Tax Planning

Finally: Definitive Guidance from the IRS on Offshore Account Reporting

A U.S. law with the Orwellian name of the “Bank Secrecy Act” requires U.S. citizens and permanent residents to report interests in, or authority over all foreign accounts with an aggregate value of $10,000 or more. The form used for this purpose is Treasury Form TD F 90-22.1, the Foreign Bank Account Reporting form, or FBAR. You must file this form with the U.S. Treasury by June 30 for accounts held in the previous year. You must also acknowledge foreign accounts annually on Schedule B of your federal income tax return.

Separately, the Foreign Account Tax Compliance Act (FATCA) requires U.S. citizens and permanent residents to file a separate report (Form 8938) listing “foreign financial assets” with an aggregate value of $50,000 or more with their annual tax return, beginning with their 2011 return. The deadline for submitting your tax return (and Form 8938, if required) to the IRS is April 17. If you won’t have your return ready by that date, you can file for an automatic six-month extension, although you need to pay all income taxes you believe are due for 2011 by April 17.

Naturally, failing to file the FBAR and Form 8938  accurately and when due renders you subject to civil and possibly criminal penalties.

Until very recently, the IRS had issued only lengthy technical regulations describing these reporting requirements that only a tax attorney could enjoy reading. But on March 26, the IRS issued a helpful and non-technical chart outlining a summary of the respective reporting rules for Form TD F 90-22.1 and Form 8938.

Significantly, the IRS has now confirmed the non-reportability of direct ownership of precious metals or foreign currencies held offshore. Similarly, direct ownership of offshore real estate need not be reported. “Direct ownership” means you don’t hold the assets in any type of account. For instance, if you own a quantity of gold coins and hold them in an offshore safety deposit box, you have direct ownership. But, if you have an account at a foreign bank that includes gold coins, you must disclose the entire value of the account on both Form TD F 90-22.1 and Form 8938.

5 Reasons to Have an Offshore Bank Account

An offshore bank account is often seen as exotic and slightly mysterious. But there are actually several practical reasons to get one. Find all the information here: Why have an offshore bank account.

Here’s a link to the chart. It’s possible the IRS may update the chart in the future, so bookmark this link as a reference.

I wish the IRS had published something like this years ago when it began ramping up enforcement of these reporting rules. Better late than never!

Copyright © 2012 by Mark Nestmann

On another note, many clients first get to know us by accessing some of our well-researched courses and reports on important topics that affect you.

Like How to Go Offshore in 2024, for example. It tells the story of John and Kathy, a couple we helped from the heartland of America. You’ll learn how we helped them go offshore and protect their nestegg from ambulance chasers, government fiat and the decline of the US Dollar… and access a whole new world of opportunities not available in the US. Simply click the button below to register for this free program.

About The Author

Need Help?

We have 40+ years experience helping Americans move, live and invest internationally…

Need Help?

We have 40+ years experience helping Americans move, live and invest internationally…

As Featured on

Get our latest strategies delivered straight to your inbox for free.

Get Our Best Plan B Strategies Right to Your Inbox.

The Nestmann Group does not sell, rent or otherwise share your private details with third parties. Learn more about our privacy policy here.

The Basics of Offshore Freedom

Read these if you’re mostly or very new to the idea of going offshore

What it Really Takes to Get a Second Passport

A second passport is about freedom. But how do you get one? Which one is best? And is it right for you? This article will answer those questions and more…

How to Go Offshore
in 2024

[CASE STUDY] How we helped two close-to-retirement clients protect their nest egg.

Nestmann’s Notes

Our weekly free letter that shows you how to take back control.