The long hoped for ruling from IRS that fideicomisos, as they are typically worded, are not trusts for IRS purposes, has finally been issued. Rev. Rul. 2013-14 - Mexican land trust not a Leaving open the possibility that some may still be treated as trusts, they said the following:
Amazing that it took them this many years to figure out something so simple. Trust me they will now find a way to tax us on trusts in some form.
Great news. I wonder how many of us that have been filing 3520's and 3520A's will receive letters next year when we do not file these now officially non- required documents.
The tax obligation is unchanged, this ruling was only about the requirements for filing informational returns. If it came to that, responding with reference to the ruling and asserting that the obligation of the bank under the trust is no more than holding bare legal title, as is the case with my fideicomiso, should be enough. In a rare case, they might then ask to see a copy of the fideicomiso, if one had not already been submitted with the initial form 3520a.
I would be more excited about this news if I could find where it's posted on the IRS website, irs.gov. Has anyone been able to find it 'officially' posted there? I can't seem to find it...
V all of this has been done. It seems as though every year we receive a notice informing us that the information provided is not sufficient. We revise it send it off and it is OK until the next year. We send the forms in as revised the previous year and again are informed later that we need to do more. No one at the IRS has ever answered exactly what is needed.
My experience, in talking with IRS agents, trying to get information, has also been completely unsatisfying, leading me not to rely on them as a source of information. I've been lucky, then, as I've had no kick back on the ones I've filed. Of course I think part of that is that mine are filed essentially "in blank" when it comes to movements of money: I simply write none for many of the sections, and leave income and expenses at "zero" because I see the trust as having none, all such being part of my personal tax return as owner/grantor of the trust. Now, it appears, IRS has decided its not a trust at all, and the whole filing requirement appears to have been eliminated for most. As for those who own their Mexican property through corporation there is no change, and they still must file informational returns, just as before.
True, Tristan. From my point of view this ruling is an abberation, yet it must have been considered, and approved, at high levels within the IRS, making it unlikely they will change their position; however, there was logic to requiring the reporting if the aim is collect taxes (and I do think that's the business their in!). Even more abberant, from my point of view, was the earlier agreement Mexico and the Treasury entered into which said that Mexican banks did not have to report the existence of these trusts; yet, that would be logical if the IRS intended to do away with all forms of reporting of these trusts. But, again, how much sense does that make, if the goal is to collect taxes??? And, how will they know of the existence of a trust which may NOT be exempt from filing, as the ruling contemplates? They risk great defections from all forms of reporting, by taking this action, which runs counter to their massive efforts to track down off shore income.... Has IRS just decided to "throw in the towel"? Or, reached new heights of benevolence?
