Your starting point should be form 8938 which covers all foreign assets including everything which would be included on this June’s FBARs. The 8938 has a part that deals with interests in foreign financial institutions and there is a part which deals with “everything else.” That section lists the relevant forms for foreign corporations, (5471) trusts,( 3520’s ) and partnerships, (8865) the idea being regardless of a taxable event, all foreign assets over a stated threshold now have to be registered with the IRS, and if you kindly file a form 3520, for example, the IRS will not make you repeat the details on the 8938.
I cannot imagine having to ask for the abatement of any late penalties on a 3520 if you are timely attaching new FATCA form 8938 to the 1040 which clearly contemplates the attachment of a 3520. The Service should not have a problem with it.
2012 is the first year of FATCA. The year 1040 filers have to register their foreign assets with Uncle. Next year and the year after, almost every foreign bank in the world (if they want to continue to handle U.S. source income, ) will be required to sign an agreement with the IRS to turn over the SSNs of all their American depositors or close their accounts.
A truthful completion of this year’s 8938 requires all 1040 filers to disclose with this year’s1040, whether there were foreign assets owned BEFORE 2011.
Tax preparers should be asking clients direct questions about foreign holdings. Your files should document your conversation about the details of foreign HOLDINGS because we are moving beyond the concept of a taxable event triggering a reporting requirement, to a full foreign asset disclosure concept where foreign assets are registered with the government.