Mobility - June 2020 - 21

corporations-who have signature authority over foreign financial accounts-must file reports. Worldwide
ERC® members should make sure that relevant
employees are aware of these obligations.

FORM 8938

Under U.S. Code Section 6038D, a taxpayer with
foreign accounts aggregating more than $50,000
at any time during the year must report them on
a separate statement filed with the tax return and
include the name of the institution, the account
number, and the aggregate amounts. The relevant
regulations make clear that the rules concerning
filing of Form 8938 are separate and distinct from
the obligation to file the FBAR.
Under IRS regulations, the Form 8938 is required if
assets exceed $50,000 at the end of the year or $75,000
at any time during the year.
A special rule shields many expats from the
requirement to report. If a U.S. individual is a resident
of a foreign country for purposes of Section 911 (the
foreign earned income exclusion), then that individual does not have to file Form 8938 unless foreign
assets exceed $200,000 at the end of the taxable year
or $300,000 at any time during the taxable year. If the
individual is married and files a joint return, these
numbers are increased to $400,000 and $600,000.
Consequently, most overseas employees will not be
subject to this report.
While the FBAR must be filed by persons who
have signature authority but no beneficial interest in
foreign accounts, that rule does not apply to reporting
under Section 6038D.
Like the failure to file the FBAR, the penalties for
failing to file the Form 8938 are severe. If a taxpayer
does not file Form 8938 and does not have reasonable
cause for the failure, there is a $10,000 failure-to-file
penalty. If the failure to file continues for 90 days after
the taxpayer is notified of the failure by the IRS, there
is an additional $10,000 penalty for every 30 days
in which the failure continues, up to a maximum of
$50,000. There also is a 40% penalty on any understatement of tax attributable to assets not disclosed
on a Form 8938, and the statute of limitations for the
year is extended until the taxpayer does provide the
required information.

Worldwide ERC®
members with
employees stationed
abroad must make
sure these employees
are aware of
and understand
their reporting
obligations.
CONCLUSION

Worldwide ERC® members with employees stationed abroad must make sure these employees are
aware of and understand their reporting obligations. With Foreign Account Tax Compliance Act
(FATCA) reporting, under which foreign financial
institutions must report accounts held by U.S.
citizens to the U.S., the IRS has enhanced ability to
match reports from foreign financial institutions
to individuals and their returns-and determine
whether required reporting has taken place. The
cost of noncompliance can be severe. M
Peter K. Scott is Worldwide ERC® tax counsel and
principal of Peter K. Scott Associates. He can be reached
at +1 910 579 5332 or pscott@worldwideerc.org.

worldwideerc.org | Mobility 21


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Mobility - June 2020

Table of Contents for the Digital Edition of Mobility - June 2020

Mobility - June 2020 - Cover1
Mobility - June 2020 - Cover2
Mobility - June 2020 - 1
Mobility - June 2020 - 2
Mobility - June 2020 - 3
Mobility - June 2020 - 4
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Mobility - June 2020 - Cover3
Mobility - June 2020 - Cover4
https://www.nxtbook.com/ygsreprints/WERC/mobility-june-2021
https://www.nxtbook.com/ygsreprints/WERC/mobility-may-2021
https://www.nxtbook.com/ygsreprints/WERC/mobility-april-2021
https://www.nxtbook.com/ygsreprints/WERC/mobility-march-2021
https://www.nxtbook.com/ygsreprints/WERC/mobility-february-2021
https://www.nxtbook.com/ygsreprints/WERC/mobility_122020
https://www.nxtbook.com/ygsreprints/WERC/mobility_112020
https://www.nxtbook.com/ygsreprints/WERC/mobility_102020
https://www.nxtbook.com/ygsreprints/WERC/mobility_092020
https://www.nxtbook.com/ygsreprints/WERC/mobility_082020
https://www.nxtbook.com/ygsreprints/WERC/mobility_072020
https://www.nxtbook.com/ygsreprints/WERC/mobility_062020
https://www.nxtbook.com/ygsreprints/WERC/mobility_052020
https://www.nxtbook.com/ygsreprints/WERC/mobility_042020
https://www.nxtbook.com/ygsreprints/WERC/mobility_032020
https://www.nxtbook.com/ygsreprints/WERC/mobility_022020
https://www.nxtbook.com/ygsreprints/WERC/mobility_012020
https://www.nxtbook.com/ygsreprints/WERC/mobility_122019
https://www.nxtbook.com/ygsreprints/WERC/mobility_112019
https://www.nxtbook.com/ygsreprints/WERC/mobility_102019
https://www.nxtbook.com/ygsreprints/WERC/mobility_092019
https://www.nxtbook.com/ygsreprints/WERC/mobility_082019
https://www.nxtbook.com/ygsreprints/WERC/mobility_072019
https://www.nxtbook.com/ygsreprints/WERC/mobility_062019
https://www.nxtbook.com/ygsreprints/WERC/mobility_052019
https://www.nxtbook.com/ygsreprints/WERC/mobility_042019
https://www.nxtbook.com/ygsreprints/WERC/mobility_032019
https://www.nxtbook.com/ygsreprints/WERC/mobility_022019
https://www.nxtbook.com/ygsreprints/WERC/mobility_012019
https://www.nxtbookmedia.com