New rules proposed by the U.S. Treasury Department relax disclosure requirements for certain offshore retirement accounts but leave classification questions unresolved. The guidance raises the reporting threshold for overseas retirement trusts, exempting more accounts than the 2020 procedure. However, uncertainty remains about classifying certain foreign retirement plans. Additionally, questions may arise about classifying transfers from foreign trusts as loans or gifts under an anti-avoidance rule for IRC Section 6039F, which requires reporting large foreign gifts.

Law360 covered the topic in an article on May 15, 2024 where Gray Reed Partner Joshua Smeltzer was one of the experts interviewed. Board Certified in Tax Law by the Texas Board of Legal Specialization, Joshua uses his experience as a former litigator for the U.S. Department of Justice to defend clients in tax audits, tax appeals, and litigation in Federal District Court, U.S. Tax Court, the U.S. Court of Federal Claims, and tax issues in U.S. Bankruptcy Court.


“Now you have different threshold requirements, but you still have this question over trust or not trust,” he said. The proposed rules note that the IRS will make determinations of whether a loan is actually a gift based on “the facts and circumstances” — an approach that some say could lead to disputes with the agency.
As Smeltzer saw it, while this proposed rule would provide some additional clarity, individuals will have to make their best determinations in many cases. A determination “may or may not be right, once the IRS actually looks at it and maybe decides to go a different way,” he said”Now you have different threshold requirements, but you still have this question over trust or not trust,” he said.

Read the full article here.

Partner Matt Roberts was also interviewed as an expert on the topic covered by Bloomberg Law in an article published on May 9, 2024. Matt is a tax litigator and trusted advisor with considerable experience helping U.S. and international clients successfully resolve all types of federal tax controversies involving civil or criminal liability, from tax audits and investigations to litigation, appeals and collection matters. Having served nearly three years as an attorney-advisor to the Chief Judge of the U.S. Tax Court in Washington, D.C., Matt brings unique insight to navigating intricate government processes and developing innovative and cost-effective solutions to his clients’ tax problems.


The proposed expansion of the reporting exemption is significant because many US taxpayers who live overseas may have retirement plans that fall under the definition of a foreign trust, Roberts said. That means they have to file with the IRS on Form 3520 or 3520-A, which critics have said can be demanding.

Read the full article here.