Do Lawful Permanent Residents File Form 8938, Treaty Election

Do Lawful Permanent Residents File Form 8938, Filing Exceptions

Do Lawful Permanent Residents File Form 8938

When it comes to international information reporting, Form 8938 is a relative newcomer to the world of international tax and reporting compliance. The Form 8938 is used to report ‘specified foreign financial assets’ in accordance with FATCA (Foreign Account Tax Compliance Act). Taxpayers who are considered U.S. Persons for Tax Purposes may be required to file Form 8938 if they meet the threshold filing requirements to report their overseas accounts, assets, and investments. A common question we receive is whether or not a Lawful Permanent Resident (non-U.S. citizen) is required to file Form 8938 – and if there are any exceptions to filing. Let’s take a brief look into whether Lawful Permanent Residents File Form 8938 and if there are any Exceptions.

U.S. Persons for Tax Purposes includes LPRs

The Form 8938 is required by U.S. Persons for Tax Purposes, in any year the Taxpayer meets the threshold requirements for filing and is required to file a U.S. tax return, and this does include a Lawful Permanent Resident.

 As provided by the IRS:

• • • You are a specified individual if you are one of the following.

      • A U.S. citizen.

      • A resident alien of the United States for any part of the tax year (but see Reporting Period, later).

      • A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return.

      • A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. See Pub. 570, Tax Guide for Individuals With Income From U.S. Possessions, for a definition of bona fide resident.

Treaty Election Exception

Some Lawful Permanent Residents may be able to qualify under a treaty election (to be treated as a foreign person for U.S. tax purposes) and avoid having to file the Form 1040 and Form 8938.

As further provided by the IRS:

• • • Specified individual filing as a nonresident alien at the end of his or her tax year. You are not required to report specified foreign financial assets on Form 8938 for the part of your tax year covered by Form 1040-NR, provided you comply with the filing requirements of Regulations section 301.7701(b)-7(b) and (c), including the requirement to timely file Form 1040-NR, as applicable, and attach Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.