What IRS Form 3520-A (2016) Is For

Form 3520-A is the annual information return that a foreign trust with at least one U.S. owner must file to provide information about the foreign trust, its U.S. beneficiaries, and any U.S. person who is treated as an owner of any portion of the foreign trust under the grantor trust rules (sections 671 through 679) (IRS Instructions for Form 3520-A (2016)). Each U.S. person treated as an owner of any portion of a foreign trust is responsible for ensuring the foreign trust files Form 3520-A and furnishes the required annual statements to its U.S. owners and beneficiaries.

When You'd Use Form 3520-A for 2016 (Late or Amended Filing)

You would file a late or amended Form 3520-A for 2016 if you received IRS notices for unfiled returns, discovered reporting errors in a previously filed return, or need to correct incomplete information.

Late filing scenarios often arise when:

• The IRS sends penalty notices under section 6677 for failure to file
  
  
• Conducting voluntary disclosure to avoid criminal exposure
  
  
• Filing substitute Form 3520-A because the trustee failed to file
  
  

The original due date for 2016 was March 15, 2017 (or September 15, 2017 with Form 7004 extension). Any filing after these dates is considered late.

Key Rules Specific to 2016

• HIRE Act provisions: Loans of cash or securities from a foreign trust to a U.S. person, or uncompensated use of trust property, cause the trust to be treated as having a U.S. beneficiary.
  
  
• Reference ID numbers: Trusts must maintain consistent reference ID numbers year over year, with correlation requirements if assets are received from other trusts.
  
  
• Form requirements: Owner and beneficiary statements are mandatory, even in substitute filings.
  
  

Step-by-Step (High Level)

• Gather Documentation: Obtain IRS account transcripts and collect all trust documents, financial statements, and distribution records for 2016.
• Complete the Correct-Year Form: Use the official 2016 version of Form 3520-A from IRS.gov.
• Attach Required Schedules: Include Foreign Grantor Trust Owner Statements and Beneficiary Statements, plus trust documents if no U.S. agent was appointed.
• Mailing Instructions: Send the form to IRS Service Center, P.O. Box 409101, Ogden, UT 84409 (no e-filing available).
• Maintain Records: Keep full copies for penalty abatement requests or future IRS correspondence.

Common Mistakes and How to Avoid Them

• Missing U.S. Agent Appointment: Always attach authorization documentation if appointing an agent.
  
  
• Incorrect Reference ID Numbers: Maintain consistency and correlate numbers when trusts merge.
  
  
• Incomplete Distribution Reporting: Report all direct and indirect benefits (e.g., credit card payments, uncompensated property use).
  
  
• Wrong Tax Year Form: Always use the 2016 version to avoid rejection.
  
  
• Inadequate Statements: Provide separate owner and beneficiary statements with correct identification details.
  
  
• Missing Reasonable Cause Documentation: Always include detailed explanations when filing late to support penalty abatement.
  
  

What Happens After You File

• Processing time: Typically 6–12 weeks, but longer for complex filings.
  
  
• IRS notices: You may receive acknowledgment or requests for additional information.
  
  
• Penalty abatement: Request in writing with reasonable cause explanation if penalties were assessed.
  
  
• Payment options: Use Form 9465 for installment agreements if full payment isn’t possible.
  
  
• Appeal rights: Available if penalty abatement is denied or penalties are assessed.
  
  

FAQs

What penalties apply for late filing of 2016 Form 3520-A?

The U.S. owner faces a penalty equal to the greater of $10,000 or 5% of the gross value of their portion of trust assets, plus continuation penalties if noncompliance continues beyond 90 days after IRS notice (section 6677).

Can I still get account transcripts for 2016?

Yes. Use Form 4506-T or request online at IRS.gov. Records older than 10 years may be limited.

Is there a statute of limitations for refunds of overpaid penalties?

Generally 3 years from the due date of the return or 2 years from when you paid the penalty, whichever is later.

What if the foreign trustee refuses to sign or provide information?

The U.S. owner must file a substitute Form 3520-A with their Form 3520 and document attempts to obtain trustee cooperation.

Should I amend my state tax return after filing late federal Form 3520-A?

Usually no, but consult your state’s rules if trust income affects state taxable income.

Can I e-file a 2016 Form 3520-A?

No, it must be mailed to the Ogden, UT processing center.

What if I discover errors after filing my late return?

File an amended Form 3520-A by checking the “Amended Return” box and providing explanations. Multiple amendments may increase IRS scrutiny.

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