GOING TO JAIL FOR NOT PAYING YOUR US TAXES WHILE LIVING ABROAD

If your earnings from whatever source and from anywhere in the world exceed a certain minimum

amount you must file a US tax return with the IRS. Also there are many special forms which must be filed to report foreign financial accounts, foreign corporate or partnership ownership, foreign trusts, foreign gifts and inheritances, and earnings from foreign mutual funds.  If you fail to file these forms you can be prosecuted and go to jail.  If you file a return you cannot go to jail for failure to pay the taxes due.

READ MORE ABOUT IRS CRIMINAL LAW FOR TAX MATTERS HERE

The statute of limitations for filing returns and collecting taxes never runs out if you fail to file a required IRS income tax return.  If you need help email Don D. Nelson, US Tax Attorney at Law at ddnelson@gmail.com for a consultation.

G8 Conference Folows US IRS Lead to Eliminate Tax Evaision and Investment Secrecy Abroad

 The world's rich economies said they would take a tougher stance on fighting money laundering and tax evasion but promised little in the way of specific new action at the end of a two-day summit on Tuesday.

The Group of Eight leaders signed up for a string of aims including improved transparency about who owns shell companies and more information-sharing between tax authorities.

Under pressure from austerity-weary voters, lawmakers have focused increasingly on tax dodges. More than 50 countries have agreed to a new protocol on tax data sharing since 2011.

Cameron said his proposal that firms report profits on a country-by-country basis could help expose corporate profit shifting into low-tax states.

The G8 leaders, meeting in Northern Ireland, said their governments would draw up action plans for collecting and sharing information on who really owns companies, making it harder to set up Russian-doll type structures.

The United States pledged to keep on pressing for legislation to cut down on the criminal use of shell companies.

"The credibility of this depends on the ability of the White House to advance legislation," said Gavin Hayman, director of campaigns at anti-corruption group Global Witness.

The United States pointed out it was planning to require banks to understand who their customers actually are and provide information for law enforcement and tax authorities.

A frequent critic of tax havens, the United States has come under fire from campaigners for the low transparency requirements around ownership of corporate entities registered in some U.S. states such as Delaware.

Tax campaigners had called for companies to be forced to make public their profits, revenues and tax payments for every country where they operate. That could deter accountants from building contrived arrangements to keep tax low. Business groups remained against such a move.

"We continue to have real doubts about the utility of any rules requiring the release of vast amounts of raw data to the public," Andrew Wilson, UK Director of the International Chamber of Commerce said in a statement.

The G8 leaders also called on the Organisation for Economic Co-operation and Development (OECD), which advises rich nations on economic policies, to come up with a way that could require multinational corporations to report profits and tax payments to authorities on a country-by-country basis

Some developing nations complain they struggle to get information about companies' operations in other countries, so the measure could help them cut profit shifting.

The OECD is working on a broader program  to tackle tax avoidance under the auspices of the Group of 20 comprising the leading developed and developing economies.

What is described above at the G8 is the wave of the future. All countries will within the next few years be sharing tax data, etc. with each other. Now is the time to get into legal compliance with your tax filings before it is too late.  If you need help email us at ddnelson@gmail.com .

Will the IRS use the internet, linked in, facebook, etc. to locate expatriate and offshore tax cheaters?

Will the IRS copy the Swedish Tax Agency tactics to find US offshore tax cheaters? They found out about a Swedish taxpayers offshore activities on Linkedin and found  they owed $750,000 in back taxes on unreported income.  The IRS will certainly use this tactic soon, if they have not started already.  READ MORE HERE                             

Offshore Tax Fraud Criminal Captured

The IRS has a long standing policy that if a taxpayer comes forward first (prior to their discovery) and makes them self current with past unfiled returns and unreported income, they will almost always waive criminal prosecution (up to five years in jail). Therefore, based on the information out there on the internet, it is best to come forward before it is too late. We can help. We have advised or assisted hundreds of taxpayers catch up and correct past returns with great success.  Visit our website at www.TaxMeLess.com or email ddnelson@gmail.com.  We offer "attorney-client" privilege for total confidentiality and privacy.

U.S. engages with more than 50 jurisdictions to curtail offshore tax evasion

The US Treasury, announced that it is engaged with more than 50 foreign country jurisdictions to improve international tax compliance as part of efforts to implement the information reporting and withholding tax provisions under the Foreign Account Tax Compliance Act (FATCA).

 The U.S. has already signed a bilateral agreement with the government of the U.K. Treasury is in the process of finalizing intergovernmental agreements and hopes to finish negotiations in this respect with: France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands, and Norway.                                                                                                       

Treasury is also maintaining an active dialog with several countries to conclude an intergovernmental agreement. Jurisdictions include: Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. The government expects to finalize the agreements with many of the listed countries by the end of the year.

Additionally, Treasury is discussing viable options for intergovernmental cooperation with: Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, Saint Maarten, Slovenia, and South Africa.

The government stated it will continue exploring ways of engaging other interested jurisdictions in intergovernmental cooperation including at a meeting of senior government officials and financial institutions.

WHAT DOES THIS MEAN TO US TAXPAYERS LIVING ABROAD? Now is the time to file all past unfiled US tax returns and report all foreign bank accounts, financial accounts, foreign corporations and partnerships, foreign mutual funds, etc.  If you wait until the IRS gets your information from a foreign source, the risk of high monetary penalties and criminal prosecution increases dramatically.  We can help you get compliant and avoid these problems before it is too late.  Email us at ddnelson@gmail.com for further assistance or with questions.

  

Chief of IRS Criminal Investigation Divisions Comes After Those No Disclosing Foreign Accounts and Assets

 On October 18th, the chief of the IRS’ Criminal Investigation Division, Richard Weber, stated that his 4000 special agents will continue to focus on unreported foreign bank accounts.

You do not want to see one
of these in person

The requirement to file FBARs (Report of Foreign Bank and Financial Accounts) dates back to the Bank Secrecy Act in the 1970′s. No attempts were made to enforce this until until the last 4 to 5 years.  Failure to report a foreign account is a felony punishable by up to 5 years in prison. Civil penalties can include the greater of $100,000 or 50% of the high account balance for each year an account is unreported. Even “innocent” violations can result in penalties of up to $10,000 per year.

The  IRS has been looking at banks outside of Switzerland (where they originally began their enforcement efforts). Those banks includes several Israeli banks as well as financial institutions in the Bahamas, India, China, Australia,  Hong Kong, Liechtenstein and others not yet announced.

Speaking before a New York CPA group, Weber said that the IRS and Department of Justice would soon be announcing a new round of indictments involving unreported accounts. These prosecutions will involve banks outside of Switzerland.   The IRS has posted CID special agents around the world.  One indication is that they now have a field office in Panama which was a popular place for US taxpayers to hide their money and income.

There is presently an amnesty program to help taxpayers with unreported accounts. This includes those with foreign hedge funds, investments, bank accounts, CD’s and the like. The program, called the 2012 Offshore Voluntary Disclosure Program offers greatly reduced penalties and a promise of no criminal prosecution.  This program may not work for everyone. Some taxpayers may achieve lower or no penalties by negotiating directly with the IRS outside of the Disclosure program.  The important part is not to wait until the IRS discovers you first because it will then be too late to avoid higher penalties and criminal prosecution.

The procedures and rules for entering the program or surfacing with the IRS outside of the program are complicated.  You should speak with  a tax lawyer right away if you are one of the millions with unreported accounts (and other foreign assets that require reporting on your tax return such as foreign corporations, foreign partnerships and LLCS, passive foreign investment companies, etc.)

Don D. Nelson, Attorney, CPA with over 20 years of expatriate and international tax experience has represented or advises hundreds of clients with a wide variety of offshore reporting issues. His  clients include dual nationals, US permanent residents, taxpayers with offshore accounts, and expatriates who have businesses abroad or who have retired in other countries.

For more information, contact him at ddnelson@gmail.com.  All inquiries are protected by the attorney – client privilege and kept in strict confidence.

UAE to Join the Network to Exchange Tax Data with US and Other Countries

The UAE is expected shortly to join the  OCED which is the network of countries that join have joined together to share economic data which includes tax data on residents of those countries with other members of the OCED.  The USA is a member of the OCED which means US expats living in those other countries will have their income and other  financial information reported to the US International. Do not make the mistake of thinking because the United Arab Emirates has no income taxes information on your will not be sent to the IRS.. READ MORE HERE ABOUT THE UAE tax information sharing arrangement.

For an up to date list of the OCED members who are sharing tax information with each other CLICK HERE.  If you live and work on one of these countries, your income and financial information will ultimately or may have already been shared with the IRS.

NO FBAR PENALTY FOR TAXPAYER WHO OPTS OUT OF IRS OFFSHORE DISCLOSURE PROGRAM

One Taxpayer who opted out of the administrative nightmare of the IRS Offshore Disclosure Program has been assessed no penalties for late filed FBAR forms.  The taxpayer was a 12 year US resident with unreported  offshore assets equal to about $120,000 at the peak. The taxpayer was ignorant of the special forms required to report offshore assets and the requirement he needed to report the income from these offshore accounts.

This may provide some guidance to those expatriates who are still trying to decide whether to enter the 2012  IRS Offshore Voluntary Disclosure Program or just proceed with a regular disclosure.  READ MORE DETAILS  ON JACK TOWNSEND (CRIMINAL TAX ATTORNEY) BLOG.

Another Tax Professional reports the following:  One of the  firm’s clients opted out and received no penalties whatsoever and another is opting out and may receive just one $10,000 penalty over 8 years even though the taxpayer had $1M+ overseas financial accounts .This professional fees the reason for these successes is  that OVDI penalties are mandated by the National Office and agents are mandated to assess penalties, whereas if someone opts out then the local office has the authority to close the case (and is typically motivated to do so to clear inventory).

US Taxpayers Must Report Foreign Gifts Received

If you receive over $100,000 a year in foreign gifts (given to you from an individual abroad who is not a US Citizen) or over $14,375 per year in gifts from foreign corporations, partnerships, etc. you must file Form 3520 in order to avoid a possible 25% penalty being imposed by the IRS.  If you fail to file this form when receiving such gifts you also risk the IRS later claiming the gift was taxable income and attempting to collect income taxes, penalties and interest for failing to report it on your US tax return.

This form is informational and does not cause you to pay any tax on the foreign gift.  You just list certain information about the gift and file.  Many fail to file this form thinking it will cause them problems, but the problem will only arise when you fail to file it. The 3520 is filed separately from your tax return but is due on the due date of your 1040. If you can show reasonable cause the penalty for not timely filing this return may be waived by the IRS.

IRS Adds 9 More Questions and Answers on Form 8938 - Reporting Foreign Financial Assets

Basic Questions and Answers on Form 8938 (rev 6/7/12)
Q&A   1-14, posted 02-29-12 Q&A 15-23, posted 06-07-12 1. What are the specified foreign financial assets that I need to report on Form 8938? If you are required to file Form 8938, you must report your financial accounts maintained by a foreign financial institution.  Examples of financial accounts include: Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer. And, to the extent held for investment and not held in a financial account, you must report stock or securities issued by someone who is not a U.S. person, any other interest in a foreign entity, and any financial instrument or contract held for investment with an issuer or counterparty that is not a U.S. person.  Examples of these assets that must be reported if not held in an account include: Stock or securities issued by a foreign corporation; A note, bond or debenture issued by a foreign person; An interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar agreement with a foreign counterparty; An option or other derivative instrument with respect to any of these examples or with respect to any currency or commodity that is entered into with a foreign counterparty or issuer; A partnership interest in a foreign partnership; An interest in a foreign retirement plan or deferred compensation plan; An interest in a foreign estate; Any interest in a foreign-issued insurance contract or annuity with a cash-surrender value.  The examples listed above do not comprise an exclusive list of assets required to be reported. 2. I am a U.S. taxpayer but am not required to file an income tax return.  Do I need to file Form 8938? Taxpayers who are not required to file an income tax return are not required to file Form 8938. 3. Does foreign real estate need to be reported on Form 8938? Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938.  For example, a personal residence or a rental property does not have to be reported. If the real estate is held through a foreign entity, such as a corporation, partnership, trust or estate, then the interest in the entity is a specified foreign financial asset that is reported on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.  The value of the real estate held by the entity is taken into account in determining the value of the interest in the entity to be reported on Form 8938, but the real estate itself is not separately reported on Form 8938.  4. I directly hold foreign currency (that is, the currency isn’t in a financial account).  Do I need to report this on Form 8938? Foreign currency is not a specified foreign financial asset and is not reportable on Form 8938. 5.  I am a beneficiary of a foreign estate.  Do I need to report my  interest in a foreign estate on Form 8938? Generally, an interest in a foreign estate is a specified foreign financial asset that is reportable on Form 8938 if the total value of all of your specified foreign financial assets is greater than the reporting threshold that applies to you. 6. I acquired or inherited foreign stock or securities, such as bonds.  Do I need to report these on Form 8938? Foreign stock or securities, if you hold them outside of a financial account, must be reported on Form 8938, provided the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.  If you hold foreign stock or securities inside of a financial account, you do not report the stock or securities on Form 8938.  For more information regarding the reporting of the holdings of financial accounts, see FAQs 8 and 9. 7. I directly hold shares of a U.S. mutual fund that owns foreign stocks and securities.  Do I need to report the shares of the U.S. mutual fund or the stocks and securities held by the mutual fund on Form 8938?  If you directly hold shares of a U.S. mutual fund you do not need to report the mutual fund or the holdings of the mutual fund. 8.  I have a financial account maintained by a U.S. financial institution that holds foreign stocks and securities.  Do I need to report the financial account or its holdings?  You do not need to report a financial account maintained by a U.S. financial institution or its holdings.  Examples of financial accounts maintained by U.S. financial institutions include: U.S. Mutual fund accounts IRAs (traditional or Roth) 401 (k) retirement plans Qualified U.S. retirement plans Brokerage accounts maintained by U.S. financial institutions 9.  I have a financial account maintained by a foreign financial institution that holds investment assets.  Do I need to report the financial account if all or any of the investment assets in the account are stock, securities, or mutual funds issued by a U.S. person? If you have a financial account maintained by a foreign financial institution and the value of your specified foreign financial assets is greater than the reporting threshold that applies to you, you need to report the account on Form 8938.  A foreign account is a specified foreign financial asset even if its contents include, in whole or in part, investment assets issued by a U.S. person.  You do not need to separately report the assets of a financial account on Form 8938, whether or not the assets are issued by a U.S. person or non-U.S. person.     10.  I have a financial account with a U.S. branch of a foreign financial institution.  Do I need to report this account on Form 8938? A financial account, such as a depository, custodial or retirement account, at a U.S. branch of a foreign financial institution is an exception to the general rule that a financial account maintained by a foreign financial institution is specified foreign financial asset.  A financial account maintained by a U.S. branch or U.S. affiliate of a foreign financial institution does not have to be reported on Form 8938 and any specified foreign financial assets in that account also do not have to be reported. 11. I own foreign stocks and securities through a foreign branch of a U.S.-based financial institution.  Do I need to report these on Form 8938? If a financial account, such as a depository, custodial or retirement account, is held through a foreign branch or foreign affiliate of a U.S.-based financial institution, the foreign account is not a specified foreign financial asset and is not required to be reported on Form 8938 12. I have an interest in a foreign pension or deferred compensation plan. Do I need to report it on Form 8938? If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you. 13. How do I value my interest in a foreign pension or deferred compensation plan for purposes of reporting this on Form 8938? In general, the value of your interest in the foreign pension plan or deferred compensation plan is the fair market value of your beneficial interest in the plan on the last day of the year.   However, if you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension or deferred compensation plan on the last day of the year, the maximum value is the value of the cash and/or other property distributed to you during the year.  This same value is used in determining whether you have met your reporting threshold. If you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension plan or deferred compensation plan on the last day of the year and you did not receive any distributions from the plan, the value of your interest in the plan is zero.  In this circumstance, you should also use a value of zero for the plan in determining whether you have met your reporting threshold.  If you have met the reporting threshold and are required to file Form 8938, you should report the plan and indicate that its maximum is zero. 14. I am a U.S. taxpayer and have earned a right to foreign social security.  Do I need to report this on Form 8938? Payments or the rights to receive the foreign equivalent of social security, social insurance benefits or another similar program of a foreign government are not specified foreign financial assets and are not reportable. 15. If I have to file Form 8938, am I required to report all of my specified foreign financial assets regardless of whether the assets have a de miminis maximum value during the tax year? If you meet the applicable reporting threshold, you must report all of your specified foreign financial assets, including the specified foreign financial assets that have a de minimis maximum value during the tax year.  For exceptions to reporting, see Exceptions to Reporting on page 6 of the instructions for Form 8938. 16.  I filed my income tax return but now realize that I should have filed Form 8938 with my return, what should I do? If you omitted Form 8938 when you filed your income tax return, you should file Form 1040X, Amended U.S. Individual Income Tax Return, with your Form 8938 attached. 17.  Do I have to file both Form 8938 and Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)? The filing of Form 8938 does not relieve you of the separate requirement to file the FBAR if you are otherwise required to do so, and vice-versa.  Depending on your situation, you may be required to file Form 8938 or the FBAR or both forms, and certain foreign accounts may be required to be reported on both forms. 18.  I have numerous specified foreign financial assets to report on Form 8938.  Is there a continuation sheet for the Form 8938?  If you have more than one account or asset to report in Part I or Part II of Form 8938, or more than one issuer or counterparty to report in Part II of Form 8938, copy as many blank Parts I and/or II as you need to complete, and attach them to Form 8938.  Check the “If you have attached additional sheets, check here” box at the top of Form 8938. 19.  I directly hold tangible assets for investment, such as art, antiques, jewelry, cars and other collectibles, in a foreign country.  Do I need to report these assets on Form 8938? No.  Directly held tangible assets, such as art, antiques, jewelry, cars and other collectibles, are not specified foreign financial assets. 20.  I directly hold precious metals for investment, such as gold, in a foreign country.  Do I need to report these assets on Form 8938? No.  Directly held precious metals, such as gold, are not specified foreign financial assets.  Note, however, that gold certificates issued by a foreign person may be a specified foreign financial asset that you would have to report on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you. 21.  This tax year I sold precious metals that I held for investment to a foreign person.  Do I have to report the sales contract on Form 8938?  The contract with the foreign person to sell assets held for investment is a specified foreign financial asset investment asset that you have to report on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you. 22.  I have a safe deposit box at a foreign financial institution.  Is the safe deposit box itself considered to a financial account?    No, a safe deposit box is not a financial account. 23.  Am I required to hire a certified appraiser or actuary to determine the fair market value of a specified foreign financial asset?  For example, if I have a foreign defined benefit plan, am I required to obtain the services of an actuary? You may determine the fair market value of a foreign financial account for the purpose of reporting its maximum value based on periodic account statements unless you have reason to know that the statements do not reflect a reasonable estimate of the maximum value of the account during the tax year.  For a specified foreign financial asset not held in a financial account, you may determine the fair market value of the asset for the purpose of reporting its maximum value based on information publicly available from reliable financial information sources or from other verifiable sources.  Even if there is no information from a reliable financial information source or other verifiable source, you do not need to obtain an appraisal by a third party in order to reasonably estimate the asset’s maximum value during the tax year.

Latest IRS Guidance on When to File Forms 8938 and TDF 90-22.1 (FBAR)

The IRS has just published further information on when to file forms 8938 (to report foreign financial assets) and TDF 90-22.1 (FBAR) to report foreign financial accounts. Their guidance clarifies when foreign currency and precious metals located in foreign countries must be reported. The Chart is easy to understand and can be read HERE.

If you wish assistance in preparing these forms or wish to have your own self prepared forms reviewed by an expert contact us.

Reporting Foreign Financial Assets

For your 2011 Tax  Year you may be required to File Form 8938 to Report your foreign financial assets with your tax return. You may also be required to File Form TDF 90-22.1 to report your foreign bank and financial accounts.  Sometimes you may be required to file both forms!

CHART SETTING FOR REQUIREMENTS FOR FILING ONE FORM OR IF YOU ARE REQUIRED TO FILE  BOTH FORMS FOR 2011

DOWNLOAD FORM 8938
DOWNLOAD INSTRUCTIONS TO FORM 8938
DOWNLOAD FORM TDF 90-22.1 AND INSTRUCTIONS

If you need help with these forms, filing them out, preparation of the forms, or review of the forms you self prepared contact us at ddnelson@taxmeless.com.  We have 30 plus  years experience preparing these  and other complex international tax forms. Download our 2011 expatriate tax questionnaire HERE and send it to us by email or fax for a fee quote.

Final Form 8938- Statement of Foreign Financial Assets Released

US Taxpayers including US Citizens, US Permanent Residents, and US Expatriates  may have to file Form 8938 with their US Income tax returns for 2012 to report their foreign financial assets.  The estimated time to complete this form is 1 to 3 hours.

Every taxpayer with assets located outside the US should review the instructions to this form to determine if they must file it. Read the Instructions to Form 8938 here.   Failure to file the Form 8938 when required can result in severe monetary penalties and criminal prosecution.


View the 2012 tax  year Form 8938  here.

FATCA Produces Fear Among US Expatriates and Foreign Banks

US Expatriates living Abroad and Foreign Financial Institutions are all in fear of the "sledge hammer" rules they must comply with in order to satisfy the IRS reporting rules on accounts owned by US taxpayers.  Some foreign banks are refusing to open bank accounts for US taxpayers in order to avoid having to comply with the extensive FATCA report rules.

 US taxpayers with sufficient foreign assets will have to start filing form 8938 with their 2012 tax returns which could take up to three hours to complete. That new form is in addition to the existing foreign assets reporting forms which must be filed which include Forms TDF 90-22.1, 5471, 8865, 3520, etc.

Taxpayers and financial institutions that fail to comply with the foreign assets tax reporting rules face severe monetary penalties and possible criminal prosecution.  We can help you avoid these dire consequences.

Read more  in  this New York Times Article

IRS Releases Guidance on Foreign Financial Asset Reporting

The Internal Revenue Service in coming days will release a new information reporting form that taxpayers will use  starting this coming tax filing season to report specified foreign financial assets for tax year 2011.

Form 8938 (Statement of Specified Foreign Financial Assets) will be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts. It is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply.

The Form 8938 filing requirement was enacted in 2010 to improve tax compliance by U.S. taxpayers with offshore financial accounts. Individuals who may have to file Form 8938 are U.S. citizens and residents, nonresidents who elect to file a joint income tax return and certain nonresidents who live in a U.S. territory.

Form 8938 is required when the total value of specified foreign assets exceeds certain thresholds.  For example, a married couple living in the U.S. and filing a joint tax return would not file Form 8938 unless their total specified foreign assets exceed $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

The thresholds for taxpayers who reside abroad are higher. For example in this case, a married couple residing abroad and filing a joint return would not file Form 8938 unless the value of specified foreign assets exceeds $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Instructions for Form 8938 explain the thresholds for reporting, what constitutes a specified foreign financial asset, how to determine the total value of relevant assets, what assets are exempted, and what information must be provided.

Form 8938 is not required of individuals who do not have an income tax return filing requirement.

The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file an FBAR (Report of Foreign Bank and Financial Accounts).  For more go to the FBAR page on this website.

Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification.  A 40 percent penalty on any understatement of tax attributable to non-disclosed assets can also be imposed. Special statute of limitation rules apply to Form 8938, which are also explained in the instructions.

Form 8938, the form’s instructions, regulations implementing this new foreign asset reporting, and other information to help taxpayers determine if they are required to file Form 8938 can be found on the FATCA page of irs.gov.

See TD 9567.