FBAR & PFIC Reporting

FBAR & PFIC Reporting

FBAR & PFIC Reporting

PFIC & FBAR: A PFIC is a Passive Foreign Investment Company. There are very complicated IRS reporting requirements when it comes to disclosing PFIC on a tax return. This generally involves the filing of Form 8621. In addition, there are FBAR filing requirements as well for PFIC. Not all PFIC is included on the FBAR, but when the U.S. Person has foreign investment funds, such as foreign mutual funds — the PFIC is included. Since the U.S. Government continues to enforce foreign accounts compliance, it is important for taxpayers to stay aware of the reporting rules, and work to get into compliance before it is too late.

Do I Report PFIC on the FBAR?

Yes, but depending on the PFIC at issue, the reporting may vary amongst different PFICs.

While there is no absolute rule on how to report every type of PFIC, we are providing you some guidance for assistance.

PFIC and Investment Account Reporting

One of the most common types of PFIC reporting on the FBAR is for foreign investment funds.

Reporting of PFIC funds will vary based on whether they are in an account or not.

For example, if you have 8 different mutual funds in an investment account, then the investment account is reported, with the main account number.

Even though there are multiple funds in the account, the account itself is reported.

PFIC Funds that are Individually Owned

When a U.S. person has separate, individually owned funds, then each fund is identified separately in the FBAR, unless it is part of the same portfolio.

What if the PFIC Funds are in Same Portfolio

Generally, when the PFIC Funds are in the same portfolio, reporting may be simplified.

If the funds are part of the same portfolio, you may be able to gross-up the value of the portfolio and report the total value of the portfolio.

That way, the full value of the funds are being reported under the portfolio number – similar to reporting an investment account with all the different funds included under the account number.

PFIC Company vs. Funds

What makes the funds a PFIC, is that the fund itself is an entity. If instead, the PFIC is a holding company (for example a BVI), then company is usually not reported on the FBAR, but the individual accounts and investments held by the PFIC are reportable.

Avoid these Issues with IRS Offshore Disclosure

If you have come to the realization that you have undisclosed unreported foreign accounts-either because you acted willfully or non-willfully, there are options available to you to get into compliance.

Golding & Golding: About our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.