FATCA: Reporting Requirements for U.S. Owners of a Foreign Trust .

[JimMcG]

My direct experience with the IRS is that they can and will make any assesment they want, with or without proof. They can and will make an assessment with evidence to the contrary of the assesment. It happended to me. Yeah, you'll perhaps win in Federal Court, after $100K or so in legal bills just for the court and 3 or 4 years of legal bills fighting the IRS, not to mention the almost debilitating stress. I guarantee that irrespective of the outcome of such a dispute you won't feel as if you won, you'll be bleeding from every orifice of your body after they get through with you.

Believe it or not the Mexican Hacienda (IRS) and the IRS have a good cooperative working relationship. A friend here in Mexico had a problem with the Hacienda and they were able, in a short time, to get copies of statements, etc. for a Bank Account in AZ, so don't fool your self on that one. I know this first hand, no rumor.

The troubling thing about this to me is that it is a reporting requirement and you can be fined for not reporting. The way I read it you are required to report the value of property you hold with a bank trust every year. It does not seem to talk about income, that's established in the tax code. I really don't think it was set up to be concerned with real estate held this way but it apprears to be an unintended effect that cold give you major heartburn if they choose to enforce it. SH*T I've got heartburn thinking about the IRS. I think I've only got a couple of more years before I can apply for Mexican citizenship. Where is that damned tequila bottle.

How will that help, Roberto?

 

[fatboyharley]

yes all property owners of foreign property should complete the paperwork regardless of country property is in and regardless if you rent or not ; additionally if you have a bank account in any foreign country you should file the paperwork; paperwork is quite extensive and you may have to go back several years.

 

[Roberto]

:mexico::mexico::mexico::mexico:

How will that help, Roberto?

I won't have to deal with the fri**en IRS !!!

 

[JimMcG]

:mexico::mexico::mexico::mexico:


I won't have to deal with the fri**en IRS !!!

Not so fast!

Renouncing your citizenship
Given how much the United States as a nation professes to value freedom, your freedom to opt out of the nation itself is surprisingly limited. The State Department does not record the annual number of Americans renouncing their citizenship—“renunciants,” as they are officially termed—but the Internal Revenue Service publishes their names on a quarterly basis in the Federal Register. The IRS's interest in the subject is, of course, purely financial; since 1996, the agency has tracked ex-Americans in the hopes of recouping tax revenue, which in some cases may be owed for up to ten years after a person leaves the country. In any event, the number of renunciants is small. In 2002, for example, the Register recorded only 403 departures, of which many (if not most) were merely longtime resident aliens returning home.

http://harpers.org/archive/2004/10/0080240

 

[Roberto]

Not so fast!

Renouncing your citizenship
Given how much the United States as a nation professes to value freedom, your freedom to opt out of the nation itself is surprisingly limited. The State Department does not record the annual number of Americans renouncing their citizenship—“renunciants,” as they are officially termed—but the Internal Revenue Service publishes their names on a quarterly basis in the Federal Register. The IRS's interest in the subject is, of course, purely financial; since 1996, the agency has tracked ex-Americans in the hopes of recouping tax revenue, which in some cases may be owed for up to ten years after a person leaves the country. In any event, the number of renunciants is small. In 2002, for example, the Register recorded only 403 departures, of which many (if not most) were merely longtime resident aliens returning home.

http://harpers.org/archive/2004/10/0080240

Thanks a lot Jim, you really know how to pop a guys bubble !!:hairout::hairout:

 

[hillrider]

Your elected representative in Congress passed this!!

First, I wanted to make sure that everybody is aware that this new stuff is not the IRS' making, but it is something that your Congressperson voted on and in the majority of cases voted "yes". As a result, I strongly suggest you contact your Congresspeople's offices with these questions and ask them what you should do. They have the power to repeal this nonsense, but will do only if many people contact them about it.

IMHO this law was drafted to restrict American's freedoms to bank with whomever they want to by making it very costly to do business with anyone else than one of the largest lobbying machine in Washington, the U.S. banks.

Finally, I found an article at http://www.procopio.com/userfiles/file/assets/files1/what-happens-in-mexico-is-taxed-in-the-us-828.pdf that explains the new law (which is already in effect) in detail. Scary stuff: the amount of paperwork required is horrible, and the costs for not filing are ridiculous, and now you get taxed on the fair market value whenever you occupy YOUR OWN HOME!!

Yes, that's what your representative passed. You should definitely contact them.

 

[Roberto]

First, I wanted to make sure that everybody is aware that this new stuff is not the IRS' making, but it is something that your Congressperson voted on and in the majority of cases voted "yes". As a result, I strongly suggest you contact your Congresspeople's offices with these questions and ask them what you should do. They have the power to repeal this nonsense, but will do only if many people contact them about it.

IMHO this law was drafted to restrict American's freedoms to bank with whomever they want to by making it very costly to do business with anyone else than one of the largest lobbying machine in Washington, the U.S. banks.

Finally, I found an article at http://www.procopio.com/userfiles/file/assets/files1/what-happens-in-mexico-is-taxed-in-the-us-828.pdf that explains the new law (which is already in effect) in detail. Scary stuff: the amount of paperwork required is horrible, and the costs for not filing are ridiculous, and now you get taxed on the fair market value whenever you occupy YOUR OWN HOME!!

Yes, that's what your representative passed. You should definitely contact them.

While brief, that article is the most informative here. Interesting and disturbing.

 

[MIRAMAR]

Here's an interesting update on an IRS ruling on Fideicomisos:

International Tax Blog: Form 3520 / 3520-A

Although here is what someone else states on the ruling:

US and Mexican Taxation for American Taxpayers in Mexico: PRIVATE LETTER RULING OBTAINED ON FIDEICOMISO FILING FORMS 3520 - PLR 201245002

I wish it were easier to determine if we need to fill out the 3520

 

[Kea]

I wish it were easier to determine if we need to fill out the 3520

I agree. Until IRS says a Fideicomiso is not a trust for these purposes, I'm filing the 3520 & 3520-A. If they determine that we do have to file them, the penalties for not doing it are just waaaaayyyyyy to large. I ain't taking any chances.

 

[Miakko]

Here's an interesting update on an IRS ruling on Fideicomisos:

International Tax Blog: Form 3520 / 3520-A

Although here is what someone else states on the ruling:

US and Mexican Taxation for American Taxpayers in Mexico: PRIVATE LETTER RULING OBTAINED ON FIDEICOMISO FILING FORMS 3520 - PLR 201245002

I wish it were easier to determine if we need to fill out the 3520

Unfortunately since this was a private letter ruling; it only applies to that individual taxpayer.

 

[MIRAMAR]

Yep, so we're still unsure whether a Fidiecomiso is a Foreign Trust. I wish the could give everyone clarity on this.

 

[Roberto]

I think this is a problem because US holders of a Fideicomiso do not have government representation on either side of the border. No one cares except teh holders of teh trust and of course the tax collectors.