As a result of these changes, many trusts that were not previously required to file an annual return, may now be required to and a failure to do so could result in hefty penalties.
Specifically, these changes will require trusts to report the identity of all:
It is important to note that some trusts will be excluded from these reporting requirements. Excluded trusts include:
In addition to these proposed reporting requirements, new penalties will also be added to tax legislation regarding the filing of returns for trusts.
If you fail to file a trust return, where required, you could be charged with a late filing penalty of $25 per day to a maximum of $2,500. Furthermore, if it is determined that you knowingly failed to file or failed to file due to gross negligence, you could be subject to an added penalty of 5% of the FMV starting at a minimum of $2,500.
For more information on how these proposed trust requirements could affect your trust, contact us today.