REPORTING 

FOREIGN ACCOUNTS 

TO IRS

Extent of Duplication 

Not Currently Known, 

but Requirements Can 

Be Clarified

Report to Congressional Requesters

February 2012

GAO-12-403

United States Government Accountability Office

GAO
Page i GAO-12-403 Reporting Foreign Accounts to IRS

Letter 1 

Appendix I Briefing Slides 5

Appendix II GAO Contact and Staff Acknowledgments 32

Abbreviations

BSA Bank Secrecy Act 

FATCA Foreign Account Tax Compliance Act

FBAR Foreign Bank Account Report

FinCen Financial Crimes Enforcement Network

IRC Internal Revenue Code

IRS Internal Revenue Service

Contents

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Page 1 GAO-12-403 Reporting Foreign Accounts to IRS

United States Government Accountability Office

Washington, DC 20548

February 28, 2012

The Honorable Max Baucus

Chairman

Committee on Finance

United States Senate

The Honorable Charles E. Grassley

Ranking Member

Committee on the Judiciary

United States Senate

This letter formally transmits the briefing we gave on February 1, 2012. 

We gave this briefing in response to your request that we assess potential 

duplicative foreign-account reporting requirements under the Foreign 

Account Tax Compliance Act (FATCA)1 for the Internal Revenue Service 

(IRS) Form 8938 and under the Bank Secrecy Act (BSA) for the Foreign 

Bank Account Report (FBAR).2

The objectives of the briefing were to (1) determine to what extent, if any, 

the reporting requirements on the FATCA Form 8938 and FBAR are 

duplicative; (2) assess the potential effects that any duplicative reporting 

requirements have on filers; and (3) identify and assess opportunities, if 

any, to cost-effectively reduce or eliminate the burden that any duplicative 

reporting creates while maintaining the usefulness of the information for 

tax-administration and law-enforcement purposes.

To address objective 1, we analyzed and compared the statutes, 

regulations, forms, and guidance governing FATCA and FBAR reporting 

requirements. We identified areas in which filers are required to report the 

same or similar information. For objective 2, we spoke with and examined 

documentation from Treasury’s Office of Tax Policy, IRS, the Financial 

Crimes Enforcement Network (FinCEN), and taxpayers and their 

 

1

FATCA was enacted in 2010 as part of the Hiring Incentives to Restore 

Employment Act, Pub. L. No. 111-147, 124 Stat. 71, title V, subtitle A (Mar. 18, 

2010).

2

Pub. L. No. 91-508, titles I and II, 84 Stat. 1114 (Oct. 26, 1970) (codified as 

amended at 12 U.S.C. § § 1829b, 1951-1959; 31 U.S.C. § § 5311-5322.

 
 

Page 2 GAO-12-403 Reporting Foreign Accounts to IRS

representatives to identify the amount of duplicative reporting they expect 

will result from the two reporting requirements. This included the 

perspectives of a range of taxpayers, tax practitioners with experience in 

reporting on the foreign financial activities of their clients, and 

organizations representing the interests of U.S. taxpayers that live in 

foreign countries.

Sufficient data were not available to estimate the number of filers that 

would have duplicative reporting requirements. For objective 3, we used 

our analysis of areas of duplication for objective 1 to determine whether 

changes could be made that would meet the following criteria:

• filer burden from duplicative reporting would be reduced or eliminated;

• usefulness of the information would be maintained for taxadministration and law-enforcement purposes—changes could not 

affect the substance of the reporting requirements including the 

deadlines for when forms must be filed; and

• implementation of the changes must be cost-effective—that is, costs 

must be less than the benefits that burden reduction or elimination 

would create.

We conducted this performance audit from September 2011 to February 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

In summary, some of the information requested on the Form 8938 and 

FBAR is duplicative, but the number of filers affected is not currently 

known. Since the Form 8938 and FBAR were developed to meet two 

different governmental needs—tax administration and law enforcement—

some filers have to report the same or similar information twice, but 

through different mechanisms and at different times. This increases the

compliance burden and adds complexity that can create confusion, 

potentially resulting in inaccurate or unnecessary reporting. Currently, the 

instructions and guidance for both forms lack any explanation of why and 

where duplication exists. Actions to reduce duplicate reporting 

requirements while maintaining the usefulness of the data for tax 

administration and law enforcement purposes would benefit filers. 

However, since the Form 8938 is a new requirement beginning after 

2011, data are not yet available to determine the number of filers subject 
 

Page 3 GAO-12-403 Reporting Foreign Accounts to IRS

to these duplicative reporting requirements. Without these data, it is not 

known whether the benefits of reduced duplication would exceed the 

costs. When filing data become available, Treasury’s Office of Tax Policy, 

IRS, and FinCEN would have the information needed to assess whether 

cost-effective steps could be taken, including allowing filers who would 

normally have to submit both forms to substitute the information reported 

on one to meet the requirements of the other. Hence, we are 

recommending that the Secretary of the Treasury direct the Office of Tax 

Policy, IRS, and FinCEN to (1) revise both the Form 8938 and FBAR 

instructions and related guidance to explain the extent to which 

duplication exists (for example, instances where account-related 

information requested on the two forms is the same or different) and the 

circumstances in which filers are, or are not, expected to comply with both 

reporting requirements; and (2) as data become available, determine 

whether the benefits of implementing a less-duplicative reporting process 

exceed the costs and if so, implement that process.

We provided a draft of this report to Treasury’s Office of Tax Policy, IRS 

and FinCEN for official comment on February 2, 2012. IRS provided a 

number of technical comments that we have incorporated where 

appropriate. In addition, during our work we met with officials at all three 

agencies, all of whom provided technical feedback. None of the agencies 

provided written comments on the draft report or recommendations. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution of this report until 30 

days from the report date. At that time, we will send copies of this report 

to the appropriate congressional committees, the Commissioner of 

Internal Revenue, the Director of FinCEN, the Secretary of the Treasury, 

the Chairman of the IRS Oversight Board, and the Director of the Office of 

Management and Budget. Copies also are available at no charge on the 

GAO website at http://www.gao.gov. 
 

Page 4 GAO-12-403 Reporting Foreign Accounts to IRS

If you or your staffs have any questions about this report, please contact 

me at (202) 512-9110 or whitej@gao.gov. Contact points for our offices of 

Congressional Relations and Public Affairs are on the last page of this 

report. GAO staff members who made major contributions to this report 

are listed in appendix II. 

James R. White

Director, Tax Issues

Strategic Issues
Appendix I: Briefing Slides

Page 5 GAO-12-403 Reporting Foreign Accounts to IRS

Appendix I: Briefing Slides

Page 1

REPORTING FOREIGN ACCOUNTS 

TO IRS: Extent of Duplication Not 

Currently Known, but Requirements 

Can Be Clarified

Briefing for Staffs of the Senate Committee on 

Finance (Majority) and Senator Grassley

February 1, 2012

For more information, contact James R. White at (202) 512-9110 or whitej@gao.gov

Based on technical comments provided by IRS, minor updates were made to these materials after the briefing date.
Appendix I: Briefing Slides

Page 6 GAO-12-403 Reporting Foreign Accounts to IRS

Page 2

• Congress, the Department of the Treasury (Treasury), the Internal Revenue Service 

(IRS), and others have expressed concerns over efforts by U.S. taxpayers to hide or 

disguise financial activities offshore. IRS does not have an estimate of the revenue loss 

due to offshore non-compliance, and estimates by others are unreliable. However, some 

international tax policy experts believe that the losses are in the billions of dollars 

annually. 

• These tax administration concerns contributed to the passage of the Foreign Account Tax 

Compliance Act (FATCA), enacted in 2010 as part of the Hiring Incentives to Restore 

Employment Act.1

- This legislation, which has several provisions, is an important development in efforts 

to combat tax evasion by U.S. persons holding investments in offshore accounts.

- One provision requires U.S. persons holding foreign financial accounts and other 

foreign assets, such as stock investments in a foreign company, to report these 

items and the related income to IRS with their tax return on the Form 8938. 2

- It is expected that IRS will use this information to increase tax compliance. 

Foreign Financial Accounts are Now Subject to Two Reporting 

Regimes for Two Purposes

1Pub. L. No. 111-147, 124 Stat. 71, title V, subtitle A (Mar. 18, 2010).

226 U.S.C. § 6038D.
Appendix I: Briefing Slides

Page 7 GAO-12-403 Reporting Foreign Accounts to IRS

Foreign Financial Accounts are Now Subject to Two Reporting 

Regimes (continued) 

• The Bank Secrecy Act of 1970 (BSA) can be used by federal, state, and local law 

enforcement agencies to combat financial crimes, including terrorist financing and tax 

evasion.3

- Under BSA, aspects of the self-reporting requirement under FATCA already exist.

- Certain taxpayers and residents are required to file a TD F 90-22.1(commonly known 

as the Foreign Bank Accounts Report or FBAR) on financial accounts. 

- Unlike FATCA, information on other foreign financial assets are not reported. 

- FBAR information is managed by the Financial Crimes Enforcement Network 

(FinCEN).

• You asked us to examine the potential duplication in foreign financial account reporting 

and any burden this creates for filers.4

Page 3

3Bank Secrecy Act, titles I and II of Pub. L No 91-508, 84 Stat. 1114 (1970), as amended, codified as 12 U.S.C. § § 1829b, 

1951-1959, and 31 U.S.C. § § 5311-5322.

4 This review only examines the self-reporting requirements under FATCA and, therefore, does not include the third party 

reporting requirements that are expected to apply to foreign financial institutions after 2012.
Appendix I: Briefing Slides

Page 8 GAO-12-403 Reporting Foreign Accounts to IRS

Page 4

1. Determine to what extent, if any, the reporting requirements on the FATCA Form 8938 

and FBAR are duplicative; 

2. Assess the potential effects that any duplicative reporting requirements have on filers; 

and

3. Identify and assess opportunities, if any, to cost effectively reduce or eliminate the 

burden that any duplicative reporting creates while maintaining the usefulness of the 

information for tax administration and law-enforcement purposes.

Objectives
Appendix I: Briefing Slides

Page 9 GAO-12-403 Reporting Foreign Accounts to IRS

Results in Brief

• Some of the information requested on the Form 8938 and FBAR is duplicative. Both 

forms ask for the same or similar information on the filer, foreign financial accounts, and 

financial institutions where accounts are held. Form 8938 asks for additional information 

not required by the FBAR, such as other foreign financial assets and income. Since the 

Form 8938 is a new requirement beginning after 2011, data are not yet available to 

determine the number of filers subject to these duplicative reporting requirements. 

• A variety of tax commentators, taxpayer representatives, and individuals stated that these 

duplicative reporting requirements have created confusion. They report being unclear 

about what and how information should be reported on both forms. Neither form provides 

filers any explanation as to why duplicative reporting is necessary, where the duplication 

occurs, or how the information being requested is the same or different.

• Without data on Form 8938 filers, the benefits and costs of taking actions to reduce 

duplicative reporting cannot be determined. When Form 8938 filing data becomes 

available, Treasury’s Office of Tax Policy, IRS, and FinCEN would have the information 

needed to assess whether cost-effective steps could be taken, including allowing filers 

who would normally have to submit both forms to substitute the information reported on 

one to meet the requirements of the other. 

Page 5
Appendix I: Briefing Slides

Page 10 GAO-12-403 Reporting Foreign Accounts to IRS

Page 6

• For objective 1, we analyzed and compared the statutes, regulations, forms and guidance 

governing FATCA and FBAR filing requirements. We did not review the FATCA 

requirements that apply to 3rd party reporting by foreign financial institutions.

• For objective 2, we spoke with and examined documentation from Treasury’s Office of Tax 

Policy, IRS, FinCEN, and taxpayers and their representatives to identify the amount of 

duplicative reporting they expect will result from the two reporting requirements. Sufficient 

data are not available to estimate the number of filers that would have duplicative 

reporting requirements. 

• For objective 3, we used our analysis of areas of duplication for objective 1 to determine 

whether changes could be made that would meet the following criteria:

• filer burden from duplicative reporting would be reduced or eliminated;

• usefulness of the information must be maintained for tax administration and lawenforcement purposes—changes could not affect the substance of the reporting 

requirements including the deadlines for when forms must be filed; and 

• implementation of the changes must be cost effective—i.e., costs must be less than 

the benefits that burden reduction or elimination would create. 

Scope and Methodology
Appendix I: Briefing Slides

Page 11 GAO-12-403 Reporting Foreign Accounts to IRS

Page 7

• Beginning in 2012, certain taxpayers with foreign financial accounts and other foreign 

financial assets above applicable thresholds must report this information with their income 

tax return on Form 8938. 

- Thresholds triggering the reporting requirement vary depending on the filer type and 

whether they reside domestically or abroad.

- Other exceptions also exist that would limit the filing requirement, such as accounts 

held in financial institutions that are considered U.S. payers (e.g., a foreign branch of 

a U.S.-based financial institution).

- Like most income tax filings, the Form 8938 is included with a timely filed tax return, 

which is generally filed by April 15, but in certain cases can be extended to as late as 

December 15 for some taxpayers that reside outside the United States.

- Filers who do not comply with this requirement could be subject to monetary 

penalties, as described in supplement 1 of this briefing.

- Like all tax information, IRS is generally prohibited from disclosing information 

provided on Form 8938 under section 6103 of the Internal Revenue Code (IRC) 

unless an exception applies.

Background
Appendix I: Briefing Slides

Page 12 GAO-12-403 Reporting Foreign Accounts to IRS

Background

• Under BSA, U.S. residents or citizens are required to keep records and file reports on 

transactions with foreign financial institutions. Administration of this requirement was 

delegated to FinCEN, which established regulations requiring those with a financial 

interest or signature authority over one or more foreign financial accounts with a total of 

more than $10,000 to annually file an FBAR with Treasury.5

• The FBAR must be filed for the calendar year by June 30th of the following year, with 

no extension allowed.

• Unlike the Form 8938, other foreign assets such as stock investments in foreign 

companies and income are not required to be reported on the FBAR.

• The FBAR, however, does require certain accounts to be reported that are not 

required on Form 8938, such as accounts that the filer does not own but has been 

designated control over the funds in the account through signature authority.

• BSA information is used by law enforcement to combat financial crimes, such as tax 

evasion, money laundering, and terrorist financing.

• Information reported under BSA is not tax information and, therefore, not protected 

from disclosure under IRC § 6103. 

• Noncompliance with FBAR can result in penalties, as shown in supplement 1.

• Figure 1 illustrates how information is reported and used under FATCA and FBAR. 

Page 8 531 C.F.R. § 1010.350.
Appendix I: Briefing Slides

Page 13 GAO-12-403 Reporting Foreign Accounts to IRS

Background

Figure 1: Illustration of Information Reporting under FATCA 

and FBAR

Page 9

FBAR filer reports on a standalone form by June 30 

reporting information on 

foreign bank accounts.

Filer is holding 

money in a 

foreign account.

Through delegated authority FBAR 

filings, along with other BSA data, 

have been processed and stored by 

IRS. This responsibility is currently 

being transferred to FinCEN 

beginning with fiscal year 2012 

filings.

Law

Enforcement

Like other BSA data, certain local, 

state, and federal law enforcement 

agencies can view FBAR filings in 

efforts to combat financial crime, 

including terrorist financing 

activities.

FATCA filer 

includes the 

Form 8938 

with the tax 

return 

reporting 

information on 

foreign bank 

accounts and 

assets owned.

Foreign financial 

institution identifies 

account holders that 

are U.S. residents 

and reports 

information on their 

accounts to IRS.

IRS plans to match the 

taxpayer information with the 

information from foreign 

financial institutions to identify 

potential noncompliance.

FATCA FBAR

Filer may have to report on 

either one or both of the 

forms based on their specific 

circumstances. See table 2 

for an example.

Foreign 

Financial 

Institution

Source: GAO analysis of Form 8938 and FBAR reporting requirements.
Appendix I: Briefing Slides

Page 14 GAO-12-403 Reporting Foreign Accounts to IRS

Page 10

• While the authority to administer BSA was delegated to FinCEN by Treasury, IRS plays an 

important role in FBAR administration. FinCEN delegated to IRS its authority to enforce 

the FBAR requirements in April of 2003. As a result, IRS currently interprets FBAR law 

when issuing administrative rulings, examining FBAR cases, and assessing FBAR 

penalties. 

• According to IRS officials, they do not regularly coordinate with FinCEN when examining 

cases or assessing penalties.

• Although FBAR enforcement authority was delegated, FinCEN maintains its authority to 

issue FBAR regulations. However, IRS has responsibility for revising the FBAR form and 

instructions. 

Background
Appendix I: Briefing Slides

Page 15 GAO-12-403 Reporting Foreign Accounts to IRS

• As shown by comparing the forms in figure 2 and the instructions in table 1, part 1 of the 

Form 8938 duplicates most of the information requested on the FBAR.

- The form language and instructions for both forms use terminology that is exactly the 

same, or duplicative, for information on the identity of the filer, the account type and 

value, and the financial institution where the account is held. 

- The forms and instructions also use terminology that is not exactly the same, but is 

similar—the forms and instructions have similar definitions. For example, the Form 

8938 asks whether the filer is a married individual filing jointly or as an “other” 

individual. The FBAR asks whether the filer is reporting as an individual. 

• Parts 2, 3, and 4 of the Form 8938 ask for information not required on the FBAR—

- Part 2 requests information on other foreign financial assets. 

- Part 3 requests information on income generated by the items.

- Part 4 asks for information on the other tax forms where foreign financial assets are 

reported that are not included on the Form 8938. 

Page 11

Form 8938 and FBAR Reporting Requirements Are Duplicative 

for Some Filers
Appendix I: Briefing Slides

Page 16 GAO-12-403 Reporting Foreign Accounts to IRS

Figure 2: Duplicative or Similar Reporting 

Requirements

Note: The entire Form 8938 can be found here: http://www.irs.gov/pub/irs-pdf/f8938.pdf and the FBAR here: http://www.fincen.gov/forms/files/f9022-1_fbar.pdf. 

Page 12
Appendix I: Briefing Slides

Page 17 GAO-12-403 Reporting Foreign Accounts to IRS

Page 13

Table 1: Areas of Duplication in Form 8938 and FBAR 

Instructions

Source: GAO analysis of the Form 8938 and FBAR instructions.

Form 8938 FBAR Duplication

Type of 

filer

Individual (U.S. citizens, resident 

aliens and some nonresident aliens) 

or any domestic entity holding, 

directly or indirectly, specified foreign 

financial assets.

(Domestic entities are not subject to 

this filing until final regulations are 

issued)

U.S. person (U.S. citizens; U.S. 

residents; entities, including but not 

limited to, corporations, partnerships, 

or limited liability companies created 

or organized in the United States or 

under laws of the United States; and 

trusts or estates formed under the 

laws of the United States).

An individual, U.S. citizen, or 

resident, in many cases will also 

be a U.S. person.

Time 

period 

covered

Taxable year. Calendar year. Taxable and calendar year, in the 

case of most individual filers, are 

the same.

Type of 

interest in 

foreign 

financial 

accounts/ 

assets

Specified interest in a foreign 

financial asset.

Financial interest in, or signature 

authority over, foreign financial 

accounts.

In many cases specified interest 

as defined in the Form 8938 

instructions will be the same as 

the financial interest under FBAR.

Currency 

conversion

Document the foreign currency 

exchange rate used and document 

the source of that rate if it is not the 

U.S. Treasury Financial Management 

Service.

Use the Treasury’s Financial 

Management Service’s conversion 

rate, unless it is not available. If it is 

not available, use another verifiable 

rate and provide the source of that 

rate.

Both forms require currency to be 

converted to U.S. dollars and 

documentation of the source of 

that rate if it is not the U.S. 

Treasury Financial Management 

Service. 
Appendix I: Briefing Slides

Page 18 GAO-12-403 Reporting Foreign Accounts to IRS

Table 1: Areas of Duplication in Form 8938 and FBAR 

Instructions (continued)

Page 14

Form 8938 FBAR Duplication

Value 

making 

foreign 

account/

asset 

reportable

Aggregate value of all assets 

exceeds:a

-$50,000 - $200,000 for US residents

- $200,000 - $600,000 for foreign 

residents.

Aggregate value of reportable 

accounts (including both financial 

interest and signature authority) 

exceeds $10,000.

Assets on the Form 8938 includes

financial accounts. Therefore, in 

many cases financial accounts that, 

in aggregate, exceed $10,000 have 

to be reported on both forms if the 

minimum Form 8938 thresholds are 

exceeded. 

Type of 

foreign 

financial 

accounts/

assets 

reportable

1. Any financial account maintained by 

a foreign financial institution. 

2. Any of the following assets which 

are not held in an account maintained 

by a financial institution—

A. Any stock or security issued by a 

person other than a U.S. person. 

B. Any financial instrument or contract 

held for investment that has an 

issuer or counterparty which is 

other than a U.S. person. 

C. Any interest in a foreign entity.

Bank account, securities account, 

or other financial account in a 

foreign country. 

Term also includes savings, 

demand, checking, deposit, time 

deposit, or other account 

maintained with a financial 

institution or other person engaged 

in the business of a financial 

institution.

Bank, securities, and other financial 

accounts as defined under FBAR, 

in many cases, would include 

financial accounts maintained by a 

foreign financial institution as 

defined for the Form 8938.

a. Different thresholds apply based on whether a filer files a joint income tax return or resides outside the United States., and whether asset 

values exceed a certain threshold at any point during the year. If the end of year aggregate value filing threshold is not met, a higher 

threshold applies during the year .

Source: GAO analysis of the Form 8938 and FBAR instructions.

.
Appendix I: Briefing Slides

Page 19 GAO-12-403 Reporting Foreign Accounts to IRS

Exceptions to Form 8938 Reporting Requirements Reduce 

Duplicative Reporting

Page 15

• Treasury’s Office of Tax Policy and IRS have worked to reduce the number of taxpayers 

that have to file the Form 8938 by creating several exceptions that do not exist in the 

FBAR requirements. These exceptions include:

- Filers that do not have a tax filing obligation;

- Filers that have already reported the foreign account information on another 

specified tax form;

- Accounts held in a foreign financial institution deemed a U.S. payer (e.g., a foreign 

branch or foreign subsidiary of a U.S. financial institution); and

- Accounts held by a resident in a U.S. possession, where the financial institution is 

also in that U.S. possession (American Samoa, Guam, the Northern Mariana 

Islands, Puerto Rico, or the U.S. Virgin Islands).
Appendix I: Briefing Slides

Page 20 GAO-12-403 Reporting Foreign Accounts to IRS

Table 2: Dollar Values Are Another Factor in Determining 

Duplicate Reporting (assuming no exceptions)

Page 16

Filer Situation (Individual U.S. Resident)a Filing Requirementsb

Foreign account values are greater than $50,000 and:

No other foreign financial assets Form 8938 part 1 and FBAR

Other foreign financial assets

Form 8938 part 1 and 2 and 

FBAR

Foreign account value are between $10,000 and $50,000 and:

No other foreign financial assets FBAR

Account and other foreign financial asset values are below $50,000 FBAR

Account and other foreign financial asset values are above $50,000

Form 8938 part 1 and 2 and 

FBAR

Foreign account values are below $10,000 and:

No other foreign financial assets No reporting

Account and other foreign financial asset values are below $10,000 No reporting

Foreign account and other foreign financial asset values are 

between $10,000 and $50,000 No reporting

Account and other foreign financial asset values are above $50,000 Form 8938 part 1 and 2

Foreign account values are zero and:

Other foreign financial asset values are below $50,000 No reporting

Other foreign financial asset values are above $50,000 Form 8938 part 2

Source: GAO analysis of Form 8938 and FBAR requirements.

bIn most cases where filers have to fill out 

the Form 8938 parts 1 or 2, they will also 

have to report income in part 3. In some 

cases filers will not fill out part 2 if they 

have already reported to IRS elsewhere. 

Instead, they would indicate this in part 4.

aFilers in other situations, such as 

individuals that are married filing jointly or 

who reside in a foreign country ,would be 

subject to different filing thresholds on the 

Form 8938. 

Note: Bold text indicates situations in which the filer would have duplicative reporting requirements. 
Appendix I: Briefing Slides

Page 21 GAO-12-403 Reporting Foreign Accounts to IRS

Page 17

IRS is Uncertain About How Many Filers Will Be Subject to 

Duplicative Filing Requirements

• Since the Form 8938 is a new requirement beginning in the 2012 filing year, IRS does not 

have data on how many Form 8938 filers will also need to file an FBAR. 

• Past FBAR filings cannot be used to produce a valid estimate of the number of filers 

subject to duplicate reporting requirements because several pieces of data are not 

available, such as—

- Data on the other foreign financial assets of FBAR filers. As shown in table 2, there 

are FBAR filers with financial accounts that fall short of the Form 8938 reporting 

threshold but who may also have other foreign financial assets that would result in 

the filer exceeding that threshold; and

- Data on some of the exceptions to the Form 8938 reporting requirement. For 

example, data is not available on how many FBAR filers reported foreign financial 

account information in another part of the tax return instead of the Form 8938. 
Appendix I: Briefing Slides

Page 22 GAO-12-403 Reporting Foreign Accounts to IRS

Some Filers and Their Representatives Expressed Concerns 

Over the Impact of Duplicative Reporting Requirements

• We talked to several tax professionals and reviewed articles in the tax press. In addition, 

we reviewed comments received by IRS on a proposed draft of the Form 8938.6 The 

sources of those comments included three representatives of organizations whose 

members are overseas taxpayers, four tax practitioners representing their clients, 12 

individual taxpayers, and 8 who were unknown. Although not representative of the 

population of filers, we identified several common concerns over duplication, including:

- additional time and cost burden to obtain and maintain records and file both forms,

- confusion over similarities and differences in terminology and the implications for 

what and how information should be reported,

- concern over exposure to two different penalty regimes for essentially the same 

information (details on the penalty regimes are in supplement 1), and

- different filing deadlines (i.e. June 30th for FBAR and between April 15th and 

December 15th, depending on extensions, for FATCA).

• Some commentators noted the obvious overlap in requirements, as evidenced by their 

use of terms like the “Tax FBAR” or “Super FBAR” when referring to the Form 8938.

Page 18

6Comments were received prior to the issuance of the IRC Section 6038D regulations and the final version of Form 

8938 and the accompanying instructions.
Appendix I: Briefing Slides

Page 23 GAO-12-403 Reporting Foreign Accounts to IRS

• Selected quotes from written comments on the draft Form 8938:

- “...if the FBAR is not sufficient for the IRS and the Department of Treasury (sic), and this 

form is used as a replacement, that is fine, but don't keep both, this is not right and not 

fair.”

- “(Part 1) is all information submitted to (T)reasury on (the FBAR), does this mean we won't 

have to file this form anymore? As doing it twice is not an appetizing thought....”

- “...I wonder if the information in (Part 1) is not redundant to what we already have to 

report. It may not be all that good an idea to require essentially duplicative reporting.”

- “...and it is in addition to (the FBAR), so not only is there a duplication of effort, but it is not 

clear how much overlap there is or if the forms are looking for different things.”

- “The information is being reported to the Secretary of the Treasury on two different forms, 

then one or the other is unnecessary duplication of effort and one or the other should be 

abolished immediately.”

Page 19

Some Filers and Their Representatives Expressed Concerns 

Over the Impact of Overlapping Reporting Requirements 

(continued)
Appendix I: Briefing Slides

Page 24 GAO-12-403 Reporting Foreign Accounts to IRS

Duplicative Reporting Requirements Resulted From Two Parts 

of Treasury Developing Separate Forms, One for Tax 

Administration and the Other For Law-enforcement Purposes

• Treasury has duplicative foreign account reporting requirements because the laws that 

established them were passed at different times, under different parts of the U.S. Code, 

and to achieve different goals.

• The Form 8938 requirement became law in 2010, whereas requirements for the 

FBAR were established in 1970.

• The Form 8938 was established in the IRC which IRS administers, whereas FBAR 

requirements were established under BSA which FinCEN administers.

• Use of the Form 8938 is generally limited to tax compliance, whereas FBAR 

information is used to combat financial crimes, which can include tax evasion, money 

laundering and terrorist financing.

• Reporting the same information on two different forms creates additional costs to the 

government to process the same or similar information twice and enforce reporting 

compliance with both requirements. The extent of these costs is not known. Enforcement 

costs would vary according to the level of effort employed by IRS.

Page 20
Appendix I: Briefing Slides

Page 25 GAO-12-403 Reporting Foreign Accounts to IRS

Although the Burden of Duplicative Reporting is Not Yet Fully 

Known, Actions Could be Taken to Reduce Confusion

• Treasury’s Office of Tax Policy and IRS have worked to reduce the number of taxpayers 

that have to file the Form 8938. However, actions have not been taken to reduce or 

eliminate the burden on filers that are subject to both requirements, in part, because data 

are not yet available to determine how many of these filers exist. 

• Some actions could be taken before this data are available. Currently, neither the Form 

8938 nor FBAR instructions or related guidance provides filers an explanation as to why 

duplicative reporting is necessary, where duplication occurs, or how the information being 

requested is the same or different. 

- As noted earlier, commentators pointed to these issues as a source of confusion.

- Clarifying these issues in the instructions could reduce confusion and, therefore, 

compliance burden because filers could better understand the circumstances in which 

they are, or are not, expected to report the same information twice. 

- Clarifying these instructions would not impose costs on filers and would not require 

changes to the requirements or the forms.

- Clarifying instructions, however, would not reduce the number of filers subject to 

duplicative reporting. 

Page 21
Appendix I: Briefing Slides

Page 26 GAO-12-403 Reporting Foreign Accounts to IRS

Options Exist for Reducing Duplicative Reporting While 

Maintaining Usefulness, But Costs and Benefits are Not Known

• We were able to identify two options that have potential to reduce duplicative reporting. 

These options would allow filers who would normally have to submit both forms to 

substitute the information reported on one to meet the requirements of the other. 

Specifically: 

1. Allow eligible filers to substitute the FBAR for part 1 of Form 8938 as the 

information source on foreign financial accounts; and/or 

2. Allow eligible filers to substitute part 1 of Form 8938 as the information source on 

foreign financial accounts for the FBAR. 

• Both options would allow eligible filers to choose to allow the information they report on 

one form or the other to meet both sets of reporting requirements without any changes to 

those requirements. Both options would:

- reduce overall burden since eligible filers would only have to report foreign account 

information in one place; and 

- maintain the usefulness of the information for tax administration and law-enforcement 

purposes since the information reported would have to meet both sets of 

requirements, including filing deadlines. 

Page 22
Appendix I: Briefing Slides

Page 27 GAO-12-403 Reporting Foreign Accounts to IRS

Both Options to Reduce Duplicative Reporting Have 

Implementation Costs, But They Are Unknown

• Either option would require changes in policies, processes, and systems to allow information 

reported on one form to be substituted for information on the other. Examples—

• The system for sharing data between IRS and FinCEN would require modification.

• Filers would need to be educated about any changes. 

• To maintain the usefulness of the information reported for tax administration and lawenforcement purposes, options exist that could satisfy standing statutory and regulatory 

requirements but implementation details would have to be worked out and agreed to by IRS 

and FinCEN. These standing requirements, which differ for FBAR and FATCA, include: 

- filing due dates;

- statutes of limitations;

- penalties for missing filing requirements; and 

- taxpayer data and other privacy protections.

• Resolving these issues would have costs, many of them would be one time transition costs. 

IRS officials said these issues could be resolved, but were not sure of the costs. 

Page 23
Appendix I: Briefing Slides

Page 28 GAO-12-403 Reporting Foreign Accounts to IRS

Whether Benefits of Either Option Would Outweigh 

Implementation Costs is Also Unknown

• Without estimated or actual data on the number of filers subject to duplicate filing 

requirements, the actual benefit that filers would receive from eliminating that requirement 

is unknown. This data would be needed to estimate the total costs in time and expense 

filers experience from having to comply with duplicative reporting requirements, and 

therefore, the benefits filers would receive from eliminating this duplication.

• Without agency-based analyses, there is no information on what the costs would be to 

implement new policies, procedures, processes, and systems for allowing information 

reported on one form to be substituted for and integrated with information reported on 

another.

Page 24
Appendix I: Briefing Slides

Page 29 GAO-12-403 Reporting Foreign Accounts to IRS

• The Form 8938 and FBAR were developed to meet two different governmental needs—

tax administration and law enforcement. As a result, some filers have to report the same 

or similar information twice, but through different mechanisms and at different times. 

• This increases compliance burden and adds complexity that can create confusion, 

potentially resulting in inaccurate or unnecessary reporting. Currently, the instructions and 

guidance for both forms lack any explanation of why and where duplication exists.

• Actions to reduce duplicate reporting requirements while maintaining their usefulness for 

tax administration and law-enforcement purposes would benefit filers. However, until Form 

8938 filing data is available, it is not known whether these benefits would exceed the costs 

of implementation. 

Page 25

Conclusions
Appendix I: Briefing Slides

Page 30 GAO-12-403 Reporting Foreign Accounts to IRS

Page 26

Recommendation for Executive Action

• We recommend that the Secretary of the Treasury direct the Office of Tax Policy, IRS, 

and FinCEN to—

1. Revise both the Form 8938 and FBAR instructions and related guidance to explain 

the extent to which duplication exists (for example, instances where financial 

account-related information requested on the two forms is the same or different) and 

the circumstances in which filers are, or are not, expected to comply with both 

reporting requirements, and 

2. As data becomes available, determine whether the benefits of implementing a less 

duplicative reporting process exceed the costs and if so, implement that process.
Appendix I: Briefing Slides

Page 31 GAO-12-403 Reporting Foreign Accounts to IRS

Supplement 1

Table 3: Comparison of Form 8938 and FATCA Penalty 

Regimes

Page 27

Form 8938 FBAR

Failure to File $10,000 Maximum of $10,000

Continuing Failure to 

File

After 90 days from notice, an additional $10,000 

for each 30 day period. Maximum additional 

penalty is $50,000

not applicable

Reasonable cause 

exception

Yes Yes

Accuracy-related 

penalty

40 percent of the underpaid tax amount not applicable.

Willful failure to file or 

willfully causing 

another to fail to file

not applicable $100,000 or 50% of the account balance, 

whichever is greater

Fraud 75 percent of the underpaid tax amount 

attributable to fraud

not applicable

Criminal Penalties Yes Yes

Statute of Limitations 3 years after the date of filing or from when the 

information is reported to IRS and 6 years after 

the return was filed if the taxpayer fails to report 

over $5,000 in gross income from foreign assets

6 years to assess penalty and 2 additional 

years to collect after assessment

Source: GAO analysis of Form 8938 and FBAR instructions.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 32 GAO-12-403 Reporting Foreign Accounts to IRS

James R. White, (202) 512-9110, whitej@gao.gov

In addition to the contact named above, Tom Short, Assistant Director; 

Amy Bowser; George Guttman; Brian James; John Mingus; and Cynthia 

Saunders made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(450945)
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