AlanDow
Junior Nomad
Posts: 38
Registered: 1-23-2011
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Does Reporting of Fideicomiso to IRS require FBAR in addition to Forms 3520/3520A?
Hi, I am attempting to file the required forms for a new Fideicomiso created in 2011 for property I purchased in Baja. After reading the other posts
on the topic of Fideicomiso reporting to the IRS, and doing my own research, I concluded that I needed to file the foreign trust disclosure forms 3520
and 3520A (and I already filed the 3520A by the 3/15/2011 deadline and will file the 3520 with my soon to be filed 1040 Federal return).
What is still not clear to me is if I also need file an FBAR (report of foreign bank and financial accounts) that if required will be due by June
30th. I don’t have a Mexican based bank or brokerage account. However since a bank is the holder of my Fideicomiso trust that holds my property, I am
wondering if this is considered a “financial account” that must be reported via an FBAR.
Since the value of the property exceeds the $10,000 threshold that triggers an FBAR report, the only remaining question appears to be – does a
Fideicomiso constitute a foreign financial account reportable with an FBAR?
I would like to hear from others who are reporting there Fideicomiso via IRS forms 3520/3520A, as to if they are also reporting there Fideicomiso as a
foreign financial account with an FBAR filing (and or from anyone who has researched this question or received professional guidance on this
question). Thanks, Alan
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bajagrouper
Senior Nomad
Posts: 964
Registered: 8-28-2003
Location: Rincon de Guayabitos, Nayarit, Mexico
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Mood: happy and retired
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I file a 3520/3520A each year but no FBAR, I do not have a bank account......
I hear the whales song
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mojo_norte
Senior Nomad
Posts: 725
Registered: 2-14-2006
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http://fideicomiso.wordpress.com/
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oladulce
Super Nomad
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We had a tax preparer file the docs a few years ago when we began reporting our fides and he included a 1041 along with each 3520, so I've been
including one of those along with the 3520.
1041= "US Income Tax Return for Estates and Trusts". Since a fide has no income, the form will either have "0" or nothing (however you want to do it)
except your signature and identification info.
Also, don't forget to include a copy of the "Foreign Grantor Trust Owner Statement" (page 3 from the 3520A you already filed in March) along with your
3520. You'll see in fine print #22 on your 3520. Nothing like repetition to have to send it in again 
Regarding the FBAR, "yes" I file one for our bank account. Personally, no i don't include FBAR's for our fides. If they want to come after us for
those, I'm grouchy and ready for battle (after spending at least three 8 hr days filling out, signing, scanning, and emailing the 50+ pages of all the
other silly forms to a relative so she can mail them in the US).
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oladulce
Super Nomad
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Forgot to add-
you'll need one "Foreign Grantor Trust Owner Statement" for each "US owner". So if both you and a spouse are named on your fide(s), you'll do one
page per person in March with your 3520A, and one page per person in April with your 3520.
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capitolkat
Senior Nomad
Posts: 510
Registered: 3-9-2006
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I may be in the minority here but I've never filed the report for my fide. I have had it for 6 years, have no Mexican accounts, no Mexican investemnt
aaccounts ,and have had the same tax preparer do my taxes for almost 30 years. He's a former IRS agent, teaches tax law at the local law school, and
every year I have given him the fide info, and the fact that we do not have any other interests in Mexico, do not rent the property and have no
income in Mexico.
he has consistently advised we do not need to report the trust as it is not income producing and we have no Mexican accounts. This seems to be
consistent with the recent tax advisory from the IRS on foregin investments and trusts.
Life is too short to drink bad wine
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oladulce
Super Nomad
Posts: 1625
Registered: 5-30-2005
Location: bcs
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We started filing a couple years ago after our neighbor was audited by the IRS and hit with $200,000 in late fees and penalties for not claiming his
fideicomisos. He also generates no income, or rent etc from his properties. He hired a specialist attorney to take his case to the IRS head office
which cost him $10,000. She was able to get the penalties and fees waived but the IRS would not state their position verbally or in writing regarding
whether a fide is in fact a foreign trust.
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rts551
Elite Nomad
Posts: 6700
Registered: 9-5-2003
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one person's opinion -
http://www.taxmeless.com/page11.html
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rts551
Elite Nomad
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Another opinion -
http://adip.info/2011/03/the-fideicomiso-controversy-and-for...
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bajabigfoot
Newbie
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Registered: 4-14-2012
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| Quote: | Originally posted by oladulce
We started filing a couple years ago after our neighbor was audited by the IRS and hit with $200,000 in late fees and penalties for not claiming his
fideicomisos. He also generates no income, or rent etc from his properties. He hired a specialist attorney to take his case to the IRS head office
which cost him $10,000. She was able to get the penalties and fees waived but the IRS would not state their position verbally or in writing regarding
whether a fide is in fact a foreign trust. |
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AlanDow
Junior Nomad
Posts: 38
Registered: 1-23-2011
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Thanks to all those who have responded. It appears that there has been much discussion on the issue of if the Fideicomiso is really a “trust”
triggering the requirement to file the 3520 and 3520(A) IRS forms, and that many (including myself) believe such forms should be filed based on
reported actual attempts by the IRS to fine some who have not filed these trust disclosures, and or based on statements by paid tax/legal
professionals that believe these forms are required.
However based on the responses so far to this post, it does not appear there is a history of the IRS or any tax/legal professionals advocating that a
Fideicomiso that exists solely to hold real property title, constitutes a “financial account” that would require that the FBAR needs to be filed in
addition to the 3520 and 3520(A) IRS trust disclosure forms.
I appreciate Kate’s comment that she prepares the FBAR as insurance against future worry, and I must admit I lean in that same direction. However I
am also concerned about not only the hassle factor of having to annually file one more form, but also does declaring you have what the IRS will assume
is a foreign bank or investment brokerage account holding over $10,000 (by filing an FBAR) raise your risk for an audit - especially when the IRS sees
you are not declaring any income on those foreign “investments”?
Just to be as sure as anyone can be, I decided I needed to read the IRS publication on FBAR (that was fun. Since the stated purpose of the FBAR per
IRS is to identify “financial accounts” that could hold or allow the tracing of unreported income or the existence of funds used for illicit purposes;
and since the Fideicomiso is not an account that can receive, hold, or distribute any funds (only exists to hold title to real estate) it appears to
me that the Fideicomiso does not meet the definition of a “financial account” requiring an FBAR report.
So based on my own research and that I have not found any evidence that the IRS or tax/legal professionals are advocating FBAR reporting for
Fideicomiso (including from nomad postings here) I have decided not to file the FBAR and to only file the trust disclosures – IRS forms 3520 and
3520(A) for my Fideicomiso. Thanks again to those who responded. Alan
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