On Aug. 21, 2024, the IRS and U.S. Treasury Dept. held a public hearing for taxpayers living abroad to provide input on proposed foreign trust regulations. Witnesses expressed the need for more clarity from the IRS on when offshore retirement plans must be reported as trusts (which generally don’t qualify for advantageous tax treatment). Also, expatriates who are confused about the rules and don’t report when required, or make simple filing mistakes, can be subject to heavy penalties. As witnesses contended, non-U.S. pensions shouldn’t be treated as trusts, and the IRS’s current proposed regulations don’t adequately address this and other critical issues.
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