Land Trust Tax Forms
In the Appendix you will find IRS Form 56, IL – 56 Notice of Fiduciary
Relationship (State of Illinois) page 9, IRS Form 501 RCMW pages 1&2, and the
Illinois Department of Revenue Real Estate Transfer Declaration form page 10.
Some practitioners of Land Trust law file IRS Form 56 (see Appendix pages 11-14)
consistently. You will notice when reading the General Instructions for IRS Form 56
it clearly states under “Who Should File” that “you may file Form 56.” The Form
goes on to explain that, “File Form 56 with the Internal Revenue Service Center
where the person for whom you are acting is required to file tax returns.”
Form IL -56 Notice of Fiduciary Relationship is a state specific form unique to
Illinois. You will notice that a trust should file this form IF it is “required to represent
the taxpayer in matters before the Illinois Department of Revenue.” Since an
Irrevocable Land Trust is considered a “pass thru entity” by the IRS, no tax return is
required.
IRS Form 501 RCMW was developed by the IRS with the assistance from the Land
Trust Council of Illinois. The form enables the IRS to track the identity of
beneficiaries of Illinois Land Trusts who may have federal tax liability. The form is
not intended to be used to monitor the reporting of gain on sale of trust property.
The Internal Revenue Service is in the process of drafting a revised land trust
reporting form (see Appendix Pages 15-19). The form is generally similar to the
current form in use but is formatted a little differently. In addition, the draft form
contains a section intended to be used when a land trust department takes over
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