Fideicomiso Fees comparision between banks

Though the US IRS does not require you file any special forms for your fido anymore (since June 2013), Mexico will not be eliminating the requirement for foreigners to hold real property through Fideicomisos since the banks do make a lot of money for them.

See the following link for a comparision of the fees charged by the Mexican banks:  http://www.thepaperchase.com.mx/blog/

Fideicomiso IRS Final Filing Suggested With IRS

In June of 2013 the IRS ruled that Fideicomiso property owners no longer had to file forms 3520 and 3520a. It is recommended if you previously filed these forms that you file for 2013 with it marked as FINAL at top and attach a statement referring to the ruling and explaining the forms are no longer required. This will avoid possible letters and fines from IRS when they later find you have not filed the forms!

IRS Finally Make a Ruling that Benefits All Fideicomiso property Owners in Mexico and Eliminates Possible Filing Requirements

After 10 years of controversy and refusals to make a ruling, the IRS has finally ruled that most Fideicomiso's in Mexico are not foreign trusts required to file Forms 3520 and 3520A.

Revenue Ruling 2013-14 describes a typical fideicomiso or Mexican Land Trust (MLT) and concludes that the arrangement is not a trust within the meaning of § 301.7704-4(a)   You should read this ruling carefully since it only applies to the situations described therein. If you have Fideicomiso that falls outside the the ones described in this ruling, you may still be a foreign trust under US tax law and be required to file special forms.

Revenue Ruling 2013-14 will be in 2013-26, dated June 24, 2013.

Mexico May Eliminate Need for Fideicomisos to Purchase Real Estate When Owned by Americans and Canadians.

The Mexico Chamber of Deputies has voted to eliminate the requirement that foreigners purchase property through Fideicomiso (Trusts) when it is located in the restricted zone (within 50 kilometers of the Ocean and 100 Kilometers of the Border). This law change still must go to the Mexican Senate and be approved by all states.  Could be big resistance to the change from all of the Banks and Attorneys that make large sums of money each year from Fideicomisos.  READ MORE HERE.

PRIVATE LETTER RULING OBTAINED ON FIDEICOMISO FILING FORMS 3520 - PLR 201245002

For the first time ever the IRS has made pronouncement concerning whether a Mexican Fideicomiso beneficiary has to file US tax forms 3520 and 3520A.  PLR 201245002.

The bad news is that it made this pronouncement by way of a Private Letter Ruling which is only binding on the IRS with respect to the taxpayer who applied for the ruling. The IRS  IS NOT bound by the holdings in the ruling with respect to other taxpayers. Other taxpayers also by law can not cite a Private Letter Ruling as authority for their position.

The Private Letter Ruling held that in the particular factual situation of the Taxpayer who applied for the ruling that the US Taxpayer was not required to file the Forms 3520 for that Taxpayer's Fideicomiso.

Whether referring to this private letter ruling will cause the IRS to eliminate penalties for not filing Forms 3520 for a Fideicomiso cannot be determined at this time.  For any filer to be completely certain they did not have to file these forms, the IRS would need to make a written public announcement that such filing was not required.  For the last 7-9 years the IRS has been requested to make such a public written holding, and has not done so to date.  READ THE RULING HERE THAT HAS NOW BEEN PUBLISHED 

Fideicomiso Filing Requirements May Change

It is rumored that an attorney in Texas has applied for a private letter ruling on behalf of a client asking for a ruling from the IRS that an owner of a property held in a Fideicomiso does not have to file forms 3520 and 3520A. Private letter rulings are only binding on the IRS with respect to the individual taxpayer who requested it, though sometimes the IRS will apply them to everyone.  That ruling is expected to be released within the next month and finally for the first time there will be an IRS written declaration on filing requirements for Fideicomisos.

Complete Form 8938 and TDF 90-22.1 Guidance In Simple Chart Form

The IRS has just published further information on when to file forms 8938 (to report foreign financial assets) and TDF 90-22.1 (FBAR) to report foreign financial accounts. Their guidance clarifies when foreign currency and precious metals located in foreign countries must be reported. The Chart is easy to understand and can be read HERE.

If the value of  the assets in your Fideicomiso, Mexican bank accounts and Mexican corportion exceed the thresholds set forth in this table, they must be reported on this form as well as on Forms 5471, 3520, 3520A, etc.

If you wish assistance in preparing these forms or wish to have your own self prepared forms reviewed by an expert contact us.

AMERICANS MUST FILE SPECIAL US TAX FORMS TO REPORT FIDEICOMISO'S OR RISK HIGH PENALTIES

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 15^th, 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.

Click here to download our Fideicomiso/3520/3520A Tax Organizer. After you fill it out, return it to us by fax or email and we can provide you with a fee quote. (File is in msword format for easy completion)

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

Email: ddnelson@gmail.com

Websites: www.TaxMeLess.com www.expatattorneycpa.com

Blogs:  www.USExpatriate.blogspot.com

IRS Announces Re Activation of the Voluntary Offshore Disclosure Program for 2012

The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes,

If you have failed to file Forms 3520 and 3520(a) for your Mexican Fideicomiso, or failed to filed Form 5471 for your Mexican Corporation, or failed to report your Mexican Bank accounts  as required by the IRS, you may be able to enter this program and eliminate or reduce the extremely high penalties (and possible criminal charges) the IRS can impose if you do not file these forms.

Remember under the US / Mexican tax treaties the IRS can obtain information on all US Gringos that own Mexican corporations, bank accounts or Fideicomisos and compare them with those filed and then assess the huge penalties allowed by US Tax law for not filing these forms.  Also under FATCA almost all Mexican banks will shortly start sending the IRS lists of their US depositors.  It is now the time to start filing these forms before it becomes more serious and expensive. 

The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.

“Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government. This new program makes good sense for taxpayers still hiding assets overseas and for the nation’s tax system.”

The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply. However, the terms of the program could change at any time going forward. For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.

“As we’ve said all along, people need to come in and get right with us before we find you,” Shulman said. “We are following more leads and the risk for people who do not come in continues to increase.”

The third offshore effort comes as Shulman also announced today the IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program.  That number will grow as the IRS processes the 2011 cases.

In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. Since the 2011 program closed last September, hundreds of taxpayers have come forward to make voluntary disclosures. Those who have come in since the 2011 program closed last year will be able to be treated under the provisions of the new OVDP program.

With a few key differences, this OVDI is similar to the 2011 program, through which participating taxpayers could escape potential criminal prosecution by filing missing tax returns and paying tax, penalties and interest. Unlike the prior program, there is no set deadline for taxpayers to apply. It is important to note, however, that the terms of the program could change at any time. For example, the IRS could decide to end the program entirely at any point, or to increase the penalties for all or some of the taxpayers or defined classes of taxpayers.

The overall penalty structure for the new program mirrors that of the 2011 program, except the highest penalty rate is increased from 25 percent to 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure. During the 2011 program, the highest penalty was 25 percent. Similar to the 2011 program, some taxpayers will be eligible for 5 or 12.5 percent penalties. Also similar to the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined. Taxpayers who wish to participate must file all original and amended tax returns and include payment for back taxes and interest for up to eight years, as well as pay accuracy-related and/or delinquency penalties.

The IRS is going to release more precise details on the new program within the next few weeks.

LATEST IRS LETTER CONCERNING IF A MEXICAN FIDEICOMISO OWNER MUST FILE FORM 3520

The following letter from an IRS Technical Reviewer  was Published by Tax Analysts(R) concerning the issue of whether or not a Mexican Fideicomiso must file Forms 3520 and 3520A.

UIL: 6048.00-00
Release Date: 6/24/2011
Date: November 17, 2010
Refer Reply To: GENIN-141622-10 – CC:INTL:B01:* * *
Dear * * *:
This is in response to your request for general information regarding the infor-mation reporting obligations with respect to Mexican fideicomisos that own certain Mexican residential real property on behalf of U.S. persons who are not also Mexican citizens.
Under section 6048(a) and (c) of the Code,¹ a U.S. person who makes a transfer to or receives a distribution from a foreign trust generally is required to report certain information on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Under section 6048(b) of the Code, a U.S. person who is treated as the owner of a foreign trust under the grantor trust rules (sections 671 through 679 of the Code) is required to complete Part II of Form 3520 and to ensure that the foreign trust files Form 3520-A, Annual Information Return of Foreign Trust with U.S. Owner. Section 6677 of the Code imposes significant penalties (up to 100 percent of the gross reportable amount) for failure to comply with section 6048.
The rules for determining whether an entity is classified as a trust for U.S. federal income tax purposes are found in section 301.7701-4 of the Procedure and Administration Regulations. The rules for determining whether an entity that is classified as a trust is a foreign trust are found in section 7701(a)(31)(B) of the Code and section 301.7701-7 of the Procedure and Administration Regulations. Any U.S. person who transfers property to or has an interest in a Mexican fideicomiso that is classified as a foreign trust must comply with section 6048.

            This letter provides general information only and does not constitute a ruling. See Rev. Proc. 2010-1, section 2.04, 2010-1 I.R.B. 7. If you would like a definitive determination as to whether a particular fideicomiso is classified as a foreign trust for U.S. federal income tax purposes, you must request a private letter ruling pursuant to the procedures set forth in section 7 of Rev. Proc. 2010-1.

We hope this information has been helpful to you. If you have any questions, please contact * * *, Identification Number * * *, at * * * (not a toll-free call).

Sincerely, M Grace Fleeman - Senior Technical Reviewer, Branch 1 (International)

TRANSLATION OF THE ABOVE REFERENCED LETTER FROM THE IRS:

We’re not telling you that your particular fideicomiso is a trust and we’re not telling you your particular fideicomiso is NOT a trust.  All we are saying is that if it IS a trust you have to file Form 3520.  In other words, if you wish to be safe you should file form 3520, 3520a because the IRS refuses to state Fideicomisos are not foreign trusts.  That refusal is a clear  message to taxpayers. 

IRS INTERNATIONAL TAX EVASION STATUS

WASHINGTON — The Internal Revenue Service continues to make strong progress in combating international tax evasion, with new details announced today showing the recently completed offshore program pushed the total number of voluntary disclosures up to 30,000 since 2009. In all, 12,000 new applications came in from the 2011 offshore program that closed last week.

The IRS also announced today it has collected $2.2 billion so far from people who participated in the 2009 program, reflecting closures of about 80 percent of the cases from the initial offshore program. On top of that, the IRS has collected an additional $500 million in taxes and interest as down payments for the 2011 program — a figure that will increase because it doesn’t yet include penalties.
“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”
Global tax enforcement is a top priority at the IRS, and Shulman noted progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and Justice Department have increased efforts involving criminal investigation of international tax evasion.
The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program (OVDP) that ended on Oct. 15, 2009. The programs gave U.S.taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.
The 2009 program led to about 15,000 voluntary disclosures and another 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some additional applications still being counted. All together from these efforts, taxpayers came forward and made 30,000 voluntary disclosures.
“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
In new figures announced today from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from every corner of the world, with bank accounts covering 140 countries.
The IRS is starting to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.
“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”
The financial impact can be seen in a variety of other areas beyond the 2009 and 2011 programs.

• Criminal prosecutions. People hiding assets offshore have received jail sentences running for months or years, and they have been ordered to pay hundreds of thousands and even millions of dollars.
• UBS. UBS AG, Switzerland's largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.

The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion, and the IRS will use this information to continue its international enforcement efforts.

Everything You Want to Know About 2011 IRS Voluntary Disclosure Program

The deadline for entering the IRS 2011 Voluntary Offshore Disclosure Program has been extended until September 9, 2011.  The procedures for entering the program are complex and must be followed carefully. You can also prior to the previous mentioned date obtain an additional 90 day extension of time to file all of your past tax returns including the special foreign reporting forms such as 5471, 8865, 5472, 3520 and TDF 90-22.1 (FBAR).

You can read all of the details and latest developments concerning the Voluntary Offshore Disclosure Program at our sister blog:  www.usexpatriate.blogspot.com .  You can read more about the special forms required at our website at www.taxmeless.com.

Remember, if you have failed to file required forms 3520 and 3520A for your Mexican Fideicomiso that means you have until 9/9/11 to file all past forms (if the real property has not produced revenue) without penalty under FAQ 18 in the rule to the program.

You also have until that date to file all past forms for your Mexican Corporation (form 5471) if  you have reported all taxable income from that corporation on your personal tax return without risk of penalty.

IRS Voluntary Offshore Disclosure Program Ends 8/31/11- After That Date Things will get really Bad!

The IRS 2011 Voluntary Offshore Disclosure Program ends on 8/31/11. Any entry into the program must be made by that date.  If you have not been filing your tax return, reporting your Mexican Bank Accounts and Financial Accounts, reporting your Mexican Corporation, Partnership or Fideicomiso this may be the last chance to eliminate or reduce potentially huge penalties, and avoid criminal prosecution.

The IRS has stated any taxpayer who does not come forward by the date, and who is later discovered or attempts to make up for past forms which have not been filed will be subject to the maximum possible penalties and possible criminal prosecution.

The IRS knows that in 2008 only about 100,000 US tax returns were filed by Gringos living in Mexico, but there are over One Million US Citizens living in Mexico.  With these statistics in mind,  there is little doubt that Mexico will become a big target for the IRS in the very near future.  The statue of limitations never runs out on future IRS action if you have not filed a return for any particular year or if you fail to file certain foreign information returns such as those for Mexican Corporations, Fideicomisos, Mexican Financial accounts, etc.

In serious situations such as this, Attorney-client privilege which we can offer our clients is often indispensable.

Read more at our website at www.TaxMeLess.com

Form 3520A due on 3/15/11 For Your IRS Reporting Requirement for Fideicomisos

Report your Fideicomiso to Uncle Sam

Form 3520A is due on 3/15/11 to comply with IRS requirements for reporting your Fideicomiso. That form can be extended until 9/15/11 if you file form 7004 by that due date. The related Form 3520 is due on the extended due date of your personal tax return.

If you have a US Corporation or LLC, those returns are due on 3/15/11 also for the 2010 tax year unless you file for an extension. There are now stiff penalties for not filing these returns on a timely basis based on the number of months it is filed late and the number of shareholders or members of the entity.

MEXICO RENTAL INCOME…………….PAYING TAX IS NOW EASIER THAN EVER AND WITH STATESIDE BENEFITS!!

by Linda Jones Neil

Those who have rental properties in Mexico can now rest easy. SAT, Mexico’s Uncle Sam, has provided a straightforward and relatively simple way to declare and pay taxes on rental income for those foreigners who have long wished to be in compliance but did not know the way to do so.

As of February 2010, SAT eliminated the requirement for a taxpayer identification number (RFC) which had previously been obtained only through extreme efforts,

Now the foreign taxpayer has two options: One to obtain the taxpayer identification number (RFC), file monthly declarations whether there is income or not, and enjoy a deduction of expenses. This is Option One.

Option Two provides for the taxpayer to make a declaration when income is received, pay a flat tax and obtain a receipt to take to the tax authorities in his/her tax residence, for credit or deduction of taxes in the home country.

On any rental the owner, or his/her property managers, are responsible for collecting the IVA tax (the added value tax) which is 11% on the Baja Peninsula and the Yucatan peninsula and 16% elsewhere. Owner or property manager must also collect the state hospitality tax which is 2 to 4% of the rental amount. These taxes must be delivered to the federal and local governments, as applicable.

It is important for the foreign person with rental property in Mexico to make arrangements for payment of these taxes since penalties can be high in Mexico for non-payment and, additionally, these same tax payments and expenses can be deducted or credited against income in taxpayer’s home country.

The next part of the equation for the US taxpayer has been deciding how to declare this income and enjoy the deductions in their US returns.

Don Nelson, Attorney and Certified Public Accountant located in California reports the following regarding tax treatment for U.S. taxpayers:

• If the Mexican rental property owned in an individuals name or through a Fideicomiso, all rental income and expenses are reported on Schedule E of the form 1040.
• Allowable rental expenses are the same as for a US property.
• Management fees, interest, property taxes, utilities, repairs, maintenance, association dues, insurance…ALL are deductible!
• Depreciation on a Mexican property is 40 years straight line
• Taxpayer can take a Foreign Tax Credit against the US income tax paid on the net rental income for income taxes paid in Mexico on that income.
• IVA (added value tax) collected from the renter must be included in rental income, but then deducted out so no double taxation.
• The special Vacation Home rules applicable to US rental property occupied part time by the owner is also apply to Mexican rental property.
• IN A SALE OF THE PROPERTY, net gain is taxed in the US at the applicable lower capital gains rates and Mexican ISR paid is a credit against that US tax on that profit.

For further information on the Rental Payment Program for Mexican properties, please contact: Lic. Quirino Parra: quirino.parra@settlement-co.com.

For further information on the payment of US taxes when Mexican income is involved, please contact attorney and CPA Don D. Nelson: ddnelson@gmail.com . His website is at www.taxmeless.com.

Author Linda Neil is the founder of The Settlement Company. It is the first escrow company in Mexico, and is dedicated to counseling buyers and sellers, processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico and, now, for payment of taxes on rental income for foreigners with properties in Mexico.. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty five years of hands on experience in all aspects of Mexican real estate. She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96.

E-Mail; linda.neil@settlement-co.com Web Site: http://www.settlement-co.com.

copyright 2011, Consultores Phoenix, S.C., reproduction prohibited without permission.

MEXICAN FIDEICOMISO PROPERTY OWNERSHIP BY US TAXPAYERS – WHAT ARE THE IRS FILING REQUIREMENTS?

By Don D. Nelson, Attorney at Law, C.P.A.

If you own your Mexican real estate through a Fideicomiso you have a yearly U.S. Tax filing obligation with the IRS.  There are  two informational forms which must be filed each year by  Fideicomisos which have been deemed to be foreign trusts.   These filing requirements are set forth below:

•    Form 3520A is due on March 15th following the end of each calendar year. The due date of this form can be extended for six months if the extension is filed before the due date..  None of the Banks in Mexico who act as trustee will file this form for your as required by US tax law.  Therefore, you must file it yourself since it is you the IRS will penalize if it is not filed. There is a penalty of 5% of the value of the assets in the trust for failing to file this form. This penalty can be waived for resonable cause. The form contains information on the Fideicomiso, its beneficiary(ies), its income and expenses, and the value of its assets, etc.

•    Form 3520 is due on the extended due date of your personal tax return. However it is filed separately from your personal return. Failure to file this form can result in a penalty equal to 35% of the value of the Mexican real estate  transferred to  the Fideicomiso. This penalty is currently waived if you provide the IRS with a reasonable late filing excuse.  This form mostly duplicates the same information contained in the form 3520A the addition of other informational items.

•    The Fideicomiso must secure a US Federal ID number from the IRS.  The ownership of all US owners must be reported.

•    If you the property you own in your Fideicomiso has been your primary personal residence for 2 out of the past 5 years, and you filed jointly with your spouse, the first $500,000US  ( $250,000US if you are singled) can be exempt on your US tax return.  You can claim a foreign tax credit for taxes paid on your sales gain in Mexico against your US tax on any gain on the sale in excess of the exemption amount.

•    If the property in your Fideicomiso is a rental, you must report the income and expenses on of the rental on your US tax return.  You must  depreciate the value of the improvements and structure on the property over a 40 year period.  Keep in mind that you must also file and pay income and IVA taxes on your rental income in Mexico or risk problems with the Hacienda.

In the past year several attorneys have written articles analyzing the IRS foreign trust filing requirements and have expressed their opinion that a Fideicomiso is not a foreign trust and should not have to file Form 3520 and 3520A. That is good theory, but does not reflect the position of the IRS.  Unfortunately the  Fideicomiso document is worded  as a foreign trust, holds title to the property in your behalf, and is administered by the Mexican Bank trustee. The IRS has never issued any pronouncement in  writing  that exempts Fideicomisos from filing the forms. Representatives of the IRS have indicated that it does not  have any plan to exempt Fideicomisos from filng these forms. Therefore, if you chose not to file you are at risk of  being assessed the high penalties for nonfiling as set forth previously.

If you own your Mexican real estate through a Mexican corporation you are required to file Form 5471 each year with your US income tax return. This form reports various information on the shareholders, income and expenses, and assets and liabilities of the corporation and the property it holds.  Failure to file this form on filing it late can result in a $10,000 per year penalty.  If you have a reasonable excuse for late filing that penalty is currently usually waived, though this policy may change in the future.

___________________________________________________________________________

Don D. Nelson is a U.S. Attorney and C.P.A.  who has been assisting US Citizens who live, work or own property in Mexico with their US tax  return filing requirements  and tax planning for over 20 years.  He is a recognized US international and expatriate tax expert.  In the past six years he has assisted a large number of Americans file their Fideicomiso US Tax Forms and has been  to date very successful in helping all of them avoid any penalties for filing past years or filing late.

No  need to visit his office. All services and return preparation is provided to clients by phone, email, fax and the internet. Contact him if you need assistance filing the required Fideicomiso US Tax forms.  Most accoutants and tax preparers do not understand these forms or know they exist. Since the forms are not filed with your personal tax return, they can be prepared and filed separately from that return.  Our if you wish, we can prepare all of your US and state income tax forms.

 Visit Don' websites at www.TaxMeLess.com & www.ExpatAttorneyCPA.com  Email: ddnelson@gmail.com   US Phone (949)481-4092.

For the lastest developments and news concerning US and Mexican taxes visit his blog at www.us-mexicantax.blogspot.com

Fideicomiso US Tax Compliance Update - Don't Miss the 9/23/09 deadline!

Under the IRS Offshore Voluntary Disclosure Program if a Fideicomiso Beneficiary has failed to file Form 3520A and 3520 (when required) they have until 9/23/09 to file those forms for the past six years without penalty if the property held by the Fido has produced no income during those past six years.  Though the IRS has not been clear, it has implied that after that date if someone files their past unfiled forms 3520 and 3520A forms they may impose the $10,000 late filing penalty for each year whether or not the Beneficiary has a reasonable excuse for late filing.  The same rules hold true for Fido Beneficiaries that have reported all of their income from the Fideicomiso, but failed to file the Forms 3520 and 3520A.

If you had unreported rental income from the Fido property and did not file those forms you must talk with an international tax expert to determine if you should enter the Voluntary Offshore Disclosure Program or risk the potentially  bigger penalties of not entering the program.  9/23/09 is the deadline to take action or risk  being assessed the tremendous penalties that the IRS can impose for not filing these forms.

US Fideicomiso Taxation

If you own property in Mexico in a Fideicomiso you must file Forms 3520 in its initial year of existence and in its final year of existence. You must file form 3520A for each year that it exists. That form was designed to be filed by the Trustee Bank, but none of them will do it, so therefore under IRS rules you as the beneficiary must file the form. These forms are filed separate your from your personal tax return. These forms must be filed even though your income is too low to require you to file a US tax return.

Failure to file these forms can result in monetary penalties. If the property in the fideicomiso generates no income (your house) or generates income and you have reported it on your US tax return if you attach a late filing excuse the penalties will be waived. If it generates income you did not report on your US tax return you may want to consider the IRS VOLUNTARY OFFSHORE DISCLOSURE PROGRAM which will end on 9/23/09 which could reduce your penalties for non filing and will stop any criminal prosecution for violating US tax law.

More information is at: http://www.taxmeless.com/page11.html



If you own property in a Mexican corporation you must file form 5471 with your yearly US tax return whether or not it makes income or you are required to file a US tax return. We will discuss this in a separate blog post.

If you wish assistance with these forms or with the Offshore Disclosure or forms 5471 contact me. I have over 20 years experience in Mexican - US taxation and other international tax matters. I do spend a great deal of time in Mexico and understand its business, real estate and taxes.