The Foreign Account Tax Compliance Act, enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, requires certain individuals to file a statement with their United States income tax returns to report interests in “specified foreign financial assets” (SFFA) if the aggregate value of those assets exceeds specific thresholds. This reporting requirement is separate from the requirement to file Form TD F 90-22.1 (FBAR).

Temporary regulations implementing this reporting requirement were issued recently. The reporting regime is applicable to U.S. citizens, resident aliens of the United States, non-resident aliens who have elected to be taxed as U.S. residents and certain residents of U.S. possessions (collectively, “specified individuals”). Specified individuals whose SFFA meet certain thresholds, discussed below, are required to complete and attach Form 8938, Statement of Specified Foreign Financial Assets, to their U.S. income tax returns. If a specified individual does not have to file a U.S. income tax return for the tax year, the individual does not have to file Form 8938 even if the value of their SFFA exceeds the reporting threshold. The reporting requirements are effective for tax years starting after March 18, 2010, which for most taxpayers will be their 2011 tax returns that are due to be filed this year.

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