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Juan del Rio
Senior Nomad
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IRS and a Mexican Fideicomiso
I'm interested in finding out if anyone else has had the same problem that my friend is having with the IRS with his Mexican Fideicomiso:
The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso . He has lived in Baja for over 20 years with a
Registered Fideicomiso on his home.
This "Proposed Assessed Penalty" is new to both of us.
The penalty is equal to 35% of the value of the property transferred to the trust.
If anyone knows about these forms and having to file...or, has had success dealing with the IRS on this kind of problem, your input would be helpful.
Thanks.
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longlegsinlapaz
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Juan del Rio, below is the thread from a year ago with a lot of discussion on filing versus not filing. If the IRS is now giving your friend flack,
then I guess those horrendous threats the IRS made a year ago were serious.
Not sure if the "I didn't know!" line would fly at this late date, but have your friend read this thread. There are a lot of URLs to sources of
informative legal information. Sadly, a year ago as many of us were trying to figure out how to proceed, not even the IRS could answer any of our
questions!
I chose to file before the 9/23/09 deadline, as did several of my friends....but I know many chose not to.
It would be interesting if your friend could document for everyone how his situation evolves as he deals with the IRS.
http://forums.bajanomad.com/viewthread.php?tid=40624#pid4417...
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gnukid
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I found these two references
http://www.taxqueries.com/questions/639/federal-form-3520-a-...
http://www.rpifs.com/AICPA/form3520.htm
It seems that you should file the forms and you should be forgiven and request any fine be waived, if you can file as the default trustee since your
trustee was unaware of the requirement to file apparently, explain that your trustee failed to file as the IRS code was not possible to be understood
as its complicated, you've done nothing wrong as you have no reportable events-not sure what a reportable event is but I gather selling it might be a
reportable event.
I am not an accountant and know nothing about this personally.
Use the IRS web site and get the forms and instructions-there is nothing wrong with doing your best to figure it out and comply to your best ability.
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k-rico
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I file the 3520 forms every year (started last year during the amnesty to catch up and filed again this past spring). There's another one that has to
do with foreign trusts that is due in September of each year. I file that too. Not sure of the form number. I could look in my records if anyone is
interested.
You may have heard that the gov is a bit short of cash these days. Assume they'll be going after every penny they can get.
[Edited on 8-29-2010 by k-rico]
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Dave
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| Quote: | Originally posted by Juan del Rio
The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso . He has lived in Baja for over 20 years with a
Registered Fideicomiso on his home.
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I'd be interested in knowing how the IRS came to contact him. 
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wessongroup
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| Quote: | Originally posted by Dave
| Quote: | Originally posted by Juan del Rio
The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso . He has lived in Baja for over 20 years with a
Registered Fideicomiso on his home.
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I'd be interested in knowing how the IRS came to contact him.
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Ditto's
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john68
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There's a good article in the April 2009 issue of Trusts & Estates magazine by Amy P. Jetel, a lawyer in Austin, Texas. Ms. Jetel concludes that
a fideicomiso is not a trust for purposes of foreign trust reporting. Your friend might want to get a copy of the article--I'm an old tax lawyer and
I thought it was pretty persuasive.
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Juan del Rio
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Thank you all for your help on this. My friend was one of the unlucky one's to get tagged for an in-depth audit from the IRS. I don't have the
background on what tiggered the issue with 3520/3520A forms.
Thank you John68 for the information from the April 2009 issue of Trusts & Estates magazine by Amy P. Jetel. Great lead.
It would be great to hear from anyone who has experienced the issue with the IRS and who may have been in the same situation and it's resolve.
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SDRonni
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Anyone know of a tax person in San Diego area who is familiar with the filing of these forms?
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Dave
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| Quote: | Originally posted by SDRonni
Anyone know of a tax person in San Diego area who is familiar with the filing of these forms? |
SDRonni, check your U2U.
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SDRonni
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Dave, check your U2U
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wessongroup
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| Quote: | Originally posted by john68
There's a good article in the April 2009 issue of Trusts & Estates magazine by Amy P. Jetel, a lawyer in Austin, Texas. Ms. Jetel concludes that
a fideicomiso is not a trust for purposes of foreign trust reporting. Your friend might want to get a copy of the article--I'm an old tax lawyer and
I thought it was pretty persuasive. |
Must agree... the intent of the law was not directed at someone buying a house in a Federal Zone in Mexico... under Laws structured for same, by the
Mexican Government.
And to ask the IRS if they will enforce a Law ... well, it all depends how one asks a question, or does not...
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k-rico
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The first post said:
"The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso ."
So it seems they disagree with Amy P. Jetel
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wessongroup
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maybe, if.....
| Quote: | Originally posted by k-rico
The first post said:
"The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso ."
So it seems they disagree with Amy P. Jetel |
Maybe but, were not sure what triggered the "audit" and the other factors which may influence their "interpretation" of the Law and regulations.. in
this particular case... at this time...
We also do not know, if ALL Mexican Fideicomiso were being assessed for not filing .... Only this one case, at this time .. 
Would offer it's a stretch to classify a Mexican Fideicomiso the same as a "Trust" formed within the United States ... as one normally see one..
It was my understanding that this law was directed toward the offshore movement of "funds" which had been occurring .. which also tied into an
agreement with UBS and our Federal Government to disclose the names of certain individuals on numbered accounts... which was agreed to, in
Switzerland, but the names have never been submitted to the Finance Committee charged with this investigation, to date.
Buy a house in Mexico .. maybe ...
[Edited on 8-29-2010 by wessongroup]
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DianaT
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| Quote: | Originally posted by k-rico
The first post said:
"The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso ."
So it seems they disagree with Amy P. Jetel |
From past experience in some other matters, the IRS's first reaction is you are wrong and you will pay and pay the penalty.
They hope there will be no argument; and with a strong well stated argument, they can change their minds. We have never stopped with what one agent
says.
May win, may not, but certainly worth an effort, I think, rather than pay that penalty.
[Edited on 8-29-2010 by DianaT]
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wessongroup
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| Quote: | Originally posted by DianaT
| Quote: | Originally posted by k-rico
The first post said:
"The IRS is assessing a penalty for not filing Form 3520 and 3520A for a Mexican Fideicomiso ."
So it seems they disagree with Amy P. Jetel |
From past experience in some other matters, the IRS's first reaction is you are wrong and you will pay and pay the penalty.
They hope there will be no argument; and with a strong well stated argument, they can change their minds. We have never stopped with what one agent
says.
May win, may not, but certainly worth an effort, I think, rather than pay that penalty.
[Edited on 8-29-2010 by DianaT] |
Ditto's...
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k-rico
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I agree it's worth arguing if you get assessed the penalty. It's a stiff one. But I think it took me 15 minutes this past April to fill out the form,
and of course the cost of an envelope and a stamp. There's no additional tax liability involved, it's just a reporting requirement.
I had a tax preparer do the intial ones that brought me up-to-date last fall (4 years of amended returns) and then just copied what he did when I did
it myself last April.
How would the IRS know is a good question. The initial poster mentioned an audit and the taxpayer must have mentioned the Fideicomiso during the
audit.
Whistleblowers get 15% of what the IRS recovers from a tip. Anybody have angry ex-spouses around?
And, no doubt, someday soon the Mexican banks will be talking with the IRS, especially if they can collect the 15% whistleblower fee.
Putting the property in your Mexican spouses name is an option. I decided it was a bad option. Better to have a fideicomiso.
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k-rico
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| Quote: | Originally posted by wessongroup
Would offer it's a stretch to classify a Mexican Fideicomiso the same as a "Trust" formed within the United States ... as one normally see one..
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True, but this is for reporting foreign trusts. I don't know if you can assume a foreign trust needs to conform to the American definition to be
reportable.
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Juan del Rio
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Here's what my friend told me on what tiggered the audit:
" Let Baja Nomads know that the IRS was auditing our company (which it seems they do every year) and started looking more into my personal matters and
where I live. They found that I live in Mexico and that I had sold some property and bought property. It just went on from there. The fine is
substantial."
We appreciate everyone who has been able to contribute some advice on this matter. Dealing with the IRS is not a "happy, happy, joy, joy" experience
for sure.
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Dave
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| Quote: | Originally posted by k-rico
Whistleblowers get 15% of what the IRS recovers from a tip. Anybody have angry ex-spouses around?
And, no doubt, someday soon the Mexican banks will be talking with the IRS, especially if they can collect the 15% whistleblower fee.
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I believe the trigger is more than 200,000 in income and 2mil in liability. The object was going after 'fat cats'. Otherwise, everyone would inform on
everybody.
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