QUESTIONS & ANSWER
FAQs & Important Information
GENERAL QUESTIONS
A Puerto Rico Trust is Considered Foreign. Therefore, Forms 3520 and 3520-A are required.
When a US Person has ownership of a foreign trust, they have significant reporting requirements on Forms 3520-A and 3520. The forms require the taxpayer to divulge substantial amounts of information to the IRS and penalties for noncompliance can be high but may also be avoided, reduced, or abated.
Unlike foreign gifts, when a US Person receives a trust distribution from a foreign trust, it is generally reportable (and there is no threshold value for reporting). Depending on the type of trust (revocable vs irrevocable) will impact the tax consequences of the distribution.
When a U.S. Person receives a Distribution from a Foreign Trust they have to Report on Form 3520.
The IRS requires certain U.S. persons with foreign trusts to report the trust to the IRS. The failure to report the trust oftentimes results in automatic fines and penalties.
When a US Person has Ownership Interest in a Foreign Trust, they may have a Form 3520-A Filing Requirement.
Even when a Person has a relationship with Foreign Trust, they may qualify for an Exception to Filing.
When a Taxpayer receives a CP15 Penalty Notice, they have a limited-time to respond to the Penalty Notice.
If you received a CP15 Notice and were rejected or missed the time to appeal, you still have other options available.
For some taxpayers who were non-willful, they are entitled to a Reasonable Cause or Delinquency Procedure submission.