Instructions For Form 8938 - 2016 (Page 9 of 14) in pdf

trust under Regulations section 1.671-5,

FailureToFile Penalty

AccuracyRelated Penalty

you do not have to report any specified

If you are required to file Form 8938 but

If you underpay your tax as a result of a

foreign financial asset held by the part of

do not file a complete and correct Form

transaction involving an undisclosed

the trust you are considered to own.

8938 by the due date (including

specified foreign financial asset, you

Domestic bankruptcy trusts. If you

extensions), you may be subject to a

may have to pay a penalty equal to 40

are considered the owner under the

penalty of $10,000.

percent of that underpayment.

grantor trust rules of any part of a

Examples. Examples of

Continuing failure to file. If you do

domestic liquidating trust under

underpayments due to transactions

not file a correct and complete Form

Regulations section 301.7701-4(d) that

involving an undisclosed specified

8938 within 90 days after the IRS mails

is created under chapter 7 or chapter 11

foreign financial asset include the

you a notice of the failure to file, you

of the Bankruptcy Code, you do not

following.

may be subject to an additional penalty

have to report any specified foreign

You do not report ownership of

of $10,000 for each 30-day period (or

financial asset held by the part of the

shares in a foreign corporation on Form

part of a period) during which you

trust you are considered to own.

8938 and you received taxable

continue to fail to file Form 8938 after

distributions from the company that you

Bona fide resident of a U.S. posses

the 90-day period has expired. The

did not report on your income tax return.

sion. If you are a bona fide resident of

maximum additional penalty for a

You do not report ownership of

a U.S. possession (American Samoa,

continuing failure to file Form 8938 is

shares in a foreign company on Form

Guam, the Northern Mariana Islands,

$50,000.

8938 and you sold the shares in the

Puerto Rico, or the U.S. Virgin Islands),

Married taxpayers filing a joint in

company for a gain and did not report

do not include the value of the following

come tax return. If you are married

the gain on your income tax return.

assets to determine if you satisfy the

and you and your spouse file a joint

You do not report a foreign pension

reporting threshold that applies to you. If

income tax return, the failure to file

on Form 8938 and you received a

you are required to file Form 8938, you

penalties apply as if you and your

taxable distribution from the pension

do not have to report the following

spouse were a single person. You and

plan that you did not report on your

specified foreign financial assets on

your spouse’s liability for all penalties is

income tax return.

Form 8938.

joint and several.

A financial account maintained by a

Presumption of maximum value. If

financial institution organized under the

Fraud

the IRS determines that you have an

laws of the U.S. possession of which

If you underpay your tax due to fraud,

interest in one or more specified foreign

you are a bona fide resident.

you must pay a penalty of 75 percent of

financial assets and asks you for

A financial account maintained by a

the underpayment due to fraud.

information about the value of any

branch of a financial institution not

asset, but you do not provide enough

organized under the laws of the U.S.

Criminal Penalties

possession of which you are a bona fide

information for the IRS to determine the

resident, if the branch is subject to the

value of the asset, you are presumed to

In addition to the penalties already

same tax and information reporting

own specified foreign financial assets

discussed, if you fail to file Form 8938,

requirements that apply to a financial

with a value of more than the reporting

fail to report an asset, or have an

institution organized under the laws of

threshold that applies to you. See

underpayment of tax, you may be

the U.S. possession of which you are a

Determining the Reporting Threshold

subject to criminal penalties.

That Applies to You, earlier. In such

bona fide resident.

Statute of Limitations

case you are subject to the failure-to-file

Stock or securities issued by an entity

penalties if you do not file Form 8938.

organized under the laws of the U.S.

If you fail to file Form 8938 or fail to

possession of which you are a bona fide

report a specified foreign financial asset

Reasonable cause exception. No

resident.

that you are required to report, the

penalty will be imposed if you fail to file

An interest in an entity organized

statute of limitations for the tax year may

Form 8938 or to disclose one or more

under the laws of the U.S. possession of

remain open for all or a part of your

specified foreign financial assets on

which you are a bona fide resident.

income tax return until 3 years after the

Form 8938 and the failure is due to

A financial instrument or contract held

date on which you file Form 8938.

reasonable cause and not to willful

for investment, provided each issuer or

neglect. You must affirmatively show the

Extended statute of limitations for

counterparty that is not a U.S. person is

facts that support a reasonable cause

failure to include income. If you do

either an entity organized under the

claim.

not include in your gross income an

laws of the U.S. possession of which

amount relating to one or more specified

The determination of whether a

you are a bona fide resident or a bona

foreign financial assets, and the amount

failure to disclose a specified foreign

fide resident of the U.S. possession of

you omit is more than $5,000, any tax

financial asset on Form 8938 was due to

which you are a bona fide resident.

you owe for the tax year can be

reasonable cause and not due to willful

Penalties

assessed at any time within 6 years

neglect will be determined on a

after you filed your return.

case-by-base basis, taking into account

You may be subject to penalties if you

all pertinent facts and circumstances.

For this purpose, specified foreign

fail to timely file a correct Form 8938 or

financial assets include any specified

if you have an understatement of tax

Effect of foreign jurisdiction laws.

foreign financial assets in which you

relating to an undisclosed specified

The fact that a foreign jurisdiction would

have an interest without regard to the

foreign financial asset.

impose a civil or criminal penalty on you

reporting threshold that applies to you

if you disclose the required information

and regardless of any exception from

is not reasonable cause.

reporting a specified foreign financial

asset on Form 8938.

Instructions for Form 8938 (2016)

Instructions For Form 8938 - 2016 Page 9

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