General Rule and Overview Who Must File Information To Be Reported Section 6038D Penalty Repatriation of Funds
Code Section 6038D added to the Internal Revenue Code as part of the Foreign Account Tax Compliance Act (FATCA) in 2010. Code Section 6038D requires certain individuals to annually report to the IRS information about their interest in specified foreign financial interest (“SFFAs”). Filing obligation is dependent of the aggregate value for the year of SFFAs and the applicable threshold. Reporting is required for assets held in taxable years beginning after March 18, 2010 on Form 8938. Form 8938 is attached to the taxpayer’s annual income tax return and is due on the same date (including extensions).
Code section 6038D(a): “Any individual who, during any taxable year, holds any interest in a specified foreign financial asset … if the aggregate value of all such assets exceeds $50,000 (or such higher dollar amount as the Secretary may prescribe).”
Specified Individual:
Dual Residents:
◦ U.S. citizens; ◦ Individuals who are U.S. residents for any portion of the relevant year; ◦ Nonresident aliens who are married to a U.S. citizen or U.S. resident and who elect under Code Section 6013(g) or Code Section 6013(h) to be treated as U.S. residents for certain federal tax purposes; ◦ Nonresident aliens who are bona fide residents of Puerto Rico; and ◦ Nonresident aliens who are bona fide residents of a so-called “Section 931 Possession,” which, at this point, means American Samoa. ◦ U.S resident who elects to be taxed as a resident of a foreign country pursuant to a U.S. income tax treaty’s residency tiebreaker rules is a Specified Individual for purposes of Section 6038D and the regulations.
Reporting period:
Reportable interest:
◦ Individuals are calendar year by default; ◦ Short year If
