Methodology & editorial standards
How we determine PFIC status and compute Form 8621.
Atamatax makes tax-law determinations, so it should be transparent about how. This page sets out the authorities we apply, where our data comes from, how often we review it, and the boundary between software and advice. Every classification the product computes traces back to the statute and the IRS form instructions described here.
Before-you-buy product screening
The screen uses the existing Atamatax security master, country and wrapper registry, and deterministic PFIC screening rule. It reports identity, recorded domicile and legal structure separately from the tax flags. A foreign domicile or an ISIN prefix alone never establishes PFIC status.
A registry match is not a statutory §1297 determination. Likely PFIC output is a screening signal; the fund’s legal form and annual income and asset tests control. Only a supported PFIC signal names Form 8621 as a possible next question. Account and wrapper results remain conditional because ownership, institution location, value, treaty facts and governing documents can change reporting.
Unmatched products remain unknown and may be submitted with public product or factsheet links for staff research. Educational explanations are written product copy; they are not generated by an AI tax decision system. No personalized tax or legal advice is provided.
Identity confidence and evidence provenance are shown on the result. The screening rule version is 2026-08-26.4; curated seed entries are not individually represented as recently verified when they lack a review record.
The authority we apply
PFIC treatment is defined in the Internal Revenue Code, Subpart D (§§1291–1298). We apply it directly:
- IRC §1297 — what a PFIC is. A foreign corporation is a Passive Foreign Investment Company if it meets the income test (≥75% of gross income is passive) or the asset test (≥50% of assets produce, or are held to produce, passive income). Conventional non-US pooled investment funds commonly satisfy one or both tests, but their legal structure and annual facts—not domicile alone—control.
- IRC §1298 — attribution and special rules. Governs indirect ownership through other entities and the look-through rules we respect when a holding is itself held via a fund or partnership.
- IRC §1291 — the default regime. With no election, “excess distributions” and gains are taxed at the highest ordinary rate for each year they are allocated to, plus an interest charge running back to the years you held the fund. This is the punitive default Form 8621 exists to administer.
- IRC §1295 — the QEF election. A Qualified Electing Fund election taxes your share of the fund's ordinary earnings and net capital gain annually, avoiding §1291 — available only when the fund supplies a PFIC Annual Information Statement.
- IRC §1296 — the mark-to-market election. Available for marketable PFIC stock; you recognise the annual change in fair market value as ordinary income (or limited loss).
Our sources
- The Internal Revenue Code (Title 26) sections above, as the controlling law.
- The current IRS Form 8621 and its official instructions for the per-fund election mechanics and reporting thresholds.
- The fund's legal form, constitutional documents, annual reports and domicile. An ISIN prefix can help identify the issuer jurisdiction, but it does not by itself establish that the holder owns stock of a foreign corporation or that the annual §1297 tests are met.
- IRS guidance on FBAR (FinCEN Form 114), Form 8938 (FATCA), Form 1116 (Foreign Tax Credit), and the Streamlined Foreign Offshore Procedures for the surrounding return.
Authorities cited
- IRC §1291 — IRC §1291 — Interest on tax deferral (excess-distribution regime)
- IRC §1295 — IRC §1295 — Qualified Electing Fund (QEF) election
- IRC §1296 — IRC §1296 — Mark-to-market election for marketable PFIC stock
- IRC §1297 — IRC §1297 — Definition of a passive foreign investment company
- IRC §1298 — IRC §1298 — PFIC special rules (attribution, indirect ownership)
- IRS Form 8621 — About Form 8621 — Information Return by a Shareholder of a PFIC or QEF
- FinCEN Form 114 (FBAR) — Report of Foreign Bank and Financial Accounts (FBAR)
- IRS Form 8938 — About Form 8938 — Statement of Specified Foreign Financial Assets
- IRS Form 1116 — About Form 1116 — Foreign Tax Credit (Individual, Estate, or Trust)
- IRS Streamlined Foreign Offshore Procedures — U.S. Taxpayers Residing Outside the United States — Streamlined Foreign Offshore Procedures
Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.
How often we review it
We re-verify the inflation-adjusted figures, thresholds, and form revisions against the IRS each filing season, and update the engine and the fund classifications when the IRS publishes new forms or guidance. This page was last reviewed on .
Software, applied to your data — and where the case service begins
Atamatax is tax-preparation software with a case service on top of it. The self-serve packages are software: the engine applies the rules to the figures you enter and confirm and generates supported draft forms and mapped worksheets when you ask for them. The Streamlined and Concierge engagements are cases, prepared against a written scope by Atamatax, with a completeness check by a person at Atamatax before release. A fully managed case is prepared by the qualified CPA or enrolled agent Atamatax engages for it, under one written quote that includes their fee. Nothing computed by the engine is individualised tax, legal or investment advice; a position that turns on facts specific to you is a matter for a licensed professional, and Atamatax engages one on a fully managed case rather than answering it in software. In every model you remain responsible for the figures, the signatures and the filing.
software
Software — you prepare with the engine
A supported return, one tax year, from your own figures: the self-serve packages, the CPA Export, the free scan, the Express Plan and the written filing assessment.
The engine prepares from the figures you confirm and generates the package on request; you review, sign and file.
assisted
Assisted preparation — Atamatax runs the case
A Streamlined catch-up or an Annual Concierge year: a written scope and a fixed price first, then a private case for your documents.
Written scope and fixed price first; Atamatax runs the case and prepares against that scope; you sign and file with the workflow.
managed
Fully managed — Atamatax engages the professional
Cases that need a CPA or enrolled agent's own work — a PFIC correction across several funds or years, an amended return, a foreign company, partnership or trust return, an expatriation filing: one written quote from Atamatax that includes the professional's fee.
One written quote from Atamatax, the professional's fee included, issued once a qualified CPA or enrolled agent has accepted the case; you sign your return.
| Task | software | assisted | managed |
|---|---|---|---|
| Entering and confirming the facts and figures | You | You | You |
| Computing the forms | The Atamatax engine | The Atamatax engine | The professional Atamatax engages for your caseThe professional Atamatax engages for your case. The full quote is issued only once one has accepted it, and they are named on your case then — never before. |
| Reading the documents against the scope | Not part of this model | A person at Atamatax | A person at Atamatax |
| Preparing the package | The Atamatax engine | A person at AtamataxPrepared by Atamatax against the written scope, with every assumption logged. | The professional Atamatax engages for your caseThe professional Atamatax engages for your case. The full quote is issued only once one has accepted it, and they are named on your case then — never before. |
| Checking completeness before release | The Atamatax engineNo person holds a self-serve package before you download it; a package generated with an open gap is stamped DRAFT — INCOMPLETE and lists what must be resolved. The written filing assessment is the exception: a report its rules hold is checked by a person at Atamatax before release. | A person at Atamatax | A person at Atamatax |
| Independent professional review | Not part of this model | Not part of this modelEngaged per case, by written scope, once a professional Atamatax has verified can take the case; never described as done before it is recorded on the case. | Not part of this modelEngaged per case, by written scope, once a professional Atamatax has verified can take the case; never described as done before it is recorded on the case. |
| Signing | You | You | You |
| Filing with the IRS and FinCEN | You, or a professional you engageAtamatax transmits nothing to the IRS or FinCEN; the package carries the step-by-step instructions. | You, or a professional you engageAtamatax transmits nothing to the IRS or FinCEN; the package carries the step-by-step instructions. | As your written quote names itNamed in your written quote: e-filed through the engaged professional's authorised e-file provider where the year and forms allow it, otherwise a paper filing Atamatax coordinates for you to sign. Atamatax's own software transmits nothing to the IRS or FinCEN. |
| Individualised tax advice | Not part of this model | Not part of this model | The professional Atamatax engages for your caseThe professional Atamatax engages for your case. The full quote is issued only once one has accepted it, and they are named on your case then — never before. |
What is inside and outside the supported scope is documented per form on supported forms, and the current human-review status — including what is deliberately not claimed — on accuracy & review.
Frequently asked
- How does Atamatax decide a fund is a PFIC?
- By the annual statutory tests in IRC §1297: a foreign corporation is a PFIC if 75% or more of its gross income is passive (the income test), or at least 50% of its average assets produce or are held to produce passive income (the asset test). Conventional non-US pooled funds, including many UCITS ETFs, commonly satisfy one or both tests, but domicile alone is a screening signal—not the statutory test. Atamatax therefore keeps legal structure and unresolved facts visible for review.
- Why is a US-stock fund like an S&P 500 UCITS ETF still a PFIC?
- The test applies to the foreign fund vehicle, not directly to the nationality of the portfolio companies. A conventional Ireland-domiciled S&P 500 UCITS fund will commonly satisfy §1297 because the fund vehicle holds passive investment assets and earns passive income, even though its underlying shares are US equities. The vehicle's legal structure and annual facts still control.
- Is Atamatax giving tax advice?
- No. The Atamatax engine applies encoded calculation rules to the data you enter and confirm, then generates supported draft forms and mapped worksheets; a Streamlined or Concierge engagement is prepared against a written scope with the same rules. The package identifies partial and unsupported areas. Its classifications are general computations, not individualised advice on your facts; a position that turns on facts specific to you is routed to a licensed professional, not answered in software.