Reporting Large Foreign Financial Assets, IRS Form 8938

During the last year, the Internal Revenue Service (“IRS") has announced several compliance campaigns designed to verify a taxpayer’s compliance with the Foreign Account Tax Compliance Act (“FATCA”). These campaigns encourage better tax compliance from U.S. taxpayers, banks, and other financial organizations subject to U.S. taxation on their income and assets. Among FATCA’s reporting requirements is section 6038D of the Internal Revenue Code (“Code”). This section provides that taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. It also imposes penalties for noncompliance. This Article will review what tax professionals representing individuals should know about Form 8938 and controversies based on the audit of Form 8938.