Congress and the IRS have determined that taxpayers need yet an additional form to file in order to report foreign held assets. This latest filing requirement will add to the Form TD F 90-22.1 – Report of Foreign Bank and Financial Accounts (FBAR), Form 8865 – Return of U.S. Persons With Respect to Certain Foreign Partnerships, Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and the plethora of other foreign asset reporting requirements. Holding foreign assets has never been more difficult and potential very costly from a tax perspective.
As part of the Hiring Incentives to Restore Employment (HIRE) Act, The Foreign Account Tax Compliance Act (FATCA) was enacted March 18, 2010. The IRS states that “The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.” In order to implement the reporting requirements under FATCA the IRS has just recently released the final Form 8938. Although FATCA has been in effect since enactment in 2010, its implementation has been delayed until the final form was published. As such, the 2011 tax return is the first return that will require this form to be attached.
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