United States

Additional foreign asset disclosure form taxpayers must be aware of Form 8938 versus FBARs

INSIGHT ARTICLE  | 

The IRS recently set out requirements for individual taxpayers to disclose their ownership of specified foreign financial assets by attaching new Form 8938, Statement of Specified Foreign Financial Assets, to their 2011 income tax returns. Form 8938 does not replace or otherwise affect a taxpayer's obligation to file Foreign Bank Account Reports (FBARs) with the U.S. Treasury. Although information disclosed on Form 8938 does overlap with the FBAR rules, there are separate criteria and independent consequences relating to each of these forms. Because of the wide applicability of both forms and the high penalties associated with failure to file, it is imperative that taxpayers pay close attention to whether they need to file one or both forms. Following is a high-level summary of each form's requirements:

 

 

Form 8938 – Statement of Specified Foreign Financial Assets

FBAR (TD F 90-22.1) – Report of
Foreign Bank and Financial Accounts

Where and when to file

 

Filed with Form 1040 (by April 15 or extended due date) to IRS Must be received by U.S. Treasury no later than June 30
Who must file Individuals Individuals, estates, trusts, U.S. businesses, entities (including disregarded entities)
Minimum filing threshold $50,000 $10,000
Penalty for not filing Civil: up to $10,000 for each 30 days of non-filing, criminal penalties may also apply Civil: up to the greater of $100,000 or 50% of the account balance in year of violation, criminal penalties may also apply

 

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