Do you have a foreign financial asset?
Do you have an interest in, or signature authority over, a foreign bank account?
 

If yes, you should review the 2011 foreign disclosure rules:
 
Form 8938, Statement of Specified Foreign Financial Assets, is a new informational reporting that is required per the Hiring Incentives to Restore Employment Act (HIRE Act) enacted by Congress.  The provisions are part of a broad initiative by the federal government to increase tax compliance, particularly by those with foreign accounts or foreign assets.

It is possible that the provision will affect you.  Some of the financial assets that must be reported on the new Form 8938 include:

• Financial accounts maintained at foreign financial institutions;
• Direct ownership of stock in a foreign corporation (held outside of a financial institution);
• Foreign partnership interests, such as foreign hedge funds and foreign private equity funds;
• Foreign retirement accounts, pensions or deferred compensation arrangements;
• Foreign life insurance products;
• Foreign notes, bonds or other indebtedness issued by a foreign person; and,
• Beneficial interests or distributions from foreign trusts or foreign estates.

The 8938 Form is to be attached to your annual federal income tax return, if you have a filing requirement.  Also note that this new reporting requirement is separate from the reporting of foreign bank and financial accounts (Form TD F 90-22.1, commonly referred to as FBAR) under the Bank Secrecy Act.  Individuals may be required to file one, the other, or both reports, depending upon the specific facts.

We would be happy to discuss these rules and how they apply with clients.

Note that there are significant civil and criminal penalties for failure to file the Form 8938 when required.