Common Form 8938 (FATCA) Mistakes to Avoid

Common Form 8938 (FATCA) Mistakes to Avoid

Common Form 8938 (FATCA) Mistakes to Avoid

Common Form 8938 (FATCA) Mistakes to Avoid: When it comes to US Persons filing the annual Form 8938, the form could be deceptively complicated. While the reporting is limited to the maximum value of the accounts for the year being reported — there are various complexities when it comes to determining which accounts have to be reported, who has to report, when the form is due — and what happens if you file late. Let’s take a brief look at some common Form 8938 (FATCA) mistakes — which can be (usually) avoided by the filer.

Common Form 8938 (FATCA) Mistakes Explained

Here are some of the common Form 8938 (FATCA) mistakes to avoid:

Due Date and Automatic Extension

The Form 8938 is part of a US tax return. Therefore, when you file your US Tax Return, the Form 8938 is due as well. If a Taxpayer files for an extension of their tax return, the Form 8938 goes on extension as well — no additional form is required.

Do I File a Form 8938 if I Do No have to File a Tax Return?

No.

The Form 8938 is part of the US Tax Return, but if a Tax Return is not required, then neither is the Form 8938. In other words, if a Taxpayer is not required to file a Tax Return otherwise, they are not required to file a tax return solely to file a Form 8938. This is different than the FBAR, which is a similar form and still required even if no tax return is required.

Is the Form 8938 Limited to Bank Accounts?

No. The Form 8938 is for Specified Foreign Financial Assets — and it includes much more than just bank accounts. It includes items such as foreign pension accounts, foreign investment accounts, and certain foreign life insurance policies with a surrender or cash value.

Untimely Form 8938 Means Criminal Indictment and Millions in Penalties?

Of course not.

For most individuals and others who have missed accurately filing and/or reporting their annual Form 8938, the IRS has developed several different Form 8938 amnesty programs to safely get you back into compliance with little to no issue. Some programs carry a penalty , while other programs carry a much more reduced penalty or even a penalty waiver if you qualify.

IRS Form 8938 Amnesty Program Summary

The Form 8938 Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs, include:

• Voluntary Disclosure Program (VDP or “New” OVDP)
• Streamlined Domestic Offshore Procedures
• Streamlined Foreign Offshore Procedures
• Delinquency Procedures
• Reasonable Cause

Can I Just Start Filing Form 8938 This Year Instead?

No, unless the current year is the first-year you had a Form 8938 Reporting requirement.

If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as a Quiet Disclosure.

The IRS has warned taxpayers that if they get caught in a Form 8938 Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.

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Our Form 8938 Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm today for assistance.