International Reporting Requirements
U.S. taxpayers with interests outside of the United States are subject to an expanding reach of reporting requirements under the Internal Revenue Code. U.S. taxpayers are required to disclose foreign assets and transactions not only on FinCen 114 (FBAR) but also on Form 926, Form 5471, Form 8865, Form 8621, Form 8621-A, Form 8865, Form 8858, Form 8938, Form 3520, and Form 3520-A. Failure to comply with these reporting obligations may result in serious criminal and civil penalties. Our firm refers to civil penalties that can be assessed against U.S. taxpayers for failing to properly report the existence of a foreign asset or transaction as international penalties. The only way to avoid an international penalty is to establish that there was substantial compliance with a specific reporting requirement or that the failure to report a foreign asset or transaction was due to reasonable cause.