The IRS has released Form 8938 Statement of Specified Foreign Financial Assets along with instructions for individuals to use to report specified foreign financial assets (“SFFAs”) for the 2011 tax year. SFFA’s generally include the following:
- Bank or custodial accounts maintained by foreign financial institutions.
- To the extent held for investment and not held in a financial account, any stock or securities issued by someone that is not a U.S. person, any interest in a foreign entity, and any financial instrument or contract with an issuer or counterparty that is not a U.S. person.
Unmarried taxpayers living in the United States must use Form 8938 if the total value of their SFFA’s is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year. The threshold for reporting by married taxpayers living in the United States is met if they have more than $100,000 of SFFA’s on the last day of the tax year or $150,000 at any time during the year.
If you are required to file Form 8938 and fail to do so, you may be subject to a penalty of $10,000. If you do not file a correct and complete Form 8938 within 90 days after the IRS mails you a notice of the failure to file, you may be subject to an additional penalty of $10,000 for each 30-day period (or part of a period) during which you continue to fail to file Form 8938 after the 90-period has expired. The maximum additional penalty for a continuing failure to file Form 8938 is $50,000.