One of the new additions to the reporting requirements for United States taxpayers with financial assets located outside the United States is a new form 8938.
It is currently being developed by IRS and is effective for taxable years beginning on or after January 1, 2011.
The majority of United States taxpayers, for the 2011 tax year, who have foreign financial assets exceeding US$50,000 in the aggregate, will need to report the fair market value of those interests on form 8938 with their 2011 tax return.
The form will be required in addition to Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts, which incidentally is filed separately to form 1040.
I’ve just written a piece for AMCHAM on the new voluntary disclosure initiative (OVDI) that is in effect until 31 August 2011, for taxpayers to disclose their previously undisclosed offshore financial assets.
IRS is rolling out what is a well-formulated, long-term strategic plan for international enforcement, first enabling taxpayers a final timeframe in which to make their disclosures before the effects of FATCA (Foreign Account Tax Compliance Act) come into force for foreign financial institutions in 2013.
IRS will be leveraging non-complying foreign financial institutions, under FATCA, to pass over details of their United States account holders – including actual account details – to the United States government.
I don’t want to be a scare-monger, but I emphatically wish to assert the fact that ignorance is not bliss and, irrespective of the geographical distance between the United States and New Zealand, United States persons who are affected by the above initiatives need to be very very concerned about complying. So, that is what I am here for, passionate about what I am doing, and trying to get the word across.
‘It’s never a problem until it is a problem’.
Read more about FATCA and OVDI.