LOS ANGELES, April 10, 2013 (GLOBE NEWSWIRE) -- Brager Tax Law Group founder Dennis Brager, a tax litigation attorney, who is a California Tax Specialist and former Senior Tax Attorney with the IRS, warns tax filers about a little known tax form required if the filer has a foreign bank account or foreign financial assets. "Many people who have foreign bank accounts and assets are unaware of this new form," says Mr. Brager about the tax form that is in its second year of use by the IRS, which continues to pursue uncovering offshore assets to collect additional taxes. "It sometimes is referred to as a 'Super FBAR' because it requires reporting assets, which don't necessarily need to be listed on the regular Foreign Bank Account Report (FBAR), TDF 90-22.1 that is due June 30th."
U.S. taxpayers may have to file IRS Form 8938 if they have foreign financial assets with a total value exceeding $50,000 on the last day of the year. Different filing thresholds apply based upon a variety of factors. The Form must be attached to the annual income tax return and filed by the due date, which, for most people, is Monday, April 15th, or later if on extension.
The failure to file Form 8938 could result in hefty fines. Those who willfully fail to file are subject to a penalty of $10,000 and continued failure to file within 90 days after IRS notification entails an additional $10,000 for each 30 day period. Furthermore, if the tax filer underpays tax due to fraud, the filer must pay a penalty of 75 percent of the underpayment.
The Form 8938, Statement of Specified Foreign Financial Assets must be filed by a person who is a U.S citizen (including those living abroad), a resident alien or a nonresident alien who makes an election to be treated as a resident alien.
"The valuation of the foreign financial assets is also important, since a major error which causes the non-filing of the Form 8938 could trigger a penalty," continues Mr. Brager. Financial assets include foreign bank accounts, stocks, securities, interest in a foreign entity such as a trust or estate, notes, currency and many others as specified in the IRS instructions for Form 8938.
"The rules surrounding the filing of the Form 8938 can be very confusing," says Mr. Brager. "If you failed to file a Form 8938 last year and now believe that was an error, you may wish to consult with a tax attorney to figure out the best way to solve the problem."
Based in Los Angeles, the Brager Tax Law Group is a tax litigation and tax controversy law firm, which represents clients with civil and criminal tax problems and tax disputes with the IRS, the California Franchise Tax Board (FTB), the State Board of Equalization (SBE) and the Employment Development Department (EDD). All of the firm's tax lawyers were former trial attorneys with the IRS.