Effective for tax years beginning after March 18, 2010, taxpayers will have to file a disclosure statement with their income tax return if the value of a “specified foreign financial asset” is greater than $50,000.
A specific foreign financial asset is a depository or custodial account at foreign financial institutions, stocks, or securities issued by foreign persons, any other financial instrument or contract held for investment that is issued by or has a counterparty who is not a U.S. person, and any interest in a foreign entity.
The penalty for non-disclosure is $10,000 per tax year. An additional $10,000 penalty applies for each 30-day period, or fraction thereof, of noncompliance if the failure to disclose continues for more than 90 days after the IRS has notified the taxpayer of noncompliance. Not to worry………this penalty is capped at $50,000.