United States - Foreign asset reporting: Release of new guidance and final form

Global Watch ()

The Internal Revenue Service ("IRS") recently released temporary and proposed regulations implementing Code § 6038D which requires reporting of a specified foreign financial asset ("SFFA"). This provision was enacted as part of the FATCA provisions of the 2010 Hiring Incentives to Restore Employment Act. It is effective for tax years beginning after March 18, 2010 and thus in practice, individuals should report for 2011 calendar tax years if they meet certain requirements and their interests in SFFAs exceed certain thresholds.

If reporting is required, the taxpayer must disclose its SFFA holdings on Form 8938 (Statement of Specified Foreign Financial Assets), with their U.S. federal income tax return. In addition to the newly issued regulations, the final Form 8938 and Instructions were also recently released.

The new regulations and final Form 8938 instructions expand upon and revise certain information contained in the draft instructions previously released in the fall. See PwC Global Watch, October 29, 2011 for an overview of the draft guidance. Among other items, changes were made to reporting thresholds and additional guidance was issued on the reporting of foreign pensions and foreign deferred compensation plans.