Jurisdiction(s):
United Kingdom

US Treasury and IRS propose foreign trust reporting rules, anti-avoidance recharacterising loans as gifts, and strengthened penalties under IRC ss 6039F, 6048, 643(i) and 6677

Published on: 08 May 2024

Published by a Law360 reporter

Legal News

Article summary

Proposed rules

The draft regulations span multiple disclosure measures for dealings with foreign trusts, encompassing IRC reporting duties and related IRC penalties for non-compliance. They also tackle IRC section 6039F—mandating that individuals declare substantial foreign gifts—partly through a proposed anti-avoidance provision. Broadly, the section 6039F proposals fold in guidance the Treasury first issued in a 1997 notice. According to the preamble, the package further supplies fresh direction to reflect later statutory changes and to confront specific abuses identified by the IRS. Among these additions is an anti-avoidance rule empowering the IRS to recharacterise supposed loans and other transfers from foreign trusts as gifts where it finds a transfer ‘is in substance’ a gift, the Treasury noted in the preamble. The department also stated the IRS has become aware of US...

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