Late Filing Form 3520 for Foreign Gifts IRS Rules
Late Filing Form 3520 for Foreign Gifts: The IRS requires U.S. Persons who receive a gift from a foreign person to report the gift to the IRS on Form 3520. If the form is not filed timely, there is the potential that the IRS will penalize the filer significantly for their 3520 non-compliance. The standard penalty is 25% on the value of the Gift. (5% per month, up to 25%). For example, if a U.S. Person receives a gift from a foreign person in the amount of $600,000, the penalty will generally be in the ballpark of $150,000. The Internal Revenue Service routinely issues these penalties by way of an IRS CP15 Notice. The CP15 Notice has very strict response time requirements. If you are going to submit a late filed form 3520 for foreign gifts, you should speak with experienced counsel first.
Let’s review late filing form 3520 for foreign gifts.
When is Form 3520 Due?
The Form 3520 is due to be filed on April 15th.
Specifically, as provided by the IRS:
- “In general, a U.S. person’s Form 3520 is due on the 15th day of the 4th month following the end of such person’s tax year for income tax purposes, which, for individuals, is April 15. If, however, on the due date of your income tax return, you are a U.S. citizen or resident who qualifies for one of the following conditions, then your Form 3520 is due on the 15th day of the 6th month (June 15) following the end of your tax year for income tax purposes. You must include a statement on the Form 3520 showing that you are a U.S. citizen or resident who meets one of these conditions.
- You live outside of the United States and Puerto Rico and your place of business or post of duty is outside the United States and Puerto Rico.
- You are in the military or naval service on duty outside the United States and Puerto Rico.
- In the case of a Form 3520 filed with respect to a U.S. decedent, the due date to file a Form 3520 is the 15th day of the 4th month following the end of the decedent’s last tax year for income tax purposes (April 15). If the U.S. person’s estate is also required to file a Form 3520, the estate will have to file by the 15th day of the 4th month following the end of the estate’s tax year for income tax purposes, just like any other U.S. person.
- If the due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday.
- Note. 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.
- Send Form 3520 to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
- Form 3520 must have all required attachments to be considered complete.
What Does This Mean?
It means most individual taxpayers will have a Form 3520 due date of April 14th. If the Taxpayer lives outside of the U.S., there is an automatic extension to June 15th, but the taxpayer should indicate it directly on the form. For decedents, it is generally also April 15th as well — including if the estate must file a separate Form 3520.
An extension will extend the time to file Form 3520 until October 15th.
Foreign Gift, Trust, and Inheritance Tax Specialist Team
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure, including help clients with late reporting of Forms 3520 and 3520-A.
Contact our firm today for assistance with getting compliant.