AICPA - American Institute of Certified Public Accountants

07/16/2024 | Press release | Distributed by Public on 07/16/2024 04:59

AICPA Comments and Requests to Testify on Foreign Trust Proposed Regulations

AICPA Comments and Requests to Testify on Foreign Trust Proposed Regulations

Washington, D.C. (July 15, 2024) - The American Institute of CPAs (AICPA) submitted comments to the Internal Revenue Service (IRS) and Treasury on proposed regulations regarding reporting transactions with foreign trusts, receiving large foreign gifts, and dealing with loans and property from foreign trusts. (REG-124850-08).

The submitted recommendations will simplify filing for taxpayers and practitioners, reduce the administrative burden on the IRS, and are consistent with and in addition to AICPA's prior comments on foreign trust and foreign gift reporting issues. The AICPA has also requested to testify at the Aug. 21, 2024 IRS hearing on the proposed regulations.

The submitted comments cover the following issues:

  1. Inbound foreign trust migration

  2. Exception for treaty protected foreign pensions and similar accounts

  3. Clarify that the section 6048 reporting exception for tax-favored foreign retirement trusts, nonretirement savings trusts, and de minimis savings trusts, shall apply retroactively to all years in the taxpayer's holding period of that investment.

  4. Actual calculation method and default calculation method

  5. Original and extended due dates for Form 3520

  6. Provide that the deadline for Foreign Nongrantor Trust Beneficiary statements and Foreign-Owned Grantor Trust Beneficiary statements is the due date of the beneficiary's income tax return.

  7. Incorporate into the regulations or administrative procedures, administrative relief including mandating (i) review of reasonable cause prior to penalty assessment, and (ii) First Time Abate (FTA) for sections 6677 and 6039F penalties.

  8. Provide guidance regarding the classification of certain foreign trusts and entities organized under the laws of a foreign or civil law jurisdiction.

  9. Clarify how the spousal attribution rule in section 672(e) applies in the content of section 672(f).

10. Distributions, deemed distributions, and related party loan transactions

11. Valuing foreign gifts for purposes of international information reporting

12. Add an example to Prop. Reg. § 1.6048-6(a)(1) that reminds taxpayers that although reporting requirements are waived for the dual resident taxpayer, they are not waived for other taxpayers who have transactions with the same foreign trust.

13. Modify the regulations to exclude foreign trusts electing to be treated as an estate under section 645 from the filing requirements of section 6048.

"Practitioners have needed guidance in this area for more than 25 years," said Eileen Sherr, AICPA's director of Tax Policy & Advocacy. "The AICPA has been engaged in dialogue with IRS about foreign trust reporting and penalty issues for many years and plans to testify at the IRS hearing to further point out our thoughts on several important issues."

About the American Institute of CPAs

The American Institute of CPAs® (AICPA®) is the world's largest member association representing the CPA profession, with 400,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.

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Background

Contact: Veronica L. Vera
202-434-9215
 [email protected]