Officials from the Internal Revenue Service are sending the message that the recent regulations for reporting on foreign account holdings are aimed at making the requirements easier to manage.
Last month, the IRS and the Treasury Department issued a set of proposed regulations for implementing the Foreign Account Tax Compliance Act (see IRS and Treasury Propose New FATCA Rules). FATCA was included as part of the HIRE Act of 2010 and imposes controversial new requirements on foreign financial institutions to report on the holdings of U.S. citizens and those holding dual citizenship.
“We looked at it from the standpoint of how we make it administrable and with the least taxpayer burden,” said Joseph Henderson, an attorney and advisor with the IRS’s International Branch, during an AICPA webcast on Tuesday. “We issued a draft Form 8938 that reflected a lot of our thinking to date. We received comments, and a lot of the taxpayer burden reduction came in response to the introduction of the forms. We really were looking at the legislation from the goal of a statute that was administrable. We aimed to collect information with as little taxpayer burden as possible.” He noted that while the formal comment period ended Monday on the temporary and proposed regulations, commenters can still submit their suggestions.
“If you’re finishing up your comments, please hurry up and send them in,” he said. “We’re always interested in hearing what people have to say. We will look through them even after the deadline.”
The IRS is sure to hear a lot more from the public about the hurdles they face in complying with the regulations.
Joe Calianno, international technical tax practice leader and partner in the National Tax Office of Grant Thornton LLP, noted that it is important to file the Form 8938 if the total value of all the specified foreign financial assets in which a person has an interest is more than the appropriate level, or else the taxpayer can incur penalties. He noted that the statute of limitations has also been expanded. “The key exception is if you do not have to file an income tax return, you don’t have to file Form 8938,” he added.