Specified Foreign Financial Asset Reporting Postponed

By Alistair M. Nevius, J.D.

From the IRS

The IRS announced that it is postponing for at least one year the requirement that domestic entities report interests in specified foreign financial assets. In Notice 2013-10, the IRS says that when it issues final regulations, they will apply no earlier than to tax years beginning after Dec. 31, 2012.

Sec. 6038D requires individuals to report interests in “specified foreign financial assets” (SFFAs) when filing their federal income tax returns. The IRS is also authorized under Sec. 6038D to apply the reporting requirement to any domestic entity that is formed or availed of principally to avoid reporting (a specified domestic entity).

In December 2011, the IRS issued temporary and proposed regulations (T.D. 9567; REG-130302-10) on the Sec. 6038D reporting requirement. The proposed regulations set out conditions under which a domestic entity will be considered a specified domestic entity and, therefore, required to report SFFAs in which the entity holds an interest. They were proposed to apply to tax years beginning after Dec. 31, 2011.

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