- 1 FBAR & PFIC Reporting
- 2 Do I Report PFIC on the FBAR?
- 3 PFIC and Investment Account Reporting
- 4 PFIC Funds that are Individually Owned
- 5 What if the PFIC Funds are in Same Portfolio
- 6 PFIC Company vs. Funds
- 7 Avoid these Issues with IRS Offshore Disclosure
- 8 Golding & Golding: About our International Tax Law Firm
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.
Contact our firm today for assistance with getting compliant.