More Foreign Financial Account Reporting
As anticipated in our March 12, 2010 Tax Alert ("Looking for FBARs in All the Wrong Places?"), some pertinent legislative proposals were just enacted as part of the HIRE (Hiring Incentives to Restore Employment) Act, signed by President Obama on March 18th. The HIRE Act contains a new set of reporting rules, and related penalties, with respect to certain foreign financial assets. The rules go into effect in 2011.
The HIRE Act provision requires an individual "holding any interest" in a specified foreign financial asset to attach pertinent information to his or her tax return if the aggregate value of such assets exceeds $50,000. Specified foreign financial assets are:
- Financial accounts maintained by a foreign financial institution
- The following assets not held in an account maintained by a financial institution:
- Any stock or security issued by a foreign issuer
- Any financial instrument or contract held for investment with a foreign issuer
- Any interest in a foreign entity
The new requirements are broader in some respects (e.g., types of assets) than the FBAR rules described in our recent Tax Alert, and narrower in others (e.g., dollar threshold, individuals only), and the reporting is on the individual tax return, not an FBAR form. The scope of the term "holding any interest" remains to be seen. Regulations may be issued to avoid duplicative disclosures.
The contours of these important new requirements will unfold in coming months. For the moment, we just wanted to alert you to their existence. The HIRE Act also contains other new provisions, e.g., regarding income tax withholding by financial intermediaries, designed to ferret out offshore non-compliance.
For more information please contact the following attorneys:
Scott D. Michel at 202-862-5030 or firstname.lastname@example.org
Patricia Gimbel Lewis at 202-862-5017 or email@example.com
Richard W. Skillman at 202-862-5034 or firstname.lastname@example.org
James E. Salles at 202-862-5012 or email@example.com
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