Monday, March 12, 2012

Foreign Trust and Corporate Tax Returns Due on March 15th | Bellevue Tax Lawyer

March 15, 2012 is the filing deadline file for 2011 corporate tax returns (1120, 1120A, 1120S), to file an amended 2008 corporate return to claim a refund a refund, or to request an extension for 2011 using Form 7004.

March 15, 2012 is also the deadline to file foreign trust returns (Form 3520-A), or to request an extension using Form 7004.

Form 3520-A is required if a "US Person" is an "owner" of a foreign trust.  

A couple of examples of foreign accounts that could be treated as a trust are a Mexican FIDEICOMISO, and foreign retirement accounts that are similar in management or structure to a US IRA.

A Mexican FIDEICOMISO:
If you own land in a restricted zone of Mexico and are not a Mexican Citizen the Mexican Constitution prohibits foreigners from owning this type of property.  To get around this restriction the land is purchased through a Mexican trust called a Fideicomiso.  This purchase structure is treated as a trust by the IRS, creates a 3520 and 3520-A reporting requirement, and possibly other reporting requirements.

Update (Jan. 7, 2013): The IRS has stated that under some conditions this structure will not be considered a foreign trust.   The conditions to determine if the Fideicomiso is or is not a foreign trust depend on the individual facts and circumstances of each arrangement.  Please consult a tax professional to determine if you have a filing requirement.   

Foreign IRA Accounts:
Many foreign retirement plans are considered foreign trusts by the IRS.  If you have an interest in a foreign retirement plan there is a chance you need to file a 3520 and 3520-A.  If you aren't sure about an account contact a tax professional as the penalties for failing to file the required forms are harsh.  

In addition to these requirements, a taxpayer may have to report these accounts on the FBAR, and Form 8938.

If you have any questions please contact me directly or leave a comment.


As with everything related to the IRS, it is difficult to provide comprehensive information related to taxes and tax law on the web.  Please do not rely on this article without consulting a tax professional.

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