December, 2016

Set forth below is our annual overview of the most important International Information Forms for U.S. tax payers living abroad for the 2016 Tax Return Filing Season.

FinCEN Report 114 (used to be Form TD90-22.1) a/k/a FBAR – filed if the aggregate of reportable foreign financial accounts exceeds $10,000. Anyone who is a signor or beneficial owner of a foreign bank or financial account(s) with more than $10,000 must disclose these accounts to the U.S. Treasury. The law imposes a civil penalty for not disclosing an offshore account as high as the highest of 50% of the balance in the account at the time of the violation or $100,000. Criminal penalties for willful failure to file an FBAR can also apply in certain situations. These penalties can be imposed for each year. Beginning with the 2016 year, The FBAR filing date has been changed from June 30th to April 15th with a six-month automatic extension until October 15th. 

FinCen Form 105 – filed when cash in excess of $10,000 is physically removed from or brought into the USA. The form is filed with the Customs officer in charge at any port of entry or departure or with the Commissioner of Customs.

Form 926 – A U.S. person that transfers cash to a foreign corporation must report the transfer on Form 926 if (a) immediately after the transfer the person holds directly or indirectly at least 10% of the total voting power or the total value of the foreign corporation or (b) the amount of cash transferred by the person to the foreign corporation during the 12-month period ending on the date of the transfer exceeds $100,000. See Regulations section 1.6038B-1(b)(3).

Form 1042-S – filed if you made payments to foreign vendors or recipients of dividends, interest, rents, royalties, service fees, etc. to the extent that the payments are U.S. source income to the foreign recipient. Due no later than March 15, 2017, with a short 30-day extension available upon request, with copies sent to the income recipients and the IRS. You should request an extension as soon as you are aware that an extension is necessary, but no later than the due date for filing Form 1042-S. By filing Form 8809, you will get an automatic 30-day extension to file Form 1042-S. If you need more time, a second Form 8809 may be submitted before the end of the initial extended due date. See Form 8809 for more information.

Form 3520 and 3520-A – filed if you are a grantor with respect to a foreign trust, or a beneficiary receiving distributions from a foreign trust or bequests or certain gifts from a foreign entity or decedent. This form is filed separately from the tax return.

Form 5471 – filed if a U.S. taxpayer (which includes individuals, partnerships, corporations, estates and trusts) owns 10% or more of the stock of a foreign corporation or are officers, directors or shareholders in Controlled Foreign Corporation. Due with the tax return (including extensions).

Form 5472 - filed by a "reporting corporation" that has "reportable transactions" with foreign or domestic related parties. A reporting corporation is either a U.S. corporation that is a 25% foreign-owned or a foreign corporation engaged in a trade or business within the United States. A corporation is 25% foreign-owned if it has at least one direct or indirect 25% foreign shareholder at any time during the tax year. For tax years ending after December 23, 2014, a Form 5472 filed separately from a reporting corporation's income tax return will not be accepted as timely filed. Form 5472 must be filed in all cases only with the reporting corporation's income tax return for the tax year by the due date (including extensions) of the return.

Form 8621 – Generally, a U.S. person that is a direct or indirect shareholder of a PFIC must file Form 8621 for each tax year under the following five circumstances if the U.S. person: (1). Receives certain direct or indirect distributions from a PFIC; (2) Recognizes gain on a direct or indirect disposition of PFIC stock; (3) Is reporting information with respect to a Qualified Electing Fund or section 1296 mark-to-market election; (4) Is making an election reportable in Part II of the form  or (5) Is required to file an annual report pursuant to Section 1298(f).

Form 8858 – filed if you have an interest in a foreign entity which is classified as a disregarded entity for U.S. tax purposes.  Due with the tax return (including extensions).

Form 8865 – filed if you have a greater than 10% interest in a foreign entity which is classified as a partnership for U.S. tax purposes.  Due with the tax return (including extensions).

Form 8938 – filed by U.S. taxpayers who have an interest in foreign financial assets with an aggregate value exceeding $50,000. Due with the tax return (including extensions). Filing Form 8938 does not relieve you of the requirement to file the FBAR Form, if you are otherwise required to file the FBAR Form. Beginning in 2015, a Form 8938 filer who satisfies his or her Form 8938 reporting obligation by completing Part IV, Excepted Specified Foreign Financial Assets, must complete the newly added checkbox on Form 3520, 3520-A, 5471, 8621, or 8865 to indicate that the respective form is included in the number of forms reported in Part IV of Form 8938. For more information, see the instructions for Form 3520, 3520-A, 5471, 8621, or 8865. For tax years beginning after December 31, 2015, certain domestic corporations, partnerships, and trusts that are considered formed or availed of for the purpose of holding, directly or indirectly, specified foreign financial assets (specified domestic entities) must file Form 8938 if the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year.

Form BE-10- filed by any U.S. person that had a foreign affiliate, i.e., that had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise – at anytime during the U.S. person’s 2014 fiscal year, or any non-U.S. real property that produced income. If the U.S. person had no foreign affiliates during its 2014 fiscal year, it must file a BE-10 Claim for Not Filing.

The content of this article is intended to provide a general guide to the subject matters and is not a substitute for legal consultation. Specific legal advice should be sought in accordance with the particular circumstances