What IRS Form 3520-A (2021) Is For

Form 3520-A is an annual information return that foreign trusts with U.S. owners must file to report detailed information about the trust, its operations, and its U.S. beneficiaries (IRS Instructions for Form 3520-A (2021)). The foreign trust itself is primarily responsible for filing this form, but if the foreign trust fails to file, the U.S. owner becomes responsible for completing and attaching a substitute Form 3520-A to their own Form 3520 by the Form 3520 due date.

When You'd Use Form 3520-A for 2021 (Late or Amended Filing)

You may need to file a late or amended Form 3520-A for 2021 if you received IRS notices about missing filings, discovered errors in a previously filed return, or are responding to penalties assessed for non-compliance. Common scenarios include situations where the foreign trust failed to file the original return by the March 15, 2022 deadline (for calendar year trusts), or where the IRS has issued Letter 3804 demanding the form and threatening penalties. Late filings may also be necessary when addressing compliance issues during audits or when claiming reasonable cause for penalty relief.

Key Rules Specific to 2021

For 2021 returns, the initial penalty for failing to file Form 3520-A is the greater of $10,000 or 5% of the gross value of trust assets owned by the U.S. person at year-end (Instructions for Form 3520-A (2021)). This penalty structure has been in effect since 2010 and continues to apply to 2021 filings. The continuation penalty remains $10,000 for every 30-day period after the initial 90-day notice period. The 2021 form must include all trust documents and a U.S. agent authorization unless these were previously filed within the past three years (IRS Instructions for Form 3520-A (2021)).

Step-by-Step (High Level)

• Gather account transcripts from the IRS to verify what returns have been filed and any penalties assessed for the 2021 tax year
• Complete the correct 2021 Form 3520-A using the specific year's form and instructions, ensuring all required attachments are included
• Attach required schedules including trust documents (if not previously filed), Foreign Grantor Trust Owner Statements, and Foreign Grantor Trust Beneficiary Statements
• Mail to the correct address (Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409) with certified mail for late filings, or attach to Form 3520 if filing a substitute return (Instructions for Form 3520-A (2021))
• Keep copies of all filed documents and certified mail receipts for your records

Common Mistakes and How to Avoid Them

• Using wrong identification numbers - Always use the foreign trust's EIN, never an SSN or ITIN, when identifying the trust (Instructions for Form 3520-A (2021))
• Filing duplicate substitute returns - If filing a substitute Form 3520-A, attach it only to Form 3520; do not mail a separate copy (Instructions for Form 3520-A (2021))
• Missing required attachments - Ensure trust documents, U.S. agent authorizations, and beneficiary statements are complete and attached (Instructions for Form 3520-A (2021))
• Incorrect signature authority - The trustee must sign unless filing a substitute return, in which case the U.S. owner signs and identifies themselves in the title line (Instructions for Form 3520-A (2021))
• Wrong filing address or method - Form 3520-A has specific mailing requirements different from regular tax returns
• Incomplete reasonable cause statements - Any penalty relief requests must include the required "under penalties of perjury" declaration language (IRS Failure to File Form 3520/3520-A Penalties guidance)

What Happens After You File

The IRS processes Form 3520-A filings and may send notices confirming receipt or requesting additional information. If penalties were previously assessed, you'll need to respond to specific correspondence to request relief based on reasonable cause (Instructions for Form 3520-A (2021)). Payment options for any assessed penalties include installment agreements using Form 9465 or direct payment methods. If you disagree with penalty assessments, you have appeal rights under standard IRS procedures, and the statute of limitations for penalty assessment is three years from when a complete and accurate return is filed (IRS Failure to File Form 3520/3520-A Penalties guidance).

FAQs

Can I still file Form 3520-A for 2021 even though it's years late?

Yes, there's no deadline preventing late filing, though penalties may apply. The IRS encourages filing delinquent returns through normal procedures (IRS.gov/individuals/international-taxpayers/delinquent-international-information-return-submission-procedures).

What if I can't get all the trust documents from the foreign trustee?

File what you can obtain and attach a statement explaining what documents are unavailable and why. Complete the form to the best of your ability using available information (Instructions for Form 3520-A (2021)).

Will filing late trigger an audit?

Late international information returns may be selected for audit through normal selection processes, but filing late doesn't automatically trigger examination (IRS.gov/individuals/international-taxpayers/delinquent-international-information-return-submission-procedures).

Can penalties be waived for reasonable cause?

Yes, penalties may be waived if you can demonstrate the failure was due to reasonable cause and not willful neglect, but foreign country penalties or trustee reluctance don't qualify as reasonable cause (Instructions for Form 3520-A (2021)).

Should I also amend my state tax returns?

Review your state's requirements separately, as foreign trust reporting rules vary by state and aren't automatically aligned with federal filing.

What if the foreign trust never obtained a U.S. tax identification number?

The trust can apply for an EIN online at IRS.gov/EIN or by calling 267-941-1099. An EIN is required for proper filing (Instructions for Form 3520-A (2021)).

How long should I keep copies of the filed Form 3520-A?

Keep copies for at least three years after filing, or longer if penalties are being disputed or if the return is part of an ongoing examination.

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