Simple Trust

A simple trust is:

An instrument that requires all income be distributed currently

An instrument that does not provide that any amounts be paid, permanently set aside, or used for charitable purposes; and

An instrument that does not distribute amounts allocated to the corpus of the trust

The trust is a simple trust only for a year in which it distributes income and makes no other distributions to beneficiaries. For a year when the trust does not meet these requirements, it is a "complex trust."

A simple trust applicant:

Is identified on Line 4c of Form 8802

Must file a Form 1041

Distributes its income to the beneficiaries

A simple trust must be certified at the beneficiary level. A beneficiary includes any person that could possibly benefit (directly or indirectly) from the trust whether the person:

Is named in the trust as a beneficiary, or

Can receive a distribution from the trust in the current year

As a simple trust itself is ignored for tax purposes and all income, deductions, etc. are treated as belonging to the beneficiary/beneficiaries, these trust applicants must provide:

The name and TIN of the trust

The name and TIN of the beneficiary/beneficiaries, and, depending on the whether the beneficiary is an individual or entity, the relevant information necessary for certification of that type of person

Authorizations (Form 8821 or like form) from each beneficiary for which certification is requested. The authorizations must authorize the 3rd party requestor to receive their tax information, and

Authorization from the Trustee, when the requestor is other than a trustee in the trust

Certification of a simple trust, in addition to meeting all the general trust certification requirements, must meet the requirements of a pass-through entity.

The trust must file its Form 1041 return.

At least one of the beneficiaries must be a resident of the U.S. for tax purposes.

When none of the beneficiaries filed their required tax return, extension, or have a determination letter, reject the Simple Trust application.

Do not list beneficiaries in the trust that failed to file, failed to provide tax disclosure authorization, filed as a non-resident, or filed a tax return claiming a foreign tax home (Form 2555 filed, see exception), with the list of participants/owners that are certified as U.S. residents on the U.S. Residency certification.