What IRS Form 3520 (2017) Is For

Form 3520 is an annual information return that U.S. persons must file to report transactions with foreign trusts and receipt of certain large foreign gifts or bequests. You must file this form if you transferred money or property to a foreign trust, received distributions from a foreign trust, are treated as owning part of a foreign trust under U.S. tax rules, or received substantial gifts from foreign individuals, estates, corporations, or partnerships during 2017 (IRS Instructions for Form 3520 (2017)).

When You'd Use Form 3520 for 2017 (Late or Amended Filing)

You're likely filing Form 3520 for 2017 now because you recently discovered you had a filing obligation you missed, received an IRS notice about unreported foreign trust transactions or gifts, or learned through a tax professional that you should have filed this form years ago.

Common scenarios include receiving foreign inheritances that exceeded the reporting thresholds, being a beneficiary of a foreign trust you weren't aware required reporting, or having transferred assets to a foreign trust without realizing the U.S. filing requirements. Unlike income tax returns, there's no statute of limitations protection for unfiled information returns, so the IRS can assess penalties for 2017 indefinitely until you file (IRS Instructions for Form 3520 (2017)).

Key Rules Specific to 2017

For tax year 2017, the foreign gift reporting thresholds were $100,000 from nonresident alien individuals or foreign estates, and $15,797 from foreign corporations or partnerships. The due date was April 15, 2018 (or October 15, 2018 with an income tax extension).

These thresholds and procedures were consistent with prior years, though the dollar amount for corporate/partnership gifts adjusts annually for inflation. The 2017 form used the same four-part structure as current versions, covering trust creations/transfers (Part I), U.S. ownership of foreign trusts (Part II), distributions from foreign trusts (Part III), and foreign gifts (Part IV) (IRS Instructions for Form 3520 (2017)).

Step-by-Step (High Level)

• Gather your tax transcripts from the IRS for 2017 to confirm what was already filed and identify any related penalties or notices
  
  
• Obtain the correct 2017 version of Form 3520 and instructions from the IRS website's prior year forms section
  
  
• Complete the applicable parts based on your specific transactions—trust transfers, ownership, distributions, or gifts—and attach required supporting schedules
  
  
• Mail the completed form to the appropriate IRS processing center (Form 3520 cannot be e-filed) with a cover letter explaining the late filing
  
  
• Keep complete copies of everything you send, including certified mail receipts, as processing can take several months and follow-up may be needed
  
  

Common Mistakes and How to Avoid Them

• Underreporting gift values by using exchange rates from the wrong dates—use the rate on the date you received the gift, not when you're filing the form
  
  
• Missing indirect distributions from foreign trusts, such as below-market loans or free use of trust property, which count as reportable distributions under U.S. rules
  
  
• Filing only for obvious transactions while overlooking that you may be treated as a trust owner under grantor trust rules, requiring additional reporting in Part II
  
  
• Using current year forms instead of the specific 2017 version, which can cause processing delays and may not reflect the correct thresholds or requirements
  
  
• Incomplete reasonable cause statements when requesting penalty relief—provide detailed explanations with supporting documentation about why the filing was late
  
  
• Failing to report related party transactions where foreign entities or trusts are connected to the same foreign persons or family members, which may trigger additional reporting requirements
  
  

What Happens After You File

The IRS typically takes 4-6 months to process Form 3520, and you may not receive an immediate acknowledgment.

If you owe penalties, you'll receive a notice with the amount due and payment options, including the ability to request an installment agreement using Form 9465 if you can't pay in full.

The IRS may also send follow-up letters requesting additional documentation or clarification about the reported transactions. You have appeal rights if you disagree with penalty assessments, and you can request reasonable cause relief by demonstrating that your late filing was due to circumstances beyond your control, not willful neglect.

Keep monitoring your tax account online or through phone inquiries, as processing times can vary significantly (IRS Instructions for Form 3520 (2017)).

FAQs

Can penalties for late filing of 2017 Form 3520 be removed?

Yes, if you can demonstrate reasonable cause and good faith. However, the IRS doesn't accept foreign bank secrecy laws or trust terms prohibiting disclosure as reasonable cause. You must provide detailed explanations and supporting evidence (IRS Instructions for Form 3520 (2017)).

What if I can't get complete trust documents from the foreign trustee?

File the form with available information and attach a statement explaining what documents you requested but couldn't obtain. The IRS may work with you, but don't delay filing while waiting for uncooperative trustees (IRS Instructions for Form 3520 (2017)).

Do I need to file amended state returns after filing Form 3520?

Form 3520 is purely informational and generally doesn't change your federal taxable income, so state amendments usually aren't needed. However, some states have their own foreign reporting requirements you should check (IRS Instructions for Form 3520 (2017)).

How long do I have to pay penalties once assessed?

Generally 10 days to 3 weeks from the notice date, but you can request installment agreements using Form 9465. Interest continues accruing until paid in full, so address penalties promptly even if you plan to appeal (About Form 9465, IRS).

Can I get transcripts showing what foreign information returns I've filed?

Yes, request "Record of Account" transcripts from the IRS, which will show filed information returns including Forms 3520. This helps identify which years you may have missed filing.

What's the penalty for a 2017 Form 3520 filed in 2025?

The penalty is the greater of $10,000 or 35% of the unreported amount for trust transactions, or 5% per month (up to 25%) for unreported foreign gifts. These can be substantial, making reasonable cause requests critical (IRS Instructions for Form 3520 (2017)).

Should I file if I'm not sure whether my situation requires Form 3520?

When in doubt, file. The penalties for not filing when required are much more severe than any inconvenience of filing an unnecessary return. Consult a tax professional familiar with international reporting if you're uncertain.

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