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