United States Court of Appeals

for the Fifth Circuit

No. 21-51064

Daphne Jeanette Rost, Executor of the Estate of John H. Rebold, 

Plaintiff—Appellant,

versus

United States of America, the Internal Revenue 

Service, 

Defendant—Appellee.

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:19-CV-607

Before Smith, Duncan, and Oldham, Circuit Judges.

Stuart Kyle Duncan, Circuit Judge:

In 2005, John Rebold formed the Enelre Foundation as a Stiftung 

under the laws of Liechtenstein. Stiftung is a German word meaning, roughly, 

“foundation” or “endowment.” Enelre’s purpose is to provide education

and general support for Rebold and his children. Rebold transferred $3 

million to Enelre’s bank accounts. He later learned the IRS would consider 

Enelre a “foreign trust,” triggering certain reporting requirements. Rebold

belatedly filed the reports, and the IRS assessed penalties. Rebold paid the 

United States Court of Appeals

Fifth Circuit

FILED

August 11, 2022

Lyle W. Cayce

Clerk

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No. 21-51064

2

penalties and then filed this refund action. The district court granted 

summary judgment for the government. We affirm.

I.

A.

The Internal Revenue Code (IRC) requires disclosures regarding 

foreign trusts. See I.R.C. § 6048. Under section 6048(a), a “United States 

person” must report “the creation of any foreign trust” and “the transfer of 

any money or property (directly or indirectly) to a foreign trust.” Id.

§ 6048(a)(1), (3)(A)(i)–(ii). A “United States person” includes U.S. citizens 

and residents. Id. § 7701(a)(30)(A). These reportable events are disclosed to 

the IRS on Form 3520.1 Failure to timely file the form or to fully disclose all 

required information results in a “penalty equal to the greater of $10,000 or 

35 percent of the gross reportable amount.” Id. § 6677(a). The “gross 

reportable amount” is “the gross value of the property involved in the event

(determined as of the date of the event).” Id. § 6677(c).

Under section 6048(b), as in effect during the years relevant to this 

case, anyone treated as the owner of a foreign trust under the grantor trust 

rules of I.R.C. §§ 671–679 must “ensure” the trust annually “makes a 

return . . . which sets forth a full and complete accounting of all trust 

activities and operations for the year, the name of the United States agent for 

such trust, and such other information as the Secretary may prescribe.” Id.

1 See Treas. Reg. § 16.3-1(a) (2018), removed by Eliminating Unnecessary Tax 

Regulations, 84 Fed. Reg. 9231-01, 9238 (Mar. 14, 2019); see also Form 3520, Annual 

Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, 

Dep’t Treas. & IRS (2021), https://www.irs.gov/pub/irs-pdf/f3520.pdf.

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§ 6048(b)(1)(A) (2009).2 The return is made on Form 3520-A.3 Failure to 

timely file the form or to fully disclose all required information results in “a 

penalty equal to the greater of $10,000 or [5] percent of the gross reportable 

amount.” Id. § 6677(a)–(b). The “gross reportable amount” is “the gross 

value of the portion of the trust’s assets at the close of the year treated as 

owned by the United States person.” Id. § 6677(c)(2).

B.

Rebold was a U.S. citizen who worked overseas as an engineer in the 

oil and gas industry. In 2005, he traveled to Switzerland and created the 

Enelre Foundation as a Stiftung4 under the laws of Liechtenstein. At the time 

2 In 2010, Congress amended section 6048(b) to require that a foreign trust owner 

not only “ensure” the trust makes an annual return but also directly “submit” a return 

“with respect to such trust for such year.” I.R.C. § 6048(b)(1) (2010).

3 See Treas. Reg. § 404.6048-1(a) (2017), removed by Eliminating Unnecessary Tax 

Regulations, 84 Fed. Reg. at 9239; see also Form 3520-A, Annual Information Return of 

Foreign Trust With a U.S. Owner, Dep’t Treas. & IRS (2021), 

https://www.irs.gov/pub/irs-pdf/f3520a.pdf.

4 Stiftung is translated from German to English as “foundation,” “establishment,” 

“donation,” or “endowment.” German-English Translation for “Stiftung,”

Langenscheidt, https://en.langenscheidt.com/german-english/stiftung (last visited 

Aug. 2, 2022); Stiftung: German to English, Collins, 

https://www.collinsdictionary.com/us/dictionary/german-english/stiftung (last visited 

Aug. 2, 2022). The plural form of Stiftung is “Stiftungen.” Stiftung v. Plains Mktg., L.P., 

603 F.3d 295, 299 n.1 (5th Cir. 2010).

“A stiftung is a creation of the laws of Liechtenstein . . . , resembling a trust, but 

not limited to specific lives in being. A stiftung can own property and is controlled by an 

administrator (known as a stiftungerat) whose powers and duties are comparable to a 

trustee.” Kraus v. Comm’r, 59 T.C. 681, 685 (1973). “A Stiftung does not have members 

or a board of directors.” I.R.S. Chief Couns. Att’y Mem. AM2009-012, 2009 WL 3336014

(Oct. 7, 2009). In forming a Stiftung, the founder “transfers specific assets to the Stiftung 

that are then endowed for specific purposes,” “states the objectives of the Stiftung[,] and 

appoints its [stiftungerat].” Ibid. A Stiftung “can be created for charitable or personal 

purposes” but “cannot be created to undertake commercial activities.” Von E. Sanborn et 

al., Classifying Trusts, Anstalts, and Stiftungs—When Is a Trust Not a Trust?, A.L.I.-

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of Enelre’s founding, Rebold was the settlor and primary beneficiary, and his 

children were secondary beneficiaries. “Enelre” is the name of Rebold’s 

wife, Erlene, spelled backwards.

Enelre’s organizing documents provide that its purpose is to provide 

education, training, support, and maintenance for its beneficiaries. The

documents prohibit “commercial trade” and do not provide for allocation of 

profits. They refer to Enelre as a trust, and Enelre has trustees and pays

trustee fees. Liechtensteinian Public Registry filings reiterate Enelre’s 

purpose and prohibition of commercial business. 

Rebold opened bank accounts for Enelre at Credit Suisse, UBS, and 

Bank Wegelin. He transferred $2 million to Enelre in 2005 and another $1 

million in 2007. Neither Rebold nor Enelre filed Form 3520 or 3520-A 

disclosing to the IRS the creation of Enelre or these transfers.

In 2010, UBS notified Rebold that it intended to turn over Enelre’s 

account records to the IRS. Rebold consulted counsel regarding tax liability 

for Enelre. An attorney for “the trust and trustees” (i.e., Enelre and its 

trustees) advised Rebold’s counsel that Rebold was “an American who set 

up a foreign trust, so [h]e will need to do 3520’s and 3520-A’s as well as 

amended US returns,” and recommended that he participate in a voluntary 

disclosure program “to limit his exposure to penalties.” That attorney noted 

that Rebold “will owe some serious tax! Nothing to be taken lightly.”

Rebold’s counsel explained that he was “trying to find a way to treat the 

A.B.A. Course of Study, SL003 ALI-ABA 293, 300 (July 2005). “Liechtenstein law 

provides that in certain cases commercial activities may be undertaken by a Stiftung if such 

activities serve its noncommercial purposes.” AM2009-012, 2009 WL 3336014. Once 

formed, the Stiftung “is entered onto the Register in Liechtenstein and must have a 

minimum amount of initial capital.” Ibid. The Stiftung “exists for the benefit of those 

named in its formation documents as being appointed as beneficiaries.” Ibid.

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Enelre Foundation as something other than a trust for US tax purposes,” 

which was “not easy.”

In 2013, Daphne Jeanette Rost, Rebold’s daughter and power of 

attorney, filed a Form 3520 for 2005 on Rebold’s behalf, reporting that he 

owned a portion of Enelre and had transferred money to it. Rost also filed 

Forms 3520-A for the years 2005, 2006, and 2007, reporting year-end 

balances of $1,680,272, $1,807,873, and $3,116,898, respectively.

In 2014, the IRS assessed $1,380,252.35 in penalties against Rebold 

under section 6677(a) and (b) for his failure to timely file Forms 3520 and to 

ensure that Enelre timely filed Forms 3520-A in 2005, 2006, and 2007. The 

IRS soon notified Rebold of its intent to levy the penalties. Rebold contested 

his liability and requested collection due process hearings. The IRS Appeals 

Office sustained the levy notices but cut the penalties in half. In June 2017, 

Rebold paid the penalties, as adjusted.In August 2018, he filed administrative 

refund claims with the IRS.

C.

In June 2019, having not received a decision from the IRS, Rebold filed 

this action, seeking refunds for the penalties. Upon Rebold’s death in 

December 2019, Rost, his executor, substituted as plaintiff.

After discovery, the parties cross-moved for summary judgment on 

Rebold’s liability. The government argued that federal tax law determines 

the classification of an entity as a trust for tax purposes and that, under a 

facts-and-circumstances test, Enelre qualified as a foreign trust. Rost argued 

that because no statute, regulation, or judicial decision provides that a 

Liechtensteinian Stiftung is a foreign trust for federal tax purposes, the 

penalties violated the government’s “duty of clarity when imposing 

sanctions,” the Administrative Procedure Act (APA), and the Due Process

Cause.

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The court granted the government’s motion and denied Rost’s. Rost 

v. United States, No. 1:19-CV-0607-RP, 2021 WL 5190875 (W.D. Tex. Sept. 

22, 2021).Applying a facts-and-circumstances test, the court held that Enelre 

qualified as a foreign trust based on its purpose and form, as stated in its 

organizing documents, and because it failed the tests for domestic trusts set 

forth in Treasury regulations. Id. at *4. The court found that Rost submitted 

no evidence “demonstrating fact issues that would prevent [it] from 

determining that [Enelre] is a ‘foreign trust’ as a matter of law.” Ibid. The 

court rejected Rost’s notice arguments, finding the statutory and regulatory 

frameworks were “sufficiently clear.” Id. at *5, *7–9. Rost timely appealed.

II.

We review a summary judgment de novo. United States v. Bittner, 19 

F.4th 734, 740 (5th Cir. 2021) (citation omitted), cert. granted, 142 S.Ct. 2833

(2022). Summary judgment is appropriate “if the movant shows that there is 

no genuine dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 248 (1986). Once the movant satisfies this burden, 

the nonmovant “must present competent summary judgment evidence of 

the existence of a genuine [dispute] of fact.” Johnson v. World All. Fin. Corp., 

830 F.3d 192, 195 (5th Cir. 2016) (citations omitted). “We view the evidence 

in the light most favorable to the nonmovant and draw all reasonable 

inferences in its favor.” Bittner, 19 F.4th at 740 (citation omitted).

In a tax refund action, “the taxpayer bears the burden of proving both 

the error in the assessment and the amount of refund to which he is entitled.” 

Brown v. United States, 890 F.2d 1329, 1334 (5th Cir. 1989) (citations 

omitted); see also Trinity Indus., Inc. v. United States, 757 F.3d 400, 413 (5th 

Cir. 2014).

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III.

At bottom, Rost argues that Rebold had insufficient notice that Enelre 

qualifies as a foreign trust for federal tax purposes. She contests the factsand-circumstances test employed by the district court. She claims that 

applicable statutes, regulations, and case law do not clearly “connect[] the 

imposition of penalties for failure to file foreign trust information returns with 

respect to a Liechtenstein Stiftung.” She then argues the penalties violate the 

APA, the government’s “duty of clarity,” and due process.

We disagree with each contention. We first outline the legal 

framework for classifying an arrangement as a foreign trust, then explain why 

Enelre qualifies as one, and then address Rost’s notice arguments.

A.

The classification of an organization “for federal tax purposes is a 

matter of federal tax law and does not depend on whether the organization is 

recognized as an entity under local law.” Treas. Reg. § 301.7701-1(a). 

Sections 301.7701–2, 301.7701–3, and 301.7701–4 determine the 

classification of organizations recognized as separate entities, unless the IRC 

“provides for special treatment of that organization.” Id. § 301.7701-1(b). 

Neither the IRC nor its regulations specifically classify or provide for special 

treatment of Stiftungen. Cf. id. § 301.7701-2(b)(8) (classifying Liechtenstein 

Aktiengesellschaften as corporations).

Determining whether an arrangement is a foreign trust requires a twostep inquiry: (1) whether it is a trust under section 301.7701-4 or a business 

entity under sections 301.7701-2 or 301.7701-3, and (2) if it is a trust, whether 

it is a United States person (i.e., a domestic trust) or a foreign trust. See I.R.C.

§ 7701(a)(30)(E), (31)(B); Treas. Reg. §§ 301.7701-1(a)–(b), (d), 301.7701-

2(a), 301.7701-4(a), 301.7701-5(a), 301.7701-7.

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A “trust” in the IRC is an arrangement where “trustees take title to 

property for the purpose of protecting or conserving it for the beneficiaries.” 

Treas. Reg. § 301.7701-4(a). An arrangement generally qualifies as a trust if 

“the purpose of the arrangement is to vest in trustees responsibility for the 

protection and conservation of property for beneficiaries who cannot share in 

the discharge of this responsibility and, therefore, are not associates in a joint 

enterprise for the conduct of business for profit.” Ibid.; see also Frank Aragona 

Tr. v. Comm’r, 142 T.C. 165, 175 (2014).

An arrangement’s purpose thus distinguishes a trust from other 

entities. “[A]ny entity recognized for federal tax purposes . . . that is not 

properly classified as a trust under § 301.7701–4” is a “business entity.” 

Treas. Reg. § 301.7701-2(a). Arrangements “known as trusts because the 

legal title to property is conveyed to trustees for the benefit of beneficiaries” 

may nevertheless not qualify as trusts under the IRC “because they are not 

simply arrangements to protect or conserve the property for the 

beneficiaries.” Id. § 301.7701-4(b). “Business trusts,” for example, 

“generally are created by the beneficiaries simply as a device to carry on a 

profit-making business which normally would have been carried on through 

business organizations that are classified as corporations or partnerships 

under the [IRC].” Ibid.; see Petersen v. Comm’r, 148 T.C. 463, 475 n.8 (2017).

In classifying an arrangement as a trust or other business entity for tax 

purposes, “there is no one rule or set formula,” and “[e]ach case must be 

decided upon its own particular facts.” Keating-Snyder Tr. v. Comm’r, 126 

F.2d 860, 862 (5th Cir. 1942); see also Comm’r v. Horseshoe Lease Syndicate, 

110 F.2d 748, 749 (5th Cir. 1940) (“the facts of each case[] must control”). 

The seminal case is Morrissey v. Commissioner, 296 U.S. 344 (1935). There, 

the Supreme Court held that a trust created for developing tracts of land and 

constructing and operating a golf course was properly classified and taxed as 

“an association” (i.e., a business trust), rather than an ordinary trust, based 

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on its “character” and “salient features,” including the trustees’ “use and 

adaptation of the trust mechanism.” Id. at 359–61. The Court applied 

Morrissey’s fact-specific approach in three companion cases decided that 

same day. See Swanson v. Comm’r, 296 U.S. 362 (1935); Helvering v. ColemanGilbert Assocs., 296 U.S. 369 (1935); Helvering v. Combs, 296 U.S. 365 (1935).

An arrangement’s most relevant features for tax-classification 

purposes are its “nature,” “purpose,” and “operations.” Morrissey, 296 

U.S. at 357; Swanson, 296 U.S. at 365.

5 The form of organization under which 

the arrangement operates “may furnish persuasive evidence” of a 

classification but “cannot be regarded as decisive.” Morrissey, 296 U.S. at 

358. No feature is dispositive; they “all go to the point of whether the trust is 

being used to achieve the organizational conveniences of the corporate 

form.” Guar. Emps. Ass’n v. United States, 241 F.2d 565, 571 (5th Cir. 1957).

In assessing these features, the arrangement’s organizing documents 

are determinative. See Swanson, 296 U.S. at 363–65; Morrissey, 296 U.S. at 

360–61. As the Supreme Court has explained, “parties are not at liberty to 

say that their purpose was other or narrower than that which they formally 

set forth in the instrument under which their activities were conducted.” 

Coleman-Gilbert, 296 U.S. at 374.6

5 Morrissey relied on five corporate features to conclude the trust was “analogous 

to a corporate organization” and thus qualified as an “association,” or “business trust.” 

296 U.S. at 359–61. These features are “(1) title to the property held by the entity, 

(2) centralized management, (3) continuity uninterrupted by deaths among the beneficial 

owners, (4) transfer of interest without affecting the continuity of the enterprise, and 

(5) limitation of the personal liability of participants.” Comm’r v. Rector & Davidson, 111 

F.2d 332, 333 (5th Cir. 1940); see Kurzner v. Comm’r, 413 F.2d 97, 101–04 & n.22 (5th Cir. 

1969) (reviewing Morrissey’s discussion of “distinguishing attributes of ‘corporateness’”).

6 See also Abraham v. United States, 406 F.2d 1259, 1262–63, 1263 n.4 (6th Cir. 

1969) (finding “broad powers . . . for conducting a business for profit . . . carefully spelled 

out” in the trust instrument could not “be negated by [a] self-serving limiting declaration 

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Once an entity is deemed a trust, it must be classified as foreign or 

domestic. A foreign trust is “any trust other than a trust” that is a “United 

States person” (i.e., a domestic trust). I.R.C. § 7701(a)(30)(E), (31)(B); 

Treas. Reg. § 301.7701-7(a)(2). A trust is domestic if (1) “a court within the 

United States is able to exercise primary supervision over the administration 

of the trust” (the “court test”) and (2) “one or more United States persons 

have the authority to control all substantial decisions of the trust” (the 

“control test”). I.R.C. § 7701(a)(30)(E); Treas. Reg. § 301.7701-7(a)(1).

A trust satisfies the court test if the governing document “does not 

direct that the trust be administered outside of the United States,” “[t]he 

trust in fact is administered exclusively in the United States,” and “[t]he 

trust is not subject to an automatic migration provision” that would move it

outside the U.S. if a U.S. court were to “attempt to assert jurisdiction” over 

it. Treas. Reg. § 301.7701-7(c)(1), (4)(ii). As to the control test, “control 

means having the power, by vote or otherwise, to make all of the substantial 

decisions of the trust, with no other person having the power to veto [them].” 

Id. § 301.7701-7(d)(1)(iii). This includes anyone with authority over 

substantial decisions, not only trust fiduciaries. Ibid. Substantial decisions are 

those “authorized or required” under the trust instrument and applicable 

law “that are not ministerial.” Id. § 301.7701-7(d)(1)(ii) (providing

examples).

contained in the last paragraph” that the trust “shall not be deemed or considered a trust 

operated for financial profit”); Nee v. Main St. Bank, 174 F.2d 425, 429 (8th Cir. 1949) 

(“The intention, through the creation of a trust, to conduct a business enterprise may 

accordingly legally be inferred . . . from the enumeration in the instrument of powers 

which, if exercised, would necessarily cause such an enterprise to result.”); Sears v. Hassett, 

111 F.2d 961, 962–63 (1st Cir. 1940) (noting the “character of the trust” is determined by 

“the purposes and potential activities as disclosed on the face of the trust instrument”).

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B.

The district court correctly found that Enelre qualifies as a foreign 

trust. Its organizing documents explain that Enelre’s purpose is to support 

its beneficiaries and limit its transactions to “pursuing and realising its 

purpose.” This is “characteristic of an ordinary trust.” Morrissey, 296 U.S. 

at 356–57. The documents also prohibit Enelre from conducting commercial 

trade. Liechtensteinian Public Registry filings confirm this prohibition.

Enelre’s familial purpose, lack of business objective, and bar on commercial 

activity render it a trust. See McKean v. Scofield, 108 F.2d 764, 765–66 (5th 

Cir. 1940) (holding a trust was taxable as a trust and not an association 

because “[s]olicitude for the future of [the settlor’s] family [wa]s a main 

purpose of the trust”); see also Estate of Bedell v. Comm’r, 86 T.C. 1207, 1221 

(1986) (holding a “trust characterized by a dominant familial objective” was 

taxable as a trust and not an association because it lacked a business 

purpose).

7

Enelre’s form of organization confirms it is a trust. Enelre is subject 

to Liechtenstein’s “Act on Trust Enterprises.” Its board members serve the 

same function as independent trustees, and Enelre’s counsel considered 

them trustees. Enelre also has beneficiaries like an ordinary trust. Rebold 

described himself as “Settlor and Beneficiary” of Enelre, and he transferred 

money to Enelre the same way a trust grantor would. Rebold’s children, the 

other beneficiaries, were not involved with Enelre and did not know it existed 

during the years in question, so they could not have been “associates” 

7 Cf. Coleman-Gilbert, 296 U.S. at 373–74 (holding trust was taxable as an 

association because the parties engaged “in carrying on an extensive business for profit”); 

Adkins Props. v. Comm’r, 143 F.2d 380, 381 (5th Cir. 1944) (holding trust with “an active 

business purpose, having the general characteristics and advantages of corporate 

organization” was taxable as an association); cases cited supra note 6.

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engaged in a common business enterprise. See Morrissey, 296 U.S. at 357; cf. 

Elm St. Realty Tr. v. Comm’r, 76 T.C. 803, 813–18 (1981). And Enelre’s 

organizing documents do not provide for profit sharing. See Morrissey, 296 

U.S. at 357.

Enelre is not a domestic trust. It fails the court test because any 

disputes must proceed to arbitration under Liechtensteinian law, with “the 

President of the Princely Liechtenstein Court of Appeal” assisting in

appointing an arbitrator. See I.R.C. § 7701(a)(30)(E)(i); Treas. Reg. 

§ 301.7701-7(a)(1)(i), (c)(1). And it fails the control test because Rebold, as 

settlor, “waive[d] any influence on [Enelre] and on any other rights 

whatsoever towards [Enelre], [its] board, and the beneficiaries,” and 

Enelre’s board has decision-making authority. See I.R.C. 

§ 7701(a)(30)(E)(ii); Treas. Reg. § 301.7701-7(a)(1)(ii), (d)(1)(i)–(iii). 

Failing both tests, Enelre is not a domestic trust and so qualifies as a foreign 

trust. See I.R.C. § 7701(a)(30)(E), (31)(B); Treas. Reg. § 301.7701-7(a)(1)–

(2); see also Kaplan v. Comm’r, 107 T.C.M. (CCH) 1226, 2014 WL 988465, 

at *7 (Mar. 13, 2014) (holding trusts “organized under the laws of the Isle of 

Jersey and supervised by the Royal Court of Jersey[] are foreign trusts”).

Rost argues that because the IRC and its regulations do not specifically 

classify Liechtensteinian Stiftungen as trusts, they could be corporations, 

partnerships, or other entities. They very well could, under certain facts and 

circumstances. But Rost presents no evidence that Enelre should be classified 

as anything other than a trust. See, e.g., Jones v. United States, 936 F.3d 318, 

321 (5th Cir. 2019) (“A non-movant will not avoid summary judgment by 

presenting ‘speculation, improbable inferences, or unsubstantiated 

assertions.’” (citation omitted)).

Rost also claims that courts have treated a Stiftung as a corporation 

under the IRC, citing Oak Commercial Corp. v. Commissioner, 9 T.C. 947 

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(1947), aff’d sub nom. Aramo-Stiftung v. Commissioner, 172 F.2d 896 (2d Cir. 

1949). But there, neither the Tax Court nor the Second Circuit evaluated 

whether the Stiftungen were properly characterized as foreign corporations.

The Tax Court merely accepted the IRS’s position that the Stiftungen were 

corporations because the taxpayer failed to challenge the classification. See 

Oak Commercial, 9 T.C. at 954–55. Accordingly, the treatment of the 

Stiftungen there is unhelpful. See Estate of Swan v. Comm’r, 247 F.2d 144, 147 

n.3 (2d Cir. 1957); Estate of Swan v. Comm’r, 24 T.C. 829, 860 (1955).

C.

Rost’s notice arguments are without merit. Rost first claims the 

penalties violate the APA because the government relied on an unwritten 

“rule” promulgated without notice and comment that Stiftungen are foreign 

trusts for tax purposes. But the government applied no “rule.” See 5 U.S.C. 

§ 551(4) (defining “rule”). As the district court explained, “Rost’s argument 

is based on the faulty premise that the IRS established a ‘rule’ that a Stiftung

always qualifies as a ‘foreign trust.’” Rost, 2021 WL 5190875, at *8. The IRS

has consistently recognized that each Stiftung must be analyzed on its own

facts and circumstances. See, e.g., I.R.S. Chief Couns. Att’y Mem. AM2009-

012, 2009 WL 3336014 (Oct. 7, 2009). Rost does not challenge the validity of

the regulations under which Enelre qualifies as a foreign trust. See Treas. Reg. 

§§ 301.7701-4, 301.7701-7.

Rost next argues the penalties “violate[] the duty of clarity for tax 

laws,” citing Central Illinois Public Service Co. v. United States, 435 U.S. 21 

(1978). She claims the penalties cannot be imposed “without a clear 

description of the prohibited circumstances, facts, or status.” This 

argument, too, is based on the false “presumption that the IRS automatically 

considers a Stiftung to be a foreign trust for tax and penalty purposes.” Rost, 

2021 WL 5190875, at *8.

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Rost claims there is “no indication which foreign entities” the 

government “might deem to be a foreign trust.” But the IRS is not obligated 

to promulgate a regulation listing all foreign entities that are or may be 

classified as a foreign trust. As Morrissey acknowledged, “it is impossible in 

the nature of things to translate the statutory concept of ‘association’ into a 

particularity of detail that would fix the status of every sort of enterprise or 

organization which ingenuity may create.” 296 U.S. at 356. So too for trusts.

In any event, Central Illinois is inapposite. There, the Court held an 

employer could not be penalized for failing to withhold income taxes on 

reimbursements of meal expenses for employees day-traveling on business 

because it was unclear at the time that the meals constituted wages subject to 

withholding. 435 U.S. at 29, 33. Rost identifies no decision applying this logic 

outside third-party withholding contexts. Cf. id. at 31 (“Because the 

employer is in a secondary position as to liability for any tax of the employee,

it is a matter of obvious concern that . . . the employer’s obligation to 

withhold be precise and not speculative.”).8 But even if it applied here, the 

legal framework set forth above is sufficiently precise.

Finally, Rost argues that the penalties violate due process because 

there is no “clear, written rule of law” that Stiftungen qualify as foreign 

trusts. As shown above, the IRC, regulations, and case law provide ample 

notice that the classification of an arrangement as a trust, and whether it is 

8 This defense has been dubbed the “‘deputy tax collector’ 

defense, . . . protect[ing] an employer from liability for failing to withhold employment 

taxes from its employees when the employer lacks ‘precise and not speculative’ notice of 

its duty to withhold.” N.D. State Univ. v. United States, 255 F.3d 599, 608 (8th Cir. 2001) 

(quoting Cent. Ill., 435 U.S. at 31); see also Univ. of Chi. v. United States, 547 F.3d 773, 784 

(7th Cir. 2008); Gen. Elevator Corp. v. United States, 20 Cl. Ct. 345, 354 (1990).

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No. 21-51064

15

foreign or domestic, are case-specific inquiries based on the facts and 

circumstances.9

IV.

The district court’s judgment is AFFIRMED.

9 Rost also claims there was no statutory authority to penalize Rebold for failing to 

file Form 3520-A before the 2010 amendment to section 6677. We decline to consider this 

argument because Rost did not raise it below. See, e.g., Rollins v. Home Depot USA, 8 F.4th 

393, 397–99 (5th Cir. 2021); Doe v. MySpace, Inc., 528 F.3d 413, 422 (5th Cir. 2008).

Case: 21-51064 Document: 00516428682 Page: 15 Date Filed: 08/11/2022