26 U.S.C. § 6048, Foreign trust information

26 U.S.C. § 6048 is a federal statute about information and returns for certain foreign trusts. For a U.S. citizen, it describes reporting rules tied to specified trust events, ownership, and distributions.

Scope of section 6048

Congress enacted this provision as part of Title 26, the Internal Revenue Code, in the chapter on information and returns. The Office of the Law Revision Counsel publishes the section on the U.S. Code Online as part of the United States Code.^[1]

Section 6048 has four main parts. They address notice of certain events, information for a U.S. person treated as an owner of part of a foreign trust, returns for U.S. persons receiving trust distributions, and additional rules on classification and filing.^[1]

Events and responsible parties

The statute defines reportable events to include a U.S. person's creation of a foreign trust or direct or indirect transfer of money or property to one. It also includes the death of a U.S. citizen or resident when specified ownership or estate conditions apply.^[1]

A responsible party gives written notice to the Secretary within 90 days after a reportable event, unless the Secretary prescribes a later time. The notice includes information prescribed by the Secretary, including transferred property amounts and identities of the trust, trustees, and beneficiaries or beneficiary class.^[1]

For a trust created during life, the grantor is the responsible party. For a covered transfer other than one by reason of death, it is the transferor; in other cases, it is the decedent's estate executor. The provision excludes certain transfers for fair market value and specified deferred compensation or charitable trusts from the relevant event definition.^[1]

Owner and beneficiary reporting

A U.S. person treated as owner of any portion of a foreign trust during a taxable year submits prescribed information about the trust for that year. The statute also assigns that person responsibility to ensure the trust files an annual return with a full accounting of trust activity, its U.S. agent's name, and other required information.^[1]

If a U.S. person receives a direct or indirect distribution from a foreign trust during a taxable year, that person files a return for that year. It includes the trust's name and the total distributions received, along with other information prescribed by the Secretary.^[1]

These provisions describe U.S. trust reporting obligations for U.S. persons connected with foreign trusts. Section 6048 does not itself identify a separate reporting requirement for foreign accounts as such; its stated subjects are foreign trusts, trust transfers, ownership, and distributions.^[1]

Additional rules and official text

The statute says a U.S. trust may be treated as a foreign trust for this section, to the extent provided by regulations, if it has substantial activities or property outside the United States. It also leaves the time and manner of required notices and returns to rules prescribed by the Secretary.^[1]

The official text is available through the United States Code Online website at uscode.house.gov.

Questions and answers

What kinds of events does section 6048 define as reportable?

The definition includes a U.S. person's creation of a foreign trust and a direct or indirect transfer of money or property to one. It also covers a U.S. citizen's or resident's death in specified trust ownership or estate circumstances.^[1]

Who gives notice after a reportable event?

The responsible party gives written notice to the Secretary. Depending on the event, that party is the grantor, transferor, or executor of the decedent's estate.^[1]

What does a U.S. owner of part of a foreign trust report?

A U.S. person treated as owner of any portion during a taxable year submits information prescribed by the Secretary for that trust and year. The statute also describes the trust's annual return and information it furnishes to owners and recipients of distributions.^[1]

What does a U.S. person report after receiving a trust distribution?

A U.S. person who receives a direct or indirect distribution from a foreign trust during a taxable year files a return about the trust for that year. The return includes the trust's name and aggregate amount distributed, plus other prescribed information.^[1]

Where can a reader find the official text?

The official text appears on the United States Code Online website at uscode.house.gov. Section 6048 is listed in Title 26, Chapter 61.^[1]

Related glossary terms

Responsible party: The Instructions for Form 3520 define the responsible party for specified events involving a foreign trust. The role differs from an owner or U.S. agent.
Foreign grantor trust beneficiary statement: A foreign grantor trust beneficiary statement appears on page 5 of Form 3520-A. It reports distributions to U.S. beneficiaries and identifies the trust's owner.
Section 679: Section 679 addresses certain transfers by U.S. persons to foreign trusts. It treats some property transfers as ownership when the trust has a U.S. beneficiary.