Latest from Form 3520 IRS Blog - Page 2

Foreign Employment Pension Trust Foreign Employment Pension Trusts & Form 3520 Foreign Employment Trusts & Form 3520: When a U.S. person has an interest in a foreign pension, that interest is considered an interest in a foreign trust. While technically foreign pensions are considered trusts, the question of whether they are reportable on Forms 3520/3520-A is still unclear. This is further complicated by the fact that recent Revenue Ruling 2020-17 exempts certain foreign tax-deferred trusts…
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…
Foreign Gift Tax Foreign Gift Tax Foreign Gift Tax: A common question we receive at our International Tax Law firm, is how to report foreign gift tax on IRS form 3520. Many Taxpayers are surprised to learn that form 3520 is not used to report foreign gift tax because typically, there is no foreign gift tax. Generally, when a U.S. Person receives a gift from a foreign person, there is no tax associated with…
US Agent & Foreign Trusts US Agent & Foreign Trust US Agent & Foreign Trust: When a U.S. person has to file a Form 3520 because they have an ownership in a foreign trust, they may have to provide a copy of the trust documents as well. This can be overburdensome and completely unfair to the taxpayer. In some instances, the foreign trustee may not want to cooperate with the IRS, and it may impact…
Foreign Gift From Related Person Foreign Gift From Related Persons Foreign Gift From Related Person: When a U.S. person receives a gift(s) from a foreign person individual or entity (such as a foreign corporation) and the aggregate value of the gifts within the tax year exceed the reporting threshold, the gift must be reported to the IRS. In calculating the amount, it is important to consider if there are related parties. If there are…
Form 3520 Penalty Appeal Form 3520 Penalty Appeal  Form 3520 Penalty Appeal: When the IRS issues a penalty for not timely or accurately filing a Form 3520, the penalties can be tough. When it comes to foreign gifts, the penalty is usually 25% of the value of the gift. When it comes to trusts, the penalties stagger based on the type of trust transaction involved. When a person receives a Form 3520 Penalty, it is…
Foreign Grantor Trust & IRS Taxation Foreign Grantor Trust Taxation & the IRS Foreign Grantor Trust Taxation & the IRS: A foreign grantor trust is a common type of trust. Essentially, it is just a grantor trust that fails the IRS court and control tests. In other words, it is a trust that simply does not qualify as a U.S. based grantor trust. Thereby, by default is a foreign grantor trust.  When it comes to…
Grantor Trust or Non-Grantor Trust Foreign Grantor Trust vs Non-Grantor Trust What is a Foreign Grantor Trust vs. Non-Grantor Trust: One common question we receive is: “What is the difference between a grantor trust vs non-grantor trust for Forms 3520 and 3520-A?” While foreign trust reporting law in general can be complicated, it is important understand the basics of these two different types of trusts. Whether or not the trust is considered a grantor or…
Employment Trusts and Form 3520 Employment Trust Form 3520 Reporting Employment Trusts & Form 3520: One of the most confusing areas of Form 3520 and 3520-A reporting involves the IRS employment trust. For example, when a U.S. person has a foreign pension, technically that is a trust. That is because the employer is the grantor; the plan administrator is the trustee, and the employee is the beneficiary. But, since the employee does not necessarily own…