Hyden, Miron & Foster, PLLC Law Blog

Tuesday, January 15, 2019

Do You Have Foreign Assets? How to Ensure You're Compliance with FBAR and FATCA Requirements

It is imperative that taxpayers who have financial assets outside of the United States review the filing requirements and deadlines for reporting foreign assets to ensure they remain compliant with IRS regulations. Filing the correct tax forms on time can avoid excessive fines and penalties that the IRS may assess for noncompliance. Our Arkansas foreign tax compliance lawyers discuss some of the FBAR and FATCA filing requirements below and are available to answer any questions you might have about reporting foreign assets.

Key Things to Know About Reporting Foreign Accounts (FBAR)

An FBAR is not filed with your tax return and does not go to the IRS. The FBAR is filed online through the BSA E-filing System for the Department of Treasury.

Even though the FBAR is an informational document, failing to file or filing late can cost you thousands of dollars in penalties. Non-willful violations of the FBAR filing requirements can total $10,000 per violation. Willful violations of the filing requirements can total $100,000 or 50 percent of the total balance in all foreign accounts, whichever amount is greater.
U.S. citizens, domestic business entities, and resident taxpayers who control, own, or have signature authority over a foreign financial account or foreign bank account you may be required to file the FBAR Form. It is not a requirement that you file a U.S. tax return to report foreign accounts. The deciding factor is the value of the foreign accounts. 
If the total of the accounts exceeds $10,000, you need to file the FBAR Form to report all foreign accounts. It does not matter how much money is in each account or how many accounts you have. You must report all foreign accounts once you reach the $10,000 combined threshold amount.

Key Things to Know About the Foreign Account Tax Compliance Act (FATCA)

The FATCA requires individuals living in the United States or outside of the United States to report certain specified foreign assets, such as ownership interests in life insurance policies, businesses, security accounts, mutual funds, trusts, and foreign accounts. You should review the complete list of all specified foreign assets that must be reported with your Arkansas tax lawyers. The form is filed with the IRS with your federal tax return.

The penalties for not filing a FATCA Form 8938 when reporting is required can be severe too. The penalty is $10,000 for each of the information returns and an additional $10,000 each month 90 days after you are notified of the delinquency, up to $50,000 per return.

Unlike the FBAR, there are different reporting thresholds for the FATCA Form 8938. The thresholds are based on whether you are filing your tax return as Married Filing Jointly, Married Filing Separate, or Single. Also, whether you live within or outside of the United States is a factor in determining the filing threshold.

Do not assume that you do not need to file FATCA Form 8938 because you have filed an FBAR. These are two different documents with different filing requirements. Failing to file each document as required can result in significant penalties.


Consult Experienced Arkansas Tax Lawyers for Help with Foreign Asset Reporting

Reporting foreign assets is a complex area of tax law. A mistake can be very costly. The FBAR and FATCA are just two of the filing requirements related to foreign financial matters. Contact the Arkansas foreign tax compliance lawyers at Hyden, Miron & Foster, PLLC today. Our Arkansas tax lawyers can review your financial transactions and foreign assets and advise you of your filing requirements to remain compliant with all foreign reporting requirements.

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