FATCA and Form 8938
FATCA imposes withholding obligations on foreign financial institutions that fail to report on U.S.-owned accounts and creates a parallel reporting obligation on U.S. persons under §6038D, filed on Form 8938. The United States does not participate in the OECD Common Reporting Standard; FATCA and its intergovernmental agreements serve as the U.S. counterpart.
What is reported
Form 8938 reports specified foreign financial assets under §6038D, including:
- Foreign financial accounts.
- Other foreign financial assets — stock and securities issued by non-U.S. persons not held in a financial account, foreign partnership interests, foreign mutual funds, foreign hedge funds and private-equity funds, foreign life insurance with cash value.
- Foreign pension and retirement arrangements, subject to exceptions (for example, certain tax-favored foreign retirement trusts exempted from Form 3520 reporting by Rev. Proc. 2020-17 remain reportable on Form 8938 if thresholds are met; check the current instructions).
Tangible foreign assets — art held in a Geneva freeport, real estate in Tuscany, a Cayman-flagged yacht — are not Form 8938 reportable in their own right, but interests held through reportable foreign entities are.
Who must report
Specified individuals (U.S. citizens, resident aliens) and specified domestic entities (closely held domestic corporations and partnerships meeting passive-asset and passive-income tests).
Thresholds
| Taxpayer | Year-end | Maximum during year |
|---|---|---|
| Individual, unmarried, U.S. resident | $50,000 | $75,000 |
| Individual, married filing jointly, U.S. resident | $100,000 | $150,000 |
| Individual, unmarried, foreign-resident U.S. citizen | $200,000 | $300,000 |
| Individual, married filing jointly, foreign-resident | $400,000 | $600,000 |
| Specified domestic entity | $50,000 | $75,000 |
The form
Form 8938 attached to the annual income-tax return (Form 1040 or 1120 etc.). Due date follows the return.
Penalties
- $10,000 for failure to file. If the failure continues more than 90 days after IRS notice, an additional $10,000 for each 30-day period (or part), up to $50,000 additional.
- 40% accuracy-related penalty on income tax from undisclosed foreign financial asset.
- Extended statute of limitations (six years) on omissions of income above $5,000 attributable to specified foreign financial assets, under §6501(e)(1)(A)(ii); and, under §6501(c)(8), the limitations period does not begin until the required information is furnished.
- Criminal exposure under §7203 (willful failure) or §7206 (false return) where applicable.
FATCA withholding (chapter 4)
The foreign-financial-institution withholding regime under §§1471-1474 imposes 30% withholding on certain U.S.-source payments to a foreign financial institution that has not entered into an agreement (or that does not comply with applicable IGA terms) to report on U.S.-person account holders. The system is implemented through bilateral Intergovernmental Agreements (Model 1 and Model 2 IGAs) between the United States and most major jurisdictions.
Relief procedures
Same streamlined and voluntary-disclosure procedures available as for FBAR. Form 8938 and FBAR are independent — a taxpayer may have only one filing obligation, or both, depending on what is held and where.
Recent guidance
The Form 8938 thresholds are fixed by regulation and are not indexed for inflation; they have not changed since the regime began. Information received from foreign financial institutions and partner jurisdictions under FATCA and its intergovernmental agreements is available to the IRS for matching against taxpayer filings.
Interaction with luxury-asset holdings
- Foreign holding company (Cayman, BVI) holding yacht or art — interest in foreign entity is reportable on 8938.
- Foreign trust beneficial interest — separate Form 3520 reporting plus 8938.
- Foreign private placement insurance — see PPLI.
- Foreign mutual fund and hedge fund interests — PFIC reporting on Form 8621 in addition to 8938.
Primary Sources
- 26 U.S.C. §§1471-1474 (FATCA chapter 4).
- 26 U.S.C. §6038D (specified foreign financial asset reporting).
- 26 U.S.C. §6038D(d) (penalties).
- 26 U.S.C. §6662(j) (accuracy penalty).
- Treas. Reg. §1.6038D-1 through -8.
- IRS Form 8938 instructions — irs.gov/forms-pubs/about-form-8938.
- U.S. Treasury FATCA IGAs — home.treasury.gov.
Reviewed October 2026