More Foreign Account Reporting Looms
Thanks to Congressional action (which doesn’t seem to occur very often), get ready to comply with Internal Revenue Code Section 6038D, starting with the filing of your 2011 tax return. That would be if you are an individual who, during the tax year, held any interest in a “specified foreign financial asset” if the aggregate value of all of your “specified foreign financial assets” exceeded $50,000 during the year.
Now don’t confuse this new burden with the longstanding requirement that you report to the Treasury Department, itself, details of your foreign bank and financial accounts (“FBAR”) if the aggregate value of those exceeded $10,000 at any time during the calendar year!
And what, you ask, falls within the definition of a “specified foreign financial asset?” That would include:
- Any “financial account” (as defined) maintained by a “foreign financial institution” (as defined), and
- Any of the following assets which are not held in an account maintained by a “financial institution” (as defined):
- Any stock or security issued by a person other than a U.S. person
- Any financial instrument or contract held for investment that has an issuer or counterparty that is other than a U.S. person, and
- Any interest in a “foreign entity” (as defined).
So, what info must you provide?
- Regarding any account, the name and address of the financial institution in which the account is held and the account number.
- In the case of any stock or security, the name and address of the issuer, and whatever information is necessary to identify the class or issue of which the stock or security is a part.
- In the case of any other instrument, contract or interest:
- Whatever info is necessary to identify the instrument, contract or interest, and
- The names and addresses of all issuers and counterparties with respect to the instrument, contract or interest.
- The maximum value of the asset during the tax year.
And lest you be inclined to stick your head in the sand regarding these
new rules (as some folks had done, consistently, regarding the FBAR requirements until the government got so worked up about the whole subject), get ready to receive more than a slap on the wrist – instead, get ready to write a check for $10 grand, plus another $10 grand for each 30 day period after the Revenooers latch on to your situation, until you provide the requisite info.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.