New IRS Foreign Asset Disclosure Requirements

The Internal Revenue Service (IRS) recently issued guidance relating to the new requirement for individuals to report ownership of "specified foreign financial assets."  This reporting requirement is part of the Hiring Incentives to Restore Employment (HIRE) Act, which became law on March 18, 2010.  2011 will mark the first year for which reporting is required.  Those required to make the disclosures must file a new IRS form, Form 8938, with their 2011 Form 1040.  In short, foreign investment-type assets must be disclosed if the value of such assets owned by the taxpayer exceeds certain thresholds, which vary depending upon whether the taxpayer files a joint return and whether the taxpayer lives in the United States or abroad.