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IRS releases 2012 draft PFIC reporting form (Form 8621) signaling intent to generally require annual reporting, and including additional information relevant to coordination with annual Form 8938 (Statement of Specified Foreign Investment Assets) reporting
The IRS posted a draft, as of August 8, 2012, of
Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund).
Background
Section 1298(f) provides authority for Form 8621. In the case of a taxpayer that failed to file Form 8621 when required, section 6501(c)(8) generally would prevent the closing of the period for assessment of taxes until three years after the date the required information was furnished.
A separate Form 8621 is required for each PFIC in which the filer holds stock.
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Changes to Form 8621 for 2012
The draft Form 8621 adds a new Part I that would require filers to provide a summary of “Annual Information” including:
- A description of shares held in the specific PFIC
- Dates of any stock acquisitions during the year
- Number of shares held at the end of the year
- A valuation of the shares held and the amounts taken into account in applying section 1291, 1293, or 1296 for the filer’s tax year
KPMG observation
The addition of the new reporting requirements in the new Part I suggests that the IRS generally intends to require annual filing of Form 8621—
- Without regard to whether an election under the PFIC rules is being made in that year, or whether the PFIC rules would alter otherwise generally applicable U.S. income tax rules for the year under section 1291, and
- Without regard to whether an income inclusion would be required under section 1293 or section 1296 for that tax year.
The instructions to the current Form 8621 (Rev. December 2011) appear to require filing only in a year in which an event listed in the instructions occurred. Those events include the making of an election, recognizing gain on a direct or indirect disposition of PFIC stock, and receipt of certain direct or indirect distributions from a PFIC.
The information in this new Part I would provide IRS with information also generally required on new Form 8938 (Statement of Specified Foreign Investment Assets), and would enable the IRS to waive reporting on Form 8938 of foreign assets reported on Form 8621 without sacrificing the ability of the IRS to obtain desired information.
The IRS did not release draft instructions, and therefore did not provide any guidance on issues such as whether it will retain current exceptions from filing of Form 8621 by tax-exempt U.S. entities that would not be subject to U.S. taxation under subchapter F on actual dividends from a PFIC.
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ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
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