What IRS Form 3520 (2022) Is For

Form 3520 is an annual information return that U.S. persons must file to report transactions with foreign trusts, ownership of foreign trusts under grantor trust rules, and receipt of certain large gifts or bequests from foreign persons. You must file Form 3520 if you transferred property to a foreign trust, are treated as the owner of a foreign trust, received distributions from a foreign trust, or received foreign gifts exceeding $100,000 from individuals/estates or $17,339 from corporations/partnerships (2022 amounts) (IRS Instructions for Form 3520 (2022)).

When You'd Use Form 3520 for 2022 (Late or Amended Filing)

You would file a late or amended Form 3520 for tax year 2022 in several scenarios: if you received IRS notices about unfiled forms or penalties, discovered unreported foreign trust transactions or gifts after filing your 2022 return, or need to correct information on a previously filed Form 3520.

Late filing typically occurs when taxpayers weren't aware of reporting requirements, missed the April 15, 2023 deadline (or October 15, 2023 with extension), or discovered additional foreign trust activities after the deadline. Unlike income tax returns, Form 3520 doesn't generate refunds, but timely filing prevents substantial penalties and keeps the statute of limitations from remaining open indefinitely (IRS Instructions for Form 3520 (2022)).

Key Rules Specific to 2022

For 2022, the foreign gift reporting threshold from corporations or partnerships was $17,339 (adjusted annually for inflation), while gifts from individuals or foreign estates remained at $100,000. The due date was April 15, 2023, with an automatic extension to October 15, 2023, if you filed an income tax extension. U.S. persons living abroad had until June 15, 2023, to file.

Form 3520 for 2022 must be filed separately from your income tax return and mailed to the IRS Ogden Campus. If you filed an income tax extension but forgot to check box 1k on Form 3520, you could call (267) 941-1000 for penalty abatement (IRS Instructions for Form 3520 (2022)).

Step-by-Step (High Level)

• Gather necessary documents: Obtain your 2022 tax transcripts from IRS.gov or by calling 1-800-908-9946, collect foreign trust documents, bank statements, and gift documentation
  
  
• Complete the correct-year form: Use the 2022 version of Form 3520 available at IRS.gov/pub/irs-prior/i3520--2022.pdf, not current year forms
  
  
• Attach required schedules: Include Schedule A for trust obligations, substitute Form 3520-A if the foreign trust didn't file, and supporting documentation for all reported transactions
  
  
• Mail to correct address: Send complete package to Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409 - Form 3520 cannot be e-filed
  
  
• Keep copies: Retain copies of all filed documents and supporting materials for your records, as the statute of limitations extends until 3 years after proper filing (IRS Instructions for Form 3520 (2022))
  
  

Common Mistakes and How to Avoid Them

• Filing when not required: Only U.S. persons must file - non-U.S. persons should not file Form 3520, even for "protective" purposes, as this triggers penalty liability
  
  
• Missing the extension checkbox: Always check box 1k if you filed an income tax extension and enter the form number (e.g., "1040") to avoid automatic penalties
  
  
• Using SSN instead of EIN: Foreign trusts must be identified by Employer Identification Number (EIN), never Social Security Numbers or Individual Taxpayer Identification Numbers
  
  
• Incorrect gift aggregation: Only aggregate gifts from related foreign persons - gifts from unrelated parties don't need to be combined for threshold testing
  
  
• Filing separate substitute forms: If filing a substitute Form 3520-A, attach it to Form 3520 - never mail a separate copy unattached to the main form
  
  
• Undervaluing assets: Use fair market value at the time of transfer or distribution, maintaining contemporaneous records of your good faith valuation methods (IRS Instructions for Form 3520 (2022))
  
  

What Happens After You File

The IRS typically processes Form 3520 within several months, though complex cases may take longer. You may receive acknowledgment letters, requests for additional information, or penalty notices if the IRS finds deficiencies.

If you owe penalties, you can request installment payment plans using Form 9465 or seek penalty abatement for reasonable cause using written requests explaining your circumstances. Interest and penalties continue to accrue until paid in full, but failure-to-pay penalty rates are reduced by half while installment agreements are active.

You have appeal rights if you disagree with IRS determinations - request an informal conference within 30 days using Form 12009, or file a formal written protest for Appeals Office review (Instructions for Form 9465 (2024)).

FAQs

What are the penalties for filing Form 3520 late for 2022?

Penalties are the greater of $10,000 or 35% of unreported transfers/distributions, or 5% of trust assets for grantor trust reporting failures. Foreign gift penalties are 5% per month up to 25% of the gift value (IRS Instructions for Form 3520 (2022)).

Can I still get penalty relief for a late 2022 Form 3520?

Yes, if you can demonstrate reasonable cause and not willful neglect. However, foreign legal restrictions or trust document provisions preventing disclosure are not reasonable cause for relief (IRS Instructions for Form 3520 (2022)).

How do I get my 2022 tax transcripts for filing Form 3520?

Order transcripts online at IRS.gov, call 1-800-908-9946, or mail Form 4506-T. Account transcripts show most IRS actions, while return transcripts show filed return information.

Is there a statute of limitations for Form 3520 audits?

If you never filed a complete Form 3520, there's no statute of limitations. Once properly filed, the IRS has 3 years to assess penalties, but this can extend indefinitely until complete filing (Section 6501(c)(8)).

Do I need to amend my state tax return if I file a late federal Form 3520?

Form 3520 is purely informational and doesn't change your federal taxable income, so state returns typically don't need amendment unless your state has separate foreign reporting requirements.

Can I set up a payment plan for Form 3520 penalties?

Yes, you can request installment agreements using Form 9465 or apply online at IRS.gov/payments if you owe $50,000 or less. Interest continues to accrue but late-payment penalty rates are reduced (Instructions for Form 9465 (2024)).

What if the foreign trust didn't file Form 3520-A for 2022?

As the U.S. owner, you must complete and attach a substitute Form 3520-A to your Form 3520 by your filing deadline to avoid penalties for the trust's failure to file (IRS Instructions for Form 3520 (2022)).

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