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The grantor (or transferor), beneficiary and fiduciary of a foreign grantor trust must file the following forms in regards to an offshore trust asset protection plan:
A grantor or transferor must report on this Schedule of their individual tax return for the year of transfer or creation, information regarding the creation of a foreign trust or the transfer of property to that trust, and the existence of any financial account in a foreign country in which the taxpayer has an interest or signatory authority.
The following information is reported on this form: the names, addresses, and taxpayer identification numbers of the foreign trust, the fiduciary, the beneficiaries and their percentage interest, the amount of cash and value of other property transferred to the foreign trust, and the location of the foreign trust’s books and records. This form must be filed as an attachment to the grantor’s income tax return no later than the due date of the return for the taxable year of the transfer, along with a copy to the Philadelphia IRS Service by the same date. The IRS is revising Form 3520 and the new form must be used to meet the new reporting requirements.
Under IRC Section 679, the U.S. grantor or transferor that would be subject to income tax will be responsible for failure to file or comply with the annual return requirements.
There should be no requirement that this form be filed with respect to foreign grantor trusts. However, this form is still required where foreign corporations are set up, directly or indirectly, by U.S. persons.
There should be no need to file this form upon the transfer of assets to an offshore trust if certain powers are retained by the grantor or transferor, precluding a gift for gift tax purposes.
The following U.S. persons must file this report annually: persons with a financial interest in bank securities or other financial accounts in a foreign country which is in excess of $10,000 in the aggregate, and those with signature authority in such accounts. Where a trust account is set up offshore requiring the signature of both the trustee and the trust protector to facilitate withdrawals, the trust protector may be required to file form TDF 90-22.1
A trustee or fiduciary is requirement to file the following forms:
This form is filed annually and should provide the IRS with a complete accounting of the activities of the foreign trust for the year; the identity of the limited agent designated to receive requests for information from the IRS, and any other information required by law. The trustee is required to file this form by the 15th day of the third month following the end of the taxable year of the foreign trust. Pending revision of this form by the IRS, the trustee should do the following: insert "Foreign Grantor Trust" at the top of the Form; complete the identifying information on the Form; attach the form a Foreign Grantor Trust Information Statement; execute an Authorization of U.S. Agent form before the due date for the form; execute and date the form; send to each U.S. owner the Foreign Grantor Trust Owner Statement (by the due date for filing this form with the IRS); and the Foreign Grantor Trust Beneficiary Statement to each U.S. beneficiary who received a distribution from the foreign trust during the taxable year (by the due date of filing this form with the IRS).
This form, which is a notice of fiduciary authority over a foreign trust with U.S. income, may not be a required filing.
This is the form used to obtain an Employer Identification Number from the IRS.
This form should not be required if the foreign trust is treated as a grantor trust.
Currently, there are no forms that exist for this requirement. This informational return may be required of any foreign person owning certain investments in U.S. real property interests with a value of $50,000 or more.
The trustee may file this form to obtain the correct Employer Identification Number or Taxpayer Identification Number of the U.S. Agent, the U.S. beneficiaries, and the U.S. owner.
The U.S. beneficiary of a foreign grantor trust should provide the following forms:
A beneficiary must report all of its beneficial interest in a foreign trust in this Schedule of their individual tax returns.
Beneficiaries are supposed to report any income they receive from foreign trusts in other portions of their individual tax returns, to the extent it is not reported by the transferors to the trust under the grantor trust rules.
Form 8288: U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
Under IRC Section 6048(c), U.S. beneficiaries who have received distributions during the year are required to report the name of the foreign trust, the aggregate amount of the distribution, and other information under Notice 97-34. A beneficiary who receives a distribution from a foreign trust must receive from the foreign trust a Foreign Grantor Trust Beneficiary Statement which must be attached to the U.S. beneficiary’s or U.S. grantor’s Form 3520. This form must be filed by the due date of the beneficiary’s or grantor’s income tax return for the year of the receipt of the distribution, subject to certain transition rules.
A "responsible party" includes a grantor and a transferor to a foreign trust, and the executor of a foreign estate. A responsible party is required to report the following "reportable events" on or before the 90th day following occurrence: the creation of a foreign trust by a U.S. person, the direct or indirect transfer of money to a foreign trust, and the death of a U.S. resident or citizen, who, under the grantor trust rules, was treated as the owner of any part of a foreign trust, or whose gross estate includes a portion of the foreign trust. A responsible party who fails to report such reportable events can be assessed a penalty tax of 35% based on the gross value of the property triggering the reportable event.
A U.S. person who is treated as an owner of a portion of a foreign trust under the grantor trust rules is, on an annual basis, responsible for: seeing that the trust makes an annual accounting of trust activities; identifying the designated U.S. agent; and providing any other information required by the regulations. This information must also be provided to any other U.S. person who is treated as an owner of any portion of the trust. There is a penalty of 5% of the gross value of the foreign trust deemed owned by the U.S. person under the grantor trust rules for failure to make these reports.
A beneficiary is required to file a return disclosing the name of the trust, the total yearly distribution and any other information required by the regulations for any year in which a U.S. person receives a distribution from a foreign trust.
**NOTE: The information contained at this site is for educational purposes only and is not intended for any particular person or circumstance. A competent tax professional should always be consulted before utilizing any of the information contained at this site.**