A Plain-English Guide

What the Form Is For

Form 3520-A is an annual information return that foreign trusts must file when they have at least one U.S. owner. Think of it as the IRS's way of keeping track of foreign trusts that have connections to American taxpayers. The form serves multiple purposes: it reports the trust's income and expenses, identifies who benefits from the trust, and ensures that U.S. owners receive the necessary statements to properly report their share of trust income on their personal tax returns.

A “foreign trust” is simply any trust that doesn't meet the requirements to be considered domestic—meaning either a U.S. court can't supervise it, or U.S. persons don't control all substantial decisions. A “U.S. owner” is someone treated as owning part of the trust under special “grantor trust” rules (found in sections 671-679 of the tax code), which essentially means the IRS considers them the real owner for tax purposes, even though the assets are technically held in trust.
Source: IRS.gov

The form includes three main components:

• The main Form 3520-A (pages 1-2)
• The Foreign Grantor Trust Owner Statement (page 3)
• The Foreign Grantor Trust Beneficiary Statement (page 4)

The trustee must prepare separate statements for each U.S. owner and each U.S. beneficiary who received distributions during the year.

When You’d Use Form 3520-A (Including Late and Amended Filings)

Regular Filing

For the 2013 tax year, Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust, this means March 15, 2014. The form goes to the IRS Service Center in Ogden, Utah (P.O. Box 409101, Ogden, UT 84409). Importantly, U.S. owners and beneficiaries must also receive their respective statements by this same deadline.
Source: IRS.gov

Extensions

Unlike personal income tax returns, a regular income tax extension won't extend your time to file Form 3520-A. You must specifically file Form 7004 (Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns) to get more time. This was a new development for 2013 that made extensions possible for the first time.

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the “Amended return” box at the top of the form. You'll need to file a complete corrected return, not just the changes. Common reasons for amendments include:

• Discovering unreported income
• Correcting beneficiary information
• Fixing calculation errors

Initial and Final Returns

Check the “Initial return” box if this is the trust's first Form 3520-A filing. Check “Final return” if the trust ceased to exist during the year. These designations help the IRS properly track the trust's lifecycle.

Key Rules and Requirements for 2013

Who Must File

The responsibility falls on the foreign trust itself, but U.S. owners are ultimately accountable. Each U.S. person treated as an owner must ensure the foreign trust files Form 3520-A and furnishes the required statements. This shared responsibility is crucial—if the trust doesn't file, the U.S. owner faces penalties.
Source: IRS.gov

U.S. Agent Requirement

One of the most important requirements is appointing a U.S. agent—a U.S. person authorized to respond to IRS requests for records and testimony. Without a U.S. agent, you must attach extensive trust documentation (trust instrument, memoranda of wishes, all agreements, etc.) to every Form 3520-A filing.
The agent can be a U.S. citizen, resident alien, or domestic corporation, including the U.S. owner or beneficiary themselves. The agent and trust must sign a specific authorization agreement, which must be attached to the form.

Reference ID Number (New in 2013)

For 2013, the IRS introduced a reference ID number requirement (line 1b(2)) if the trust doesn't have an Employer Identification Number (EIN).

• This alphanumeric identifier (up to 50 characters, no special characters) helps track the trust consistently from year to year.
• You create this number yourself—no need to apply to the IRS.
• Once assigned, the same reference ID must be used on all future Forms 3520-A and related Forms 3520.

Reporting Standards

All amounts must be in U.S. dollars, and all information must be in English. The trust must report income using U.S. income tax principles, even if it's located in a country with different accounting rules. The balance sheet should reflect fair market value (FMV) of assets, determined as if the owner died on the valuation date—though formal appraisals aren't typically required.
Source: IRS.gov

Step-by-Step Filing Guide (High Level)

Step 1: Gather Information

Collect all trust financial records, including income from U.S. and non-U.S. sources, expenses, asset valuations, and distribution records. Identify all U.S. owners and beneficiaries who received distributions. If you haven't appointed a U.S. agent, gather all trust documents.

Step 2: Complete Part I (General Information)

Enter the trust's identifying information (name, EIN/reference ID, address). Indicate whether a U.S. agent is appointed; if not, attach trust documents. Provide trustee information and indicate any property transfers.

Step 3: Complete Part II (Income Statement)

Report all income using U.S. tax principles—interest, dividends, rents, royalties, partnerships, capital gains/losses, and other income.
Then report deductible expenses such as interest, taxes, depreciation, trustee fees, and charitable contributions.
List distributions to U.S. owners and beneficiaries with names, ID numbers, and amounts.
Source: IRS.gov

Step 4: Complete Part III (Balance Sheet)

List all trust assets and liabilities at the beginning and end of the year at FMV. Include cash, receivables, investments, real property, etc. Report liabilities and calculate net worth.

Step 5: Prepare Owner Statements (Page 3)

For each U.S. owner, complete a Foreign Grantor Trust Owner Statement. Include trust info, agent details, the owner's information, and income/expense breakdowns. Attach an explanation for ownership status. Trustee must sign each statement.

Step 6: Prepare Beneficiary Statements (Page 4)

For each U.S. beneficiary who received distributions, complete a Foreign Grantor Trust Beneficiary Statement. Describe property distributed, provide FMV, and attach ownership explanations.

Step 7: Sign, Copy, and File

The trustee (or representative) must sign and date the main form under penalties of perjury. Make copies for all owners and beneficiaries. Mail the form and statements to Ogden Service Center by the deadline and furnish each party their statement.

Common Mistakes and How to Avoid Them

Mistake #1: Not Appointing a U.S. Agent

Failing to appoint a U.S. agent triggers the obligation to attach extensive documentation. Appointing one (even the U.S. owner) simplifies filing and communication with the IRS. Ensure the authorization agreement is signed and attached.

Mistake #2: Confusing Form 3520-A with Form 3520

Form 3520-A is filed by the trust; Form 3520 is filed by U.S. persons with trust transactions. U.S. owners usually must file both forms—attaching page 3 of Form 3520-A to their own Form 3520.

Mistake #3: Missing the Separate Statement Deadline

Trustees must furnish owner and beneficiary statements by the same deadline as the main filing. Set a reminder to send them simultaneously.
Source: IRS.gov

Mistake #4: Failing to Report Constructive Distributions

Constructive distributions include:

• Loans
• Credit card payments
• Use of trust property
• Overpayments for services

All must be reported on lines 17b or 17c.

Mistake #5: Inconsistent Reference ID Numbers

Use the same reference ID each year. If assets transfer from another trust, properly correlate old and new IDs.

Mistake #6: Not Requesting an Extension Properly

Form 7004 must be filed specifically for Form 3520-A. A general income tax extension does not apply.

What Happens After You File

Processing

The IRS receives Form 3520-A at the Ogden Service Center and enters it into their system to record the trust’s U.S. connections and income allocations.

U.S. Owner Responsibilities

Each U.S. owner must:

• Attach page 3 (Owner Statement) to Form 3520
• Report the trust income on their own return (Form 1040 or equivalent)

U.S. Beneficiary Responsibilities

Each U.S. beneficiary must:

• Attach page 4 (Beneficiary Statement) to Form 3520
• Determine taxability depending on whether the trust is grantor or nongrantor

IRS Review

The IRS may request additional info, especially if there’s no U.S. agent. Having an agent streamlines compliance.

Penalties for Non-Compliance

If the trust fails to file or files incomplete data, the U.S. owner faces a penalty of $10,000 or 5% of the trust’s gross value, whichever is greater. Continued non-compliance adds more penalties.
Source: IRS.gov

Reasonable Cause Exception

Penalties may be waived if failure was due to reasonable cause (not willful neglect). However, foreign laws restricting disclosure or fiduciary reluctance are not valid reasons.

FAQs

Q1: I'm a U.S. citizen with a foreign trust from an inheritance. Do I need to worry about Form 3520-A?

It depends on whether you’re treated as an owner under grantor trust rules. Beneficiaries (not owners) will receive page 4 if they got distributions. Owners share responsibility for filing. Consult a tax professional.

Q2: Can I file Form 3520-A electronically for 2013?

No. You must mail a paper return to the Ogden Service Center. Keep proof of mailing and copies.

Q3: What's the difference between a U.S. agent and a trustee?

A trustee manages trust assets; a U.S. agent responds to IRS inquiries. One person can serve both roles if eligible.
Source: IRS.gov

Q4: I have a Canadian RRSP. Do I need to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if you’re eligible to file Form 8891. Revenue Procedure 2002-23 provides this relief.

Q5: The trust had no income this year. Do I still need to file?

Yes. The filing requirement applies regardless of income level. Report zero if needed, but still file to remain compliant.

Q6: What if the foreign trustee refuses to file?

Then the U.S. owner must file a substitute Form 3520-A. This is challenging but necessary to avoid penalties.

Q7: How do I value trust assets for the balance sheet and penalty calculations?

Use fair market value (FMV) as under Section 2031—based on what a willing buyer would pay a willing seller. Use market prices or good faith estimates. Keep documentation.

Sources

• 2013 Instructions for Form 3520-A
• 2013 Form 3520-A
• IRS.gov: About Form 3520-A

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