Since 2011, under the Foreign Account Tax Compliance Act, or FATCA, individual US taxpayers have been required to annually report ownership of certain foreign deferred compensation on Form 8938. This is often referred to as individual-level FATCA. Separately, FATCA also imposes 30% tax withholding on certain US source income known as entity-level FATCA. IRS regulations on entity-level FATCA and specific FATCA Intergovernmental Agreements have included exemptions for certain retirement funds from entity-level FATCA. Last year, the IRS issued final regulations under Code section 6038D that expressly stated that those entity-level FATCA exemptions for retirement accounts do not apply for purposes of individual-level FATCA. Most recently, the IRS added that warning to the instructions to Form 8938. Fortunately, in doing so it has also granted relief if an individual failed to report such plans for years beginning on or before December 12, 2014.
Please see the attached memo for further information.
