GAO reports confusion over foreign account reporting under FATCA and FBAR

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GAO reports confusion over foreign account reporting under FATCA and FBAR Powered By Docstoc
					GAO reports confusion over foreign account reporting under
FATCA and FBAR

 GAO reports confusion over foreign account reporting under FATCA and FBAR

The U.S. government has been tightening its scrutiny of taxpayers who use foreign financial
accounts to circumvent U.S. tax law. Last year the Treasury department imposed new
requirements on taxpayers with financial interests in or signature authority over a foreign
financial account, including a bank account, brokerage account, mutual fund, trust, or other type
of foreign financial account. Many taxpayers must now report information related to the foreign
financial account to the IRS on a yearly basis by filing the “FBAR.”

Form 8939 v. FBAR: duplicated information
The Government Accountability Office (GAO) recently reported that duplication of some of the
information requested on Form 8938, Statement of Specified Foreign Financial Assets, and
Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), was creating
confusion among taxpayers. Even though Form 8938 and the FBAR were developed to meet
two different governmental needs (tax administration and law enforcement), FATCA reporting
on Form 8938 may be duplicative in some instances of reporting on the FBAR

The IRS noted that individuals must file each form for which they meet the relevant reporting
threshold. But for the sake of taxpayer convenience, the IRS recently posted a comparison chart
of Form 8938 and FBAR requirements on its website www.irs.gov.

The chart addresses many of the important differences between the two forms including:

--Who is required to file each form?
--What U.S. territories are subject to the reporting requirements?
--What is the reporting threshold?
--When do you have an interest in an account or asset?
--What is reported?
--When is the form due?

The FBAR is required because foreign financial institutions may not be subject to the same
reporting requirements as domestic financial institutions. The U.S. government can use the
information it gleans from FBARs to identify or trace funds used for illicit purposes or to identify
unreported income maintained or generated abroad.

Contact Doeren Mayhew, a Michigan Tax and Accounting firm located in Michigan, for more
information.

				
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Description: The U.S. government has been tightening its scrutiny of taxpayers who use foreign financial accounts to circumvent U.S. tax law.