What IRS Form 3520-A (2025) Is For

Form 3520-A is an annual information return that a foreign trust must file when it has at least one U.S. owner. The form reports detailed information about the trust's financial activities, income, and distributions to U.S. owners and beneficiaries (IRS Instructions for Form 3520-A (2025)). Each U.S. person who is treated as an owner of any portion of a foreign trust under grantor trust rules is responsible for ensuring this form gets filed, even if the foreign trustee fails to do so.

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

You'll typically need to file a late or amended Form 3520-A for 2025 in several scenarios. If you received IRS notices about missing information returns or penalties for foreign trust reporting, you may need to file delinquent returns for prior years. Late filing situations often arise when U.S. owners discover they were unaware of their reporting obligations, or when foreign trustees failed to file the required forms. For substitute filings, if the foreign trust failed to file Form 3520-A, you as the U.S. owner must complete a substitute version and attach it to your Form 3520 by your Form 3520 due date (typically April 15 for individuals, with extensions to October 15) rather than the normal Form 3520-A due date (IRS Instructions for Form 3520 (2025)).

Key Rules Specific to 2025

Form 3520-A has been converted to a continuous-use form starting in 2025, meaning it will be updated as needed rather than annually revised (IRS Instructions for Form 3520-A (2025)). The IRS has also recently changed its penalty assessment practices - they no longer automatically impose penalties at the time of filing for late Forms 3520-A, representing a significant procedural shift from previous years. The form continues to require extensive documentation including balance sheets, income statements, and owner/beneficiary information statements that must be furnished to U.S. parties by the 15th day of the 3rd month after the trust's tax year ends.

Step-by-Step (High Level)

• Gather your tax transcripts from IRS.gov or by calling 1-800-908-9946 to understand what years need filing and any existing penalty assessments
• Complete the correct-year Form 3520-A with all required parts including trust financial statements, balance sheet, and owner/beneficiary statements (pages 3-5)
• Attach required schedules and documentation including Authorization of Agent forms, trust documents if no U.S. agent exists, and detailed distribution information
• Mail to the correct address: Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409, or include with your Form 3520 if filing as a substitute
• Keep complete copies of all filings and certified mail receipts, as these forms may trigger IRS examinations

Common Mistakes and How to Avoid Them

• Failing to file when the foreign trustee doesn't file - U.S. owners are responsible for ensuring filing occurs and must submit substitute forms if needed
• Missing the Authorization of Agent requirement - Attach this form every 3 years or when changes occur to avoid IRS redetermination of trust amounts
• Incomplete owner/beneficiary statements - Pages 3-5 must be completed separately for each U.S. owner and beneficiary receiving distributions
• Wrong due dates for substitute filings - Substitute forms attached to Form 3520 follow Form 3520 due dates, not the regular Form 3520-A March 15 deadline
• Inadequate reasonable cause documentation - Any penalty relief requests must include detailed written explanations with "under penalties of perjury" declarations
• Mixing up gross values vs. adjusted basis - Use fair market values as of transaction dates for penalty calculations and reporting requirements

What Happens After You File

Processing times for Form 3520-A typically take 6-12 months, during which the IRS may request additional documentation or clarification. If you filed late, expect potential penalty assessments including initial penalties (greater of $10,000 or 5% of trust assets) and continuation penalties ($10,000 per 30-day period) that began 90 days after initial IRS notice (Internal Revenue Code Section 6677). You can request penalty relief by demonstrating reasonable cause, but foreign jurisdiction penalties or trust provisions preventing disclosure don't qualify as reasonable cause. If you disagree with IRS determinations, you have appeal rights and can request installment agreements using Form 9465 for any penalty payments. The IRS may also open related examinations of your other tax returns when foreign trust issues are identified.

FAQs

Can I get my Form 3520-A penalties reduced if I have reasonable cause?

Yes, but you must provide written documentation "under penalties of perjury" explaining why the failure wasn't due to willful neglect. Foreign country penalties or trust restrictions on disclosure don't qualify as reasonable cause (IRS Instructions for Form 3520-A (2025)).

What's the difference between filing Form 3520-A directly vs. as a substitute with Form 3520?

Direct filings are due by the 15th day of the 3rd month after the trust's tax year ends (usually March 15). Substitute filings attached to Form 3520 are due with your Form 3520 (usually April 15 for individuals, October 15 with extension).

How do I get tax transcripts to see what years I need to file?

Request transcripts online at IRS.gov, call 1-800-908-9946, or mail Form 4506-T. Request "Account Transcripts" for penalty information and "Return Transcripts" to see what forms were filed.

Is there a statue of limitations on these penalty assessments?

Yes, the IRS has 3 years from when you file a complete and accurate Form 3520-A to assess penalties. However, if you never file, there's no statute of limitations protection.

Should I amend my state returns if I file late federal foreign trust forms?

Review your state's requirements as some states have conformity provisions or separate foreign trust reporting requirements that may require amendments when federal returns are corrected.

Can I request an installment agreement if I owe large penalties?

Yes, use Form 9465 to request payment plans. The IRS also offers Currently Not Collectible status and Offers in Compromise for taxpayers facing financial hardship.

What happens if I discover I should have filed Form 3520-A for multiple years?

File all delinquent years as soon as possible. The IRS may abate some continuation penalties if you demonstrate good faith efforts to comply once you discovered the requirements.

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