Individuals Receive Information Reporting Relief for Transactions with Certain Foreign Trusts

Foreign trusts are subject to many tax filing requirements, and failure to meet them can result in significant penalties. Annual information reporting generally includes a U.S. person’s transfers of money or other property to, ownership of, and distributions from, foreign trusts.

The IRS has issued guidance[1] that:

  1. Exempts certain U.S. individuals from information reporting requirements for their transactions with, and ownership of, foreign retirement and foreign nonretirement savings trusts and foreign trusts; and
  2. Establishes procedures for these individuals to request abatement or refund of penalties assessed or paid under for failing to comply with the information reporting requirements.

Reporting Relief

The Treasury Department and IRS have determined that certain U.S. individuals should be exempt from information reporting requirements because:

a. the trusts are generally subject to written restrictions (e.g., contribution limitations, conditions for withdrawal, and information reporting) by the laws of the country where the trust is established; and

b. U.S. individuals with an interest in these trusts may be required by FATCA (Foreign Account Tax Compliance Act) to separately report information about their interests in accounts held by or through the trusts.

Penalty Relief

Eligible individuals who have been assessed a penalty for failing to comply with foreign trust reporting for an applicable tax-favored foreign trust and want relief must complete Form 843, Claim for Refund and Request for Abatement.

The guidance is effective as of Mar. 3, 2020.

The complexity that surrounds foreign trusts should be regularly reviewed by taxpayers in order to minimize unfavorable tax implications.


[1] Rev. Proc. 2020-17, Mar. 3, 2020

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Choosing The Wrong Accounting Method for Home Construction Contracts is a Costly Mistake
2020-2021 Special Per Diem Rates
Notices for Nonpayment of Income Taxes
Ohio Net Operating Loss’ Impact on the Bonus Depreciation Adjustment
Schneider Downs’ Construction Practice Ranked Once Again
Pennsylvania Commonwealth Court Decides Market-Based Sourcing for Services Prior to Legislative Change in 2014

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102