Foreign Account Tax Compliance Act (FATCA)
Continuing its enforcement efforts of foreign account disclosure, Congress passed the Foreign Account Tax Compliance Act (FATCA) as part of the 2010 Hiring Incentives to Restore Employment Act (HIRE). FATCA created IRC § 6038D, which requires "specified individuals" with interests in "specified foreign accounts and assets" that have an aggregate value exceeding $50,000 to report certain information regarding their foreign assets on Form 8938, Statement of Specified Foreign Financial Assets and attach it to their tax return.
Who is required to file Form 8938?
FATCA requires the following persons to file Form 8938 with their income tax return:
- United States citizens;
- Resident aliens who meet the green card test or substantial presence test;
- Non-resident aliens who make an election to be treated as a resident alien for purposes of filing a joint tax return
- Non resident aliens who are bona fide residents of Puerto Rico or American Samoa.
Single taxpayers living in the United States are required to file Form 8938 if the total value of specified foreign financial accounts is more than $50,000 on the last day of the tax year or more than $75,000 at any point during the year.  Married taxpayers living in the United States who file separate tax returns are subject to the same filling thresholds. Married taxpayers living in the United States and who file a joint income tax return are required to file Form 8938 if the total value in their specified foreign financial accounts exceeds $100,000 on the last date of the tax year or more than $150,000 at any point during the tax year. 
Single taxpayers and married taxpayers filing separate tax returns who live outside the United States must file Form 8938 if the total value of their specified foreign financial accounts exceeds $200,000 on the last day of the tax year or more than $300,000 at any point during the tax year.  Married taxpayers who file joint tax returns and who live outside the United States must file Form 8938 if the total value of their specified foreign financial accounts exceeds $400,000 on the last day of the tax year or more than $600,000 at any point during the tax year. 
Form 8938 is not required if a "specified individual "is not required to file an income tax return. FATCA currently only applies to individuals but Proposed Treasury Regulations have been issued requiring certain domestic entities to file Form 8938. 
What types of foreign assets must be reported on Form 8938?
FATCA covers a broader range of foreign assets than the FBAR. FATCA defines the following foreign financial assets as "specified foreign financial assets" and requires that they be reported on Form 8938 if the aggregate balances meet the thresholds described above:
· Financial accounts maintained at foreign financial institution;
· Foreign financial assets if held for investment and not maintained at foreign financial institutions, including stock or securities issued by a non-U.S. person, any interest held in a foreign entity, and any financial instrument or contract that has an issuer or counterparty that is not a U.S. person. 
Financial accounts maintained by a United States payor are not considered specified
foreign financial assets and are not required to be reported on Form 8938.  Specified foreign financial assets reported on other designated IRS forms are included in the valuation calculations but are not required to be reported on Form 8938.  Additionally, interests in foreign government sponsored social security, social insurance or other similar program are not specified foreign financial assets for FATCA purposes.  Interests held by specified individuals in certain trusts are also excluded from FATCA reporting requirements.
Internal Revenue Code § 6038D(c) provides that "specified individuals" must disclose the following information pertaining to specified foreign financial assets:
- Name and address of the financial institution where the account is maintained and the account number;
- Name and address of the issuer of any stock or security and any information necessary to identify the class or issue of which such security or stock is a part;
- Identifying information for other instruments, contracts, or interests, including the names and addresses of all issuers and counterparties; and
- Maximum value of the assets during the taxable year.
Similar to the FBAR rules, foreign accounts and assets must be converted into United
States dollars to determine the maximum account value. Pursuant to Temp. Treas. Reg. 1.6038D-5T, taxpayers are required to use the currency exchange rate on the last day of the tax year, even if the asset was sold or otherwise disposed of during the tax year.
Civil and criminal penalties apply to taxpayers who fail to file a complete and accurate Form 8938. A civil penalty of up to $10,000 may be imposed for failing to file by the due date.  If the IRS sends written notice of a failure to file and a taxpayer does not respond within 90 days, an additional penalty of $10,000 for each 30 day period after the expiration of the 90 days may be imposed, up to a maximum of $50,000.  Similar to the FBAR penalties, reasonable cause is a defense to the failure to file penalties.  Accuracy-related and fraud penalties may also be assessed as well as criminal penalties.
 Temp. Treas. Reg. 1.6038D-1T(a)(2).
 Temp. Treas. Reg. 1.6038D-2T(a)(1).
 Temp. Treas. Reg. 1.6038D-2T(a)(2).
 Temp. Treas. Reg. 1.6038D-2T(a)(3).
 Temp. Treas. Reg. 1.6038D-2T(a)(4).
 Prop. Treas. Reg. 1.6038D-6
 IRC § 6038D(b).
 Temp. Treas. Reg. 1.6038D-3T(a)(3).
 TD 9567, December 19, 2011.
 IRC 6038D(d)(1).
 IRC 6038D(d)(2).
 IRC 6038D(g).