IRS Proposes to Eliminating Form 3520-A/3520 Filing For Foreign Pensions | What Does this Mean?

The US Treasury is proposing a fix to the burdensome Form 3520-A and Form 3520 filing for Americans with foreign pensions. However, there is a catch - in order to be exempt from filing, you must report any distributions on a federal income tax return as compensation income.


Link to proposed regulation:
https://www.federalregister.gov/docum...

But what happens if you live in a country with a tax treaty that exempts pension income, like the UK?

The answer is not much has changed, as the UK Treaty has been deemed to be a "good" treaty. And Form 3520 and Form 3520-A was alreayd largely not required

Link to US-UK treaty: https://home.treasury.gov/system/file...

But what about an Australian Superannuation? There is a US-Australian tax treaty that appears to exempt pensions from taxation in the US.

Link to US-Australian Tax Treaty

https://www.irs.gov/pub/irs-trty/aus.pdf

Joining host Anthony Parent and long time guests Keith Redmond and John Richardson, is Karen Alpert, an expert on the US-Australian treaty.

So while it appears that Form 3520-A and Form 3520 requirement are going away, can a treaty position be taken that even if an Australian superannuation is a foreign trust the income it earns is shielded?

Do any aspects of the Secure Act 2.0 also give support to block things such as the UK Individual Savings Account (ISA) from US taxation?

Join us for the lively discussion