As a follow up to the blog Ringing In the New Year, the IRS just released the final version of Form 8938, Statement of Specified Foreign Financial Assets, and its instructions. Individuals must refer to these instructions to report specified foreign financial assets under Internal Revenue Code Section 6038D beginning in tax year 2011. For now, the IRS has only issued regulations for individuals. Therefore, domestic entities will not need to file Form 8938 until the IRS has finalized these regs, which will most likely be 2012.
The newly released instructions can be found at http://www.irs.gov/pub/irs-pdf/i8938.pdf and provide detailed guidance on the following:
• Who is required to file
• Filing thresholds
• Determining fair market value
• Dates to use for valuation determination
• Currency exchange rate dates – www.fms.treas.gov/intn.html
You may also refer to the aforementioned blog for a brief summary of these requirements. The IRS will be posting updates and recent developments relating to this form on their website at www.irs.gov/form8938.
Penalties for failure to file or disclose required information are heavy, starting at $10,000, unless substantiated with a reasonable cause and not willful neglect. A failure continuing for more than 90 days after the day on which the IRS mails a notice of the failure will lead to an additional penalty of $10,000 for each 30-day period (or fraction thereof) during which the failure continues after the 90-day period has expired, up to a maximum penalty of $50,000 for each such failure.
Jill A. Helm, CPA