A recent report from the Government Accountability Office found that the Internal Revenue Service's Form 8938 and the Report of Foreign Bank and Financial Accounts, or FBAR, are "duplicative," often asking for the same or similar information.
As the Form 8938 only began to be required in 2011, the GAO was unable to say how many filers would be affected by the duplication, but it did note that the two forms overlap in asking for information about the individual filer, foreign financial accounts, and financial institutions where accounts are held.
The report added that "a variety of tax commentators, taxpayer representatives, and individuals [have] stated that these duplicative reporting requirements have created confusion. They report being unclear about what and how information should be reported on both forms."
Form 8938 was created as part of the Foreign Account Tax Compliance Act of 2010, while the FBAR was created by the Bank Secrecy Act in 1970, but has only been seriously enforced within the last several years. Both aim to uncover income and assets held by U.S. taxpayers overseas.
The GAO recommended that the Treasury and the IRS revise the forms and their instructions to explain the extent of the duplication, and the circumstances in which filers are, or are not, expected to comply with both reporting requirements. It also recommended that, as data becomes available, the tax authorities determine how cost-effective it would be to reduce the duplication between the forms.
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