Notice 2011-55: IRS Partially Suspends FATCA Information Reporting Requirements

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The IRS announced today that information reporting requirements under new Code Sections 6038D and 1298(f) are suspended until the release of new Form 8938 and revised Form 8621. Notice 2011-55, which comes only one day after the IRS released its draft Form 8938, provides a short respite for U.S. taxpayers subject to the barrage of foreign asset reporting requirements.

FATCA Reporting Requirements

The suspended requirements were initially enacted in 2010 with the Foreign Account Tax Compliance Act (“FATCA”), which plays a revenue support role in the larger Hiring Incentives to Restore Employment Act (“HIRE”). Code Section 6038D mandates U.S. taxpayers with foreign financial assets valued over $50,000 to file new informational Form 8938 with their annual return. Code Section 1298(f) requires shareholders of a passive foreign investment company (“PFIC”) to file an annual information report, later deemed to be a revised Form 8621. Both requirements are effective for tax years beginning on or after March 18, 2010; the Treasury intends to release regulations clarifying each provision.

Interim Guidance: Notice 2011-55

Because individuals may be subject to reporting requirements under 6038D and 1298(f) before the appropriate forms are released, the IRS issued interim guidance in Notice 2011-55. Scheduled to be published on July 18 with Internal Revenue Bulletin 2011-29, Notice 2011-55 provides the following:

Form 8938 reporting requirements under 6038D are suspended before the IRS releases Form 8938;

Pending the release of revised Form 8621, Section 1298(f) reporting requirements are suspended for PFIC shareholders who are not otherwise required to file Form 8621 under the forms current instructions. PFIC shareholders with Form 8621 obligations per the forms current instructions must continue to file the form with an income tax or information return filed before the IRS releases revised Form 8621.

Following the release of each form, individuals subject to the respective reporting requirements will attach the appropriate form(s) to their next income tax or information return to be filed with the IRS. Notice 2011-55 states,

A Form 8938 or 8621 filed for a suspended taxable year with a timely filed income tax or information return as required by this notice will be treated as having been filed on the date that [the return] for the suspended year was filed. Failure to file as required by the notice may result in the extension of the period of limitation for the suspended taxable year under section 6501(c)(8), and penalties may apply.

No FBAR Relief

Compliance with Code Sections 6038D and 1298(f) does not relieve a taxpayer of the obligation to file a Report of Foreign Bank and Financial Accounts (“FBAR”).

The attorneys at Fuerst Ittleman, PL have extensive experience with the complex regulatory provisions governing foreign asset reporting and PFICs. Contact an attorney by emailing us at contact@fidjlaw.com.