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Relief from Foreign Financial Assets Disclosure Reporting for Entities Extended through 2012 Tax Year

The IRS issued Notice 2013-10 this week announcing that reporting by domestic entities (U.S. corporations, partnerships, trusts, LLCs, etc.) of interests in specified foreign financial assets will not be required before the date specified in future regulations and that such date will not be earlier than tax years beginning after December 31, 2012.  This notice does not affect individuals or the Foreign Bank Account Report “FBAR” filing requirements.

Suggested Action
Please contact your CohnReznick client service professional for additional information. Individuals should continue to report their interests in specified foreign financial assets valued at $50,000 ($100,000 if married filing jointly) or more by attaching IRS Form 8938 to their tax return.

IRC Section 6038D was enacted in 2010 as part of the HIRE Act. IRC Section 6038D(a) requires individuals to report interests in specified foreign financial assets whose aggregate value  exceeds $50,000 ($100,000 if married filing jointly) by completing and attaching IRS Form 8938 to their annual tax return.  

IRC Section 6038D(f) authorizes the IRS to issue regulations applying this reporting requirement to domestic entities as if the entity were an individual. Proposed regulations were issued on December 19, 2011 specifying entities required to report their interests in specified foreign financial assets for tax years beginning after December 31, 2011.  

IRS Notice 2013-10 states that final regulations will modify this effective date and reporting will not be required with respect to tax years before that modified effective date. Moreover, the modified effective date will not be earlier than tax years beginning after December 31, 2012.

Individuals whose interests specified foreign financial assets exceeding $50,000 ($100,000 if married filing jointly) must continue to complete and attach IRS Form 8938 to their annual tax return. These specified foreign financial assets including the following:

  • Foreign bank accounts
  • Brokerage accounts
  • Stocks or bonds of foreign entities
  • Interests in foreign entities; and
  • Any interest in a financial instrument with a foreign counterparty,

The FBAR on Treasury Form TD F 90-22.1 must continue to be filed annually by individuals with interests in foreign financial accounts of $10,000 or more.

For more information, please visit the CohnReznick International Tax webpage and contact James Wall, Principal, International Tax Practice, at 646-254-7460, or Christopher White, CPA, Partner, International Tax Practice, at 818-297-2512.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing or recommending to another party any tax related matters.

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