Form 8938 Statement of Specified Foreign Financial Assets

[Pacun]

If Form 8938, “Statement of Specified Foreign Financial Assets" was not included on the last three filing, do we need to amend each return?

Clients live in the US and have filed 1040 but not form 8938.

Fbar and Fincen were filed for each year and I wonder why the IRS has not requested form 8938 with a letter.

 

[PatHack]

Yes, amend ALL years that were required to include a form 8938.  The SoL never closes if the form was not provided, and a penalty of $10k/year could apply.  I would suggest filing under the IRS Delinquent International Information Return procedures.

Here's a couple links to get you started.

https://intltax.typepad.com/intltax_blog/2014/02/statute-of-limitations-for-foreign-related-items.html

https://www.thetaxadviser.com/issues/2015/feb/tax-clinic-05.html

https://www.irs.gov/individuals/international-taxpayers/delinquent-international-information-return-submission-procedures

[Pacun]

Thank you I will check the links you sent me.

After talking to my clients, they didn't report some bank interest each year so I am going to amend and add form 8938. Amending is to correct errors on filing and since tax liability will not change just for adding 8938, do you still believe I should do it under the IRS delinquent International Information Return?

To other preparers, make sure you are adding that informational form, if your clients have accounts abroad with a lot of money.

 

[PatHack]

Yes, by filing under the IRS DIIR program there is a good chance that the penalties will be waived, even if there is some interest that wasn't reported (or in my experience from my clients, some significant income from Subpart F and PFICs). As long as your client has a reasonable cause for not filing (1st time that they were subject to it, young, not knowledgeable about intl tax reporting, and as soon as they/you found out, you immediately filed amended returns.)...and no signs that the accounts were to hide money (eg the accounts are in the Seychelle islands and they are not from there).  If you don't file under the DIIR program, it is my understanding that the IRS may not be as lenient.