Washington, DC
July 9, 2024
American Citizens Abroad (ACA) Submits Comments on IRS Regulations for Information Reporting of Foreign Trusts
ACA responded to a request by the IRS for comments on proposed regulations for Transactions with Foreign Trusts and Information Reporting on Transactions with Foreign Trusts and Large Foreign Gifts (REG-124850-08). Since posting the proposed regulation for commentary, the IRS has received over 1000 submissions, a majority from U.S. citizens living and working overseas who may find that their foreign pension plans qualify for reporting as a Foreign Trust (form 3520/3520A). These same foreign pensions plans may also be reportable for the Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank Account Report (FBAR).
ACA’s submission ACA_Comments_on_Foreign_Trust_regs_7.8.2024_FINAL.pdf (nationbuilder.com) notes that the reporting rules for U.S. citizens living and working overseas are incredibly complicated. The proposed regulation in question deal with trusts and foreign trusts, which can be difficult for average taxpayers overseas to understand without the help of a professional tax preparer. The proposed regulation potentially creates a foreign trust reporting obligation for a foreign pension. ACA maintains that all foreign pensions and retirement plans should be afforded beneficial treatment under income tax treaties and should be exempt from reporting. These are savings plans that most U.S. citizens overseas need to manage their day-to-day finances and should be viewed in the same light as U.S. domestic pensions plans.
“Once again, regulations intended to address tax compliance for individuals with sophisticated financial structures, are negatively impacting U.S. citizens who simply are trying to understand how to remain compliant and file what should be a straightforward, simple tax return,” said Marylouise Serrato, ACA Executive Director.
ACA has long advocated for adoption of Residence-based taxation (RBT) that would put U.S. citizens overseas on equal footing with all other foreign nationals and would alleviate many of the tax and compliance issues the community faces. ACA is currently meeting with Congressional Representatives to make sure that in the lead up to addressing the expiring tax provisions from the Tax Cuts and Jobs Act (TCJA), that U.S. citizens overseas are brought into that discussion ACA’s_Comment_Listening_Tour_Submitted_240528.pdf (nationbuilder.com)
“It is time for Congress to take up the issue of tax reform for U.S. citizens overseas. The call from the community is getting stronger every day, evidenced by submissions on these regulations and others by those living overseas. House Ways & Means leadership has promised a listening tour to hear from U.S. taxpayers. They now have an opportunity to hear from the community of 4 to 6 million U.S. citizens living and working overseas ACA/DEG Analysis of Revenue Effects of Residents-Based Taxation – American Citizens Abroad (americansabroad.org) – Congress simply can’t leave U.S. citizens overseas out of those listening sessions,” added Charles Bruce, ACA Legal Counsel and ACAGF Chairman.
Contact:
Marylouise Serrato
marylouise.serrato@americansabroad.org
+1 202 322 8441
