DO YOU HAVE A FOREIGN BANK ACCOUNT OR INCOME PRODUCING PROPERTY?
In the past several years, the IRS has been vigorously pursuing taxpayers who fail to comply with foreign reporting requirements. The IRS has instituted banking treaties with almost all sovereign countries which require foreign banks to report amounts that are in the name of U.S. citizens. These reports are then matched to each person’s U.S. tax return.
It is important taxpayers are reminded of the forms they are required to file. Below are the forms you could be liable for if you have a foreign bank account or own income producing property in another country.
FinCEN Form 114, Report of Foreign Bank and Financial Accounts for U.S. taxpayers with greater than $10,000 (at any point during the year) in a foreign bank account.
Form 8938, Statement of Specified Foreign Financial Asset, for U.S. taxpayers with more than $50,000 of foreign financial assets on the last day of the tax year or more than $75,000 at any time during the tax year.
If you transfer money or property to a foreign corporation or if you are an owner in a foreign partnership or corporation, additional reporting may be required.
Penalties are SEVERE. Penalties start at $10,000 for each negligent violation. If U.S. taxpayers commit a willful violation then the penalty can be up to $100,000 or 50% of the amount in the account.