【KPMG Global】United States – IRS Issues Foreign Trusts and Gifts Reporting Rules

免费

3.0 林sir 2024-05-21 36 205.63KB 4 页免费

侵权投诉

Country Copyright

2024-0XX | DATE

GMS Flash Alert

2024-XXX | May 7, 2024

United States – IRS Issues Foreign Trusts and Gifts

Reporting Rules

On May 7, 2024, the U.S. Treasury and Internal Revenue Service (IRS) released proposed

regulations that would provide guidance regarding information reporting on transactions with foreign

trusts and receipt of large foreign gifts and regarding loans from, and uses of property of, foreign

trusts, and amend the regulations relating to foreign trusts having one or more U.S. beneficiaries.1

This GMS Flash Alert provides an overview of the proposed regulations most relevant to

international assignees.

WHY THIS MATTERS

It is very common for assignees to participate, or have an interest, in a retirement or savings arrangement in a

foreign country that is classified as a foreign trust for U.S. purposes. This classification generally means the

assignee will have to comply with onerous foreign trust information reporting requirements, which are

administratively burdensome and increase U.S. tax compliance costs.

It is also very common for assignees to receive gifts or bequests from individuals in their home country (often

from family members). Gifts and bequests from foreign persons over US$100,000 are generally reportable.

These proposed regulations expand upon the relief from these onerous reporting requirements provided in

Revenue Procedure 2020-17 (GMS Flash Alert 2020-044 United States – IRS Announces Relief for Reporting of

Certain Foreign Trusts (March 3, 2020) (kpmg.com)). Additionally, these proposed regulations provide a

reporting exception for “treaty tiebreaker” or “dual resident” taxpayers.

With this expanded relief, more assignees and foreign trusts should qualify for an exemption from these

information reporting requirements.

Background

The proposed regulations would provide guidance under sections 643(i), 679, 6039F, 6048, and 6677

regarding information reporting on transactions with foreign trusts and receipt of large foreign gifts and

Country Copyright

2024-0XX | DATE

regarding loans from, and uses of property of, foreign trusts, and amend the regulations relating to foreign

trusts having one or more U.S. beneficiaries. These proposed regulations generally implement rules set forth

in Notice 97-34, Revenue Procedure 2015-55, and Revenue Procedure 2020-17, with certain additions and

other modifications.

The proposed regulations are proposed to apply to transactions with foreign trusts and the receipt of foreign

gifts in tax years beginning after the date on which the final regulations are published in the Federal Register.

However, a taxpayer may rely on the proposed regulations for any tax year ending after the date the

proposed regulations are published in the Federal Register (which is scheduled to be May 8, 2024) and

beginning on or before the date that final regulations are published in the Federal Register, provided that the

taxpayer and all related persons (within the meaning of sections 267(b) and 707(b)(1)) apply the proposed

regulations in their entirety and in a consistent manner for all tax years beginning with the first taxable year of

reliance until the applicability date of the final regulations.

U.S. Person

The proposed regulations provide special rules for a “dual resident taxpayer.” Also known as a “treaty

tiebreaker,” a dual resident taxpayer is a foreign national who is considered a resident of the United States

pursuant to the internal laws of the United States and also a resident of a treaty country pursuant to the treaty

partner's internal laws who computes U.S. income tax liability as a nonresident alien and complies with

certain filing requirements.

Although dual resident taxpayers are generally treated as nonresident aliens for purposes of computing their

U.S. income tax liability, they may be treated as U.S. persons for certain international information reporting

requirements (such as Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of

Certain Foreign Gifts and Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner).

Under the proposed regulations, a dual resident taxpayer is generally not treated as a U.S. person for any

portion of the year the dual status taxpayer is treated as a nonresident alien for purposes of computing U.S.

income tax liability.

Foreign Gifts

Presently, the foreign gift reporting threshold is US$100,000. This amount is not indexed for inflation,

meaning as inflation rises more gifts and bequests from foreign persons are reportable on Form 3520.

Under the proposed regulations, the $100,000 reporting threshold is indexed for inflation.

Relief for Reporting Certain Foreign Trusts

The proposed regulations generally implement and expand upon the relief provided in Revenue Procedure 2020-

17, which provides selected U.S. citizens and residents an exemption from Form 3520 and Form 3520-A reporting

for qualified foreign trusts. GMS Flash Alert 2020-044 United States – IRS Announces Relief for Reporting of

Certain Foreign Trusts (March 3, 2020) (kpmg.com) provides an overview the relief provided in Revenue Procedure

2020-17.

Tax-Favored Foreign Retirement Trust

Under Revenue Procedure 2020-17, a foreign trust was a “tax-favored foreign retirement trust” exempt from

reporting if it met certain conditions. One of the conditions is that a trust may only permit contributions with respect

to income earned from the performance of personal services. This condition meant that a trust that allowed

unemployed individuals to contribute (a common feature) would not qualify for this exception.

The proposed regulations modify this condition to allow for limited contributions made by unemployed individuals.

Revenue Procedure 2020-17 also imposes a contribution limit on the trust (contributions to the trust must either be

limited by a percentage of earned income, an annual limit of US$50,000, or a lifetime limit of US$1 million) which is

not indexed for inflation.

研报加载中……请稍候！
如果长时间未打开，您也可以点击刷新试试。

下载研报到电脑，查找使用更方便

立即下载

摘要：

CountryCopyright2024-0XX|DATE1GMSFlashAlert2024-XXX|May7,2024UnitedStates–IRSIssuesForeignTrustsandGiftsReportingRulesOnMay7,2024,theU.S.TreasuryandInternalRevenueService(IRS)releasedproposedregulationsthatwouldprovideguidanceregardinginformationreportingontransactionswithforeigntrustsandreceiptofla...

展开>> 收起<<

【KPMG Global】United States – IRS Issues Foreign Trusts and Gifts Reporting Rules.pdf

共4页,预览2页

还剩页未读，继续阅读