About Form 3520 & Form 3520-A

What is Form 3520?

Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, is an information return filed with the IRS. It does not calculate or impose any tax by itself; it is purely a reporting form. Its purpose is to inform the IRS that a U.S. person had a transaction involving a foreign trust or received a large gift or bequest from a foreign person.

The form is authorized by IRC §6048 (trust transactions) and §6039F (foreign gifts). It was introduced because the IRS otherwise has no visibility into these cross-border transactions. Foreign trusts and foreign donors are outside the U.S. information-reporting system, and without Form 3520 the IRS would not know these events occurred.

What is Form 3520-A?

Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner, is a companion form filed for foreign trusts that have a U.S. owner under the grantor trust rules of IRC §§671–679. Where Form 3520 reports events (a transfer, a distribution, or a gift), Form 3520-A reports the annual financial activity of the trust itself: its income statement and balance sheet.

Technically, the foreign trust’s trustee is responsible for filing Form 3520-A (§6048(b)). When the trustee does not file, the U.S. owner must file a “substitute” Form 3520-A and attach it to their timely filed Form 3520 (including extensions) to avoid penalties (Form 3520-A Instructions). That is the position of a U.S. person treated as owning part of a foreign pension, retirement account, or savings plan that is a foreign trust, if its trustee doesn’t file.

Who needs to file

A U.S. person, defined in IRC §7701(a)(30) as a U.S. citizen, lawful permanent resident (green card holder), or resident alien meeting the substantial presence test, must file if any of the following apply during the tax year. The Form 3520 instructions also treat domestic partnerships, domestic corporations, estates (other than foreign estates), and domestic trusts as U.S. persons, and a dual resident who claims treaty benefits as a nonresident remains a U.S. person for Form 3520 purposes under the current instructions.

• You transferred property to a foreign trust (Form 3520, Part I; IRC §6048(a)). This includes transfers during life and at death, direct and indirect transfers, and transfers by related parties on your behalf. A “reportable event” also includes the death of a U.S. person treated as owner of a foreign trust.
• You are treated as the owner of a foreign trust (Form 3520, Part II, and Form 3520-A; IRC §6048(b)). This is what brings filings every year. Under IRC §679, a U.S. person who transferred property to a foreign trust with a U.S. beneficiary is treated as the owner for income tax purposes. Whether a foreign pension, retirement account, or savings plan is a foreign trust depends on who holds it and for what purpose: a fund a trustee holds usually is; unfunded plans, social insurance and contracts with an insurer usually aren’t; and an account you hold title to, locked for retirement, is not settled. If it is one, and you are treated as its owner, you may have to file both forms every year unless an exception applies. In an employer’s plan described in §402(b), you are treated as owner of at most the part your own contributions fund.
• You received a distribution from a foreign trust (Form 3520, Part III; IRC §6048(c)). This includes direct and indirect distributions, loans from the trust, and use of trust property.
• You received a large gift or bequest from a foreign person (Form 3520, Part IV; IRC §6039F). The reporting threshold is more than $100,000 in aggregate from a nonresident alien individual or foreign estate. For gifts from a foreign corporation or foreign partnership, the threshold is adjusted annually for inflation ($20,573 for 2026 tax year; see IRS.gov/InflationAdjustment for the applicable year). Gifts from donors who are related to each other under §§267 and 707(b), or where one donor acts as a nominee or intermediary for another, are aggregated.

You may need to file for more than one reason in the same year. For example, a person who owns a foreign pension (Part II + 3520-A) and also received an inheritance from a foreign relative (Part IV) would complete both parts on a single Form 3520.

How U.S. tax residents come under these rules

You don’t have to do anything unusual to owe a Form 3520 or 3520-A. Ordinary life events that involve a foreign country can be enough. Here are some of the ways U.S. tax residents come under these rules:

Working abroad and contributing to a local retirement plan

A U.S. citizen or green card holder takes a job abroad and participates in a local workplace pension or retirement scheme. Where the arrangement is a trust under U.S. principles (Treas. Reg. §301.7701-4) and no U.S. court or U.S. person controls it (Treas. Reg. §301.7701-7), it is a foreign trust. If the account holder is treated as its owner under §§671–679, Form 3520 (Part II) and Form 3520-A are due every year the account exists, even after moving back to the U.S. Important exceptions apply: Canadian RRSPs, RRIFs and other Canadian retirement plans are exempt from both forms (Rev. Proc. 2014-55; Form 3520 instructions); employer plans whose trust is described in §402(b) are outside §6048(a) and §679 (§6048(a)(3)(B)(ii)), and you are treated as owner only of the part your own contributions fund, once they are more than your employer’s and if the grantor trust rules are otherwise met (Treas. Reg. §1.402(b)-1(b)(6)); and eligible individuals’ tax-favored retirement and savings trusts may be exempt under Rev. Proc. 2020-17 or the 2024 proposed regulations. See the Reporting Guide and country guides before concluding you must file.

Whether you have anything to file can turn on what you chose. In an employer’s plan that is a foreign trust, money withheld from your pay because the plan’s rules require it counts as your employer’s, on the IRS Chief Counsel’s reading of a similar fund (1997; not precedent), and you aren’t treated as owner of your employer’s part. So a member who chose nothing may own nothing and have nothing to file. What you chose to put in counts as yours: voluntary top-ups, salary sacrifice and, on our reading, automatic enrollment you could have opted out of. Once that is more than your employer’s, you are treated as owner of the part it funds if the grantor trust rules are otherwise met, and the forms are due every year however small the account, unless an exemption applies.

Receiving an inheritance from a relative abroad

A U.S. person whose parent, grandparent, or other relative lives abroad receives an inheritance. If the decedent was a nonresident alien and the aggregate amount exceeds $100,000 in a calendar year, the U.S. heir must report it on Form 3520, Part IV (IRC §6039F). A bequest from a foreign individual or estate is generally not income to the recipient, so the reporting is ordinarily informational only (but exceptions can apply; see Part IV below). The penalty for not reporting can reach 25% of the amount (§6039F(c): 5% per month of continued failure), though the IRS no longer assesses it when a late Form 3520 arrives, while an examination still can (see Penalties).

This catches many first-generation immigrants and dual citizens by surprise. The U.S. has no federal inheritance tax on the recipient, so there is no intuitive reason to report it. But §6039F exists precisely because the IRS has no other way to learn about these inflows; the foreign estate is not subject to U.S. information reporting.

Gifts from foreign parents or family members

Cash gifts from nonresident alien parents are common in immigrant families: help with a down payment, a wedding gift, or a regular transfer of family wealth. If the aggregate from related donors exceeds $100,000 in a year (§6039F; gifts from related donors who are related to each other under §§267 and 707(b), or where one acts as a nominee or intermediary, are aggregated), the U.S. recipient must file Form 3520 Part IV. Tuition a relative pays directly to a school for you, and payments made directly to a medical provider for your care, aren’t foreign gifts and don’t count toward the $100,000 (§6039F(b) leaves out these “qualified transfers”, §2503(e)(2)). Many families are unaware of the threshold because (a) the U.S. has no gift tax on the recipient, and (b) the U.S. gift tax on a nonresident alien donor is narrow: it generally doesn’t reach their gifts of intangible property (§2501(a)(2); certain former citizens and long-term residents are excepted, §2501(a)(3)), and it reaches their other gifts only of property in the United States (§2511(a)).

Becoming a U.S. person with existing foreign accounts

Someone who becomes a U.S. tax resident, by obtaining a green card or meeting the substantial presence test, and already holds a foreign pension or retirement account may trigger the filing requirement starting in their first year of U.S. tax residency; under §679(a)(4), contributions made within the five years before the residency starting date are treated as transfers on that date. Ownership of earlier contributions depends on the general grantor trust rules, and the exceptions above may apply. The account existed before they were a U.S. person, but the obligation attaches prospectively. This is particularly common among H-1B visa holders, L-1 transferees, and new permanent residents who retain retirement savings in their home country.

Distributions from a family trust abroad

A U.S. person who is a beneficiary of a foreign trust established by a non-U.S. family member receives a distribution. This triggers Form 3520 Part III (IRC §6048(c)). If the trust has undistributed net income from prior years, the accumulation distribution rules under IRC §§665–668 may apply, resulting in a throwback tax and an interest charge under §668. The throwback computation is among the most complex in the Code: under §667(b), it uses a three-year averaging method: the accumulation distribution is divided by the number of trust years it is thrown back to, that amount is added to the beneficiary’s taxable income in three of the five preceding years (dropping the highest- and lowest-income years), the average resulting tax increase is multiplied by the number of throwback years, and interest is charged under §668 for the deferral period.

Gifts from a foreign corporation or partnership

Less common but still a trigger: a U.S. person receives a transfer from a foreign corporation or foreign partnership exceeding the inflation-adjusted threshold (currently $20,573 for 2026; see IRS.gov/InflationAdjustment). This might be a distribution from a foreign entity that is recharacterized as a gift, a non-arm’s-length transaction, or a transfer from a family-owned foreign company.

Spouse’s foreign pension and joint filing

A U.S. citizen married to a nonresident alien who has a foreign pension may trigger a filing obligation depending on how they file. If the couple files jointly and the NRA spouse elects to be treated as a U.S. person under §6013(g), the spouse’s pension may become reportable as a foreign trust owned by a U.S. person on Form 3520 (Part II) and Form 3520-A (the election applies for chapters 1 and 24; §6048 is in chapter 61, so its reach is not entirely settled). If filing separately, the NRA spouse’s pension is not reportable by the U.S. citizen: the obligation follows the person treated as the owner, not their spouse.

Why these rules catch people off guard

The common thread is that none of these situations feel like they should involve the IRS. A workplace pension is just a retirement account. An inheritance is a private family matter. A gift from a parent is an act of generosity. But the U.S. worldwide-income tax system treats a “U.S. person” as subject to reporting obligations on all foreign financial connections, and the penalties for non-compliance (§6677, §6039F) are severe relative to the purely informational nature of the forms. The best defense is awareness: knowing the rules exist is the hardest part.

Deadlines and extensions

Form 3520 is due on the 15th day of the 4th month after the end of your tax year (April 15 for calendar-year individuals), generally, but not always, the same day as your income tax return (the Form 3520 instructions note that the due date “may differ from and is not tied to the due date of the U.S. person’s income tax return”). If you live outside the United States and Puerto Rico and your place of business or post of duty is also outside them (or you are on military duty outside them), the due date is extended to June 15; attach a statement to Form 3520 showing you qualify (Form 3520 instructions, When and Where To File). If you extend your income tax return (Form 4868 for individuals; Form 7004 for an entity’s own return), Form 3520, and any substitute Form 3520-A attached to it, is due by the extended date, October 15 for calendar-year individuals. Form 7004 filed under the trust’s EIN extends only a trustee-filed Form 3520-A.

Form 3520-A has an earlier deadline: it is due on March 15, the 15th day of the 3rd month after the end of the trust’s tax year (Form 3520-A Instructions). A six-month extension to September 15 is available by filing Form 7004. If the foreign trustee doesn’t file, the U.S. owner files a substitute 3520-A. The substitute is due with the owner’s Form 3520 (not the March 15 date for a trustee-filed 3520-A).

Both forms are filed on paper with the IRS at P.O. Box 409101, Ogden, UT 84409, separately from your income tax return. A substitute Form 3520-A is attached to Form 3520 and mailed with it; only a trustee-filed Form 3520-A is mailed on its own. Under the Streamlined procedures (below), they go with the income tax returns instead.

Penalties

The penalties for failing to file are severe relative to the informational nature of the forms. There are three separate penalty regimes:

• IRC §6677(a) - Trust-related failures (Parts I & III of Form 3520): The penalty is the greater of $10,000 or 35% of the gross reportable amount. For a trust distribution of $200,000, the penalty could be $70,000. If the failure continues for more than 90 days after the IRS mails a notice, an additional $10,000 per 30-day period applies. In all, the penalties can’t exceed the gross reportable amount: for a $7,000 distribution, no more than $7,000.
• IRC §6677(b) - Form 3520-A failures (U.S. owner annual reporting): An initial penalty of the greater of $10,000 or 5% of the gross value of the trust assets treated as owned by the U.S. person. Continuation penalties of $10,000 per 30-day period after 90 days from IRS notice. The aggregate penalty cannot exceed the gross reportable amount.
• IRC §6039F(c) - Foreign gift failures (Part IV): 5% of the amount of the foreign gift for each month the failure continues, up to a maximum of 25% of the gift amount. The IRS’s own procedures no longer assess this penalty when a late Form 3520 reporting gifts arrives (IRM 21.8.2.19.2, in the manual since at least its October 2025 revision); the law is unchanged, and an examination can still assert it (IRM 20.1.9.10).

These penalties apply per failure, per year: each part of Form 3520 and Form 3520-A is a separate requirement (IRM 20.1.9.13.4). An owner’s penalty is the exception to counting both forms: the IRS’s manual says it is imposed for Form 3520-A rather than for Part II of Form 3520 (IRM 20.1.9.13.4), and the IRS doesn’t assess Part II when a late return arrives (IRM 21.8.2.19.2). The same manual keeps a penalty code for Part II (IRM 20.1.9.13.2), so an examination could differ. On the manual’s reading, a person who missed three years of Part II and a substitute Form 3520-A, with no transfer or distribution to report, could face three initial penalties, one a year, not six, before any continuation penalty. A transfer or distribution reported late, left off or wrong on Part I or Part III adds its own. Reasonable cause abatement is available under §6677(d) and §6039F(c) if the taxpayer can demonstrate that the failure was due to reasonable cause and not willful neglect. Note that penalties imposed by a foreign jurisdiction for disclosing trust information do not constitute reasonable cause (§6677(d)).

A late or incomplete Form 3520 or 3520-A also keeps the IRS’s time to assess tax open. For what Parts I to III and Form 3520-A report, that time doesn’t run out until 3 years after the information is filed. If the failure had reasonable cause and wasn’t willful neglect, only the items the information relates to stay open; otherwise the whole income tax return can (§6501(c)(8); IRM 20.1.9). Gifts reported in Part IV aren’t covered by this rule.

Parts of Form 3520

Form 3520 is organized into four main parts. You complete page 1 and the part for each way you’re involved with a foreign trust or gift:

• Part I - Transfers to foreign trusts (IRC §6048(a)). Reports transfers of money or property to a foreign trust by a U.S. transferor. Includes gratuitous transfers (gifts to the trust) and transfers in exchange for an obligation (sales, loans). Schedule A covers obligations of a related trust, Schedule B covers gratuitous transfers, and Schedule C covers qualified obligations outstanding.
• Part II - U.S. owner of a foreign trust (IRC §6048(b)). Completed when the filer is treated as the owner of a foreign trust under the grantor trust rules (§§671–679). Reports the trust’s name, identifying information, and references the Form 3520-A filed for the trust. A foreign pension holder completes it only if the plan is a foreign trust and they are treated as owning part of it.
• Part III - Distributions from foreign trusts (IRC §6048(c)). Reports any distributions received from a foreign trust during the year, including cash, property, use of trust assets, and loans. If the accumulation distribution rules apply (§§665–668), the throwback tax is computed on Form 4970 and carried to Schedule C, line 49; the interest charge under §668 is computed on Schedule C.
• Part IV - Foreign gifts and bequests (IRC §6039F). Reports gifts and inheritances received from foreign individuals, foreign estates, and foreign corporations/partnerships above the applicable thresholds. A gift or bequest from a foreign individual or estate is generally not income to the recipient, so Part IV is ordinarily informational only. Exceptions: gifts or bequests from a “covered expatriate” may be subject to the §2801 tax (Form 708); purported gifts from foreign corporations or partnerships can be recharacterized as income under §672(f)(4); and if the gift is not timely reported, §6039F(c)(1)(A) lets the IRS determine its tax consequences.

What goes on Form 3520-A

Form 3520-A is an annual financial return for the trust (IRC §6048(b)). It has three main components:

• Income statement: The trust’s income for the year (interest, dividends, capital gains, rents, royalties, and other income) minus deductions and expenses. For a foreign pension or retirement account, this means the investment returns credited to the account during the year.
• Balance sheet: The trust’s assets and liabilities at the beginning and end of the year. For a retirement account, this is typically the opening and closing balance, with contributions and distributions as the main changes.
• Foreign Grantor Trust Owner Statement: For trusts with a U.S. owner under the grantor trust rules (§§671–679), this statement reports the owner’s share of the trust’s income, deductions, and credits. The U.S. owner attaches it to their Form 3520.
• Foreign Grantor Trust Beneficiary Statement: When a foreign grantor trust distributes to U.S. beneficiaries, this statement reports each beneficiary’s share of trust distributions. The beneficiary attaches it to their Form 3520 (Part III, line 29) and does not need to complete the remainder of Part III with respect to that distribution, because the distribution is treated as coming directly from the trust’s owner (for example, as a gift that is not included in gross income).

For foreign pensions and retirement accounts, the 3520-A is typically prepared using annual statements from the foreign financial institution: member benefit statements, account summaries, or brokerage reports. The foreign institution will not prepare the form for you.

How the two forms relate

The two forms serve different purposes and have different filing mechanics:

• Form 3520 is filed by the U.S. person. It reports transactions and events: what happened during the year. It is filed separately from the income tax return (not attached to it) and is mailed to the IRS Ogden, UT service center.
• Form 3520-A is filed for the trust itself. It reports the trust’s annual financials: how the trust performed during the year. When filed by the foreign trustee, it is due March 15. When the U.S. owner files a substitute 3520-A, it is attached to their timely filed Form 3520 and shares the Form 3520 due date.

If you are the U.S. owner of a foreign trust, you typically file both forms each year. Form 3520 (Part II) identifies the trust and references the 3520-A. The 3520-A provides the underlying financial detail. Together, they give the IRS a complete picture of the trust’s activity and your relationship to it.

If you only received a foreign gift (Part IV), you file Form 3520 but do not need a Form 3520-A; there is no trust involved.

What these forms are not

It is important to understand what Form 3520 and Form 3520-A do not do:

• They do not impose a tax. These are information returns. Any tax owed on trust income or distributions is computed on your Form 1040, not on the 3520 or 3520-A. The one exception is the throwback tax computed on Form 4970 (IRC §667), which is reported through Part III, Schedule C.
• They are not FBAR (FinCEN 114). The FBAR reports foreign financial accounts with an aggregate value exceeding $10,000. A foreign trust account may trigger both an FBAR and a Form 3520/3520-A, but they are separate filings with different rules, different thresholds, and different deadlines. The FBAR is filed electronically with FinCEN, not the IRS.
• They are not Form 8938 (FATCA). Form 8938 reports specified foreign financial assets above certain thresholds ($50,000–$600,000 depending on filing status and residency). The same asset may trigger multiple filings. The “Excepted Specified Foreign Financial Assets” checkbox on Form 3520 (Item C) coordinates the two forms.
• A tax treaty by itself does not eliminate the filing requirement. A treaty may reduce or defer the income tax owed on foreign trust earnings, but it does not override the §6048 and §6039F reporting obligations, although the IRS has exempted certain treaty-country plans by revenue procedure (e.g., Canadian RRSPs under Rev. Proc. 2014-55).

Catching up on missed filings

If you have unfiled Forms 3520 or 3520-A from prior years, there are several paths to come into compliance:

• Streamlined Filing Compliance Procedures: Available to individuals who failed to report income from a foreign financial asset and pay the tax on it, and who can certify that their failures, the missed forms included, were non-willful: due to negligence, inadvertence, mistake, or a good-faith misunderstanding of the law, not a deliberate decision to avoid filing. If you had no such income, you don’t meet this condition; look at the next option. You can’t use it if the IRS has opened a civil examination of any year’s return or a criminal investigation of you, and every return needs a valid taxpayer ID number. This program allows you to file the delinquent information returns without information return penalties, though penalties already assessed for those years aren’t abated. It requires filing delinquent or amended income tax returns for the most recent three years (the domestic variant takes amended ones only) and delinquent FBARs for the most recent six years. Forms 3520 and 3520-A go in the same package as those returns, on paper, to the address the IRS gives for these procedures in Austin, with “Streamlined Foreign Offshore” or “Streamlined Domestic Offshore” written in red at the top of each. The domestic variant includes a 5% miscellaneous offshore penalty; the foreign variant (for taxpayers who meet the non-residency requirement) carries no penalty.
• Delinquent International Information Return Submission Procedures: For taxpayers who are not under civil examination or criminal investigation and have not already been contacted by the IRS about the late returns. Delinquent Forms 3520 and 3520-A are filed according to their own instructions (other information returns go with an amended income tax return). You may attach a reasonable cause statement; for Forms 3520 and 3520-A the IRS states it will consider the statement before assessing a penalty, and asks you to write “Reasonable Cause Statement attached” at the top of the first page. Penalties may still be assessed after review. When a return is past its due date, File3520 can add a page for your statement, which you sign under penalties of perjury, and prints that line on the form.
• Voluntary Disclosure Practice: For taxpayers whose failure may have been willful, with criminal exposure as a result. This is a more formal process with more significant consequences. It can help you avoid criminal prosecution, but the IRS says it “does not guarantee immunity from prosecution” (IRM 9.5.11.9).

The choice of program depends on the specific facts. In all cases, coming into compliance voluntarily is far better than waiting for the IRS to discover the unfiled returns.

Sources

This page summarizes the law as of its last update and is not tax advice. The primary authorities are:

• IRC §6048 - Information with respect to certain foreign trusts (reporting requirements for transfers, ownership, and distributions).
• IRC §6039F - Notice of large gifts received from foreign persons (reporting thresholds and penalty).
• IRC §6677 - Failure to file information returns with respect to certain foreign trusts (penalty structure).
• IRC §679 - Foreign trusts having one or more United States beneficiaries (grantor trust treatment for U.S. transferors).
• IRC §§671–678 - Grantor trust rules (general provisions).
• IRC §§665–668 - Accumulation distribution rules and throwback tax.
• IRC §643(a) - Distributable net income.
• IRC §7701(a)(30) - Definition of “United States person.”
• IRC §7701(a)(31)(B) - Definition of “foreign trust.”
• Treas. Reg. §301.7701-7 - Domestic and foreign trust classification (court test and control test).
• Form 3520 Instructions (Rev. December 2025) - Filing procedures, deadlines, mailing address.
• Form 3520-A Instructions (Rev. December 2025) - Substitute filing procedures, March 15 deadline.
• IRS Streamlined Filing Compliance Procedures - Procedures for non-willful taxpayers to come into compliance.
• IRS Delinquent International Information Return Submission Procedures - Procedures for filing late information returns with reasonable cause.
• IRM 9.5.11.9 - The IRS’s Voluntary Disclosure Practice.
• IRM 20.1.9 and IRM 21.8.2.19 - How the IRS imposes and assesses these penalties.