- 1 Foreign Account & Tax Amnesty Program
- 2 What is the Foreign Account Tax Compliance Act?
- 3 Reporting of Foreign Assets
- 4 What Types of Assets Have to Be Reported?
- 5 How do Individuals and Entities Report?
- 6 What Are the Thresholds for Reporting?
- 7 Can I Just Start Filing This Year?
- 8 What are the 8938 Penalties?
- 9 Foreign Account Amnesty Programs Reduce & Avoid Penalties
- 10 What Can You Do?
- 11 4 Types of IRS Voluntary Disclosure Programs
Tax Amnesty Program – Foreign Accounts & Assets | Board Certified
Tax Amnesty Program: If you have foreign assets and did not report them under FATCA, our Tax Law Specialist Team can safely represent you in the FATCA Amnesty Program.
We are the Tax Specialist Team other Attorneys, CPAs, EA, Accountants, IRS Personally, & clients worldwide retain for FATCA Amnesty Program representation.
Foreign Account & Tax Amnesty Program
When a person meets the threshold requirements for reporting under FATCA — at least in the eyes of the US government — it means the person has significant offshore assets.
If a person did not timely properly report under FATCA, then you may submit to the FATCA Amnesty Program.
What is the Foreign Account Tax Compliance Act?
FATCA is Foreign Account Tax Compliance Act
What is the Purpose of the Foreign Account Tax Compliance Act?
The main purpose of FATCA is to reduce offshore and foreign tax fraud, facilitate tax compliance and ensure the IRS and U.S. government can keep tabs on your foreign assets.
Who Has to Comply with the Foreign Account Tax Compliance Act?
Any U.S. taxpayer (foreign or U.S. resident) who has to file a tax return may become subject to FATCA Reporting. For individuals and other entities filing U.S. tax returns, the main reporting requirement is filing form 8938.
Unlike other international reporting forms such as an FBAR, 5471 or 8865 – Form 8938 is only required if you have to file a US tax return. The other forms we just mentioned have to be filed irrespective of whether a person meets threshold having to file a US tax return or not.
Stated another way, a person does not have to file a tax return just to include a form 8938 for FATCA Reporting. If they did not otherwise have to file a tax Return, then the Form 8938 is not required.
How Many Foreign Countries Entered into Agreements with the U.S.?
More than 110 hundred different countries (114) have entered into FATCA Agreements. These agreements are more specifically referred to as intergovernmental agreements (IGA), and there are two main types of agreements.
To try to put this into a better perspective for you, while the United States has entered into bilateral tax treaties with about 60 different countries, they have entered into almost twice as many agreements regarding FATCA.
How Many Foreign Institutions Comply with these Agreements?
At present time, it is estimated that more than 300,000 foreign financial institutions have agreed to report to the United States regarding offshore accounts and assets of U.S. Account holders.
Reporting of Foreign Assets
Understanding how the Foreign Account Tax Compliance Act impacts your IRS reporting responsibilities, and what you must know about foreign Asset & tax compliance to stay out of the IRS cross-hairs.
The purpose of this guide is to assist individual taxpayers and entities with FATCA filing (Foreign Account Tax Compliance Act) – it is not a guide for Foreign Financial Institutions such as Foreign Banks and/or Foreign Investment Firms.
Understanding Foreign Asset Basics
Reporting Foreign Assets and FATCA go hand-in-hand.
FATCA is the Foreign Account Compliance Act. It is an international act designed to facilitate compliance for U.S. Taxpayers, Foreign Financial Institutions, and other intermediaries with proper reporting of Specified Foreign Financial Assets.
In recent years, the IRS has increased enforcement of offshore and foreign reporting – with the goal of combatting, reducing, and eliminating offshore/foreign tax fraud and evasion.
What if My Bank is in a Non-FATCA Country?
Even if your bank is in a non-FATCA country, it is important to understand that many institutions in non-FATCA countries are still reporting.
When is FATCA Reporting Due?
Form 8938 is required to be filed along with your tax return. Therefore, depending on whether the filer is an individual or an entity, and whether or not the person is filing on extension or not will determine when the reporting is due.
Since form 8938 is a part of your tax return, if you file an extension for the tax return, then by default the time to file your form 8938 would also be on extension.
What Types of Assets Have to Be Reported?
Many different types accounts and assets have to be included, but for the most part they will include the following types of assets:
- Bank Accounts
- Investment Accounts
- Certificates Of Deposit
- Stock Accounts
- Mutual Funds (Possible Overlap with 8621)
- Foreign Corporation ownership (Possible Overlap with 5471)
- Foreign Partnership ownership (Possible Overlap with 8865)
*Exceptions, Exclusions and Limitations apply.
How do Individuals and Entities Report?
There are two main reporting culprits when it comes to individuals and entities having to report under FATCA.
The first, is form 8938 described above.
The second, is when a person receives a FATCA Letter from a foreign financial institution (FFI).
What Are the Thresholds for Reporting?
There are four main thresholds for individuals is as follows:
- Single or Filing Separate (in the U.S.): $50,000/$75,000
- Married with a Joint Returns (In the U.S): $100,000/$150,000
- Single or Filing Separate (Outside the U.S.): $200,000/$300,000
- Married with a Joint Returns (Outside the U.S.): $400,000/$600,000
Can I Just Start Filing This Year?
If you did not file the form in prior years, you cannot just begin “reporting going forward.”
You have to first (or simultaneously) go back and fix the prior year(s) non-reporting before filing the current year.
That might mean applying for an extension in the current year, to give you sufficient time to amend the prior-year returns.
If you just started reporting going forward, this is considered a Quiet Disclosure or Silent Disclosure (an intentional omission of prior year returns) — which can have some serious ramifications.
What are the 8938 Penalties?
You may be subject to penalties if you fail to timely file a correct Form 8938 or if you have an understatement of tax relating to an undisclosed specified foreign financial asset.
If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000.
Continuing Failure to File
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-day period has expired.
The maximum additional penalty for a continuing failure to file Form 8938 is $50,000.
Married Taxpayers Filing a Joint Income Tax Return
If you are married and you and your spouse file a joint income tax return, the failure to file penalties apply as if you and your spouse were a single person. You and your spouse’s liability for all penalties is joint and several.
Foreign Account Amnesty Programs Reduce & Avoid Penalties
Whether it is because you did not you had to report foreign accounts, thought you were below the threshold for filing, did not realize non-bank accounts were required to be reported, and/or have other unreported income, accounts, investments or assets – we can help.
What Can You Do?
Presuming the money was from legal sources, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
4 Types of IRS Voluntary Disclosure Programs
There are typically four types of IRS Voluntary Disclosure programs, and they include:
- Traditional (IRM) IRS Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
Contact Us Today; Let us Help You.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)