The IRS has clearly identified legitimate reasons why “US Persons” would establish or maintain ownership in a foreign trust. However, there are significant and complex tax reporting requirements associated with US taxpayers who are beneficiaries or own an interest in a foreign trust. There are specific transactional reporting requirements for those who conduct transactions with a foreign trust including:
- transferring funds
- moving assets
- transfer real property ownership
- receive a beneficial distribution
There are separate reporting requirements for US taxpayers who are beneficiaries or maintain ownership in a foreign trust, as well as separate reporting requirements for the foreign entity or trust itself. Recent international business and tax developments driven by FATCA have eliminated many tax strategies for shielding offshore income and assets. The IRS has developed direct reporting and data sharing relationships with thousands of offshore banks, investment houses, and sovereign tax agencies. The actions you take offshore, and the transactions conducted by a foreign trust will become more and more transparent to the IRS.
What action should you take if you have ownership in a foreign trust or if you hold a beneficial interest in an offshore trust? Contact the experienced international tax and trust attorneys at Allen Barron for a free and substantive consultation at 866-631-3470. We will help you to understand all of the reporting requirements associated with these activities, as well as the newest strategies to structure and protect offshore investments and assets.