Differences Between Form 3520 & 3520-A

Differences Between Form 3520 & 3520-A

Difference Between Form 3520 and Form 3520-A

What is the Difference Between 3520 & 3520-A?: Two of the most common international reporting forms involve the reporting of foreign trusts and gifts in accordance with Internal Revenue Code section 6039 and 6677(a). Form 3520 “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts” and Form 3520-A “Annual Information Return of Foreign Trust With a U.S. Owner.” Both forms involve Foreign Trust Reporting. But Form 3520 also includes Foreign Gift reporting as well.  In addition, the due dates for filing the form are different — so are the methods and timing for filing the form, and/or requesting an extension. International reporting penalty enforcement is on the rise, in accordance with the IRS’ overall aggressive enforcement of Foreign Accounts Compliance by the U.S. Government. The failure to file the forms may result in significant fines and penalties — but the IRS has developed various International Tax Amnesty Programs to assist Taxpayers with getting into compliance.

Who Has to File Form 3520 and 3520-A

The Form 3520 is used by U.S. Persons who have certain foreign trust and gift transactions.  When a U.S. Person receives a gift from a foreign person that exceeds the threshold for reporting, the U.S. person must file the Form 3520. In addition, if the U.S. person that either: owns any assets that comprise a foreign trust, received a distribution from a foreign trust, or have certain other related types of trust transactions — they must also file the form. With Form 3520-A, the filing is only required when there is a Foreign Trust with a U.S. owner. The IRS has developed various exceptions and limitations for reporting, such as the Canadian RRSP (Registered Retirement Plan), and a more general reporting limitation in accordance with Rev. Proc 2020-17.

Date of Filing of Form 3520 vs 3520-A

Filing the Form coincides with individual tax return filing.   The Form is due when a person’s tax return is due to be filed. Even if the person does not have to file a Tax Return, they still must submit the Form 3520, if applicable.

As to filing Form 3520-A,  it is due:

    • ” by the 15th day of the 3rd month after the end of the trust’s tax year.”

For most people, the Form 3520-A is due on March 15.

Requesting an Extension

To request an extension to file Form 3520, the person files for a regular extension with their tax return (Form 4868).

    • “If a U.S. person is granted an extension of time to file an income tax return, the due date for filing Form 3520 is the 15th day of the 10th month (October 15) following the end of the U.S. person’s tax year.”

The Form 3520-A has more specific requirements. In order to request an extension:

    • “An automatic 6-month extension of time to file Form 3520-A (including the statements on pages 3 through 5) may be granted by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, by the 15th day of the 3rd month after the end of the trust’s tax year.”

Abatement of Penalties

In order to avoid a penalty, a person must submit a detailed and effective Form 3520 reasonable cause statement.  Just throwing together a paragraph or two and sending it off to the IRS with the delinquent forms is not sufficient. Alternatively, if other reporting such as FBAR and FATCA is necessary, then the person may want to consider a voluntary disclosure (aka offshore tax amnesty) submission in lieu of reasonable cause.

Where to Submit the Forms

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
Form 3520-A

Need Help with Late Filing 3520 or 3520-A?

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