Tag Archives: foreign mutual fund

Are "non-U.S. mutual funds" foreign corporations AKA #PFIC? Does your tax preparer know for sure?


I have written many posts that include a discussion of PFICs. This post has been motivated by a post by Karen Alpert at “Fix The Tax Treaty” (well it can’t really be fixed). The post focuses on the use of “non-U.S. mutual funds” in retirement planning. The post is written from the perspective that “non-U.S. mutual funds” ARE PFICs.
If you don’t know what a PFIC is be happy, be happy! A bit of knowledge (especially if you know things that aren’t true) can be a dangerous thing. Although most “tax professionals” treat non-U.S. mutual funds as PFICs, there is little explanation or analysis of WHY or HOW a “non-U.S. mutual fund” is a PFIC. In other words, most “tax professionals” know that “non-U.S. mutual funds” are PFICs. But, they don’t do a good job of explaining why. This post is based on a series of comments on Karen’s post that are consolidated as tweets in this Storify post.

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PFIC taxation and Americans abroad

This post was originally written in February of 2014. It has been updated September 11, 2020

First, giving credit where credit is due …

A superb “Readers Digest” summary of how the PFIC rules are understood to apply to individuals was prepared by PWC in 2017. You will find the report here and here:

pwc-united-states-pfic-guidance-provides-new-reporting-exceptions

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Circa 2014:

This is a problem that is going to become more and more significant. As a result Dr. Kish and I have authored a separate “PFIC” submission – dated February 6, 2015 – which we have submitted to the U.S. Senate Finance Committee.

This submission is titled: “Request for PFIC Tax Rules Changes for U.S. Citizens Overseas”.
It is intended to be a further elaboration of the “PFIC rules” component of the January 17 2014 submission made to the Senate Finance Committee by Richardson, Yates, and Kish entitled “Request for Tax Rule Changes for U.S. Citizens Overseas.”

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