The Internal Revenue Service finally published a private letter ruling that U.S. landowners in Mexico have been waiting for all year: PLR 201245003 (released Nov. 9, 2012).
U.S. taxpayers have questioned whether Mexican land trusts, or fideicomisos, are really “trusts” for U.S. taxpurposes. Many of these taxpayers entered into IRS voluntary disclosure programs out of fear that they might be subject to penalties for failing to file foreign-trust Forms 3520 and 3520-A. But, if a fideicomisoisn’t a trust, then it’s not a foreign trust—and Forms 3520 and 3520-A aren’t required. In PLR 201245003, the IRS ruled that a fideicomiso isn’t a trust, which is great news for U.S. taxpayers who own land in fideicomisos.
For a thorough discussion of the legal analysis of the PLR, see my article “Fideicomisos: Clarity at Last?” in the November 2012 issue of Trusts & Estates or on Wealthmanagement.com.