US Citizens and Offshore Trust Reporting Obligations

As a reminder of the Internal Revenue Code (“IRC”) § 6048(a), the 2011–2012 Priority Guidance Plan of the US Tax office focuses again on the reporting requirements for foreign trusts.

The IRC Code § 6048(a) imposes a duty upon the “responsible party” (settlor or transferror) to provide written notice of any “reportable event” to the Secretary disclosing the following information: names, addresses and identification information of the foreign trust, beneficiaries (including their percentage interests), the location of the trust, and the value of cash or other property transferred to the foreign trust, sending a copy of the 3520 Form to the IRS Philadelphia Service Centre.

The IRC Code § 6048(b) imposes upon an “owner” of any portion of a foreign trust the responsibility of insuring that:

  1. the trust files a return for each year which sets forth a full and complete accounting of all trust activities and operations for the year, the name of the U.S. agent for the trust, and such other information as the Secretary prescribes; and
  2. the trust furnishes such information as the Secretary requires to each U.S. person who is treated as an owner of any portion of the trust or who receives (directly or indirectly) any distribution from the trust.

Finally the IRC § 6048(c) imposes a duty upon the beneficiary of any foreign trust receiving (directly or indirectly) any distribution from the foreign trust during the taxable year to file a return, which must include:

(1) the name of such trust;

(2) the aggregate amount of the distributions so received from such trust during the taxable year, and

(3) such other information as the Secretary may prescribe.

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