Form 3520-A, Information Return of Foreign Trusts With a U.S. Owner

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine , a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

What is Form 3520-A?

Form 3520-A is an information return required to be filed under the Internal Revenue Code (IRC) section 6048(b) by foreign trusts with at least one U.S. owner.  The form is intended to provide the IRS with financial information about the trust (i.e., income statements, balance sheets, etc.), its U.S. beneficiaries, and any U.S. person who is treated as an owner of any portion of the foreign trust under the grantor trust rules of IRC sections 671–679. Where required, the form must be filed by the 15th day of the 3rd month after the end of the trust’s tax year, along with statements from the U.S. owners and U.S. beneficiaries who received distributions from the trust. The filing of Form 3520-A is not tied to any income tax filing requirements; therefore, an extension can only be obtained by filing Form 7004.

Failing to File Form 3520-A Properly

The penalty imposed on a U.S. owner for failure to timely file Form 3520-A with correct and complete information is the greater of $10,000 or 5% of the gross value of the portion of the trust’s assets treated as owned by the U.S. person at the close of that tax year. The owner may be subject to an additional penalty of the same amount for failing to timely file Form 3520 with correct and complete information. Continued non-compliance with the filing requirement for more than 90 days after notice from the IRS will result in additional penalties of an undefined amount. In addition to these monetary penalties, criminal penalties may be imposed for missing the filing deadline, or for filing of false or fraudulent information. Penalties will not be assessed if the filing deficiency was due to reasonable cause, not willful neglect.

Custodians of certain Canadian retirement plans where U.S. persons hold an interest are not required to file Form 3520-A.

 

For other IRS Form summaries, see IRS Form 5471, IRS Form 5472, and IRS Form 3520.

Other Related Articles:

Everything That You Need To Know About International Tax Penalties

Form 8865, U.S. Persons and Foreign Partnerships

The FBAR (Report of Foreign Bank and Financial Accounts): Everything You Need to Know

 

 

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