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Relief from Filing Forms 3520a/3520 for Certain Tax-Favored Foreign Trusts

IRS exempts certain plans from onerous trust reporting

Rev. Proc. 2020-17 exempts from section 6048 information reporting an eligible individual’s transactions with, or ownership of, an applicable tax-favored foreign trust. As a result, the penalties under section 6677 do not apply to eligible individuals who fail to report transactions with, or ownership of, these trusts under section 6048. 

An eligible individual is a person who is or was a U.S. citizen or resident and who is compliant (or comes into compliance) with all requirements for filing U.S. federal income tax returns and has reported any contributions to, earnings of, or distributions from, an applicable tax-favored foreign trust. 

The revenue procedure will apply to all open tax years, subject to the limitations of section 6511. 

How to interpret relief requirements

SECTION 3 outlines six qualifying conditions for a foreign tax-favored retirement plan to qualify for the relief from filing Forms 3520a/3520 (see Sep 2019 article: New Compliance Campaign – IRS Going after Non-US Trusts).

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