r2i forum

Hi,
I'm living in the U.S.A for about 6 years now. In 2012, I found out that income in India is taxable in the U.S. that I've not been declaring in my tax returns because I didn't know. All my Indian income was from bank interests and MF investments, so nothing substantial. I closed out all the accounts leaving only one savings account. I then hired an attorney and a CPA and we filed for OVDP for the tax years 2009-2011.
Now the IRS is asking is my Indian MF is subject to PFIC. My MF investments were in SBI and Reliance, and in spite of asking them repeatedly, they've not answered my question if they meet the PFIC tests. I'm planning to respond to the IRS saying that in absence of any data, and since both SBI and Reliance have other business than just MF, I'm going to assume that they're not subject to PFIC.
Any suggestions?

asarkar,
I believe that MF's in India (like Reliance and SBI that you own) are PFICs. However most people from what I know have not been reporting these as PFICs; and I have been told that it is very unlikely that IRS will question whether mutual funds are PFICs. However from your post it seems that IRS is asking you whether your India MFs are PFICs. Can you please comment on what exactly is IRS asking you? Have they sent you a notice? What does the notice say?

asarkar;593601Hi,
I'm living in the U.S.A for about 6 years now. In 2012, I found out that income in India is taxable in the U.S. that I've not been declaring in my tax returns because I didn't know. All my Indian income was from bank interests and MF investments, so nothing substantial. I closed out all the accounts leaving only one savings account. I then hired an attorney and a CPA and we filed for OVDP for the tax years 2009-2011.
Now the IRS is asking is my Indian MF is subject to PFIC. My MF investments were in SBI and Reliance, and in spite of asking them repeatedly, they've not answered my question if they meet the PFIC tests. I'm planning to respond to the IRS saying that in absence of any data, and since both SBI and Reliance have other business than just MF, I'm going to assume that they're not subject to PFIC.
Any suggestions?

@nehad, as I mentioned, I'd filed for OVDP. The IRS is asking if the Indian MFs are subject to PFIC while processing my case. There's nothing extraordinary in the notice, just this question and two umother things related to my OVDP filing.

asarkar;593601Hi,
I'm living in the U.S.A for about 6 years now. In 2012, I found out that income in India is taxable in the U.S. that I've not been declaring in my tax returns because I didn't know. All my Indian income was from bank interests and MF investments, so nothing substantial. I closed out all the accounts leaving only one savings account. I then hired an attorney and a CPA and we filed for OVDP for the tax years 2009-2011.
Now the IRS is asking is my Indian MF is subject to PFIC. My MF investments were in SBI and Reliance, and in spite of asking them repeatedly, they've not answered my question if they meet the PFIC tests. I'm planning to respond to the IRS saying that in absence of any data, and since both SBI and Reliance have other business than just MF, I'm going to assume that they're not subject to PFIC.
Any suggestions?

It is not for SBI or Reliance to answer whether they are PFIC or not. It is between IRS and you.

Both SBI and Reliance have multiple independent businesses and there would not be one answer.
SBI or Reliance equity will not be PFIC. Investing in Mutual Funds promoted by them would be subject to PFIC, as far as I understand. FDs would probably not be flagged as PFIC. So it really depends on what is the category of your investment.

I am no financial expert. So do not go only by my advice. Look for some one more knowledgeable. I hope members that have posted previously as financial experts will give their opinion and post their views.