Why International Reporting Matters
If you’re a U.S. citizen, green-card holder, or domestic business with foreign assets, the IRS and Massachusetts DOR require detailed disclosures. Failure to report can lead to steep penalties, criminal exposure, and reputational harm. Our team helps clients stay compliant, avoid surprises, and harness planning opportunities under FATCA and other regimes.
Who Must File and What Forms Apply
- U.S. persons with foreign financial accounts exceeding $10,000 at any time in the year must file the FBAR (FinCEN Form 114).
- Specified individuals owning foreign “specified foreign financial assets” may need to file Form 8938 with their federal return.
- U.S. shareholders of controlled foreign corporations file Form 5471, reporting corporate income and distributions.
- U.S. owners of foreign corporations or partnerships use Form 8865 or Form 8858, as applicable.
- U.S. persons with certain foreign gifts or bequests may need Form 3520 or Form 3520-A.
- Domestic corporations with reportable transactions with related foreign parties file Form 5472.
Key Reporting Regimes
FATCA (Foreign Account Tax Compliance Act)
Requires U.S. taxpayers to disclose offshore accounts and investments. It also obligates foreign financial institutions to report U.S. account-holders to the IRS, increasing enforcement.
FBAR (Foreign Bank Account Report)
Filed electronically by April 15 (with automatic extension to October 15). Covers all foreign financial accounts—bank, brokerage, or mutual fund—if combined balances exceed $10,000.
Form 8938 vs. FBAR
- Form 8938 attaches to your Form 1040; thresholds vary by filing status and residence.
- FBAR is submitted separately to FinCEN.
- Filing one does not substitute for the other.
Our Compliance & Planning Process
- Initial Assessment (1–2 weeks):
- Review client’s residency, account statements, corporate interests, and prior filings.
- Obligation Mapping (2 weeks):
- Identify all required forms and due dates—FBAR, 8938, 5471, 8865, 3520, 5472.
- Preparation & Drafting (2–4 weeks):
- Compile financial data, translate foreign documents, prepare accurate disclosures.
- Review & Filing (by due date):
- Electronically file FBAR; attach 8938 and 5471 to federal return; handle state disclosures if needed.
- Post-Filing Monitoring:
- Track confirmations, respond to IRS or FinCEN inquiries, and update your compliance calendar annually.
Timeline & Typical Fees
| Stage | Timing | Fee Structure |
|---|---|---|
| Initial Assessment | 1–2 weeks | Flat fee |
| Obligation Mapping | 1–2 weeks | Flat or hourly |
| Drafting & Review | 2–4 weeks | Hourly |
| Filing & Confirmation | By each form’s due date | Flat |
| Ongoing Monitoring | Annual | Subscription or hourly |
Fees depend on the complexity and number of forms. We provide a detailed engagement letter up front.
Frequently Asked Questions
Q: What happens if I miss an FBAR deadline?
You can file late via FinCEN’s streamlined procedures, but penalties may still apply without proper cause.
Q: Do I need both Form 8938 and FBAR?
Yes—each serves different statutes; filing one does not satisfy the other.
Q: Are foreign trusts reportable?
Often. Form 3520/3520-A may apply if you’re a grantor, recipient, or trustee of a foreign trust.
Q: What penalties apply for non-compliance?
Civil penalties can reach up to 50% of account balances per year on FBAR; criminal sanctions are also possible in willful cases.
Q: Can I amend a late Form 5471?
Yes—by filing an amended federal return with corrected 5471 schedules and a detailed explanation.
Q: How do I determine my filing thresholds?
Thresholds vary based on filing status (single, married, living abroad) and total asset values. We calculate these for you.
Q: Is state reporting required in Massachusetts?
Massachusetts generally follows federal on foreign assets; we’ll confirm any additional state disclosures.