Thursday, March 1, 2012


As you know, properties along the Coast of Mexico owned by Americans must hold title through Fideicomisos which are foreign trusts. This means certain special tax forms must be filed each year with the IRS to report your Fideicomiso holdings. Though a few tax commentators have written learned articles saying Fideicomisos are required to file these forms, the IRS has never so stated in writing and the IRS has further stated it does not intend to exempt Fideicomiso owners from filing these forms forms.

These forms do not result in any additional tax, but are informational only. Starting in tax year 2011, you may also have to file Form 8938

Failure to file these forms in a timely manner, or filing the required forms late can result in the IRS imposing penalties up to 35% of the value of the real property held in the Fideicomiso. The IRS has stated that if a late filing excuse is attached penalties may be waived. In fact they have waived penalties in the past though it is not certain how long this will continue into the future.

  • Form 3520A is due on March 15th, but can be extended if an extension is filed by that date.
  • Form 3520 must also be filed for your fideicomiso. This six page form is due on the same day as your personal tax return but is mailed to a separate address.

We have prepared hundreds of Forms 3520 and 3520A for our clients in Mexico over the past ten years. If you want to prepare the forms yourself, we also offer a review service so you can be assured you prepared them correctly. Let me know how we can help.

We will be in  Los Cabos and La Paz to assist our clients  there from March 16th thru May, 2012.  Please email or contact us for an appointment.

Don D. Nelson, C.P.A., Attorney at Law
Kauffman Nelson LLP
Dana Point, CA 92629 USA
US Phone: 949-481-4094 US Fax 949-218-6483 Skype: dondnelson

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