IRS Tax Form 3520 and Foreign Gift Reporting

IRS Tax Form 3520 and Foreign Gift Reporting

IRS Tax Form 3520 and Foreign Gift Reporting

Tax Form 3520 and Foreign Gift Reporting: Not all IRS forms are used to for tax purposes. Rather, some of the international reporting forms required by the Internal Revenue Service are for “reporting,” and not tax. One common example is IRS form 3520. The Form 3520 is referred to as the Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. It is primarily used by U.S. persons who have received a gift (or series of gifts) from a Foreign Person (Individual or Corporation) in the same tax year, which exceeds the threshold for reporting. It is also used to report foreign trust ownership and certain trust transactions.

Is the Gift Taxable?


A Gift is not income. Therefore, the gift amount you receive from a foreign person is not taxable. But, since the person who gives the gift is a foreign person, and not subject to U.S. tax (subject to proposed expatriation regulations), the IRS puts the responsibility squarely on the U.S. Person. This responsibility requires the U.S. person to report the gift if it exceeds the threshold for filing.

Is the Trust Income Taxable?

It depends.

When a beneficiary receives income from a trust it can be taxable. Conversely, when the trust provides a gift to the beneficiary (or return of basis) depending on whether the grantor has been taxed (foreign grantor trust rules usually dictate the grantor, not beneficiary) to be taxed. Foreign trusts can be complicated, and if the IRS believes it is a sham trust, then all persons involved may be subject to income tax, interest and penalties.

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.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about our Firm?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.