I came across this on the 'In the Roo Forum' and felt that there may be some here who were as unaware as I was... I searched here first and couldn't find anything on this so FYI and use: "The IRS wants to know about your Fideicomiso!": http://tinyurl.com/mbcugq http://fideicomiso.wordpress.com/ Also, some other informative supportive links at the above site. Forms 3520 and 3520-A: http://tinyurl.com/mr3757 ETA: Original Frequently Asked Questions – Posted May 6, 2009 http://www.irs.gov/pub/irs-utl/faqs-revised_6_24.pdf (see # 42)
Extremely timely posting, Mole. Every time a taxpayer files Schedule B with their individual tax return, they are asked about this on the form itself: they are also asked about whether they have a foreign bank account. Here's the Schedule B for 2008, for anyone who'd like to check. (These questions have appeared on Schedule B for as long as I can remember.) http://www.irs.gov/pub/irs-pdf/f1040sab.pdf (Scrolling down the page, you will first see Schedule A, then B. The questions appear at the bottom of Schedule B.) The forms required for filing can be downloaded for 2008, and prior years. As with most IRS forms, at first blush they look onerous to fill out, but after you've completed the first one they get easier.
Thanks for your comment. We bought our place in August 2007 and when doing '07 taxes I interpreted it just as I have bolded above, as having a bank account, an interest bearing vehicle and not a Trust holding property due to location under Mexican Law. My bad as it turns out. Since finding that link this morning, I've been doing a lot more searching and it looks like not many are/were aware that it includes the Trust too.
Hi, Mole. In commenting about foreign bank accounts, I was referring to the requirement, separate from the requirement to report foreign trusts, of reporting any foreign bank accounts in which a U.S. person is one of the owners of the account, or is one of the signatories. (This later requirement for an annual filing kicks in if the foreign bank accounts, combined, held more than the equivalent of $10,000 USD at any point in time during the tax year.) The report required is of the existence of the account, and it doesn't matter whether any interest is earned by the account. So, there are requirements to report foreign trusts, annually; and, to report foreign bank accounts, annually. Here's the link to the form for reporting foreign bank accounts for anyone who'd like to look. http://www.irs.gov/pub/irs-pdf/f90221.pdf My reading, in general, suggests that the IRS is paying more attention to what taxpayers living abroad are doing with their money, and loading the reporting requirements- such as these- with more severe penalties, as time goes by. ________________ For those who are officers or directors of a foreign corporation; or, who own 10% or more of the foreign corporation's stock, there are separate reporting requirements for that, as well. See form 5471, and the related forms and requirements. http://www.irs.gov/pub/irs-pdf/f5471.pdf
I have been paying fideicomiso since 2006, and was never aware of this, since I earn no money in Mexico. I wonder if the "amnesty" period (ends Sept. 23, 2009) applies to past years as well. Other searching has indicated that there IS normally a penalty for deliquent filing of form 3520.
Hi, Rick, I read what was posted here, and the information in the links. What it seemed to say, is that the years all the way back to 2003 could be filed before the 23rd, and the penalties would be waived; it also seemed to say that IRS was simply not going to bother with the years prior to 2003, as a practical matter. This struck me as a reasonable approach, if what they're trying to do is get better compliance with the reporting requirements regarding foreign trusts. I don't have a fidecomiso, nor a foreign corporation, so I don't yet have to deal with the reporting requirements associated with these but I have been filing the required reports of the existence of foreign bank accounts from the first year that I had any (2003). I do know they watch these, as I failed to complete one properly, one year, and it kicked back: I had to resubmit it, with corrections. It wouldn't be prudent not to also point out that nothing in what I read as a result of CancunMole's original post said anything about the waiving of penalties for late filing/failure to file reports of foreign corporations or bank accounts. Everyone's situation is a little different, and it's best to consult a tax professional if there are other issues that go beyond the simple need to file these three, different annual reports as it gets sufficiently complex when you begin dealing with concrete situations.... An example of what could complicate the picture would be unreported income, coupled with the failure to file the corresponding report.
Thanks v, and I hope you're right. I do have a "token" Mexican bank account, (less than $50 US in it) and I believe I report that. But I just had no idea that a fideicomiso was considered a foreign trust. I wonder how many ex-pats are under that same misconception. However, if I read correctly, the penalties for deliquent filing the 3520 are quite severe, so that's why I am asking about this amnesty period, and if it covers the past years.
http://www.irs.gov/pub/irs-utl/faqs-revised_6_24.pdf When we were buying our place I thought that we had covered all bases so I did some quick reading at all the links from the initial article and then tracked down this link at the IRS Site to be sure. Note: You may need to file both Form 3520 and 3520-A.
Nice work, Mole. You've provided a real service for those in a position to respond. For the others, do you know anyone in the Cancun area with expertise in U.S. taxation law who is willing to take professional responsibility for helping those with issues other than omissions to file the required reports? (As I mentioned earlier, I don't have these issues, myself, but there may be those who would benefit from some expert advice, at this point.)
