Partnerships and S Corporations with Foreign Assets
FBAR (Form 114) – Report of Foreign Financial Accounts (Civil penalty starting at $10,000 or 50% of the account value, up to 10 years in prison)
Form 8938 – Statement of Specified Foreign Financial Assets (Civil penalty up to $50,000 and 40% of unpaid tax, IRC § 6038)
Form 8858 – Information Return of U.S. Persons with Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs) (Same penalty as Form 8938)
Form 8865 – Return of U.S. Persons with Respect to Certain Foreign Partnerships (Same penalty as Form 8938)
Form 8621 – Information Return by a Shareholder of a Passive Foreign Investment Company (PFIC) or Qualified Electing Fund (No direct penalty)
Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations (Same penalty as Form 8938)
What Is This About?
These forms are used by U.S. partnerships and S corporations that own foreign financial accounts, assets, or interests in foreign entities.
FBAR (Form 114) is required if total foreign financial accounts exceed $10,000 at any time during the year. Severe penalties apply for noncompliance.
Form 8938 is for reporting foreign financial assets if they exceed IRS thresholds.
Forms 8858, 8865, and 5471 are for U.S. persons or entities with ownership in foreign entities (disregarded entities, partnerships, or corporations).
Form 8621 is used for Passive Foreign Investment Companies (PFICs) but does not have a direct penalty.
Why Is This Important?
Failure to report foreign accounts or assets can lead to severe IRS penalties, including high fines and potential criminal charges.
Certain thresholds apply, so not all entities must file all forms.
These forms ensure compliance with U.S. tax laws and foreign asset reporting requirements under FATCA and FBAR regulations.