Form 8621 Case Study

Sam, who is a US person, owns a foreign mutual fund directly and has never made any elections with respect to the fund. There were no distributions from or dispositions of the fund in 2018. Is SAM required to file Form 8621 with Part I filled in for 2018?

The general rule is that Sam should file Form 8621 annually if he owns the PFIC shares directly even if there is no income to report. (There are other scenarios involving indirect ownership where Sam may need to file, but those situations are not the topic of this newsletter.)

Sam may qualify for an exception to filing Form 8621 if the total value of all his PFIC shares is less than $25,000 and other criteria are met.

Even if Sam qualifies for that exception, he may still have to report the PFIC on Form 8938.If Sam doesn’t fulfill his annual filing requirement on Form 8621, and no exceptions to the requirement apply, the Statute of Limitations stays open indefinitely for his entire tax return until 3 years after he furnishes the required Form 8621 information.