Monday, February 9, 2015

Final Regulations on Reporting Foreign Financial Assets - Form 8938

The IRS published final regulations (TD 9706, 12/12/14) on the statutory provisions that require specified foreign financial assets to be reported for tax years beginning after 3/18/10. The regulations provide guidance on the requirement that individuals attach a statement to their income tax return to provide required information regarding specified foreign financial assets in which they have an interest.

The regulations exempt from the reporting requirements some dual resident taxpayers who determine their U.S. tax liability as if they were nonresident aliens and claim treaty benefits as nonresidents of the U.S.

Also, the regulations clarify the reporting requirements for some interests in assets under Reg. 1.6038D-2(b) regarding non-vested property under Section 83 and assets held by a disregarded entity.

In addition, they:

  1. Clarify aspects of the rules on joint owners of specified foreign financial assets.
  2. Modify the definition of a financial account for Section 6038D purposes to require consistent reporting under the section for retirement and pension accounts and some non-retirement savings accounts regardless of whether an account is maintained in a specified jurisdiction. 
  3. State that specified foreign financial assets include:
    •  stock, securities, 
    • inancial instruments, and 
    • contracts that are held for investment, are not held in an account maintained by a financial institution, and are issued by a person organized under the laws of a U.S. possession. 

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