As in the past, First Advisory Group continues its efforts to assist all customers and business partners to enforce compliance with US tax laws, as they may be applicable, although it has always refrained from providing and will continue to not provide any advice including tax advice on US related matters:
A U.S. owner of a foreign trust (e.g., a Liechtenstein foundation) has various reporting obligations with respect to such trust. The 2 primary forms are the Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts) and the Form 3520-A (Information Return of Foreign Trust with a U.S. Owner).
Generally, the Form 3520 is required of a U.S. person who creates or funds a foreign trust, is treated as the owner for U.S. income tax purposes (i.e., it is a grantor trust), receives distributions from a foreign trust (whether or not it is a grantor trust) or receives gifts (in excess of $100,000) from a non-U.S. person. The Form 3520 is due April 15th and is eligible for a 6 month extension. The penalty for failing to file each one of these information returns, or for filing an incomplete return, is the greater of $10,000 or 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.
A U.S. owner of a foreign trust is also required to ensure that the foreign trust files a Form 3520-A each year during which he or she is the owner of the trust for U.S. income tax purposes under sections 671 through 679. In addition, the U.S. person is responsible to ensure that the trust furnishes the required annual statements to its U.S. owners and U.S. beneficiaries (i.e., Foreign Grantor Trust and Foreign Non-Grantor Trust Owner and Beneficiary Statements). The Form 3520-A is due March 15th and is eligible for a 6 month extension. The penalty for failing to file each one of these information returns or for filing an incomplete return, is the greater of $10,000 or 5 percent of the gross value of trust assets determined to be owned by the U.S. person.
Should you require assistance, please do not hesitate to liaise with your contact person within First Advisory Group who will arrange for the necessary assistance in order to endorse tax compliance.