International Tax Consulting

Foreign Trust Reporting

What is Foreign Trust Reporting?

A Foreign trust is a trust that is governed by a foreign jurisdiction outside of the U.S. or is supervised by a foreign person or entity. In general, the IRS has determined that a U.S. person that provides supervision over the administration of a foreign trust or one or more persons that have authority to control all substantial decisions of a foreign trust must report certain transactions with foreign trusts.

Foreign Trust Reporting can include, but is not limited to:

  • reporting ownership of the foreign trust,
  • the trust’s beneficiaries,
  • taxable income, property, and assets transferred into the foreign trust.
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Get confidential help with foreign trust reporting. Talk with our international tax attorneys during a consultation by clicking here or calling us at (410) 497-5947.

The Complexities of Foreign Trust Reporting

Foreign Trust Reporting can be complexed to that of domestic trust reporting because there is additional foreign reporting required. The taxation laws governing foreign trust reporting impact the income and distributions depending on the foreign trust’s state during the time examinations by the IRS are made.

The IRS is cracking down on offshore reporting evasion by offshore scheme promoters attempting to circumvent the current payment of income tax through the use of foreign trusts. Over the years, with the implementation of the Foreign Account Tax Compliance Act (FATCA), countries around the world are providing the U.S. with foreign trust information, making it difficult for U.S. citizens to evade foreign trust reporting requirements.

Should I be reporting my Foreign Trust to the IRS?

U.S. persons are subject to Foreign Trust Reporting if a U.S. person creates a foreign trust, transfers funds or property into a foreign trust, or is the owner, beneficiary, or trustee of a foreign trust. If you own or control or benefit from a foreign trust, it is likely that you should be reporting the requisite information of your foreign trust.

How do I avoid penalties when reporting my Foreign Trust?

To avoid criminal action against you for non-Foreign Trust Reporting, be sure to submit the proper forms timely, provide all of the information as detailed in section 6048(b) of the Internal Revenue Code, and make sure that the information is correct. Additional penalties will be enforced for noncompliance after the IRS has issued a notice to comply with the proper Foreign Trust Reporting requirements.

What forms are needed to report my Foreign Trust?

In general, Form 3520-A is commonly used for foreign trust reporting. Found in section 671-679 of the Internal Revenue Code “a U.S. person treated as an owner of any portion of a foreign trust under the grantor rules is responsible for ensuring that the foreign trust files

Form 3520-A pursuant to IRC section 6048(b) and furnish the required annual statements to its U.S. owners and U.S. beneficiaries.

Reporting foreign trust assets are stated on Form 8938 and foreign bank and financial accounts are reported on FinCEN Form 114. There are exceptions to filing Form 3520, however a U.S. person is subject to prosecution for not appropriately reporting foreign trusts requirements.

Where can I get help with reporting my Foreign Trust?

The attorneys at Frost Tax Law are experienced with reporting requirements for foreign trusts and may be able to help you avoid foreign trust reporting penalties with the IRS.

Contact our international tax attorneys for a consultation by clicking here to schedule a meeting or by calling us at (410) 497-5947 to get started today.


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