US tax collector postpones reporting of specified foreign financial assets for one year

The U.S. Internal Revenue Service (IRS) on Wednesday announced that it is postponing for at least one year the requirement that U.S. domestic entities report interests in specified foreign financial assets. In Notice 2013-10, the IRS says that when it issues final regulations, they will apply no earlier than to tax years beginning after December 31st 2012.

U.S. Internal Revenue Code (IRC) Sec. 6038D requires individuals to report interests in “specified foreign financial assets” (SFFAs) when filing their U.S. federal income tax returns. The IRS is also authorised under IRC Sec. 6038D to apply the reporting requirement to any domestic entity that is formed or availed of principally to avoid reporting (a specified domestic entity).

In December 2011, the IRS issued temporary and proposed regulations (Treasury Decision 9567; REG-130302-10) on the IRC Sec. 6038D reporting requirement. The proposed regulations set out conditions under which a domestic entity will be considered a specified domestic entity and, therefore, required to report SFFAs in which the entity holds an interest. They were proposed to apply to tax years beginning after December 31st 2011.

—Alistair M. Nevius (anevius@aicpa.org) is CGMA Magazine’s editor-in-chief, tax.