Thursday, December 15, 2011

IRS TO RELEASE GUIDANCE ON FOREIGN FINANCIAL ASSET REPORTING

Income tax returns for 2011 must have attached new Form 8938, which is the "Statement of Foreign Financial Assets."  The new 8938 is intended to supplement the "check a box" yes or no answer on Form 1040 Schedule B asking whether the taxpayer had ownership or control over any foreign bank account. For 8938 asks for more broad information about the taxpayer's foreign situated assets exceeding $100,000 on 12/31 of the tax year or $150,000 on any day of the tax year.  The IRS just issued T.D. 9567, announcing that Form 8938 instructions are forthcoming. 

A failure to file Form 8938 can result in a $10,000 penalty or a penalty of $50,000 if there is a continued failure to file after IRS notification.  This form is not a replacement for, but is an separate filing requirement that will be in addition to the required FBAR report to be filed with the U.S. Treasury.

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