So, you or your non-US company received W-9 from your bank. If Canadian the notice says it needs info under Income Tax Act Part XVIII to release your info to CRA so that if CRA chooses, it can squeal on you to IRS, as FATCA designed.
Should CRA release said banking info it receives to IRS, since IRS designed FATCA to catch US taxpayer omission of foreign account information if you have not reported income from non-US accounts on your US tax returns, you may wish to consider quickly filing amended returns to report it under an IRS streamlined program before IRS asks you to do so if and when IRS receives the bank info and if that info shows income.
Same goes For FBAR, which was designed to aid in law enforcement. The purpose of the FBAR is compliance with the Bank Secrecy Act and is not part of a tax return. FBARs are used primarily by the Treasury Department's Financial Crimes Enforcement Network to track and combat international money laundering.
While materiality will be considered both in terms of how much income was generated by the account, and the account balance amount at risk via penalties, make sure to note that the assessment cost can still be high* even for low amounts of income not reported since: the additional penalty is assessed against the account balance, not the tax due on the omitted income AND no reasonable cause exception exists for a willful violation and because of potential criminal penalties**
* Willful violations penalty can equal to the greater of $100,000 or 50 percent of the balance of the account at the time of the FBAR violation. This penalty is in addition to the tax, interest, and accuracy penalty, which can be between 20% and 40%.
**Criminal Penalties other than FBAR Penalties
The Internal Revenue Service has an arsenal of potential criminal charges:
Failure to file an income tax return - IRC § 7203 – not filing a required return in a timely manner. A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000.
Filing a false return - IRC § 7206(1) – filing a return containing false information. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000.
Tax evasion - IRC §7201 – willfully attempting in any manner to evade paying tax. A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000.
Tax perjury - IRC §7206(1) – willfully signing false returns under penalty of perjury. A person convicted of perjury is subject to a prison term of up to five years and a fine of up to $250,000.
Tax obstruction - IRC §7212(a) – corruptly impairing the lawful function of the IRS. A person convicted of obstruction of justice is subject to a prison term of up to and not more than 10 years or a fine of up to $250,000.
Conspiracy - 18 U.S.C. §371 – conspiring to commit one of the above crimes or impairing the IRS from enforcement. A person convicted of conspiracy to commit one of the above offenses or to defraud the United States is subject to a prison term of not more than five years and a fine of up to $250,000.
Willfully failing to file an FBAR - 31 U.S.C. § 5322 – Knowing of the obligation to file the FBAR and not doing so. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000.
Willfully filing a false FBAR - 31 U.S.C. § 5322 – Filing a FBAR with inaccurate information. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000.