Contents
- 1 Form 8938 Penalties Under 6038D (FATCA)
- 2 FATCA (26 USC 6038D)
- 3 IRS FATCA Form 8938 Instructions Penalty Summary
- 4 How to Avoid or Minimize Penalties
- 5 SFCP (Streamlined Filing Compliance Procedures)
- 6 SDOP (Streamlined Domestic Offshore Procedures)
- 7 SFOP (Streamlined Foreign Offshore Procedures)
- 8 DFSP (Delinquent FBAR Submission Procedures)
- 9 DIIRSP (Delinquent International Information Return Submission Procedures)
- 10 VDP (Voluntary Disclosure Program)
- 11 RC (Reasonable Cause)
- 12 Avoid Making a Quiet Disclosure (QD)
- 13 Current Year vs Prior Year Non-Compliance
- 14 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 15 Need Help Finding an Experienced Offshore Tax Attorney?
- 16 Golding & Golding: About Our International Tax Law Firm
Form 8938 Penalties Under 6038D (FATCA)
Form 8938 is one of the newest additions to the Internal Revenue Service’s international information reporting requirements for US Taxpayers who have foreign accounts, assets, or investments overseas. Form 8938 was introduced in 2012 on the 2011 tax return in accordance with FATCA (Foreign Account Tax Compliance Act). While the penalties for not being in compliance with Form 8938 are usually not as bad as it is for the FBAR penalties – despite the reporting overlap between Form 8938 and FBAR, in recent months the US government has increased enforcement of Form 8938 penalties and are moving from soft letters such as IRS Letter 6291, to audits and CP15 assessable penalty notices. Let’s take a brief look at the Form 8938 Penalty framework.FATCA (26 USC 6038D)
FATCA penalties in accordance with form 8938 are codified in Internal Revenue section 6038D, which provides the following:
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Penalty for failure to disclose
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(1) In general
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If any individual fails to furnish the information described in subsection (c) with respect to any taxable year at the time and in the manner described in subsection (a), such person shall pay a penalty of $10,000.
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(2) Increase in penalty
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where failure continues after notification If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the individual, such individual shall pay a penalty (in addition to the penalties under paragraph (1)) of $10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period.
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The penalty imposed under this paragraph with respect to any failure shall not exceed $50,000.
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IRS FATCA Form 8938 Instructions Penalty Summary
Referring to the form 8938 instructions provides more insight into how penalties are issued and provides the following:
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Penalties
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You may be subject to penalties if you fail to timely file a correct Form 8938 or if you have an understatement of tax relating to an undisclosed specified foreign financial asset.
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Failure-To-File Penalty
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If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000.
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Continuing Failure To File
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If you do not file a correct and complete Form 8938 within 90 days after the IRS mails you a notice of the failure to file, you may be subject to an additional penalty of $10,000 for each 30-day period (or part of a period) during which you continue to fail to file Form 8938 after the 90-day period has expired. The maximum additional penalty for a continuing failure to file Form 8938 is $50,000.
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Married Taxpayers Filing a Joint Income Tax Return
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If you are married and you and your spouse file a joint income tax return, the failure-to-file penalties apply as if you and your spouse were a single person. Your and your spouse’s liability for all penalties is joint and several.
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