Taxpayers will begin to use the new Statement of Specified Foreign Financial Assets, or Form 8938, with their 2011 tax year filings, the IRS said.
The new Form 8938 is to be filed by taxpayers “with specific types and amounts of foreign financial assets or foreign accounts”, who may be US citizens and residents, non-residents who elect to file a joint income tax return, and certain nonresidents who live in a U.S. territory, according to an IRS statement released last night.
Importantly, only those individuals whose specified foreign assets exceeds certain thresholds will be obliged to file the new form, and the threshold for taxpayers who reside abroad is significantly higher than that set for those who reside in the US, the IRS said.
For example, it noted, a married couple residing abroad and filing a joint return would not be required to file a Form 8938 “unless the value of [their] specified foreign assets exceeds $400,000 on the last day of the tax year, or more than $600,000 at any time during the year”.
Those individuals who do not have an income tax return filing requirement are not obliged to file the new form, which also does not replace or otherwise affect a taxpayer’s obligation to file an FBAR (Report of Foreign Bank and Financial Accounts), according to a statement released by the IRS yesterday.
Failure to comply with the new filing requirement may result in “significant penalties”, it added.
More banks shed Americans
The IRS announcement coincided with news that several German banks, including Deutsche Bank, were reported to be seeking the termination, or transfer into a different type of account, of securities accounts held byAmerican clients, ahead of the implementation of FATCA in 2013. Like other banks that have also asked Americans to leave, they are blaming the burden of adopting the new reporting procedures that FATCA imposes on foreign financial institutions.
HypoVereinsbank, a subsidiary of Italy’s Unicredit Spa, is said to have announced plans to close all its American clients’ accounts as of 1 Jan. As reported, HSBC announced in July that it would ask Americans with certain types of accounts to close them.
To read about the new form and other background about FATCA on the IRS’s website, click here.
