§6038D Information with respect to foreign financial assets

Summary

You must attach information to your federal income tax return if you own certain foreign financial assets and the total value of those assets is more than $50,000 (or a higher amount the Secretary sets). The rule covers foreign bank or financial accounts and other foreign investments not kept in an account, such as stocks or securities issued by non‑U.S. persons, financial contracts with non‑U.S. issuers or counterparties, and ownership interests in foreign entities. For each asset you must give basic identifying details (for accounts: the financial institution’s name, address, and account number; for stocks: the issuer’s name and address and the class or issue; for other instruments: identification plus names and addresses of issuers and counterparties) and the asset’s maximum value during the year. If you fail to give the required information, you pay a $10,000 penalty. If the failure continues more than 90 days after the Secretary mails notice, you pay another $10,000 for each 30‑day period (or part of one) after that, up to $50,000 total for the continuing failure. The Secretary can apply the same rules to a U.S. entity set up to hold these foreign assets. No penalty applies if you can show the failure was due to reasonable cause and not willful neglect, but the possibility of foreign penalties for disclosure does not count as reasonable cause. The Secretary must issue rules and may create exceptions for certain asset classes, nonresident aliens, and bona fide residents of U.S. possessions.