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Author: Subject: Fideicomisos and Forms 3520/3520A--recent developments
john68
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[*] posted on 9-20-2010 at 09:43 AM
Fideicomisos and Forms 3520/3520A--recent developments


Amy Jetel, a lawyer in Austin, Texas (512-370-2750), wrote an article in Trusts & Estates magazine in April 2009 concerning the requirement to file forms 3520/3520A for a fideicomiso. It's her position that they are not required. She would probably send a reprint to anyone who requested one.

Amy recently represented a taxpayer in a Form 3520/3520A penalty dispute. Amy took the matter to the National Office of the IRS and the National Office directed the local revenue agent to back off. This result is not binding on other taxpayers, but it's indicative of the position the National Office might take in other cases.
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DianaT
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[*] posted on 9-20-2010 at 09:47 AM


Quote:
Originally posted by john68
Amy Jetel, a lawyer in Austin, Texas (512-370-2750), wrote an article in Trusts & Estates magazine in April 2009 concerning the requirement to file forms 3520/3520A for a fideicomiso. It's her position that they are not required. She would probably send a reprint to anyone who requested one.

Amy recently represented a taxpayer in a Form 3520/3520A penalty dispute. Amy took the matter to the National Office of the IRS and the National Office directed the local revenue agent to back off. This result is not binding on other taxpayers, but it's indicative of the position the National Office might take in other cases.


I think the article was posted before---I think, but do you have any links or more information about the recent dispute???

Thanks----it would be very good information for many.
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john68
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[*] posted on 9-20-2010 at 09:49 AM


That's all I know about the recent dispute.

I suggest you contact Amy for more details.
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bajajazz
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[*] posted on 9-20-2010 at 10:19 AM


The claim that holders of Fideicomisos need to file these forms is fictitious BS promulgated by the lawyers and tax consultants who specialize in terrifying expatriate Gringos and use forums like the Gringo Gazette to do so. They often advertise in the Gazette, and that so-called "newspaper" returns the favor by giving them free newspace to further their selfish interests.

Same thing goes for obtaining license plates from South Dakota. I just renewed my plates and had no trouble whatsoever, contrary to reports published in the Gazette that we now have to either physically reside in or at least visit South Dakota, or have no choice but to use the fee-for-service business that advertises in the GG to get re-plated in South Dakota.

A lot of what's known as "log-rolling" goes on in the pages of the English language publications in BCS, with an "expert" in one field writing press releases promoting the business interests of "experts" in another field. Credibility suffers as a result, which in the long run is bad business.
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wessongroup
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[*] posted on 9-20-2010 at 10:22 AM


Ditto's jazz...



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k-rico
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[*] posted on 9-20-2010 at 10:36 AM


Quote:
Originally posted by bajajazz
The claim that holders of Fideicomisos need to file these forms is fictitious BS promulgated by the lawyers and tax consultants who specialize in terrifying expatriate Gringos and use forums like the Gringo Gazette to do so.


Then why has Amy Jetel gone to such great lenghs to analyse the situation and why in the case mentioned, did the National Office direct the local agent to "back off"? That is, the local agent didn't think it was BS. There also have been recent posts where an individual is paying big bucks because of this problem.

What's your opinion based upon?

Completing the forms costs nothing except some time and once you've done it, it's real easy the next year.


[Edited on 9-20-2010 by k-rico]
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krafty
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[*] posted on 9-20-2010 at 10:48 AM


Gringo Gazette has been out of business for several years.
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john68
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[*] posted on 9-20-2010 at 11:05 AM


GG is still published in BCS.
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wessongroup
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[*] posted on 9-20-2010 at 11:12 AM
Close but no cigar


K-rico .... and will insure an interpretation which is not warranted by current law .. as a Fideicomiso is not the same as a trust set up in the United States

It is a work around to allow the purchase(?) of property of which the "Bank" holds title on, not you... also a "Trust" Revocable or Irrevocable is not normally set with a specific time for renewal, nor does in have a condition of review by a Government Agency prior to renewal and/or amendment when applicable, in this case the Ministry of Foreign Affairs... who's current requirements may change in 50 years ...

In one case the trust is for Tax purposes and the protection of assets, in the other cases it is to be able to live in a home in the "restricted zone"... in Mexico by a foreigner .... the "intent" of the Fideicomiso, has nothing to do with taxes ....

Also it should be noted that Mexico's Constitution gives the government control of land and the transfer of ownership rights. I do not believe this is true in the United States at this time..... and a good reason ones tolerance for risk should be quantified up front...

:):)

[Edited on 9-20-2010 by wessongroup]




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k-rico
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[*] posted on 9-20-2010 at 11:21 AM


Yes wessongroup but the IRS forms we're talking about address foreign trusts so the fact that "a Fideicomiso is not the same as a trust set up in the United States" as you say, perhaps isn't as important as you think. I would assume just to be on the safe side that foreign trusts do not have to be the same as trusts in the US to be subject to IRS rules.

If you get an IRS agent that doesn't agree with your logic you can always hire a lawyer to argue your point.

Or, hope the Mexican banks never tell the IRS about Fideicomisos.

Or, just fill out the forms until the issue is officially decided.

BTW, I contacted the CPA I used to fill out my first set of forms this morning to see if he has heard anything. He said he hasn't and is busy "getting the IRS to back off penalties" for his current clients.

http://dillingercpa.com/ - good guy.

[Edited on 9-20-2010 by k-rico]
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wessongroup
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[*] posted on 9-20-2010 at 12:54 PM


We differ on a very basic assumptions.. I do not assume anything when dealing with any Government agency.. and I use their own Laws and Regulations to determine what is required... in this case they are not required .. if you want to hang your hat on a CPA, that is your right as an American citizen...

I will say though... no one can SPEAK for the IRS but the IRS.. so getting a "read" from a CPA and/or Lawyer on what the IRS is saying is really going in a circle... as you are not getting an answer directly from the IRS...



Yes the "forms" address a foreign trusts.. however by definition as outline above they do not meet the criteria of Trust.. therefore they are not... a foreign trust

As this Mexican trust is an agreement entered into pursuant to Mexican legislation, the same cannot be said of Trust which we are talking about as understood within the context of Trust which are set up here in the States and which the IRS has laws and regulations which govern these legal entities created by individuals, CPA, Lawyers, and Banks.

These Trust are not the result of legislation, rather legislation came to clarify certain aspects for tax liability.. for the Government upon death of the trustee




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[*] posted on 9-20-2010 at 01:13 PM


Don't worry, the government is there to help.
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[*] posted on 9-20-2010 at 02:26 PM


bajajazz & wessongroup, those of us who have chosen to comply & complete the 3520 & 3520A have been in touch with the IRS & though they couldn't answer any of the finer point questions asked via e-mail or voice communications, the bottom line is that the IRS, as opposed to "CPA and/or Lawyer" or tax specialists, is who ruled have failed to issue a ruling on whether or not a fideicomiso falls under foreign trust reporting requirements. Why do you think the tax experts got involved in the first place? Because the IRS issued a ruling failed to issue a ruling, despite the fact the IRS implemented "amnesty" date of September 23, 2009 to file the previous 5 years worth of 3520 & 3520A forms on foreign trusts.

How you can think this is something being promulgated by "CPA and/or Lawyers" or tax specialists is beyond me....these groups are actually challenging the IRS's unwillingness/failure to make a ruling on fideicomisos specifically.

"and will insure an interpretation which is not warranted by current law .. as a Fideicomiso is not the same as a trust set up in the United States" When the IRS says they consider it to be equal, then, IMO, for all intent & purposes, it is. Those of us who challenged & researched this didn't just say, "Oh, okay, let me hop right on something like 9 pages of forms for each of the previous 5 years & whip those puppies out!" Everyone I know who did file, researched the hell out of it. Obviously they were all convinced that it was a legal requirement they complied with....or face the horrendous fines & penalties the IRS was threatening fideicomiso foreign trust holders for failure to report. I personally would not be in a financial position to come up with the fines & penalties they were threatening.

I personally do not "roll-over" without a challenge to the majority of people or agencies who request what I consider to be frivolous or nonsensical requirements. (Just ask my former boss who came to my desk with tears in his eyes begging me to reverse the "No!" I gave to someone in the Pentagon!) But after challenging the IRS, I heard their message loud & clear....& I complied....despite the fact I totally disagree with their thought process & the fact that it does not change my taxable income one red cent! I'm not going to knowingly defy the IRS.

I read all the tax specialists information, but I HEARD the IRS trust specialists telling me my fideicomiso is considered a foreign trust. If you guys don't believe this was truly an IRS requirement, then you haven't personally researched it thoroughly enough or personally discussed it with the IRS!

Edit: Thanks to gnukid, I saw the error of my ways in having used the word "ruling" in my original post, when it's actually the opposite.....they failed to make a ruling specifically addressing the fideicomiso as a foreign trust.

[Edited on 9-20-2010 by longlegsinlapaz]
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[*] posted on 9-20-2010 at 02:38 PM


Long legs,


It's fine for WessonGroup or anyone else to discuss the finer points in their own opinion as that is the function of this web site. I am not a lawyer and I know nothing at all about the specifics.

There is no evidence the IRS ruled on this, if so name a single decision in favor? We only know that a single agent acting as a rogue is threatening someone that we know of. This person who was threatened has not been successfully prosecuted nor paid any fine.

All evidence by knowledgeable parties suggests that this is nothing more than a case of a rogue agent of the IRS until such time as has been proven otherwise, aggressive and outrageous threatening behavior is common and apparently encouraged in the IRS.

All professional people in the field of US taxes who handle clients in California who I spoke to are under the impression this will pass and nothing will come of it as it the IRS action is unreasonable and indefensible under current law, unless someone chooses to volunteer to pay an arbitrary fine, so far no one has and I doubt anyone will. So far the threats are outside the realm of normally expected reason.
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[*] posted on 9-20-2010 at 04:16 PM


gnukid, I've added to one of your statements in italics. Excuse me for putting words in your mouth.

"All evidence by knowledgeable parties that I'm aware of suggests that this, the only case I'm aware of, is nothing more than a case of a rogue agent of the IRS."

I agree it doen't make any sense but I decided I didn't want to take the chance that I would need to hire a pro to make the case that it doesn't make any sense only to hear the IRS say they think it does. And regardless what the IRS said, I'd still have to pay the pro.

I don't know who you spoke to but I called around the San Diego area, CPAs and tax lawyers. I started the conversations by asking a question - "I think I may have a foreign trust tax issue, do you know what a fideicomiso is?" No one did. BTW, it was sorta fun listening to a few of the lawyers admit they didn't know something because they knew that was the wrong answer.

[Edited on 9-20-2010 by k-rico]
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[*] posted on 9-20-2010 at 04:20 PM


gnukid, since when has the IRS handled things in a " realm of normally expected reason" ??? I've owned a biz in the U>S for almost 25 years. In all of my dealings with the IRS, they have proven to be almost without fail, unreasonable!! Now, if they say it has to be done this way, I do it that way. Yes, I fought the law, and the law won!!Fortunatly this will not be an issue for me, as I will just put everything in my wife's name. If, as Legz said, it does not raise taxable income, why fight it?
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[*] posted on 9-20-2010 at 04:30 PM


Quote:
Originally posted by k-rico
Yes wessongroup but the IRS forms we're talking about address foreign trusts so the fact that "a Fideicomiso is not the same as a trust set up in the United States" as you say, perhaps isn't as important as you think. I would assume just to be on the safe side that foreign trusts do not have to be the same as trusts in the US to be subject to IRS rules.

If you get an IRS agent that doesn't agree with your logic you can always hire a lawyer to argue your point.

Or, hope the Mexican banks never tell the IRS about Fideicomisos.

Or, just fill out the forms until the issue is officially decided.

BTW, I contacted the CPA I used to fill out my first set of forms this morning to see if he has heard anything. He said he hasn't and is busy "getting the IRS to back off penalties" for his current clients.

http://dillingercpa.com/ - good guy.

[Edited on 9-20-2010 by k-rico]


I called the IRS and the first lady I talked to asked me first and foremost,

Do you generate revenue from this property on a daily, weekly, monthly or annual basis. Which I don't, and she told me this is more directed at a Swiss Bank account where assests are being stored and are deriving interest that the IRS is not getting paid on.
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wessongroup
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[*] posted on 9-20-2010 at 04:36 PM


Not trying to say that anyone has not read and studied this topic, rather than perhaps we were looking at it a bit differently ... it happens all the time... so don't shoot the messenger... I'm trying to help.. :):)

Let's try it this way... I just went again and looked at the forms which are being reverenced... 3520 & 3520A



I believe a very, very import piece of information is found at the very top and clearly shows that this in fact does not apply to Americans when it comes to tax reporting on a Forgein Trust

The Form applies to "Annual Information Return of Foreign Trust With a U.S. Owner

Who owns the Trust in Mexico, as it would appear that a U.S. person should not be considered the owner of the fideicomiso under IRC Section 679

Based on this point, one would not have to file the form based on the Forms Definition of who it applies too... owner of a Foreign Trust With a U.S. Owner

As the bank becomes the legal owner of the property for the exclusive use of the buyer/beneficiary.

Now maybe that will make a bit more sense.... :saint::saint:


[Edited on 9-20-2010 by wessongroup]




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wessongroup
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[*] posted on 9-20-2010 at 04:38 PM


k-rico... see above



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k-rico
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[*] posted on 9-20-2010 at 04:41 PM


Quote:
Originally posted by CortezBlue

I called the IRS and the first lady I talked to asked me first and foremost,

Do you generate revenue from this property on a daily, weekly, monthly or annual basis. Which I don't, and she told me this is more directed at a Swiss Bank account where assests are being stored and are deriving interest that the IRS is not getting paid on.


"more directed at a Swiss Bank account where assests are being stored and are deriving interest that the IRS is not getting paid on"

That's true, no question about it. And if the IRS finally rules in the way that everyone thinks they should, I'll stop filling out the forms and say YAHOO!

But, if you rented your house owned via a fideicomiso, the answer you received indicates that the forms do need to be completed.
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