§6048 Information with respect to certain foreign trusts

Summary

You must tell the IRS in writing within 90 days after a "reportable event," unless the IRS allows more time. The notice must give the information the IRS asks for, such as how much money or property was put into the trust and the names of the trust, each trustee, and each beneficiary or beneficiary class. A "reportable event" means creating a foreign trust by a U.S. person, a U.S. person transferring money or property to a foreign trust (including by death), or the death of a U.S. citizen or resident when the decedent was treated as owning part of a foreign trust or part of the trust was in the decedent’s estate. Transfers for at least the fair market value and trusts described in sections 402(b), 404(a)(4), 404A, or treated as 501(c)(3) are not reportable. The "responsible party" is the grantor for a living trust, the transferor for transfers (not by death), or the executor in other cases. If a U.S. person is treated as owning any part of a foreign trust for a tax year, that person must give the IRS the information it requires for that trust that year. That person must also make sure the trust files a full return with an accounting, names a U.S. agent, and gives required information to U.S. owners or anyone who gets distributions. Any U.S. person who receives a distribution from a foreign trust must file a return that names the trust and reports the total distributions and other IRS-required details. If records are not provided, the distribution can be treated as an accumulation distribution included in the recipient’s taxable income, and for certain tax calculations the number of years used will be one-half of the years the trust existed. The IRS can set the form and timing of notices, treat a U.S. trust as foreign if it has substantial activity or property abroad, or suspend or change these rules if the U.S. has no significant tax interest.