The Foreign Account Tax Compliance Act (FATCA) was put into action during 2010. This means that U.S. taxpayers who own financial assets outside of the Unite States and meet the filing requirements must report the fair market value of those assets on an annual basis to the IRS.
FATCA applied to U.S. tax payers who live within the U.S. and those who live abroad. The act requires foreign institutions such as banks to report certain information about their financial accounts held by U.S. taxpayers or by the entities in which U.S. taxpayers hold a substantial ownership interest.
Individuals who are required to report their foreign assets to the IRS under FATCA on the Form 8938 include:
· U.S. citizens
· Non-citizens who meet the substantial presence test
· A non-resident alien who makes an election to be treated as a resident alien for the purposes of filing a joint tax return
· A non-resident alien who is a bona fide resident of American Samoa or Puerto Rico