by Brian Mahany
There has been a constant stream of news these days on unreported offshore accounts and the current foreign tax amnesty program. Recently, however, the IRS published in draft Form 8938 due for release later this year. That form, called the Statement of Specified Foreign Financial Assets, requires disclosure of assets held overseas. If you think this just means resort villas or factory equipment, you are probably in for a rude surprise.
It’s no secret that the current administration does not like offshore investments. While investing overseas is completely legal – and often makes sound economic sense – not telling Uncle Sam is a crime. The current Report of Foreign Bank and Financial Accounts is geared at bank accounts. Mention FBAR and most people think Swiss or Cayman bank accounts. That’s because the storage of physical gold and precious metal is generally not subject to an FBAR account.
Under the proposed rules, that all changes.
People with safe deposit boxes in foreign banks should not panic. But absolutely make sure that you have a a CPA familiar with offshore reporting requirements. Currently, the mere failure to file an FBAR is a felony. The feds take offshore reporting seriously. Unfortunately, many tax preparers are not fluent in these regulations.
The forms and rules are proposed at this point but expected to be implemented later this year. Make sure your accountant is prepared. Most tax preparers (non CPA’s) are not prepared and even many CPA’s do not keep up with foreign reporting. If you do not have confidence that your accountant is fluent in these rules, ask that she or he consult with a knowledgeable tax attorney.
Mahany & Ertl, America’s tax lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services nationwide.