Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

No items found.

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

Heading

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Frequently Asked Questions

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

Form 3520-A is the IRS's way of keeping tabs on foreign trusts that have U.S. owners. Think of it as a detailed annual report card that a foreign trust must file to help U.S. owners meet their tax obligations. When you're treated as the owner of a foreign trust under U.S. tax rules (called the "grantor trust" rules), the IRS wants to know about the trust's income, assets, and distributions—even though the trust is located outside the United States.

The form serves multiple purposes: it reports the trust's financial activities, identifies U.S. beneficiaries who received distributions, and ensures transparency between foreign trusts and the IRS. The foreign trust itself files this form, but U.S. owners are responsible for making sure it gets filed. Along with the main form, the trust must provide special statements (included on pages 3 and 4) to each U.S. owner and beneficiary, breaking down their share of income and any distributions they received during the year.
IRS.gov

When You'd Use It (Late/Amended Filings)

Regular Filing

Form 3520-A must be filed by the 15th day of the 3rd month after the trust's tax year ends. For a calendar-year trust (ending December 31, 2010), this means March 15, 2011. The form goes to the IRS Service Center in Ogden, Utah, and copies of the owner and beneficiary statements must be given to the respective U.S. persons by the same deadline.

Extensions

If you need more time, you can request an automatic extension using Form 7004. This gives you additional months to gather information and complete the form accurately.

Late Filing

If the trust misses the deadline and hasn't filed Form 3520-A, the U.S. owner faces serious penalties—starting at the greater of $10,000 or 5% of the trust assets they're treated as owning. Additional penalties pile on if the IRS sends a notice and the problem still isn't fixed. The only way to avoid penalties is to demonstrate "reasonable cause" for the delay, not just inconvenience or reluctance to disclose information.
IRS.gov

Amended Returns

If you discover errors after filing, you can submit an amended Form 3520-A by checking the "Amended return" box at the top of the form. This might be necessary if trust income was miscalculated, distributions were omitted, or ownership percentages changed.

Final Returns

When a foreign trust terminates or no longer has U.S. owners, check the "Final return" box on the form to close out the trust's reporting obligations.

Key Rules for 2010

Enhanced Penalties

The year 2010 brought significant changes through the HIRE Act (Hiring Incentives to Restore Employment Act), passed in March 2010. Section 535 of the HIRE Act modified penalties for failure to file. The U.S. owner now faces an initial penalty of the greater of $10,000 or 5% of the gross value of their portion of the trust assets. If the trust doesn't file or provides incorrect information, these penalties apply to the U.S. owner—not the trust itself. A new 20% penalty under section 6662(j) also applies for underpayments related to "undisclosed foreign financial asset understatements" for tax years beginning after March 18, 2010.

Expanded U.S. Beneficiary Definition

After March 18, 2010, a foreign trust is presumed to have U.S. beneficiaries in certain situations. For example, if the trust loans money or marketable securities to a U.S. person who doesn't repay at market interest rates within a reasonable time, or if a U.S. person uses trust property without paying fair market value, the trust is treated as having a U.S. beneficiary. This presumption can trigger additional reporting requirements.

U.S. Agent Requirement

While not mandatory, appointing a U.S. agent is strongly recommended. A U.S. agent is a U.S. person (citizen, resident, or domestic corporation) authorized to respond to IRS requests for trust records and testimony. Without a U.S. agent, the IRS can unilaterally determine the tax consequences of your trust transactions, which rarely works in your favor. The agent's information must appear on lines 3a–3g of Part I.
IRS.gov

Document Attachment Requirements

The trust must attach copies of all trust documents to Form 3520-A, including the trust instrument, memoranda of wishes, letters of wishes, and summaries of any oral agreements. If these were filed within the previous three years, you only need to attach updates or changes.

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Confirm that your foreign trust has at least one U.S. owner under sections 671–679 of the tax code. U.S. owners are responsible for ensuring the trust files Form 3520-A, even though the trust itself completes the form.

Step 2: Gather Trust Information

Collect the trust's employer identification number (EIN), complete address, and details about the trustee. If the trust appointed a U.S. agent, you'll need their name, address, and taxpayer ID number.

Step 3: Complete Part I (General Information)

Fill in basic trust identification details. Check whether this is an initial, final, or amended return. Indicate whether a U.S. agent was appointed (highly recommended). If not, attach all trust documents, including the trust instrument and any amendments.

Step 4: Complete Part II (Foreign Trust Income Statement)

Report all trust income using U.S. tax principles: interest, dividends, rents, royalties, partnership income, capital gains, and other income. Then list all expenses: interest, foreign and state taxes, depreciation, trustee fees, charitable contributions, and other expenses. Calculate net income and report the total fair market value of all distributions, listing specific distributions to U.S. owners and beneficiaries separately with names, ID numbers, dates, and amounts.
IRS.gov

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Provide a snapshot of the trust's financial position at the beginning and end of the tax year. List all assets (cash, securities, real property, etc.) and all liabilities (accounts payable, mortgages, etc.) at fair market value. Calculate net worth and show changes in trust corpus and accumulated income.

Step 6: Prepare Owner and Beneficiary Statements

Complete a separate Foreign Grantor Trust Owner Statement (page 3) for each U.S. owner, showing their share of trust income and expenses. Complete a Foreign Grantor Trust Beneficiary Statement (page 4) for each U.S. beneficiary who received distributions during the year.

Step 7: Attach Required Documentation

Include trust documents (if not previously filed), transfer statements (if the trust transferred property to another person), and schedules explaining complex items.

Step 8: Sign and File

The trustee (or authorized person) must sign under penalties of perjury. Mail the complete package to the IRS Service Center in Ogden, Utah, by the deadline. Send copies of the owner and beneficiary statements to the respective U.S. persons.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Some U.S. owners mistakenly believe that if the foreign trust doesn't file, they're not responsible. Wrong! U.S. owners are ultimately responsible for ensuring Form 3520-A is filed.
How to Avoid: Maintain regular communication with the trustee. If they're uncooperative, prepare the substitute form yourself using available trust records.

Mistake #2: Missing the U.S. Agent Appointment

Many trusts skip appointing a U.S. agent, thinking it's optional. While technically true, this gives the IRS free rein to determine your tax consequences without your input.
How to Avoid: Always appoint a U.S. agent (this can be yourself, another U.S. beneficiary, or a domestic corporation). Complete the authorization form included in the instructions and include the agent's information on lines 3a–3g.

Mistake #3: Incomplete or Incorrect Documentation

Failing to attach required trust documents or providing summaries instead of actual documents triggers penalties.
How to Avoid: Attach complete trust instruments, amendments, memoranda of wishes, and letters of wishes. If you filed these within the last three years, note the year and attach only new changes.

Mistake #4: Using Non-U.S. Tax Principles

The income statement must reflect U.S. income tax principles, not the trust's local country rules.
How to Avoid: Consult with a U.S. tax professional familiar with international trust taxation to ensure proper income calculation and classification.

Mistake #5: Ignoring the 2010 HIRE Act Changes

The March 18, 2010 changes significantly expanded when a trust is treated as having U.S. beneficiaries and increased penalties.
How to Avoid: Pay special attention to loans and uncompensated use of trust property after March 18, 2010.
IRS.gov

Mistake #6: Wrong Filing Address or Missing Statements

Form 3520-A must go to the Ogden Service Center, not your local IRS office.
How to Avoid: Mail the form to:
Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Keep proof of mailing and send copies of pages 3 and 4 to all U.S. owners and beneficiaries by the same deadline.

What Happens After You File

Immediate Processing

Once the IRS receives Form 3520-A, it enters their processing system. The form becomes part of the trust's permanent record and is cross-referenced with Forms 3520 filed by U.S. owners and beneficiaries.

Owner Reporting

U.S. owners must attach the Foreign Grantor Trust Owner Statement (page 3) to their personal Form 3520 and report the trust income on their individual or business tax returns as if they earned it directly.

Beneficiary Reporting

U.S. beneficiaries who received distributions attach the Foreign Grantor Trust Beneficiary Statement (page 4) to their Form 3520 and report the distributions accordingly.

IRS Review

The IRS may select the return for examination, especially if the trust transferred property, distributions seem disproportionate, no U.S. agent was appointed, or required documentation is missing.

Statute of Limitations

Generally, the IRS has three years from the filing date to assess additional taxes. However, if Form 3520-A isn't filed or is incomplete, the statute of limitations remains open indefinitely.

Penalty Assessment

If the form is late, incomplete, or inaccurate, expect a penalty notice. The initial penalty starts at $10,000 or 5% of trust assets (whichever is greater) for U.S. owners.
IRS.gov

Ongoing Obligation

Filing Form 3520-A for 2010 doesn't end your obligation. The trust must file annually as long as it has U.S. owners, and the information must remain consistent year-over-year unless circumstances change.

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

You're treated as a U.S. owner if you're a U.S. person and you're treated as owning any portion of the trust under the grantor trust rules (IRC §§ 671–679).

Q2: What if the foreign trust refuses to file Form 3520-A?

If the trust doesn't file, you must prepare a substitute Form 3520-A and attach it to your Form 3520. Document your efforts to obtain information from the trustee.
IRS.gov

Q3: Can I request an extension, and does it apply to the statements?

Yes. File Form 7004 for an automatic extension. It applies to both the form and the owner/beneficiary statements.

Q4: What's the difference between Form 3520 and Form 3520-A?

Form 3520-A is filed by the foreign trust; Form 3520 is filed by U.S. persons with transactions involving foreign trusts.

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

No. Canadian RRSPs and RRIFs are exempt if the U.S. interest holder files Form 8891 or qualifies under Rev. Proc. 2002-23.
IRS.gov

Q6: How are penalties calculated if we file late?

The penalty is the greater of $10,000 or 5% of trust assets owned. Additional penalties accrue monthly until compliance is achieved.

Q7: What happens if the trust's tax year doesn't match mine?

You report the trust income on your tax return for the year in which the trust’s tax year ends.

Sources:

‍

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

When You'd Use It (Late/Amended Filings)

Regular Filing

Extensions

Late Filing

Amended Returns

Final Returns

Key Rules for 2010

Enhanced Penalties

Expanded U.S. Beneficiary Definition

U.S. Agent Requirement

Document Attachment Requirements

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Step 2: Gather Trust Information

Step 3: Complete Part I (General Information)

Step 4: Complete Part II (Foreign Trust Income Statement)

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Step 6: Prepare Owner and Beneficiary Statements

Step 7: Attach Required Documentation

Step 8: Sign and File

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Mistake #2: Missing the U.S. Agent Appointment

Mistake #3: Incomplete or Incorrect Documentation

Mistake #4: Using Non-U.S. Tax Principles

Mistake #5: Ignoring the 2010 HIRE Act Changes

Mistake #6: Wrong Filing Address or Missing Statements

What Happens After You File

Immediate Processing

Owner Reporting

Beneficiary Reporting

IRS Review

Statute of Limitations

Penalty Assessment

Ongoing Obligation

FAQs

Q1: What makes me a "U.S. owner" of a foreign trust?

Q2: What if the foreign trust refuses to file Form 3520-A?

Q3: Can I request an extension, and does it apply to the statements?

Q4: What's the difference between Form 3520 and Form 3520-A?

Q5: Are Canadian RRSPs and RRIFs required to file Form 3520-A?

Q6: How are penalties calculated if we file late?

Q7: What happens if the trust's tax year doesn't match mine?

Thank you for submitting!

Frequently Asked Questions

Related Articles

Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner (2010)

What the Form Is For

When You'd Use It (Late/Amended Filings)

Regular Filing

Extensions

Late Filing

Amended Returns

Final Returns

Key Rules for 2010

Enhanced Penalties

Expanded U.S. Beneficiary Definition

U.S. Agent Requirement

Document Attachment Requirements

Step-by-Step Guide (High Level)

Step 1: Determine Filing Requirement

Step 2: Gather Trust Information

Step 3: Complete Part I (General Information)

Step 4: Complete Part II (Foreign Trust Income Statement)

Step 5: Complete Part III (Foreign Trust Balance Sheet)

Step 6: Prepare Owner and Beneficiary Statements

Step 7: Attach Required Documentation

Step 8: Sign and File

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Entirely

Mistake #2: Missing the U.S. Agent Appointment

Mistake #3: Incomplete or Incorrect Documentation

Mistake #4: Using Non-U.S. Tax Principles

Mistake #5: Ignoring the 2010 HIRE Act Changes

Mistake #6: Wrong Filing Address or Missing Statements

What Happens After You File

Immediate Processing

Owner Reporting