What IRS Form 3520 (2024) Is For

Form 3520 is an annual information return that U.S. persons must file to report certain transactions with foreign trusts and receipt of large gifts from foreign persons (IRS Instructions for Form 3520 (12/2023)). You must file if you transferred money or property to a foreign trust, are treated as an owner of a foreign trust, received distributions from a foreign trust, or received gifts exceeding $100,000 from foreign individuals or more than $19,570 from foreign corporations or partnerships for 2024 (IRS.gov/businesses/gifts-from-foreign-person).

When You'd Use Form 3520 for 2024 (Late or Amended Filing)

You would file Form 3520 for 2024 late or amended in several scenarios. If you receive IRS notices about unfiled returns or unpaid penalties, you must file immediately to stop continued penalty accrual beyond the initial assessment. Late filing situations commonly arise when taxpayers discover foreign trust ownership they weren't aware of, receive unexpected distributions from foreign trusts, or learn about foreign gift reporting requirements after receiving inheritances or gifts from foreign relatives. Balance due situations occur because penalties for late filing can be substantial—ranging from $10,000 to 35% of unreported amounts. Unlike income tax refunds, there's no refund statute of limitations benefit for information returns like Form 3520, so late filing only stops ongoing penalties rather than recovering refunds.

Key Rules Specific to 2024

For 2024, the section 6039F threshold amount for reporting gifts from foreign corporations or partnerships is $19,570, adjusted annually for inflation (IRS.gov/businesses/gifts-from-foreign-person). The $100,000 threshold for gifts from foreign individuals remains unchanged. Form 3520 continues to use the December 2023 revision, which converted to a "continuous-use" format meaning updates occur as needed rather than annually (IRS Instructions for Form 3520). No other material changes affect 2024 filings compared to current rules, though the IRS has been focusing enforcement efforts on international information return compliance.

Step-by-Step (High Level)

• Gather your transcripts: Obtain account transcripts from the IRS to understand any prior assessments or penalties related to your foreign trust or gift reporting obligations

• Complete the correct-year form: Use the 2024 tax year Form 3520, checking the appropriate boxes (Initial, Final, or Amended return) and completing applicable parts based on your situation

• Attach required schedules: Include any substitute Form 3520-A if the foreign trust didn't file, trust documents if no U.S. agent was appointed, and any beneficiary statements received

• Mailing considerations: Send to IRS Service Center, P.O. Box 409101, Ogden, UT 84409; Form 3520 cannot be e-filed and must include all attachments to be considered complete

• Keep copies: Maintain records of all submissions, certified mail receipts, and supporting documentation as the statute of limitations remains open until complete information is provided

Common Mistakes and How to Avoid Them

• Missing the EIN requirement: Always use the foreign trust's Employer Identification Number on Form 3520-A rather than your Social Security Number; apply for an EIN if the trust doesn't have one

• Failing to file substitute Form 3520-A: If the foreign trust doesn't file Form 3520-A, you must complete and attach a substitute version by your Form 3520 due date to avoid penalties

• Incomplete gift reporting: Report all foreign gifts over $5,000 individually when the total exceeds thresholds, and remember that related foreign persons are aggregated for threshold calculations

• Missing qualified obligation requirements: Properly document and report qualified obligations with required terms, interest rates, and statute of limitations extensions to avoid recharacterization

• Incorrect due date calculations: Form 3520 is due April 15th (or June 15th if living abroad), with extensions to October 15th maximum—different from income tax return extensions

• Overlooking reasonable cause documentation: When filing late, always include a detailed explanation of reasonable cause to potentially avoid penalties, though foreign law restrictions don't qualify

What Happens After You File

The IRS typically takes 8-12 weeks to process Form 3520 and update your account transcripts. You may receive notices requesting additional documentation or clarification about reported transactions. If you owe penalties, you can request payment plans using Form 9465 or explore offers in compromise for financial hardship situations. The IRS may propose additional penalties if they determine your filing was incomplete or incorrect. You have appeal rights through the Office of Appeals if you disagree with penalty assessments, and you can request penalty abatement for reasonable cause (IRS Instructions for Form 3520). For substitute Form 3520-A filings, the IRS may contact the foreign trust directly to verify information or request the trust file its own return.

FAQs

Can I file Form 3520 electronically?

No, Form 3520 must be filed by mail with all required attachments to be considered complete (IRS Instructions for Form 3520).

What penalties apply for late filing?

Initial penalties are the greater of $10,000 or 35% of transferred/distributed amounts, with additional penalties if filing remains incomplete after 90 days of IRS notice (IRS Instructions for Form 3520).

How do I get transcripts for prior years?

Request account transcripts online at IRS.gov, by phone at 800-908-9946, or using Form 4506-T to understand any prior assessments.

Is there a statute of limitations for Form 3520?

The assessment period remains open for 3 years after complete information is provided, and incomplete filings keep the statute open indefinitely (IRS Instructions for Form 3520).

Should I amend my state tax return too?

Generally no, as Form 3520 is an information return that doesn't directly affect state tax liability, though consult your state's requirements.

Can penalties be waived for reasonable cause?

Yes, penalties may be abated if you demonstrate the failure was due to reasonable cause and not willful neglect, though inability to obtain foreign information due to local laws doesn't qualify (IRS Instructions for Form 3520).

What if I can't complete all required information?

File what you can with a detailed explanation of missing information and efforts made to obtain it, as partial compliance is better than non-filing.

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