Form 8938 penalty

What triggers this penalty

• Failing to attach required specified foreign financial asset reporting to an income tax return.
• Omitting assets or filing incomplete information that does not satisfy the reporting requirement.
• Assuming that an FBAR or a foreign tax return replaces Form 8938.

Potential amount

• The initial failure-to-file penalty is $10,000 when Form 8938 is required.
• After more than 90 days of continued failure following IRS notice, additional $10,000 penalties can apply for each 30-day period or fraction, up to $50,000 in total filing penalties.
• Tax underpayments related to undisclosed assets may carry separate penalties; those are not included in the filing penalty total.

Common situations

• A taxpayer reports foreign accounts on an FBAR but misses Form 8938.
• A new U.S. resident overlooks foreign financial assets retained abroad.
• An income tax return reports investment income but omits the required asset disclosure.

Confirm that the form was required

Form 8938 depends on specified taxpayer status, asset values and the applicable threshold, which can differ by filing status and residence. Not every foreign asset or account automatically creates a filing obligation. Establish the relevant year’s facts before accepting a penalty assessment.

Reconcile the different disclosures

FBAR and Form 8938 have different scopes and filing systems. Some assets appear on both, while others do not. Review account statements, ownership and any reporting exceptions carefully; another international form may change how information is listed without eliminating every Form 8938 obligation.

Check the return as well as the assets

A missing disclosure can accompany omitted investment income or other return errors. Identify whether the correction involves only information reporting or also additional tax. Responding to a filing penalty does not settle a separate tax calculation, and any continuation notice deserves prompt attention.

What to do after receiving a notice

• Read every page of the notice, identify the form, tax period and legal basis, and record the response deadline immediately. Do not ignore the notice while you investigate whether the assessment is correct.
• Gather the filed return, attachments, extension requests, delivery confirmations and correspondence. Compare the IRS calculation with your records before accepting the amount or disputing it; a filing error and an IRS processing error require different explanations.
• Respond through the address or method stated in the notice, keep a complete copy and proof of timely delivery, and review any appeal rights. Do not assume that a telephone call or a pending relief request suspends another deadline.

Is penalty relief available?

• Relief may be available depending on the facts. Identify the specific penalty and the applicable relief standard before choosing a procedure; eligibility for one type of relief does not establish eligibility for another.
• If reasonable cause is relevant, prepare a truthful, dated account of what prevented compliance, what steps you took to comply, and how quickly you corrected the problem. Support the explanation with records rather than a generic claim that you did not know the rule.
• Chirino USA can review the filing history, notice and supporting evidence to help evaluate correction and response options. Filing the missing information does not itself cancel an assessed penalty or guarantee that the IRS will accept a relief request.