RECOMMENDATION 00971-001
RECOMMENDATION TEXT:
Current Text: Maximum value of all deposit accounts. Recommended Text: Maximum value of all deposit accounts during the year. Justification: This language is consistent with the language for line 23 of Part V.
IRS Action: Recommended
RECOMMENDATION 00971-002
RECOMMENDATION TEXT:
Current Text: Maximum value of all custodial accounts. Recommended Text: Maximum value of all custodial accounts during the year. Justificaiton: This language is consistent with the language for line 23 of Part V.
IRS Action: Recommended
RECOMMENDATION 00971-003
RECOMMENDATION TEXT:
Current Text: Maximum value of all assets (reported in Part VI). Recommended Text: Maximum range of values of all assets (reported in Part VI). Justification: The language should be consistent with Part VI.
IRS Action: Recommended
RECOMMENDATION 00971-004
RECOMMENDATION TEXT:
Current Text: Maximum value of all assets (reported in Part VI) Recommended Text: Provide guidance on the maximum value of all assets calculated when assets listed in Part VI may have reported a maximum value during the year as a range. Justification: Instructions for Line 11 Part II are not clear as to what values to use when Line 32 Part VI assets are reported in ranges. Lack of clarity could contribute to reporting errors and increases the burden on taxpayers.
IRS Action: Recommended
RECOMMENDATION 00971-005
RECOMMENDATION TEXT:
Current Text: Recommended Text: Create a chart that summarizes Who must file. Justification: Instructions are lengthy and a quick-reference chart, summarizing the filing requirements, would simplify the determination for taxpayers and minimize their compliance burden.
IRS Action: Recommended
RECOMMENDATION 00971-006
RECOMMENDATION TEXT:
Current Text: Reporting obligations under section 6038D not affected Recommended Text: Certain tax-favored foreign trusts established and operated exclusively or almost exclusively to provide pension or retirement benefits, or to provide medical disability or educational benefits must still be reported on Form 8938. Justification: Modifying the heading highlights for the taxpayer that certain foreign trusts are still required to be reported on Form 8938 even though they are excepted from filing Form 3520 and 3520-A.
IRS Action: Recommended
RECOMMENDATION 00971-007
RECOMMENDATION TEXT:
Current Text: Recommended Text: Move Exceptions to Reporting to third paragraph under who must file. Second recommendation: Create a chart of exceptions to reporting. Pages 10 and 11 Justification: Taxpayers should be alerted to the exceptions to reporting saving time for taxpayers and reducing their compliance burden.
IRS Action: Recommended
RECOMMENDATION 00971-008
RECOMMENDATION TEXT:
Current Text: Recommended Text: Move Reporting Period from page 8 to page 2 after the last bullet point. Justification: Moving the language earlier in the document allows the taxpayer to quickly evaluate if they are a specified individual as a resident alien.
IRS Action: Recommended
RECOMMENDATION 00971-009
RECOMMENDATION TEXT:
Current Text: Entities described in section 1473(3) Recommended Text: A specified domestic entity does not include: (A) any corporation the stock of which is regularly traded on an established securities market, (B) any corporation which is a member of the same expanded affiliated group (as defined in section 1471 (e)(2) without regard to the last sentence thereof) as a corporation the stock of which is regularly traded on an established securities market, (C) any organization exempt from taxation under section 501(a) or an individual retirement plan, (D) the United States or any wholly owned agency or instrumentality thereof, (E) any State, the District of Columbia, any possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing, (F) any bank (as defined in section 581), (G) any real estate investment trust (as defined in section 856), (H) any regulated investment company (as defined in section 851), (I) any common trust fund (as defined in section 584(a)), and (J) any trust is described in section 4947(a)(1). Justification: Adding additional language assists the taxpayer to quickly determining if it is a specified domestic entity required to file form 8938.
IRS Action: Recommended
RECOMMENDATION 00971-010
RECOMMENDATION TEXT:
Current Text: Recommended Text: Create a chart that summarizes Types of Reporting Thresholds. Justification: Instructions are lengthy and a quick-reference chart, summarizing the filing requirements, would simplify the determination for taxpayers and minimize their compliance burden. Some of the classifications can be combined for ease of reading. For example, taxpayers living in the United States and filing either as unmarried or married filing separately have the same reporting threshold.
IRS Action: Recommended
RECOMMENDATION 00971-011
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add Tip: The valuation of the asset reported is the maximum value during the year even though the reporting thresholds measure the value on the last day of the year and more than $150,000 during the year. Justification: Adding the tip adds clarity that the reporting value is the highest value during the year even though the reporting threshold has an end of year value measurement.
IRS Action: Recommended
RECOMMENDATION 00971-012
RECOMMENDATION TEXT:
Current Text: Recommended Text: Create a chart that summarizes the methods and timing for valuations of reportable assets following the first paragraph under the heading Determining the Total Value of Your Specified Foreign Financial Assets. Justification: Instructions are lengthy and a quick-reference chart, summarizing valuation methods and timing of valuations for reportable assets, would reduce complexity and lessen the compliance burden.
IRS Action: Recommended
RECOMMENDATION 00971-013
RECOMMENDATION TEXT:
Current Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a specified foreign financial asset with a value of $1,000. Recommended Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000 at the end of the year. I have a separate interest in a specified foreign financial asset with a value of $1,000 at the end of the year. Justification: Adding the language makes it clear to the taxpayer the reporting threshold in the example is met by the end of the year values.
IRS Action: Recommended
RECOMMENDATION 00971-014
RECOMMENDATION TEXT:
Current Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a specified foreign financial asset with a value of $1,000. Recommended Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000 at the end of the year. I have a separate interest in a specified foreign financial asset with a value of $1,000 at the end of the year. Justification: Adding the language makes it clear to the taxpayer the reporting threshold in the example is met by the end of the year values.
IRS Action: Recommended
RECOMMENDATION 00971-015
RECOMMENDATION TEXT:
Current Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a specified foreign financial asset with a value of $60,000. Recommended Text: My spouse has a separate interest in a specified foreign financial asset with a value of $10,000 at the end of the year. I have a separate interest in a specified foreign financial asset with a value of $60,000 at the end of the year. Justification: Adding the language makes it clear to the taxpayer the reporting threshold in the example is met by the end of the year values.
IRS Action: Recommended
RECOMMENDATION 00971-016
RECOMMENDATION TEXT:
Current Text: Financial accounts maintained by a foreign financial institution Recommended Text: Add: A foreign financial institution includes a financial institution that is organized under the laws of a U.S. possession (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands). Justification: The discussion of a foreign financial institution is worthy of repetition in item 1 under specified foreign financial assets. The taxpayer may not look at the Financial Account paragraph where the language is currently.
IRS Action: Recommended
RECOMMENDATION 00971-017
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add Tip: A bona fide resident of a U.S. possession (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands) A financial account maintained by a financial institution organized under the laws of the U.S. possession of which you are a bona fide resident is not required to be reported. See Exceptions To Reporting Bona Fide Resident of a U. S. Possession. Justification: Adding the tip helps bona fide residents of a US possession to know that the account does not need to be included in Form 8938.
IRS Action: Recommended
RECOMMENDATION 00971-018
RECOMMENDATION TEXT:
Current Text: Recommended Text: Create a chart that summarizes excepted assets. Justification: A quick-reference chart, summarizing excepted asset categories, would minimize the time taxpayers must spend to complete this form and eases taxpayer burden.
IRS Action: Recommended
RECOMMENDATION 00971-019
RECOMMENDATION TEXT:
Current Text: Recommended Text: Create a chart that summarizes excepted assets. Justification: A quick-reference chart, summarizing excepted asset categories, would minimize the time taxpayers must spend to complete this form and eases taxpayer burden.
IRS Action: Recommended
RECOMMENDATION 00971-020
RECOMMENDATION TEXT:
Current Text: Joint Form 5471 or Form 8865 Filers Recommended Text: Joint Form 5471 Information Return of U.S. Persons with Respect to Certain Foreign Corporations or Form 8865 Return of U.S. Persons With Respect to Certain Foreign Partnerships Filers Justification: Adding the form descriptions helps the taxpayer easily know what the forms relate to and how that section may apply to them.
IRS Action: Recommended
RECOMMENDATION 00971-021
RECOMMENDATION TEXT:
Current Text: Recommended Text: Move penalties after who must file section. Justification: Penalties for not filing Form 8938 are significant. The taxpayer should be informed early in the instructions of the penalty.
IRS Action: Recommended
RECOMMENDATION 00971-022
RECOMMENDATION TEXT:
Current Text: Report the total maximum value of these deposit accounts. Recommended Text: Report the total maximum value of these deposit accounts during the year. Justification: This language is consistent with the language for line 23 of Part V.
IRS Action: Recommended
RECOMMENDATION 00971-023
RECOMMENDATION TEXT:
Current Text: Report the total maximum value of these custodial accounts. Recommended Text: Report the total maximum value of these custodial accounts during the year. Justification: This language is consistent with the language for line 23 of Part V.
IRS Action: Recommended
RECOMMENDATION 00971-024
RECOMMENDATION TEXT:
Current Text: Report the total maximum value of these accounts and assets. Recommended Text: Provide guidance on how to report the maximum value when some of the assets reported use a range. Justification: Taxpayers need to know how to report the maximum value in the assets when some of the asset values are a range.
IRS Action: Recommended
RECOMMENDATION 00971-025
RECOMMENDATION TEXT:
The instructions should be written in plain English language and avoid referring a taxpayer to code, regulations, or other guidance. The other guidance will be highly technical in nature and the taxpayer may have to seek professional help to complete the tax return accurately. Hiring a professional will increase the cost of tax compliance.
IRS Action: Recommended
RECOMMENDATION 00971-026
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add: Taxpayer Advocacy Panel Standard Language to instructions: Taxpayers have an opportunity to provide direct feedback to the Internal Revenue Service (IRS) through the Taxpayer Advocacy Panel (TAP). TAP is a Federal Advisory Committee comprised of an independent panel of citizen volunteers who listen to taxpayers, identify taxpayers’ systemic issues, and make suggestions for improving IRS customer service. Contact TAP at www.improveirs.org Justification: Taxpayers are entitled to know their rights and where they may find assistance if they feel their rights have not been respected.
IRS Action: Recommended
RECOMMENDATION 00971-027
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add: Taxpayer Advocate Service Standard Language. See attachment 1 Justification: Taxpayers are entitled to know their rights and where they may find assistance if they feel their rights have not been respected.
IRS Action: Recommended
RECOMMENDATION 00971-028
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add a checkbox to Form 8938 to allow the taxpayer to satisfy the FBAR requirements by authorizing the IRS to share the information necessary to satisfy the FinCEN Form 114 requirements. Justification: Taxpayers must accumulate similar information for these forms. Although these forms serve differing purposes, requiring duplicated work increases the compliance burden and cost to taxpayers. We believe sharing information with other agencies would be similar to other statutory allowances for the IRS to disclose return information for other purposes. See report for additional information on this recommendation. Foreign Asset Reporting: Actions Needed to Enhance Compliance Efforts, Eliminate Overlapping Requirements, and Mitigate Burdens on U.S. Persons Abroad | U.S. GAO We recommend the IRS evaluate the possibility of sharing information within the Treasury as currently occurs with the State Department and Social Security Administration.
IRS Action: Recommended
RECOMMENDATION 00971-029
RECOMMENDATION TEXT:
Current Text: Recommended Text: Add a checkbox to Form 8938 to allow the taxpayer to satisfy the FBAR requirements by authorizing the IRS to share the information necessary to satisfy the FinCEN Form 114 requirements. Justification: Taxpayers must accumulate similar information for these forms. Although these forms serve differing purposes, requiring duplicated work increases the compliance burden and cost to taxpayers. We believe sharing information with other agencies would be similar to other statutory allowances for the IRS to disclose return information for other purposes. See report for additional information on this recommendation. Foreign Asset Reporting: Actions Needed to Enhance Compliance Efforts, Eliminate Overlapping Requirements, and Mitigate Burdens on U.S. Persons Abroad | U.S. GAO We recommend the IRS evaluate the possibility of sharing information within the Treasury as currently occurs with the State Department and Social Security Administration.