What IRS Form 3520 (2025) Is For

Form 3520 is used by U.S. persons to report certain transactions with foreign trusts, ownership of foreign trusts under Internal Revenue Code sections 671-679, and receipt of large gifts or bequests from foreign persons. You must file a separate Form 3520 for transactions with each foreign trust (IRS Instructions for Form 3520 (2025)).

When You'd Use Form 3520 for 2025 (Late or Amended Filing)

You may need to file Form 3520 late or as an amended return if you previously failed to report foreign trust transactions, ownership, or foreign gifts exceeding the thresholds. Common scenarios include receiving IRS notices about unreported foreign gifts, discovering previously unreported trust ownership after tax preparation, or needing to correct incomplete or inaccurate information on a previously filed return.

Important development: As of October 24, 2024, IRS Commissioner Daniel Werfel announced that the IRS will no longer automatically assess penalties for late-filed Forms 3520, providing significant relief for taxpayers with past compliance issues (IRS.gov).

Key Rules Specific to 2025

For 2025, the foreign gift reporting threshold from foreign corporations or partnerships is $20,116 (up from $19,570 in 2024), while gifts from foreign individuals remain at $100,000 (Rev. Proc. 2024-40). The IRS has ended automatic penalty assessments for late filings, meaning penalties will now be evaluated on a case-by-case basis considering reasonable cause.

Form 3520 for 2025 uses the December 2023 revision and remains due by the 15th day of the 4th month following your tax year end, with extensions available (IRS Instructions for Form 3520).

Step-By-Step (High Level)

• Gather transcripts: Obtain account transcripts from the IRS to verify what returns were filed and any notices received
• Complete correct-year form: Use the Form 3520 for the specific tax year being filed, ensuring all required parts are completed based on your situation
• Attach required schedules: Include Form 3520-A (if you're a U.S. owner), supporting documentation, and reasonable cause statements if filing late
• File by mail: Send to Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409 (Form 3520 cannot be e-filed)
• Keep copies: Maintain records of the filed return and all supporting documentation for your records

Common Mistakes and How to Avoid Them

• Not filing separate forms for each trust: File a separate Form 3520 for each foreign trust—don’t combine multiple trusts on one form
• Missing the foreign gift thresholds: Report gifts exceeding $100,000 from individuals/estates or $20,116 from corporations/partnerships for 2025
• Incomplete Part II for U.S. owners: Complete Part II even if there were no trust transactions during the year—ownership alone triggers reporting
• Wrong tax year form: Use the form revision that corresponds to the tax year being filed, not the current year form
• Forgetting Form 3520-A requirements: U.S. owners must ensure the foreign trust files Form 3520-A or attach a substitute to avoid penalties
• Not claiming reasonable cause: When filing late, include a detailed statement explaining why the failure was due to reasonable cause and not willful neglect

What Happens After You File

The IRS typically takes 6-8 weeks to process Form 3520, though complex returns may take longer. You may receive acknowledgment of receipt or requests for additional information.

Under the new policy, late filing penalties are no longer automatic—the IRS will evaluate reasonable cause on a case-by-case basis. If you owe additional taxes based on the form, you can set up payment plans using Form 9465 (IRS.gov). If the IRS proposes penalties or adjustments you disagree with, you have appeal rights and can request Collections Due Process hearings for collection actions.

FAQs

I received foreign gifts in 2020 but never filed Form 3520. What should I do?

File the delinquent Form 3520 for 2020 with a reasonable cause statement. The IRS no longer automatically assesses penalties for late filings as of October 2024.

How do I get transcripts for years I may not have filed Form 3520?

Request account transcripts online at IRS.gov, by phone at 1-800-908-9946, or by mailing Form 4506-T. These show what returns were filed and any IRS actions taken.

Is there a statute of limitations for filing late Form 3520?

There’s no statute of limitations for filing information returns like Form 3520. However, filing late Form 3520 extends the assessment period for related income taxes to 3 years after filing (IRS Instructions for Form 3520).

What penalties can still apply even with the new IRS policy?

While automatic penalties are eliminated, the IRS can still assess penalties if they determine the failure was willful or not due to reasonable cause. Penalties can be 35% of trust transfers/distributions or 5% of trust assets for ownership reporting failures (IRS Section 6677).

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

Form 3520 is federal only, but if the foreign trust income affects your state return, you may need to file amended state returns. Consult your state’s requirements or a tax professional.

Can I file Form 3520 electronically?

No, Form 3520 must be filed by mail to the IRS processing center in Ogden, Utah. Electronic filing is not available for this form (IRS Instructions for Form 3520).

What’s considered “reasonable cause” for late filing?

Reasonable cause includes reliance on incorrect professional advice, serious illness, natural disasters, or genuine lack of knowledge about filing requirements. The fact that a foreign country would impose penalties for disclosing the required information is not reasonable cause (IRS Section 6677).

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