Dec. 11, 2013: As a part of our ongoing efforts to help US expats living overseas to understand and comply with US IR tax issues, we pass along updates as we become aware of them. In talking with various US expats, none of them were aware of the IRS’s “new” requirement to e-file FBAR information – in effect for 2012 and 2013 Treasury department filings – in effect since July 1, 2012. FBAR (Foreign Bank and Financial Account Reporting) rules requires Americans with foreign accounts and trusts worth more than an aggregate $10,000 US dollar value to file annual reports with the Treasury Department. http://www.fincen.gov/forms/e-filing/Efiling_FAQs.html
Since our previous FBAR reports on Fideicomisos, it is worth noting that in July 2013, the IRS decided that typical real estate Fideicomisos for Mexican properties do not require FBAR filings, as long as the OWNER DOES NOT RECEIVE ANY INCOME (no rental income) from the real estate trust/property. Still, if you are an expat married to a Mexicana, you may have Mexican bank accounts that have aggregate worth over the $10,000 limit, and hence are required by the US FinCEN (Financial Crimes Enforcement Network) to make annual e-filings in June with the US Treasury.
~ Filing at the BSA E-Filing website is FREE.
~ FinCEN granted a general exemption for mandatory E-Filing for the FBAR until June 30, 2013.
~ FBAR filers can start the process at: File an Individual FBAR – FinCEN BSA E-Filing System
~ The US IRS has kindly recognized “that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1, but have recently become aware of their filing obligations and now seek to come into compliance with the law. ” As a result the IRS announced a “New Streamlined Filing Procedure” that includes being: “required to file delinquent tax returns, with appropriate related information returns (e.g. Form 3520 or 5471), for the past three years and to file delinquent FBARs (Form TD F 90-22.1) for the past six years.”
*sigh* So, it appears that if you do not owe anything, you can catch up on past omissions using their “new” systems.
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© Steven M. Fry
Read-on MacDuff . . .
Thanks for that article, Dr. Fry. I myself had a nightmare over this a few months ago, and appreciate any added info. As a person who was familiar with the regulations PREceding the FBAR, I was amazed at how much harder the process has become. Let me add two cautionary notes: The conversion rate (to calculate whether one has had more than the allowed dollar equalivent) is now pegged to December 31. Thus, even if one thought that they had not exceeded the $10,000 USD equivalent, on a monthly basis, it might not be true come December 31.
Secondly: the IRS’s electronic submission of the FBAR was NOT, when I tried to use it, compatible with a computer not using WINDOWS. So a Mac user without Windows was out of luck. (I was granted a “one-time-only” exemption, and allowed to file the FBAR by mail.) Hopefully, this will be cleared up by the time (never, I hope) that I have to file this form again.
Based on Alinde’s finding that one needed to be using a Window O.S:, besides leaving out in the cold — remember cold? not a Yucatecan normal experience except that anything below 80 deg F here is termed “bad weather”! — those using an Apple O.S. or any of the many Linux variants are also not able to conform, and it is just crazy for the IRS to expect computer literacy and Internet access to all U.S. persons abroad.
Steve, don’t you think this table, showing what must be reported and what need not be reported, introduces some doubt about whether fideicomisos need be reported on Form FinCen 114 and Form 8938?
Read the form’s “What is Reported” columns. Personal not-for profit real estate trusts are exempted and are not included in “What is Reported”:
“Maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets.”
“Maximum value of financial accounts maintained by a financial institution physically located in a foreign country.”
Note that the IRS instructions do NOT mention foreign real estate trusts, only “financial accounts”.
So, yes, if you are renting your Fideicomiso property, or you are getting income from the Fideicomiso property, then yes, you report it.
If you are using your Fideicomiso property exclusively as a personal residence, then it is NOT reported (per June and July 2013 IRS public reports).
“Read the form’s “What is Reported” columns. Personal not-for profit real estate trusts are exempted and are not included in “What is Reported”
This is a little too cryptic to make it easy to get to the meat.
Which form or instruction are you referring to, in your reply? If a form, which line; and, if an instruction, what page and paragraph?
If you still doubt the previous analysis, read: Internal Revenue Bulletin – June 24, 2013 – Rev. Rul. 2013-14 : http://www.irs.gov/irb/2013-26_IRB/ar06.html
This Internal Revenue Bulletin: 2013-26 describes 3 common scenarios where fideicomisos for Mexican Land Trusts, are NOT considered trusts by the IRS ( => 3 scenarios where the fideicomiso is exempt and does NOT have to file with the IRS).
Summary: The Fideicomisos that ARE considered trusts by the IRS (requiring filing) are those that give the fideicomiso owner more rights than simply “holding legal title”. One example of a non-exempt fidiecomiso is one that gives the individual owner or corporation the additional right to use the property to generate revenue:
“If, under the MLT agreement, B holds legal title to any assets other than Greenacre or is permitted or required to engage in any activity beyond holding legal title to Greenacre, the holding of this revenue ruling does not apply and the rules of §§ 301.7701-1 through 301.7701-4 will determine the federal tax classification of the MLT.”
Hope that clarifies things,
Just wondering, if we don’t need to file these forms when we have a fidiecomiso with no income, only using as a vacation home for ourselves…..are we still required to file 3520, 3520A?
Thank you so much for highlighting the on-going confusion on this issue. As a response, we just wrote the answer(s) to your good question at: https://yucalandia.com/2014/01/24/fideicomisos-and-irs-fbar-3520-filing-requirements/ Fideicomisos and IRS FBAR, FinCen, SSFFA Filing Requirements
Basically, it all boils down to how your fideicomiso was structured (how it was worded).
Some do have to file, others do not.
Please tell us if the post clears up your questions,