IRS Form 3520-A (2018): Late & Amended Filing Guide
What IRS Form 3520-A (2018) Is For
IRS Form 3520-A is the annual information return that foreign trusts with at least one U.S. owner must file to provide detailed information about the trust’s income, activities, assets, and distributions (IRS Instructions for Form 3520-A (2018)). Filing ensures U.S. owners of foreign trusts meet their reporting requirements under IRC section 6048(b), and it enables the IRS to monitor foreign trust operations that may affect U.S. taxation.
When You'd Use Form 3520-A for 2018 (Late or Amended Filing)
You would file a late or amended Form 3520-A for 2018 if:
- You received IRS notices (e.g., Letter 3804) about missing or incomplete returns.
- The foreign trustee failed to file by March 15, 2019 (or September 15, 2019 with a valid Form 7004 extension), requiring you as the U.S. owner to file a substitute Form 3520-A.
- You discovered unreported trust ownership, distributions, or transactions during compliance reviews.
- You need to correct prior filings that contained errors or incomplete data.
Since Form 3520-A is an information return, filing late does not generate refunds, but it prevents penalties from continuing to accrue and starts the statute of limitations.
Key Rules Specific to 2018
- Penalty structure: Greater of $10,000 or 5% of the gross value of trust assets owned by the U.S. person, plus continuation penalties of $10,000 every 30 days after IRS notice, capped at the trust’s total asset value (IRC §6677).
- Identification numbers: Trusts must have an EIN or valid reference ID number. Reference IDs were restricted to 50 alphanumeric characters (no spaces or special symbols).
- U.S. agent requirement: If a U.S. agent was not appointed, full trust documents (including trust deed and amendments) had to be attached.
- Filing method: Paper only, mailed to the IRS Ogden Service Center—no e-file option.
Step-by-Step (High Level)
- Gather Documentation: Collect trust financial statements, transfer records, and prior filings. Request IRS transcripts to verify history.
- Use Correct-Year Form: File the 2018 version of Form 3520-A, not current-year forms.
- Attach Required Schedules:
- Foreign Grantor Trust Owner Statement(s) (pages 3–4) for each U.S. owner.
- Foreign Grantor Trust Beneficiary Statement(s) (page 5) for each U.S. beneficiary.
- Trust documents if no U.S. agent is appointed.
- Foreign Grantor Trust Owner Statement(s) (pages 3–4) for each U.S. owner.
- File Properly: Mail to IRS Service Center, P.O. Box 409101, Ogden, UT 84409. If filing a substitute, attach it to Form 3520 instead of mailing separately.
- Maintain Records: Keep all forms, trust documents, mailing receipts, and supporting documentation for compliance and penalty relief requests.
Common Mistakes and How to Avoid Them
- Mailing substitute returns separately: Substitute Forms 3520-A must be attached to Form 3520.
- Omitting owner/beneficiary statements: Each U.S. person requires a separate statement.
- Incorrect valuations: Use fair market value, not book value or estimates.
- Improper ID numbers: Do not use PTINs or SSNs in place of trust EINs/reference IDs.
- Incomplete trust attachments: If no U.S. agent is designated, attach all required trust deeds and amendments.
- Weak reasonable cause statements: Provide detailed explanations with the required penalties-of-perjury declaration when requesting penalty abatement.
What Happens After You File
- Processing time: Typically 6–8 weeks, but may be longer for complex trust cases.
- IRS correspondence: You may receive acknowledgment notices, information requests, or penalty assessments.
- Penalty relief: Can be requested by filing a reasonable cause statement; IRS review may take months.
- Payment options: Penalties can be paid via installment agreements (Form 9465).
- Appeal rights: If relief is denied, you may appeal through the IRS Appeals Office under normal procedures.
FAQs
Can I still file Form 3520-A for 2018 even though it’s years late?
Yes. There’s no statute of limitations preventing filing. Filing late stops continuation penalties and starts the three-year assessment period.
What penalties apply to late 2018 filings?
The greater of $10,000 or 5% of trust assets, plus $10,000 every 30 days after IRS notice until compliance, capped at total asset value.
Do I need transcripts before filing?
Not required, but helpful for confirming prior filings and penalties. Request using Form 4506-T or IRS online tools.
What qualifies as “reasonable cause”?
Demonstrating ordinary prudence but inability to comply—such as lack of access to trust records. Foreign secrecy laws or trust restrictions do not qualify.
Should I amend state returns after filing late federal Form 3520-A?
Generally no, since Form 3520-A is federal-only. Check state-specific rules for foreign trust disclosures.
Can the trustee still file even if I submit a substitute?
Yes. If the trustee later files a complete Form 3520-A, you may amend your filing to attach it, potentially reducing penalties.
How long to claim refunds for overpaid penalties?
Generally 3 years from the date of payment, or 2 years from overpayment—whichever is later.
