused to accept US person customers into some (but not all) of their accounts. From what I recall, HM Treasury said when I asked the Minister that this was a choice to save NS&I the costs of becoming FATCA compliant. This discussion was roughly a dozen years ago so may have no relevance today, the only way to be certain which accounts accept US persons currently is to read the current terms & conditions. These are all on the NS&I website.

Thanks.  It isn’t a problem opening the account. NS&I said it was fine.

Is this vehicle of an NS&1 direct saver  OK without violating the PFIC rules with the IRS. (Passive foreign investment company).  I know premium bonds don’t violate the PFIC rules because it says so in the tax treaty.

I appreciate your help.

Thanks.  It isn’t a problem opening the account. NS&I said it was fine.

Is this vehicle of an NS&1 direct saver  OK without violating the PFIC rules with the IRS. (Passive foreign investment company).  I know premium bonds don’t violate the PFIC rules because it says so in the tax treaty.

I appreciate your help.

The definition of a PFIC can be found only in IRC Section 1297. This can be found here: https://www.law.cornell.edu/uscode/text/26/1297#a. There are no tax treaties that affect the definition of a PFIC found in Section 1297.

Thanks.  It isn’t a problem opening the account. NS&I said it was fine.

Is this vehicle of an NS&1 direct saver  OK without violating the PFIC rules with the IRS. (Passive foreign investment company).  I know premium bonds don’t violate the PFIC rules because it says so in the tax treaty.

I appreciate your help.

We have held NS&I direct saver accounts for several years and report the interest in schedule B like our other interest from savings accounts.