75th Founding Day Lecture Meeting on “India@2030” Know More

May 2010

New foreign asset disclosure rules enacted

By Raman Jokhakar
Tarunkumar G. Singhal
Chartered Accountants
Reading Time 1 mins
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On March 18, 2010, President Obama signed H.R. 2847, the
Hiring Incentives to Restore Employment (HIRE) Act, into law. There are a number
of international tax provisions in the Act.

One of the provisions is new Code § 6038D. This section,
titled ‘Information with Respect to Foreign Financial Assets,’ is effective for
taxable years beginning after March 18, 2010 (2011 for calendar year taxpayers).

Code § 6038D applies to individuals who hold one or more
interests in ‘specified foreign financial assets,’ if the aggregate value of all
such assets exceeds $ 50,000. If the section applies, the individual must attach
to his/her tax return for that year certain basic information about the foreign
financial assets. The rule also applies to domestic entities formed or availed
of to hold specified foreign financial assets.

The penalty for failure to disclose is the (standard) $
10,000 with a reasonable cause exception. The penalty can increase where the
taxpayer has been notified of the failure to file and the taxpayer continues to
not file.

(Source : intltax.typepad.com/intltax, dated 18-3-2010)

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