What are the rules regarding Foreign Bank Accounts?
Here are the new the "New Rules regarding Foreign Bank Accounts."
1. Does the taxpayer have a foreign bank account? Was the balance in the account(s) greater than $10,000 total? If the answer is yes to both, then the taxpayer would need to file what's commonly referred to as an "FBAR," a foreign bank account reporting form.
The new name is FinCEN Report 114, FinCEN being an acronym for Financial Crimes Enforcement Network.
Failure to meet file to properly file this Tax Form would result in potentially severe penalties.
2. If a taxpayer maintains very high balances in their respective foreign bank accounts, they would be required to file IRS Form 8938, Statement of Specified Foreign Financial Assets.
3. If the taxpayer meets certain thresholds of ownership in any foreign corporations or partnerships, or if they are the beneficiary of a foreign trust, the taxpayer should be aware of the complex reporting requirements in those instances.
The pertinent forms are:
a)Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
b)Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.
c)Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.
All of these Tax Forms are available at the IRS website.