If you are a U.S. citizen or U.S. resident and you own financial assets overseas, you may be subject to reporting requirements under the Foreign Account Tax Compliance Act (FATCA). Failing to meet your FATCA reporting requirements can result in steep penalties. To find out what you need to disclose to the IRS, or to protect yourself if you are being accused of violating FATCA, you should speak with a Washington DC FATCA lawyer right away.
What is FATCA?
FATCA is a federal law that requires U.S. taxpayers to disclose offshore financial holdings to the Internal Revenue Service (IRS). It also requires foreign banks and certain other entities to report assets held by U.S. taxpayers to the IRS. Many FATCA investigations are triggered by discrepancies between foreign banks’ reports and individual U.S. taxpayer’s foreign financial asset disclosures (or lack thereof).
5 Key Facts About FATCA for U.S. Taxpayers
If you have offshore assets, if you have received a “FATCA letter” from your bank, or if you are facing an IRS audit or investigation, what do you need to know about FATCA? Here are five key facts about the law for U.S. taxpayers:
1. Owning Offshore Accounts Does Not Necessarily Trigger Reporting Requirements
While FATCA applies to U.S. taxpayers with foreign assets, owning foreign assets does not necessarily trigger a reporting obligation. There are thresholds that apply; and, if you have received a FATCA letter, you should consult with a Washington DC FATCA lawyer before deciding whether to disclose your foreign holdings to the IRS.
2. If You Have a Reporting Obligation, You Must Complete and Submit IRS Form 8938
If you have a reporting obligation, then you must report your financial holdings using IRS Form 8938. Like all IRS forms, Form 8938 must be submitted under penalty of perjury, and both intentional and unintentional misrepresentations and omissions can lead to severe consequences.
3. You May Need to Submit Various Other IRS Forms as Well
In addition to Form 8938, owning foreign financial assets can potentially trigger other IRS reporting requirements as well. Depending on the nature of your foreign financial holdings, you may also need to submit IRS forms including, but not limited to: Form 3520, Form 3520A, Form 5471, Form 5472, Form 8621 and Form 926.
4. You May Also Need to Submit a Foreign Bank Account Reporting (FBAR) Form to FinCEN
If you own foreign bank accounts, then you may need to report your foreign holdings to the IRS and the Financial Crimes Enforcement Network (FinCEN). This requires the submission of a Foreign Bank Account Reporting (FBAR) form.
5. The Consequences of Non-Compliance with FATCA Can Be Substantial
Failing to disclose your foreign financial holdings to the federal government can lead to substantial penalties. Due to the severe risks of non-compliance, it is strongly advised that you discuss your obligations with a Washington DC FATCA lawyer before making any decisions about what to file (or not file) with the IRS and FinCEN.
Request a Confidential Consultation with Washington DC FATCA Lawyer Kevin E. Thorn
For more information about your reporting obligations, contact Thorn Law Group to schedule a confidential initial consultation. To request an appointment with Kevin E. Thorn, Managing Partner, Thorn Law Group, please call 202-349-4033 or inquire online now.