Monday, October 18, 2010
Most Current IRS Position on Filing Form 3520 & 3520A for Fideicomisos (foreign trusts)
The IRS has never in writing or in any other manner exempted Mexican Fideicomisos from filing forms 3520 and 3520A which are required of foreign trusts. The Fideicomiso documents are worded like foreign trusts and they due hold title to real property in Mexico on behalf of the property owner. The Trustee of a Fideicomiso is a Mexican Bank.
Today in an off the record phone conversation a knowledgeable IRS representative stated that currently they do not plan to ever publish anything that would exempt Fideicomisos from filing those forms. There are huge monetary penalties not filing those forms or for filing them late (though currently if you file late they have been in almost all situations waiving those late filing penalties).
Therefore, though there are several articles being circulated written by aggressive attorneys that conclude in theory that Fideicomiso's should not have to file Forms 3520 and 3520A, the IRS has not concurred with those conclusions. Any Fideicomiso beneficiary that does not file these required forms each year, is doing so without the concurrence of the IRS and is in grave danger of incurring huge civil penalties.