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LATEST INFORMATION ON FOREIGN BANK AND OTHER REPORTING REQUIREMENTS FOR US CITIZENS
Feb 4 2011Taxpayers who fail to report their investments in foreign corporations, partnership and disregarded entities, which have foreign bank accounts, fail to file two separate information reporting forms, with two separate sets of penalties.
The penalties range from $10,000 per late form, to up to 50% of the highest balance during the taxable year in the case of foreign bank accounts, and to 10% of the fair market value of property transferred to a foreign corporation or partnership.
The following is a summary of the international information returns that your may be required to file or collect:
· Form 90-22.1 – filed if the aggregate of reportable foreign financial accounts exceeds $10,000. This is a U.S. Treasury Department form due by June 30, 2010, with no extensions; it is not filed with the tax return.
· Form 926 – filed if a U.S. taxpayer transfers property to a foreign corporation.
· Form 3520 and 3520-A – filed if a U.S. taxpayer is a grantor with respect to a foreign trust, or a beneficiary receiving distributions from a foreign trust or bequests from a foreign decedent. This form is filed separately from the tax return.
· Form 5471 – filed if a U.S. taxpayer (individual, corporate or partnership) owns 10% or more of the stock of a foreign corporation. Due with the tax return (including extensions).
· Form 8858 – filed if a U.S. taxpayer has an interest in a foreign entity which is classified as a disregarded entity for U.S. tax purposes. Due with the tax return (including extensions).
· Form 8865 – filed if a U.S. taxpayer has a greater than 10% interest in a foreign entity which is classified as a partnership for U.S. tax purposes. Due with the tax return (including extensions).
The IRS established an amnesty program that expired October 15, 2009 for taxpayers who had not filed the Form 90-22.1 (although the program also covered taxpayers who failed to file certain other international information returns as well). Although the amnesty program has expired, the IRS has announced that it is considering another amnesty. In any event, the Voluntary Disclosure Program remains in place and is available for taxpayers who have failed to file all the required international information returns in prior tax years.
The penalties range from $10,000 per late form, to up to 50% of the highest balance during the taxable year in the case of foreign bank accounts, and to 10% of the fair market value of property transferred to a foreign corporation or partnership.
The following is a summary of the international information returns that your may be required to file or collect:
· Form 90-22.1 – filed if the aggregate of reportable foreign financial accounts exceeds $10,000. This is a U.S. Treasury Department form due by June 30, 2010, with no extensions; it is not filed with the tax return.
· Form 926 – filed if a U.S. taxpayer transfers property to a foreign corporation.
· Form 3520 and 3520-A – filed if a U.S. taxpayer is a grantor with respect to a foreign trust, or a beneficiary receiving distributions from a foreign trust or bequests from a foreign decedent. This form is filed separately from the tax return.
· Form 5471 – filed if a U.S. taxpayer (individual, corporate or partnership) owns 10% or more of the stock of a foreign corporation. Due with the tax return (including extensions).
· Form 8858 – filed if a U.S. taxpayer has an interest in a foreign entity which is classified as a disregarded entity for U.S. tax purposes. Due with the tax return (including extensions).
· Form 8865 – filed if a U.S. taxpayer has a greater than 10% interest in a foreign entity which is classified as a partnership for U.S. tax purposes. Due with the tax return (including extensions).
The IRS established an amnesty program that expired October 15, 2009 for taxpayers who had not filed the Form 90-22.1 (although the program also covered taxpayers who failed to file certain other international information returns as well). Although the amnesty program has expired, the IRS has announced that it is considering another amnesty. In any event, the Voluntary Disclosure Program remains in place and is available for taxpayers who have failed to file all the required international information returns in prior tax years.
