The filing requirements related to foreign investments, bank accounts, assets, or transactions have increased over time, as have the penalties for noncompliance. US individuals and businesses participating in foreign activities could be subject to several different reporting obligations.
FATCA, the Foreign Account Tax Compliance Act, was designed to improve tax compliance involving foreign financial assets and offshore accounts. If you're like many people, you may not realize how many of the various filings could apply to you, your businesses, or your investments.
Our Foreign Financial Activity Reporting Requirements Table is intended as an overview of the various filings that could apply to US filers. This table is not all inclusive and should be used as a starting point for identifying potential filing obligations.
The penalties for noncompliance are listed on the table; however, there are several important notes with regard to penalties:
- For many forms, once the noncompliance has occurred, it cannot be cured. For example, filing Form 5471 late still results in noncompliance and can be subject to penalty.
- Many penalties are increased for willful disregard.
- In addition to noncompliance penalties, civil or even criminal penalties can apply.
To learn more about your obligations to report foreign financial activity to the IRS, visit the IRS foreign assets information page and the IRS FBAR (Report of Foreign Bank and Financial Accounts) information page.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.