Source: https://www.goldinglawyers.com/reporting-offshore-assets-irs-voluntary-disclosure-golding-golding/
Timestamp: 2019-04-19 02:59:13+00:00

Document:
2 10 Common Types of Unreported Foreign Financial Information.
If you are considered a U.S. person (which generally means a US Citizen, Legal Permanent Resident/Green-Card Holder or foreign national subject to US tax under the substantial presence test) and you meet the threshold requirement for having to file a US tax return.
But what if you only earned minimal income and do not have to file a Tax Return?
While the amount of income you earn for the year will usually dictate if you must file a tax return for the year, you may still be required to file and report your foreign accounts, investments and/or assets – even if you are not required to file a tax return.
Many of the required forms must be reported whether or not you meet the threshold requirement for having to file a tax return for a particular year.
With that said, one of the most basic (and important!) questions we receive is what types of foreign information must be reported?
At Golding & Golding, we focus our entire practice on Offshore Voluntary Disclosure. We work with taxpayers in nearly 50 different countries regarding reporting and disclosing foreign account information, foreign money and foreign investments.
While there are numerous different forms that may have to be filed, such as an FBAR, FATCA Form 8938, 3520, 3520-A, 5471, 5471, 8621, 8865 – the purpose of this brief article is to provide you a summary of the types of information that must be reported – and not the actual forms to be used.
*Whether or not the information must be reported will depend on the value and structure of ownership.
10 Common Types of Unreported Foreign Financial Information.
Foreign Bank Accounts: If you have a bank account in a foreign country, chances are your required to report this account to the United States if you meet the threshold requirement for reporting. The minimum threshold requirement for reporting is more than $10,000 on any day of the year in an account, joint account, or account in which you only maintain signature authority – the money does need to belong to you.
Foreign Investment Accounts: If you have a foreign investment account which you may use to purchase/hold/own stocks, trading, or other investments — the account information will generally be reported to the United States.
Foreign Life Insurance: If you have a foreign life insurance policy (aka a Life Insurance Policy issued in another country), and the insurance policy either has a surrender value and/or investment component to it, it may have to be reported to the United States.
Foreign Retirement Funds: Generally, if a person has a foreign retirement fund such as a superannuation fund, PPF, CPF, EPF, etc. the account information associated with the form retirement must be reported to the United States – whether or not the retirement was funded before you came a US person or not, and whether or not you have received any distributions from the retirement at this time.
Foreign Stock Ownership: If you own foreign stock or securities directly, you may still have a reporting requirement to the United States. While direct ownership of stocks and bonds usually does not need to be included on the FBAR, it still needs to be included at a minimum on the FATCA form 8938 if certain threshold requirements are met.
Foreign Business Ownership: If you have ownership or interest in a foreign business and meet the threshold requirements (usually at least 10% ownership), then you are required to report this ownership to the United States. Even if you are not required to file a tax return for the year, you still may have to forms detailing your ownership in the foreign business.
Foreign Passive Business Ownership: If you have ownership in a foreign business that is a passive business and may only be used for investments, or primarily for investments — more likely than not you have to report this information to the IRS. In fact, the reporting requirements for foreign passive businesses are so strict that even fractional ownership may require reporting.
Non-Distributed Earnings: If you have investments abroad that are earning interest or other passive income, you generally will have to report this income under US tax return. It does not matter if that income was distributed or not as long as it was earned-it usually must be reported.
Trust Distributions or Trust Ownership: If you receive distributions from a foreign trust and/or have ownership of a foreign trust (even if there are no distributions) then this information must be reported to the US government annually on certain forms.
Gifts: When a person receives either a gift from a foreign person or foreign corporation, they must report the gifts when certain threshold requirements are met. In addition, when a person receives distributions from a foreign trust it must also be report to the U.S. Government.
If you fail to report any of the aforementioned investments, the IRS can implement very high fines and penalties against you. Moreover, even though there are foreign assets in accordance with IRS tax law and FATCA, the IRS can Levy or Lien either foreign or domestic assets in order to satisfy the debt.
– A Penalty for failing to file FBARs. United States citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the year. The civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign financial account per violation. See 31 U.S.C. § 5321(a)(5). Non-willful violations that the IRS determines were not due to reasonable cause are subject to a $10,000 penalty per violation.
– FATCA Form 8938. Beginning with the 2011 tax year, a penalty for failing to file Form 8938 reporting the taxpayer’s interest in certain foreign financial assets, including financial accounts, certain foreign securities, and interests in foreign entities, as required by IRC § 6038D. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
– A Penalty for failing to file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Taxpayers must also report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust and receipt of distributions from foreign trusts under IRC § 6048. This return also reports the receipt of gifts from foreign entities under IRC § 6039F. The penalty for failing to file each one of these information returns, or for filing an incomplete return, is the greater of $10,000 or 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.
– A Penalty for failing to file Form 3520-A, Information Return of Foreign Trust With a U.S. Owner. Taxpayers must also report ownership interests in foreign trusts, by United States persons with various interests in and powers over those trusts under IRC § 6048(b). The penalty for failing to file each one of these information returns or for filing an incomplete return, is the greater of $10,000 or 5 percent of the gross value of trust assets determined to be owned by the United States person.
– A Penalty for failing to file Form 5471. Information Return of U.S. Persons with Respect to Certain Foreign Corporations. Certain United States persons who are officers, directors or shareholders in certain foreign corporations (including International Business Corporations) are required to report information under IRC §§ 6035, 6038 and 6046. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
– A Penalty for failing to file Form 5472. Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Taxpayers may be required to report transactions between a 25 percent foreign-owned domestic corporation or a foreign corporation engaged in a trade or business in the United States and a related party as required by IRC §§ 6038A and 6038C. The penalty for failing to file each one of these information returns, or to keep certain records regarding reportable transactions, is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency.
– A Penalty for failing to file Form 926. Return by a U.S. Transferor of Property to a Foreign Corporation. Taxpayers are required to report transfers of property to foreign corporations and other information under IRC § 6038B. The penalty for failing to file each one of these information returns is ten percent of the value of the property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the transfer was intentional.
– A Penalty for failing to file Form 8865. Return of U.S. Persons With Respect to Certain Foreign Partnerships. United States persons with certain interests in foreign partnerships use this form to report interests in and transactions of the foreign partnerships, transfers of property to the foreign partnerships, and acquisitions, dispositions and changes in foreign partnership interests under IRC §§ 6038, 6038B, and 6046A. Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return, and ten percent of the value of any transferred property that is not reported, subject to a $100,000 limit.

References: § 5321
 § 6038
 § 6048
 § 6039
 § 6048
 § 6038