Further to Trust Requirements and the IRS

Here’s a couple of  documents, one from Enrique Hernandez of the law firm Procopio, called “What Happens in Mexico” and  another called “What’s a Fideicomiso” by American lawyer Amy P. Jetel. Both has differing opinions with regards to how or if Mexican Trusts need to be registered with the IRA.

I also suggest reading the comments that have been coming in regarding this at this post.

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5 Responses to Further to Trust Requirements and the IRS

  1. Vince D. says:

    The prudent approach is debatable. Amy Jetel, Esq. makes a very compelling argument not to file, There are some CPA’s online such as John Dillinger CPA who are looking to enrich themselves by scaring fideicomiso holders into filing these forms immediately at an eventual cost of thousands of dollars. Assuming that there is a responsibility to file, and there are many arguments against that premise, these forms are next to impossible to have filled out properly, there is very little liklihood that a bank rep in Mexico is going to sign as trustee. Expect a high quote to do so, and many months to work through the bank’s beaureacratic channels. Has any US Fideicomisos ever successfully completed these forms?

    I have spoken to some very smart international tax specialists, actual lawyers, not CPAs who lhave investigated this situation. Their position is that these particular trusts are not considered grantor trusts under IRC 679. They are non-grantor trusts – they have no “owner.”

    Of course, if a CPA calls the IRS they are going to say over the phone that such a “foreign trust” is required to file the forms. A phone call is not a ruling. I still see no analysis of the INTERNAL REVENUE CODE or U.S. TREASURY REGULATIONS. John Dillinger CPA is now advocating on his blog that all fideicomiso holders report themselves to the IRS Criminal Investigations unit by October 15th or risk a potential 20% penalty on the value of their property. This is irresponsible & reckless advice. Who does Mr. Dillinger represent, clients or the IRS??

    See his posting here: http://fideicomiso.wordpress.com/

    • John Dillinger, CPA, MS.tax says:

      Wow, Vince

      You judge harshly, and obviously have not looked very closely at my blog. It contains many links to articles analyizing the code and regs. Plus, I share my expereinces finding out why more people didn’t know about this. It was quite the challenging experience.

      In regards to Amy Jetel’s article, even she asks the IRS to make a determination. However, the AICPA and the California State Bar have already been doing that for years, with no success.

      Well, thanks to so many people calling the IRS, they made a determination. IRS CI said that you have to file. It may not be the answer you wanted to hear, but it’s a definite answer.

      I do wonder about your motives. Currently, if a person files under the Voluntary Disclosure Program, they know what they have to do and what will happen. If they do not file, what will happen is uncertain.

      Different people have different comfort levels with uncertainty. The choice is yours. However, as a CPA I’m required to tell you that you are supposed to file.

      Regards,

      John Dillinger, CPA, MS(tax)

  2. johnlifestyles says:

    John,
    They have made a determination, or a clarification? Is there somewhere online we could see that? it would be helpful for people to have access to.
    I’m not a lawyer or a CPA, but this just doesn’t seem right to me (although that doesn’t make any difference as far as the IRS is concerned!).
    EXAMPLE: If someone purchases a house in Vallarta, on the coast, they cannot obtain title, they have to have the title placed in a trust with a Mexican bank. And now we find out that they have to file with the IRS regarding that trust.
    However, if someone buys a house in San Miguel de Allende, outside of the border/coastal areas, they CAN obtain title and therefore don’t need a trust. Does that person need to file that they bought property in Mexico? If not, rather strange that two Americans buying real estate in Mexico,(but in different regions), both have different rules to follow, just because of the way Mexico has established its rules for foreign land ownership. Perhaps this will give Mexico more incentive to change the constitution so that foreigners CAN own land along the border/coastal areas!
    Thanks for posting.
    John

  3. Vince says:

    Jon, please provide a link to the determination that the IRS has made in written form and no, I am not talking about any phone calls you have made to get your questions answered.
    It is interesting that you will not post any opposing comments on your own blog. You never posted my comment from weeks ago, for example, which raised questions about this ruling. I question your motives. Why don’t you make it clear how much you expect to charge a US fideicomiso holder for your CPA work to file? You are going to make thousands of dollars every year per filer for this work. That is your motive. And when you have successfully filed the IRS paperwork including getting signature from the trustee of the bank in Mexico, let us know as well. I dont expect to hear from you anytime soon.

  4. John Dillinger, CPA, MS.tax says:

    John,

    I see your point, many feel like you. However, that’s not what the IRS sees. It has nothing to do with the property, it has everything to do with the entity, the trust. The law states that a US Person with a Foreign Trust must report the information to the IRS. Unless there is an exception. Currently, there is not an exception. Sorry,

    Vince,

    I did not respond to your comment on my blog, because it was, well, rude.

    I’m pretty busy these days, with double 10/15 deadlines and frankly didn’t think the tone of your comments deserved a reply.

    As I said before, you obviously have not read my entire blog. If you had, you would not be jumping to the conclusions that you are making, or asking the questions you are asking. Therefore, I will not take the time to answer questions that have already been previously addressed.

    I wonder if you paid for Amy Jetel’s article? It’s only supposed to be available by subscription. I wouldn’t be surprised if you read it for free online, and that makes since, as you seem to expect everyone to work for free.

    Peace,

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