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IRS Delays Foreign Financial Asset Reporting

by Mike Godfrey,, Washington

28 January 2013

The United States Internal Revenue Service (IRS) has disclosed that, in a Notice to be published on February 19, 2013, it will provide guidance to certain taxpayers concerning the first taxable year they must report specified foreign financial assets to comply with the provisions of the Foreign Account Tax Compliance Act (FATCA).

It was originally proposed that, starting in tax year 2011, a Statement of Specified Foreign Financial Assets would need to be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts.

With the FATCA filing requirement being enacted in 2010 to improve tax compliance by US taxpayers with offshore financial accounts, individuals who may have to file will be US citizens and residents, non-residents who elect to file a joint income tax return, and certain non-residents who live in a US territory.

The statement will be required when the total value of specified foreign accounts and/or assets exceeds certain thresholds. The FATCA requires any taxpayer holding more than USD50,000 in reportable foreign assets to report information, but other thresholds can be established for other situations, for example a married couple living in the US and filing a joint tax return.

However, the new IRS Notice has now informed taxpayers that the first taxable year they will be required to report their interest in foreign financial assets has been delayed.

The IRS and the Treasury Department intend that, when final regulations are issued, those final regulations will modify the effective/applicability date of the FATCA reporting provision so that it will not be required earlier than taxable years beginning after December 31, 2012.

TAGS: individuals | compliance | tax | tax compliance | interest | law | banking | Internal Revenue Service (IRS) | tax authority | offshore | legislation | offshore banking | United States | regulation | individual income tax | Compliance

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