Foreign Trust Bank Account Reporting

Foreign Trust Account Reporting on FBAR & Form 3520

Foreign Trust Bank Account Reporting: As if dealing with the IRS and Form 3520 for Foreign Trust Reporting is not bad enough, you may have an additional requirement when the trust has foreign accounts; it gets complicated. See, in general when you have a managed investment fund that has various foreign investments in the fund, then you do not have to report the specific accounts within the fund — just the main account. With the foreign trusts, the same rules do not apply. Therefore, if you have foreign bank and other financial accounts within the trust, you may need to report them on items such as the FBAR, FATCA, etc.

Example of Foreign Account Reporting for Trusts

Let’s take a simple example:

Ralph is a U.S. Person (Green Card Holder).

He has a Foreign Trust located outside the U.S.

The trust is a grantor trust in which Ralph is the grantor (or “Settlor”).

The trust has rental properties, and the rental properties deposit funds into a bank account that is in the trust name.

Therefore, the trust has its own bank account in the trust name.

A. Do Trusts File FBAR?

Yes.

There is no exception to FBAR filing for trusts.

As provided by FinCEN:

“Who Must File

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

a financial interest in or signature or other authority over at least one financial account located outside the United States if

the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.”

B. Is a Foreign Trust a U.S. Person?

If the foreign trust is a grantor trust, with a U.S. Person grantor or settlor (owner), then the U.S. Person should presumably file the FBAR on behalf of the trust.

C. What if the Trust Does Not File the FBAR?

If the trust does not file the FBAR, it may become subject to significant fines and FBAR Penalties.

Foreign Gift, Trust, and Inheritance Tax Specialist Team

Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure, including help clients with late reporting of Forms 3520 and 3520-A.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about our Firm?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

The post Foreign Trust Bank Account Reporting on FBAR & Form 3520 Rules appeared first on Form 3520 IRS Resource Guide: Foreign Gift & Trust Specialist.