No relief in sight for US Expatriates worldwide as Duplicative Reporting Requirements Continue to Burden US Expatriate Taxpayers

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The National Taxpayer Advocate Report for 2017 (Purple Book) is a summary of legislative recommendations that the Office of Taxpayer Advocate (OTA) believes will strengthen taxpayers rights and improve tax administration. One of the Recommendations of the OTA is to eliminate duplicative FATCA reporting where assets have already been reported on an FBAR and to provide a same-country exception for reporting financial accounts held in the country in which a US taxpayer is a bona fide resident.

The Bank Secrecy Act (BSA) requires US citizens and Permanent Residents to report foreign accounts with an aggregate value of $10,000 or more at any time during the calendar year on FinCEN Report 114, Report of Foreign Bank and Financial Account – also known as FBAR.  In addition, The Foreign Account Tax Compliance Act (FATCA) requires US citizens and Permanent Residents to file Form 8938 (Statement of Specified Foreign Financial Assets) with their federal Income Tax Returns.  It reports foreign financial assets exceeding specified asset value thresholds. 

The recommendation for harmonizing reporting requirements for Taxpayers subject to both FATCA and FBAR stems from the reality that US Taxpayers face increased compliance burdens and costs as a result of FATCA reporting obligations that overlap with the FBAR filing requirements.  

The recommendations of OTA have been to:

  • eliminate duplicative reporting of assets on Form 8938 if an asset is or has been reported or reflected on an FBAR
  • exclude financial accounts maintained by a financial institution organized under the laws of the country of which the US person is a bona fide resident from the specified foreign financial assets required to be reported on Form 8938
  • exclude financial accounts maintained by a financial institution organized under the laws of the country of which the subject US person is a bona fide resident from the definition of “financial account” subject to reporting by FFIs.

Up to now, the IRS has ignored the recommendations from the OTA.  Moreover, the tax reform recently enacted did not provide a “territorial” status to Individuals as it did to Corporations.  That said, US Taxpayers living abroad will continue with the burden of reporting and filing complex and overlapping Forms. 

Don’t be a victim of your own making.  If you are subject to reporting Form 8938 and FBARs, consult your tax specialist.

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