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American Samoa

Moderate relevance

American Samoa trusts are foreign trusts for Forms 3520 and 3520-A, but most people born there are U.S. nationals, not citizens, and a national without a green card is a nonresident alien who files none of them. Citizens and residents file; American Samoa is not a mirror code territory, so the 2024 proposed exception for residents does not apply.

Each account below opens with four answers, one for each part of the forms: File, No or Depends.

Contents

Tax-deferred employer plans

American Samoa Government Employees' Retirement Fund

Part Iwhat you put in: No
Part II + Form 3520-Aa part you're treated as owning: DependsOnly if it is a §402(b) trust and your contributions exceed the government's
Part IIIwhat you received: DependsPayouts, on the cautious course
Form 4970throwback tax: No

For a U.S. citizen or resident, if the Fund is a trust. A U.S. national who is not a citizen, has no green card and does not meet the substantial presence test is a nonresident alien and files none of these.

What it is

The American Samoa Government Employees' Retirement Fund is the public pension plan for American Samoa's government employees.¹ Its statute could not be read for this guide, so its contribution rates and benefits are not given here; check them with the Fund.

1 GAO-24-105862

“The plans are the public pension plans for the other four U.S. territories (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and Puerto Rico)”GAO-24-105862 (2024): the public pension plans of the other four territories, the American Samoa Government Employees' Retirement Fund among them

Trust classification

A foreign trust, if its fund is a trust; no IRS guidance.

If the Fund is a trust, an arrangement in which trustees hold property for beneficiaries,² it is a foreign trust: set up under American Samoa law and supervised by its courts, it fails the court test.^3,4 No IRS guidance addresses whether the Fund is a trust.

2 Treas. Reg. §301.7701-4(a)

“an arrangement created either by a will or by an inter vivos declaration whereby trustees take title to property for the purpose of protecting or conserving it for the beneficiaries”Treas. Reg. §301.7701-4(a)

3 Treas. Reg. §301.7701-7(a)(1)-(2)

“The term foreign trust means any trust other than a domestic trust.”Treas. Reg. §301.7701-7(a)(1)-(2): a trust is domestic only if it meets both the court test and the control test

4 Treas. Reg. §301.7701-7(c)(3)(ii)

“a court within a territory or possession of the United States or within a foreign country is not a court within the United States”Treas. Reg. §301.7701-7(c)(3)(ii)

§402(b) analysis

An employer plan read as a §404(a)(4) or §402(b) trust; no IRS guidance.

As an employer's plan it reads as an employees' trust: the trust §404(a)(4) describes if it would meet §401(a) but for its location, and a §402(b) trust if not.^5,6 On the first reading its participants are taxed as in a qualified plan;⁷ on the second, once your own contributions exceed the government's you are treated as owner of the part yours fund, if the grantor trust rules are otherwise met, and in a defined benefit plan the government's contribution for you is worked out by actuarial methods if it is not known.^8,9 A bona fide resident of American Samoa leaves income from American Samoa out of U.S. gross income.¹⁰

5 26 U.S.C. §404(a)(4)

“If a stock bonus, pension, or profit-sharing trust would qualify for exemption under section 501(a) except for the fact that it is a trust created or organized outside the United States”26 U.S.C. §404(a)(4)

6 26 U.S.C. §402(b)(1)

“Contributions to an employees' trust made by an employer ... shall be included in the gross income of the employee in accordance with section 83”26 U.S.C. §402(b)(1)

7 26 U.S.C. §402(d)

“which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or organized outside the United States shall be treated as if it were a trust exempt from tax under section 501(a)”26 U.S.C. §402(d)

8 Treas. Reg. §1.402(b)-1(b)(6)

“contributions made by an employee are not incidental when compared to contributions made by the employer if the employee's total contributions as of any date exceed the employer's total contributions on behalf of the employee as of such date”Treas. Reg. §1.402(b)-1(b)(6), which makes the employee owner only if the grantor trust rules (subpart E) are also satisfied

9 Treas. Reg. §1.402(b)-1(a)(2)

“is not determinable or for any other reason is not known”Treas. Reg. §1.402(b)-1(a)(2): where the employer's contributions for an employee are not known, an amount worked out by a formula or by recognized actuarial principles

10 26 U.S.C. §931(a), (c)

“In the case of an individual who is a bona fide resident of a specified possession during the entire taxable year, gross income shall not include”26 U.S.C. §931(a), (c): bona fide residents of Guam, American Samoa, and the Northern Mariana Islands leave income from there out of U.S. gross income

Exemption analysis

No mirror-code exception: American Samoa is not a mirror code possession. Rev. Proc. 2020-17: not settled.

The 2024 proposed exception for bona fide residents is only for mirror code possessions, where the income tax is the U.S. income tax as if the possession were the United States.^11,12 American Samoa is not one: it adopts the U.S. income tax as it stood on December 31, 2000, as a separate territorial tax, and the IRS and the Joint Committee on Taxation count it with Puerto Rico as a territory with its own tax law, not a mirror code one.^13,14,15

11 Prop. Treas. Reg. §1.6048-5(e)

“Sections 6048(a) through 6048(c) do not apply to a trust located in a mirror code possession to the extent the responsible party”Prop. Treas. Reg. §1.6048-5(e), 89 Fed. Reg. 39,481 (May 8, 2024): for a trust located in a mirror code possession, to the extent the person is a bona fide resident of it (§1.937-1(b))

12 Prop. Treas. Reg. §1.6048-5(e)

“a mirror code possession is a possession of the United States where, under the income tax system of the possession, the income tax liability of the residents of the possession is determined by reference to the income tax laws of the United States as if the possession were the United States”Prop. Treas. Reg. §1.6048-5(e) (mirror code possession)

13 A.S.C.A. §11.0403(a)-(b)

“The income tax and the income tax rules in force in the United States of America in effect on December 31, 2000, where not clearly inapplicable or incompatible with the intent of this section, are adopted by American Samoa, and shall be deemed to impose a separate Territorial income tax”A.S.C.A. §11.0403(a)-(b) (the Samoan Income Tax Act)

14 IRM 4.71.21.3

“The territories that use a Mirror Code System of Taxation are the USVI, Guam and CNMI.”IRM 4.71.21.3 (02-16-2024), Key Definitions: Mirror Code System of Taxation

15 JCT, JCX-132-15

“are non-mirror Code possessions. These two territories have their own internal tax laws, and a resident of American Samoa or Puerto Rico may be required to file an income tax return with both the territory of residence and the United States.”Joint Committee on Taxation, JCX-132-15 (Sept. 28, 2015): American Samoa and Puerto Rico

Rev. Proc. 2020-17 exempts an eligible individual¹⁶ for a retirement trust established under the laws of a foreign jurisdiction that meets its conditions.^17,18

16 Rev. Proc. 2020-17, §5.02

“is compliant (or comes into compliance) with all requirements for filing a U.S. federal income tax return ... and to the extent required under U.S. tax law, has reported as income any contributions to, earnings of, or distributions from, an applicable tax-favored foreign trust”Rev. Proc. 2020-17, §5.02 (eligible individual)

17 Rev. Proc. 2020-17, §5.03

“a foreign trust for U.S. tax purposes that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust's jurisdiction)”Rev. Proc. 2020-17, §5.03 (and §5.04, in the same words)

18 Rev. Proc. 2020-17, §5.03

“to operate exclusively or almost exclusively to provide, or to earn income for the provision of, pension or retirement benefits and ancillary or incidental benefits”Rev. Proc. 2020-17, §5.03

Whether a U.S. territory is a foreign jurisdiction is not settled, and no IRS guidance answers it. For it: the revenue procedure is written for trusts that are foreign for U.S. tax purposes, which a territory's trusts are;^17,4 the Code treats a company organized under a territory's law as foreign, because only the States and the District of Columbia are the United States, and the Joint Committee on Taxation says entities organized there are generally foreign persons;^19,20,21 the IRS's examination manual says the territories are generally treated as foreign for U.S. tax purposes unless the Code says otherwise;²² and the Form 8938 reporting the revenue procedure gives as a reason for the exemption counts an account at a territory's financial institution as a foreign asset.^23,24 Against it: the revenue procedure and the 2024 preamble explain the exemption by the restrictions imposed under the laws of the country where the trust is established,^25,26 and a territory is not a country. The Code names foreign countries and U.S. possessions separately, and Treasury defines a foreign country as territory under another government's sovereignty.^27,28 The FBAR rules count the territories as part of the United States,²⁹ and a bona fide resident of a territory leaves accounts at its own institutions off Form 8938,³⁰ so the duplicate reporting the revenue procedure relies on may not exist for them. The 2024 proposal deals with territory trusts in an exception of their own, by the filer's residence and only for some territories.¹¹ The proposed regulations' exemption for retirement and savings trusts uses the same words as the revenue procedure, so the same doubt applies to it.³¹ Until the IRS says, the cautious course is not to rely on either exemption for a trust in a U.S. territory, and to report it in full.

17 Rev. Proc. 2020-17, §5.03

4 Treas. Reg. §301.7701-7(c)(3)(ii)

“a court within a territory or possession of the United States or within a foreign country is not a court within the United States”Treas. Reg. §301.7701-7(c)(3)(ii)

19 26 U.S.C. §7701(a)(4)-(5)

“means created or organized in the United States or under the law of the United States or of any State”26 U.S.C. §7701(a)(4)-(5): a corporation or partnership is foreign unless created or organized in the United States or under the law of the United States or of any State

20 26 U.S.C. §7701(a)(9)

“The term “United States” when used in a geographical sense includes only the States and the District of Columbia.”26 U.S.C. §7701(a)(9)

21 JCT, JCX-132-15

“Entities organized in U.S. possessions are generally treated as foreign persons.”Joint Committee on Taxation, JCX-132-15 (Sept. 28, 2015)

22 IRM 4.71.21.4

“are generally treated as foreign for U.S. tax purposes, unless otherwise specified in the Code or related statutes”IRM 4.71.21.4 (07-15-2019), Introduction to Retirement Plans Maintained in U.S. Territories (the IRS's examination procedures, not a ruling)

23 Rev. Proc. 2020-17, §3

“may be required under section 6038D to separately report information about their interests in accounts held by, or through, these trusts”Rev. Proc. 2020-17, §3 (why the exemption is given)

24 Treas. Reg. §1.6038D-3(a)(2)

“A specified foreign financial asset includes a financial account maintained by a financial institution that is organized under the laws of a U.S. possession.”Treas. Reg. §1.6038D-3(a)(2) (Form 8938)

25 Rev. Proc. 2020-17, §3

“which are imposed under the laws of the country in which the trust is established”Rev. Proc. 2020-17, §3 (why the exemption is given)

26 Preamble, 89 Fed. Reg. 39,454

“under the laws of the country in which they are established”Preamble to the proposed regulations, 89 Fed. Reg. 39,454 (May 8, 2024), on proposed §1.6048-5(b)

27 26 U.S.C. §901(b)(1)

“to any foreign country or to any possession of the United States”26 U.S.C. §901(b)(1) (taxes paid to foreign countries and to possessions, named separately)

28 Treas. Reg. §1.911-2(g)-(h)

“The term “foreign country” when used in a geographical sense includes any territory under the sovereignty of a government other than that of the United States.”Treas. Reg. §1.911-2(g)-(h): for §911 the United States includes the possessions, and a foreign country is territory under another government

29 31 C.F.R. §1010.100(hhh)

“the Territories and Insular Possessions of the United States”31 C.F.R. §1010.100(hhh) (the United States, for FinCEN's rules, the FBAR included)

30 Treas. Reg. §1.6038D-7(c)

“A financial account maintained by a financial institution organized under the laws of the U.S. possession of which the specified individual is a bona fide resident”Treas. Reg. §1.6038D-7(c)(1)-(4): a bona fide resident of a possession leaves off Form 8938 accounts at, and interests in, entities organized in that possession

11 Prop. Treas. Reg. §1.6048-5(e)

31 Prop. Treas. Reg. §1.6048-5(b)(2)

“means a foreign trust that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust's jurisdiction)”Prop. Treas. Reg. §1.6048-5(b)(2) (and (b)(3)-(4), in the same words)

Treaty provisions

No treaty: American Samoa is a U.S. territory.

No treaty: the United States has no income tax treaty with its own territories, and federal tax rules apply to them in a way different from both the States and foreign countries.³² The IRS has a tax coordination agreement with each of the five territories, which resolves inconsistent treatment between the two tax systems;³³ no guidance says one changes Forms 3520 and 3520-A.

32 JCT, JCX-132-15

“Federal tax rules apply to the territories in a manner that is different from their application in relation to both the States and foreign countries.”Joint Committee on Taxation, Federal Tax Law and Issues Related to the Commonwealth of Puerto Rico (JCX-132-15), Sept. 28, 2015

33 IRM 4.71.21.4

“Tax Coordination Agreements allow the U.S. Competent Authorities and the relevant territory to resolve, by mutual agreement, inconsistent tax treatment between the two jurisdictions.”IRM 4.71.21.4 (07-15-2019), Tax Coordination Agreements and Mutual Agreement Procedures

3520/3520-A treatment

No Part I. Part II only if it is a §402(b) trust. Cautious course: Part III for payouts.

No Part I: no contribution to a plan trust described in §402(b) or §404(a)(4) is a Part I event.^34,5 If the Fund is a trust, Part II and Form 3520-A apply only if it is a §402(b) trust and your contributions exceed the government's;^8,35 payouts go on Part III on the cautious course, unless it is a §402(b) trust and you report them as compensation.^36,37,38 No Form 4970: payouts from an employees' trust are not taxed under the trust distribution rules.³⁹

34 26 U.S.C. §6048(a)(3)(B)(ii)

“Subparagraph (A) shall not apply with respect to a trust which is ... described in section 402(b), 404(a)(4), or 404A”26 U.S.C. §6048(a)(3)(B)(ii)

5 26 U.S.C. §404(a)(4)

8 Treas. Reg. §1.402(b)-1(b)(6)

35 26 U.S.C. §6048(b)

26 U.S.C. §6048(b) (U.S. owner of a foreign trust: Form 3520 Part II and Form 3520-A)

36 26 U.S.C. §6048(c)(1)

“If any United States person receives (directly or indirectly) during any taxable year of such person any distribution from a foreign trust, such person shall make a return”26 U.S.C. §6048(c)(1) (distributions, Form 3520 Part III)

37 Instructions for Form 3520, Exceptions To Filing

“Distributions from foreign trusts that are taxable as compensation for services rendered (within the meaning of section 672(f)(2)(B) and its regulations), so long as the recipient reports the distribution as compensation income on its applicable federal income tax return.”Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing

38 Treas. Reg. §1.672(f)-3(c)(1)(i)

“A nonexempt employees' trust described in section 402(b)”Treas. Reg. §1.672(f)-3(c)(1)(i): compensatory trusts

39 Rev. Rul. 2007-48

“The taxation of the distributions is not governed by the provisions of § 662.”Rev. Rul. 2007-48 (amplifying Rev. Rul. 74-299), on a nonexempt employees' trust

These apply to you only if you are a U.S. person: a U.S. citizen, or a resident by green card or the substantial presence test. A U.S. national who is not a citizen, as most people born in American Samoa are, and has neither, is a nonresident alien and files none of these.^40,41,42 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^43,44

40 26 U.S.C. §7701(b)(1)(B)

“An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States”26 U.S.C. §7701(b)(1)(B); a resident is a green card holder or someone who meets the substantial presence test (§7701(b)(1)(A))

41 8 U.S.C. §1408(1)

“the following shall be nationals, but not citizens, of the United States at birth: (1) A person born in an outlying possession of the United States on or after the date of formal acquisition of such possession”8 U.S.C. §1408(1)

42 IRS Publication 519 (2025)

“Only nonresident aliens who are U.S. nationals; residents of Canada, Mexico, or South Korea; or students and business apprentices from India who qualify for benefits under Article 21(2) of the income tax treaty with India can claim the CTC.”IRS Publication 519 (2025): U.S. nationals who are not citizens file as nonresident aliens

43 Rev. Proc. 2020-17, §3

“This revenue procedure does not affect any reporting obligations under section 6038D or under any other provision of U.S. law, including the requirement to file FinCEN Form 114”Rev. Proc. 2020-17, §3

44 Instructions for Form 3520, Exceptions To Filing and Additional Reporting

“The exemptions from foreign trust information reporting described in Rev. Proc. 2014-55, Rev. Proc. 2020-17, and the proposed regulations under section 6048 do not affect any other reporting obligations.”Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing and Additional Reporting

Private employer plans under the Samoan Income Tax Act

Part Iwhat you put in: No
Part II + Form 3520-Aa part you're treated as owning: DependsOnly for a plan that fails §401(a), once your contributions exceed your employer's
Part IIIwhat you received: DependsPayouts, on the cautious course
Form 4970throwback tax: No

For a U.S. citizen or resident. A U.S. national who is not a citizen, has no green card and does not meet the substantial presence test is a nonresident alien and files none of these.

What it is

Employers in American Samoa set up retirement plans under the Samoan Income Tax Act, the U.S. income tax as it stood on December 31, 2000, adopted as American Samoa's own.¹³ The employer pays in, and employees may too.

13 A.S.C.A. §11.0403(a)-(b)

Trust classification

A foreign trust: American Samoa's courts are not U.S. courts for the court test.

A foreign trust. A trust is domestic only if a U.S. court can exercise primary supervision over it and U.S. persons control its substantial decisions, and the courts of a territory are not courts within the United States for that test,^3,4 so a trust supervised by American Samoa's courts is a foreign trust.

3 Treas. Reg. §301.7701-7(a)(1)-(2)

“The term foreign trust means any trust other than a domestic trust.”Treas. Reg. §301.7701-7(a)(1)-(2): a trust is domestic only if it meets both the court test and the control test

4 Treas. Reg. §301.7701-7(c)(3)(ii)

“a court within a territory or possession of the United States or within a foreign country is not a court within the United States”Treas. Reg. §301.7701-7(c)(3)(ii)

§402(b) analysis

§402(b) only for a plan that fails §401(a); otherwise its participants are taxed as in a qualified plan.

A plan that would be qualified but for its trust's location is treated, for §402, as if its trust were exempt, so its participants are taxed as in a qualified plan and §402(b) does not apply;⁷ that is the trust §404(a)(4) describes.⁵ A plan that fails §401(a) in other ways is a §402(b) employees' trust: your employer's contributions are U.S. income to you as they vest, you are not treated as owner of the part they fund, and once your own contributions exceed your employer's you are treated as owner of the part yours fund, if the grantor trust rules are otherwise met.^6,45,46,8 A plan that meets only the 2000 Code may fail today's §401(a).

7 26 U.S.C. §402(d)

5 26 U.S.C. §404(a)(4)

6 26 U.S.C. §402(b)(1)

“Contributions to an employees' trust made by an employer ... shall be included in the gross income of the employee in accordance with section 83”26 U.S.C. §402(b)(1)

45 Treas. Reg. §1.402(b)-1(a)(1)

“but only to the extent that the employee's interest in such contribution is substantially vested at the time the contribution is made”Treas. Reg. §1.402(b)-1(a)(1)

46 26 U.S.C. §402(b)(3)

“A beneficiary of any trust described in paragraph (1) shall not be considered the owner of any portion of such trust under subpart E”26 U.S.C. §402(b)(3)

8 Treas. Reg. §1.402(b)-1(b)(6)

Exemption analysis

As for the Government Employees' Retirement Fund above.

No mirror-code exception, and Rev. Proc. 2020-17 is not settled for a territory.^12,17

12 Prop. Treas. Reg. §1.6048-5(e)

17 Rev. Proc. 2020-17, §5.03

Treaty provisions

No treaty: American Samoa is a U.S. territory.

No treaty: the United States has no income tax treaty with its own territories.³²

32 JCT, JCX-132-15

3520/3520-A treatment

No Part I. Part II only for a plan that fails §401(a). Cautious course: Part III for payouts.

No Part I: transfers to a trust described in §402(b) or §404(a)(4) are excepted.^34,5 No Part II or Form 3520-A for a plan that meets §401(a) apart from its trust's location: §679 does not apply to transfers to it.^47,48 For a plan that fails §401(a), Part II and Form 3520-A each year once your own contributions exceed your employer's.^8,35 Payouts go on Part III unless the plan is a §402(b) trust and you report them as compensation, so the cautious course for a plan that meets §401(a) is to report its payouts on Part III.^36,37,38 No Form 4970: payouts from an employees' trust are not taxed under the trust distribution rules.³⁹

34 26 U.S.C. §6048(a)(3)(B)(ii)

“Subparagraph (A) shall not apply with respect to a trust which is ... described in section 402(b), 404(a)(4), or 404A”26 U.S.C. §6048(a)(3)(B)(ii)

5 26 U.S.C. §404(a)(4)

47 26 U.S.C. §679(a)(1)

“A United States person who directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)) shall be treated as the owner ... if for such year there is a United States beneficiary of any portion of such trust”26 U.S.C. §679(a)(1)

48 Treas. Reg. §1.679-4(a)(2)

“Any transfer of property to a foreign trust described in sections 402(b), 404(a)(4), or 404A”Treas. Reg. §1.679-4(a)(2): §679 does not apply to

8 Treas. Reg. §1.402(b)-1(b)(6)

35 26 U.S.C. §6048(b)

26 U.S.C. §6048(b) (U.S. owner of a foreign trust: Form 3520 Part II and Form 3520-A)

36 26 U.S.C. §6048(c)(1)

37 Instructions for Form 3520, Exceptions To Filing

38 Treas. Reg. §1.672(f)-3(c)(1)(i)

“A nonexempt employees' trust described in section 402(b)”Treas. Reg. §1.672(f)-3(c)(1)(i): compensatory trusts

39 Rev. Rul. 2007-48

“The taxation of the distributions is not governed by the provisions of § 662.”Rev. Rul. 2007-48 (amplifying Rev. Rul. 74-299), on a nonexempt employees' trust

40 26 U.S.C. §7701(b)(1)(B)

41 8 U.S.C. §1408(1)

42 IRS Publication 519 (2025)

43 Rev. Proc. 2020-17, §3

44 Instructions for Form 3520, Exceptions To Filing and Additional Reporting

Tax-deferred individual plans

No individual retirement account under American Samoa's own law was found for this guide; the Samoan Income Tax Act adopts the U.S. income tax as it stood on December 31, 2000,¹³ and an account set up there with a local trustee would be reported as any foreign trust only you pay into: full reporting, unless an exemption applies.^47,49,35,36

13 A.S.C.A. §11.0403(a)-(b)

47 26 U.S.C. §679(a)(1)

49 26 U.S.C. §6048(a)(3)(A)(ii)

“the transfer of any money or property (directly or indirectly) to a foreign trust by a United States person”26 U.S.C. §6048(a)(3)(A)(ii) (reportable events, Form 3520 Part I)

35 26 U.S.C. §6048(b)

26 U.S.C. §6048(b) (U.S. owner of a foreign trust: Form 3520 Part II and Form 3520-A)

36 26 U.S.C. §6048(c)(1)

Trusts and other structures

American Samoa trusts

Part Iwhat you put in: DependsA U.S. person who funds it, or the executor when a U.S. owner dies
Part II + Form 3520-Aa part you're treated as owning: DependsA U.S. person treated as owner
Part IIIwhat you received: DependsA U.S. person who receives a distribution
Form 4970throwback tax: DependsAccumulation distributions from a non-grantor trust

For U.S. persons. A U.S. national who is not a citizen, has no green card and does not meet the substantial presence test is a nonresident alien, not a U.S. person.

What it is

A trust set up under American Samoa law, during someone's life or by their will, in which a trustee holds investments or a business for family members.² If the trustee mainly runs a business for profit rather than holding property for the family, U.S. law may classify the arrangement as a business entity rather than a trust.⁵⁰

2 Treas. Reg. §301.7701-4(a)

50 Treas. Reg. §301.7701-4(b)

“generally are created by the beneficiaries simply as a device to carry on a profit-making business”Treas. Reg. §301.7701-4(b)

Trust classification

A foreign trust: American Samoa's courts are not U.S. courts for the court test.

An ordinary trust where the trustee holds property for the beneficiaries.² A trust is domestic only if a U.S. court can exercise primary supervision over it and U.S. persons control its substantial decisions, and the courts of a territory are not courts within the United States for that test,^3,4 so a trust supervised by American Samoa's courts is a foreign trust.

2 Treas. Reg. §301.7701-4(a)

3 Treas. Reg. §301.7701-7(a)(1)-(2)

“The term foreign trust means any trust other than a domestic trust.”Treas. Reg. §301.7701-7(a)(1)-(2): a trust is domestic only if it meets both the court test and the control test

4 Treas. Reg. §301.7701-7(c)(3)(ii)

“a court within a territory or possession of the United States or within a foreign country is not a court within the United States”Treas. Reg. §301.7701-7(c)(3)(ii)

Owner analysis

A U.S. person who funds it is owner when it has a U.S. beneficiary; a non-citizen national is a U.S. person only as a resident.

Who is treated as owner decides who files Part II and Form 3520-A. A U.S. person who transfers property to the trust is treated as owner of the part it funds for any year in which the trust has a U.S. beneficiary,⁴⁷ and a U.S. citizen living in American Samoa is a U.S. person, as is any family member who is a U.S. citizen or resident.⁵¹ Someone who funds the trust while not a U.S. resident and becomes one within 5 years is treated, for this rule and for Part I, as transferring that part of the trust on the day their U.S. residency starts.⁵² A settlor who is not a U.S. person is treated as owner only if they can revoke the trust alone or with the consent of a related or subordinate party subservient to them, or if only they or their spouse can receive distributions during their life.⁵³ Otherwise, unless another grantor trust rule makes a U.S. person owner,⁵⁴ no one is owner, and the trust is taxed as a separate, non-grantor trust.⁵⁵ Most people born in American Samoa are U.S. nationals but not citizens,^41,56 and a national who is neither a citizen nor a resident by green card or substantial presence is a nonresident alien;^40,42 days in American Samoa do not count toward the substantial presence test.⁵⁷ Such a settlor is a foreign person for these rules.

47 26 U.S.C. §679(a)(1)

51 26 U.S.C. §7701(a)(30)(A)

“a citizen or resident of the United States”26 U.S.C. §7701(a)(30)(A) (a United States person)

52 26 U.S.C. §679(a)(4)(A)

“If a nonresident alien individual has a residency starting date within 5 years after directly or indirectly transferring property to a foreign trust, this section and section 6048 shall be applied as if such individual transferred to such trust on the residency starting date”26 U.S.C. §679(a)(4)(A)

53 26 U.S.C. §672(f)(1)-(2)(A)

“this subpart shall apply only to the extent such application results in an amount (if any) being currently taken into account ... in computing the income of a citizen or resident of the United States or a domestic corporation”26 U.S.C. §672(f)(1)-(2)(A): a foreign person is treated as owner only of a trust they can revoke alone or with the consent of a related or subordinate party subservient to them, or one that can pay only them or their spouse during their life

54 26 U.S.C. §677(a)(2)

“held or accumulated for future distribution to the grantor or the grantor's spouse”26 U.S.C. §677(a)(2): the grantor is treated as owner of a portion whose income may be held for the grantor

55 26 U.S.C. §671

“Any remaining portion of the trust shall be subject to subparts A through D.”26 U.S.C. §671

41 8 U.S.C. §1408(1)

56 8 U.S.C. §1101(a)(29)

“The term “outlying possessions of the United States” means American Samoa and Swains Island.”8 U.S.C. §1101(a)(29)

40 26 U.S.C. §7701(b)(1)(B)

42 IRS Publication 519 (2025)

57 Treas. Reg. §301.7701(b)-1(c)(2)(ii)

“It does not include the possessions and territories of the United States”Treas. Reg. §301.7701(b)-1(c)(2)(ii): for the residence tests, the United States is the States and the District of Columbia

A trust has a U.S. beneficiary for the transferor rule if anyone has discretion to pay or benefit any person, unless its terms identify the class who may benefit and none of them is a U.S. person that year,⁵⁸ even if nothing is paid to a U.S. person that year;⁵⁹ a power to amend the trust to benefit a U.S. person counts, and so does a letter of wishes or other understanding that points to benefiting one, even one that says it is only a suggestion.⁶⁰ Where a U.S. person funds the trust, the IRS may treat it as having a U.S. beneficiary unless that person shows it has none.⁶¹ A beneficiary who first became a U.S. person more than 5 years after the transfer is not counted,⁶² and a transferor whose trust gains a U.S. beneficiary is taxed that year on the income the trust kept for that part to the end of the year before, as an accumulation distribution with the interest charge.^63,64 A settlor who is not a U.S. person keeps the revocable-trust exception for a year only if they can take the property back alone, or with the consent of a related or subordinate party subservient to them, for at least 183 days of it; a power that needs anyone else's consent, such as an independent trustee's or protector's, does not count.^65,66 Once the exception fails for a year it is lost for good.⁶⁷ Separately, a portion already treated as owned under §676, or under §677 other than its life insurance rule, on September 19, 1995 keeps that owner for the property it held that day, for as long as it stays so treated.⁶⁸ A U.S. settlor of a trust with no U.S. beneficiary can still be owner under another rule, for example by keeping a power to take the property back,⁶⁹ and a U.S. beneficiary who alone can take the property is owner of it.^70,53

58 26 U.S.C. §679(c)(4)

“if any person has the discretion (by authority given in the trust agreement, by power of appointment, or otherwise) of making a distribution from the trust to, or for the benefit of, any person, such trust shall be treated as having a beneficiary who is a United States person unless ... the terms of the trust specifically identify the class of persons to whom such distributions may be made, and ... none of those persons are United States persons during the taxable year.”26 U.S.C. §679(c)(4)

59 Treas. Reg. §1.679-2(a)(2)(iii), Example 10

“Because it is possible that a U.S. person will receive distributions of income or corpus, or will have income accumulated for his benefit, FT is treated as having a U.S. beneficiary. This result applies even if, during a tax year, no distributions or accumulations are actually made to or for the benefit of a U.S. person.”Treas. Reg. §1.679-2(a)(2)(iii), Example 10: a trustee's discretion to benefit anyone studying ancient Greek

60 Treas. Reg. §1.679-2(a)(4)

“All written and oral agreements and understandings relating to the trust; ... Memoranda or letters of wishes; ... If the terms of the trust instrument allow the trust to be amended to benefit a U.S. person, all potential benefits that could be provided to a U.S. person pursuant to an amendment must be taken into account ... a letter of wishes directs the trustee of FT to provide for the educational needs of B, who is about to begin college. The letter of wishes contains a disclaimer to the effect that its contents are only suggestions and recommendations ... FT is treated as having a U.S. beneficiary.”Treas. Reg. §1.679-2(a)(4)(i)(A)-(B), (a)(4)(ii)(A) and (a)(4)(iii), Example 2: understandings, amendment powers and letters of wishes

61 26 U.S.C. §679(d)

“the Secretary may treat such trust as having a United States beneficiary for purposes of applying this section to such transfer unless such person ... demonstrates to the satisfaction of the Secretary that such trust satisfies the requirements of subparagraphs (A) and (B) of subsection (c)(1)”26 U.S.C. §679(d): presumption that a foreign trust has a United States beneficiary

62 26 U.S.C. §679(c)(3)

“A beneficiary shall not be treated as a United States person in applying this section with respect to any transfer of property to foreign trust if such beneficiary first became a United States person more than 5 years after the date of such transfer.”26 U.S.C. §679(c)(3)

63 26 U.S.C. §679(b)

“the transferor shall be treated as having income for the taxable year (in addition to his other income for such year) equal to the undistributed net income (at the close of such immediately preceding taxable year) attributable to the portion of the trust referred to in subsection (a)”26 U.S.C. §679(b): a trust that acquires a U.S. beneficiary

64 Treas. Reg. §1.679-2(c)(1)

“The amount of the additional income is equal to the trust's undistributed net income, as defined in section 665(a), at the end of the U.S. transferor's immediately preceding taxable year and is subject to the rules of section 668, providing for an interest charge on accumulation distributions from foreign trusts. ... A is treated as receiving an accumulation distribution”Treas. Reg. §1.679-2(c)(1) and (c)(3), Example 1: a trust acquiring a U.S. beneficiary

65 Treas. Reg. §1.672(f)-3(a)(1)

“the power to revest absolutely in the grantor title to such portion is exercisable solely by the grantor ... without the approval or consent of any other person. If the grantor can exercise such power only with the approval of a related or subordinate party who is subservient to the grantor, such power is treated as exercisable solely by the grantor.”Treas. Reg. §1.672(f)-3(a)(1)

66 Treas. Reg. §1.672(f)-3(a)(2)

“the grantor is treated as having a power to revest for a taxable year of the trust only if the grantor has such power for a total of 183 or more days during the taxable year of the trust”Treas. Reg. §1.672(f)-3(a)(2)

67 Treas. Reg. §1.672(f)-3(a)(1)

“A trust (or portion of a trust) that fails to qualify for the exception provided by this paragraph (a) for a particular taxable year of the trust will be subject to the general rule of § 1.672(f)-1 for that taxable year and all subsequent taxable years of the trust.”Treas. Reg. §1.672(f)-3(a)(1), last sentence

68 Treas. Reg. §1.672(f)-3(a)(3)

“the general rule of § 1.672(f)-1 does not apply to any portion of a trust that was treated as owned by the grantor under section 676 on September 19, 1995, as long as the trust would continue to be so treated thereafter ... treated as owned by the grantor under section 677 (other than section 677(a)(3)) on September 19, 1995, as long as the trust would continue to be so treated thereafter. However, the preceding sentence does not apply to any portion of the trust attributable to gratuitous transfers to the trust after September 19, 1995.”Treas. Reg. §1.672(f)-3(a)(3), with (b)(3) for §677 and (d) for later gifts: trusts in existence on September 19, 1995

69 26 U.S.C. §676(a)

“The grantor shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under any other provision of this part, where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a non-adverse party, or both.”26 U.S.C. §676(a)

70 26 U.S.C. §678(a)(1)

“such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself”26 U.S.C. §678(a)(1): a person other than the grantor is treated as owner of a portion of a trust they alone can take

53 26 U.S.C. §672(f)(1)-(2)(A)

When a settlor who was not a U.S. person dies, the revocable-trust and spouse-only exceptions end for that settlor's portion, because the person left with the power, even a surviving spouse, is not its grantor;⁷¹ a U.S. person who alone can take the property, or a U.S. person who funded the trust, can still be owner, and otherwise the portion is taxed as a non-grantor trust.^70,47,55 When a portion stops being owned by a U.S. person, the owner is treated, for the gain rule, as transferring it to a foreign trust that day.⁷² At death the gain is excused only if the trust's basis in the property is then reset to its value at death under section 1014(a), as where the owner could still revoke the trust;⁷³ otherwise the owner is treated as transferring it immediately before death and recognizes the gain.⁷⁴

71 Treas. Reg. §1.672(f)-3(a)(4) and (b)(4), Examples 2

“the exception in paragraph (a)(1) of this section is no longer applicable, because FP2 is not a grantor of T within the meaning of § 1.671-2(e). ... The exception in paragraph (b)(1) of this section is no longer applicable, because W is not a grantor of FT within the meaning of § 1.671-2(e).”Treas. Reg. §1.672(f)-3(a)(4) and (b)(4), Examples 2: a foreign grantor's death

70 26 U.S.C. §678(a)(1)

47 26 U.S.C. §679(a)(1)

55 26 U.S.C. §671

“Any remaining portion of the trust shall be subject to subparts A through D.”26 U.S.C. §671

72 Treas. Reg. §1.684-2(e)(1)

“the U.S. person shall be treated as having transferred, immediately before (but on the same date that) the trust is no longer treated as owned by that U.S. person, the assets of such portion to a foreign trust”Treas. Reg. §1.684-2(e)(1): a portion that stops being owned by a U.S. person, for the gain rule

73 Treas. Reg. §1.684-3(c)(1)

“The general rule of gain recognition under § 1.684-1 shall not apply to any transfer of property to a foreign trust or foreign estate ... by reason of death of the U.S. transferor, if the basis of the property in the hands of the transferee is determined under section 1014(a).”Treas. Reg. §1.684-3(c)(1): transfers at death

74 Treas. Reg. §1.684-3(g), Examples 2 and 3

“A retained the power to revoke FT, thus, the value of all property owned by FT at A's death is includible in A's gross estate for U.S. estate tax purposes. Pursuant to paragraph (c) of this section, A is not required to recognize gain ... A retains no power over FT, and FT's basis in the property transferred is not determined under section 1014(a). Under § 1.684-2(e)(1), A is treated as having transferred the property to FT immediately before his death”Treas. Reg. §1.684-3(g), Examples 2 and 3: a U.S. owner's death, with and without a power to revoke

Treaty provisions

No treaty: American Samoa is a U.S. territory.

No treaty: the United States has no income tax treaty with its own territories.³²

32 JCT, JCX-132-15

3520/3520-A treatment

Part I for whoever funds it, Part II and Form 3520-A for an owner, Part III for whoever receives a distribution.

A U.S. person who transfers property to the trust files Part I for that year.⁴⁹ A transfer to a foreign trust is treated as a sale, and you recognize any gain on what you transfer;⁷⁵ a transfer is not, to the extent anyone is treated as owning the part it funds.⁷⁶ Part I also applies on the death of a U.S. citizen or resident who was treated as owner of any part of the trust, or whose gross estate includes part of it, and to property that passes to the trust by reason of a U.S. person's death; the executor reports it, whether or not the executor is a U.S. person.⁷⁷ The gain rule does not apply to property that passes to the trust by reason of a U.S. person's death, if its basis in that property is set under section 1014(a).⁷³ A U.S. owner files Part II and makes sure Form 3520-A is filed, or files a substitute, each year.^35,78 A U.S. beneficiary who receives a distribution files Part III for that year.³⁶ A distribution from a non-grantor trust that carries out income the trust kept in earlier years is an accumulation distribution, taxed with an interest charge on Form 4970.⁷⁹ Form 4970 can also apply to a transferor taxed when the trust gains a U.S. beneficiary, as the owner step says.⁶⁴ Owing no U.S. tax on the trust's income does not remove any of these: transfers and distributions are reportable whether or not they have U.S. income tax consequences.⁸⁰ Rev. Proc. 2020-17 does not apply: it covers only retirement trusts and medical, disability, or educational savings trusts.⁸¹

49 26 U.S.C. §6048(a)(3)(A)(ii)

“the transfer of any money or property (directly or indirectly) to a foreign trust by a United States person”26 U.S.C. §6048(a)(3)(A)(ii) (reportable events, Form 3520 Part I)

75 26 U.S.C. §684(a)

“in the case of any transfer of property by a United States person to a foreign estate or trust, for purposes of this subtitle, such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of”26 U.S.C. §684(a)

76 26 U.S.C. §684(b)

“Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any person is treated as the owner of such trust under section 671.”26 U.S.C. §684(b)

77 Instructions for Form 3520 (Rev. December 2025), Definitions

“The transfer of any money or property, directly or indirectly, to a foreign trust by a U.S. person, including a transfer by reason of death. ... The death of a U.S. citizen or resident if: The decedent was treated as the owner of any portion of a foreign trust under the rules of sections 671 through 679, or Any portion of a foreign trust was included in the gross estate of the decedent. ... The executor of the decedent’s estate in any other case (whether or not the executor is a U.S. person).”Instructions for Form 3520 (Rev. December 2025), Definitions, Reportable Event and Responsible Party

73 Treas. Reg. §1.684-3(c)(1)

35 26 U.S.C. §6048(b)

26 U.S.C. §6048(b) (U.S. owner of a foreign trust: Form 3520 Part II and Form 3520-A)

78 Instructions for Form 3520-A, When To File

“If the foreign trust fails to file Form 3520-A, the U.S. owner must file a substitute Form 3520-A”Instructions for Form 3520-A (Rev. December 2025), When To File

36 26 U.S.C. §6048(c)(1)

79 26 U.S.C. §§665-668

26 U.S.C. §§665-668: an accumulation distribution from a trust that is not a grantor trust is taxed as if paid in the years the income was earned (§667), with an interest charge for a foreign trust (§668); figured on Form 4970

64 Treas. Reg. §1.679-2(c)(1)

80 Preamble, 89 Fed. Reg. 39,455

“whether or not there are any U.S. income tax consequences associated with the transfer or distribution”Preamble to the proposed regulations, 89 Fed. Reg. 39,455 (May 8, 2024), on proposed §1.6048-6(b): a transfer or distribution is reportable

81 Rev. Proc. 2020-17, §1

“certain tax-favored foreign retirement trusts and certain tax-favored foreign nonretirement savings trusts, as described in sections 5.03 and 5.04”Rev. Proc. 2020-17, §1

A distribution is any gratuitous transfer from the trust, whether or not it is a grantor trust and whether or not you are named as a beneficiary, including a credit card bill it pays or guarantees and a check written on its account.⁸² On the proposed rules, a payment from a company the trust owns to a U.S. person who is a grantor, owner or beneficiary of the trust, or related to one, is treated as a distribution from the trust, unless that person shows it is properly attributable to their own interest in the company.^83,84 A loan of cash or marketable securities, or use of trust property, to you or a related U.S. person goes on Part III whether or not it is taxable;⁸⁵ it is treated as a distribution for income tax, except a loan made on a qualified obligation (a written loan in U.S. dollars, for 5 years or less, at an interest rate tied to the federal rate, for which you extend the IRS's time to assess and that you report each year) or use you pay the fair market value for within a reasonable time,^86,87,88,89 and where a U.S. person funded the trust, the loan instead makes it a grantor trust, and it still goes on Part III.⁹⁰

82 Instructions for Form 3520, Definitions, Distribution

“any gratuitous transfer of money or other property from a foreign trust, whether or not a portion of such trust is treated as a grantor trust under the grantor trust rules of sections 671 through 679, and without regard to whether the recipient is designated as a beneficiary by the terms of the trust ... if charges you make on a credit card are paid by a foreign trust or guaranteed or secured by the assets of a foreign trust, the amount charged will be treated as a distribution to you by the foreign trust. Similarly, if you write checks on a foreign trust's bank account, the amount will be treated as a distribution.”Instructions for Form 3520 (Rev. December 2025), Definitions, Distribution

83 Prop. Treas. Reg. §1.6048-4(b)(3)

“A distribution includes any transfer of property from an entity in which a foreign trust directly or indirectly holds an ownership interest that is received by a U.S. person who is a related person ... unless the U.S. person demonstrates to the satisfaction of the Commissioner that the distribution from the entity is properly attributable to the U.S. person's ownership interest in the entity”Prop. Treas. Reg. §1.6048-4(b)(3), 89 Fed. Reg. 39,477 (May 8, 2024): transfers from an entity a foreign trust owns to a related person, who under Treas. Reg. §1.679-1(c)(5) is a grantor, owner or beneficiary of the trust or someone related to one

84 Instructions for Form 3520, Exceptions To Filing

“You may rely on these proposed regulations for any tax year ending after May 8, 2024, and beginning on or before the date that final regulations are published in the Federal Register, provided you and all related persons ... apply the proposed regulations in their entirety and in a consistent manner”Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing (the regulations were still proposed when these instructions were issued, and the Federal Register shows no final rule as of October 20, 2026)

85 Instructions for Form 3520, Part III

“the amount of such loan or the FMV of the use of trust property will be treated as a reportable distribution, whether or not taxable”Instructions for Form 3520 (Rev. December 2025), Part III, line 25

86 26 U.S.C. §643(i)(1)

“if a foreign trust makes a loan of cash or marketable securities (or permits the use of any other trust property) directly or indirectly to or by ... the amount of such loan (or the fair market value of the use of such property) shall be treated as a distribution by such trust to such grantor or beneficiary (as the case may be)”26 U.S.C. §643(i)(1)

87 26 U.S.C. §643(i)(2)(E)

“In the case of the use of any trust property other than a loan of cash or marketable securities, paragraph (1) shall not apply to the extent that the trust is paid the fair market value of such use within a reasonable period of time of such use.”26 U.S.C. §643(i)(2)(E)

88 Instructions for Form 3520 (Rev. December 2025), Definitions

“The obligation is reduced to writing by an express written agreement; The term of the obligation does not exceed 5 years (including options to renew and rollovers); All payments on the obligation are denominated in U.S. dollars; The yield to maturity of the obligation is not less than 100% of the applicable federal rate ... The U.S. person agrees to extend the period for assessment ... The U.S. person reports the status of the obligation, including principal and interest payments”Instructions for Form 3520 (Rev. December 2025), Definitions, Qualified Obligation

89 Instructions for Form 3520 (Rev. December 2025), line 28

“If the obligation fails to retain the status of a qualified obligation, you will be treated as having received a taxable distribution under section 643(i) from the foreign trust.”Instructions for Form 3520 (Rev. December 2025), Part III, line 28: a loan given for a qualified obligation

90 Instructions for Form 3520 (Rev. December 2025), line 25

“the loan or use of trust property will not be treated as a taxable distribution under section 643(i) but will remain reportable on Part III of this Form 3520”Instructions for Form 3520 (Rev. December 2025), Part III, line 25, Note: a foreign trust with a U.S. transferor

If you are the U.S. owner of the part that pays you, you complete only lines 24 and 27, and the rest of this paragraph does not apply to you.⁹¹ Otherwise, with a complete Foreign Grantor Trust Beneficiary Statement you treat a payment as coming from the owner, so a gift from the owner is not your income;⁹² without one, the default method applies even to a distribution from a grantor trust.⁹³ From a non-grantor trust you may use the actual method if you have a Foreign Nongrantor Trust Beneficiary Statement,⁹⁴ and without one the default method applies: the part of this year's distributions above 1.25 times the average of the three years before is an accumulation distribution, taxed on Form 4970 with an interest charge figured on Form 3520's Schedule C, and the rest is ordinary income,^95,79,96 and once you use the default method you must keep using it in later years, except that in the year the trust ends you may use the actual method if you have the statement.⁹⁷ In the trust's first year as a foreign trust, you stop Part III once you have entered how many years it has been foreign, so no accumulation distribution is figured that year.⁹⁸ The statute treats the whole distribution as an accumulation distribution where adequate records are not given;⁹⁹ the default method is the IRS's relief from that, open if you can give the trust's distributions for the three years before,¹⁰⁰ and where there were none, it too makes the whole distribution an accumulation distribution.⁹⁵ A foreign trust's distributable net income, the income its distributions carry out, includes its capital gains,¹⁰¹ and the exception for income kept before a beneficiary was born or turned 21 does not apply to it.¹⁰²

91 Instructions for Form 3520 (Rev. December 2025), Part III

“If a U.S. owner (defined later) of a foreign trust receives, directly or indirectly, a distribution from the foreign trust, the U.S. owner must only complete lines 24 and 27 in Part III.”Instructions for Form 3520 (Rev. December 2025), Part III, Reporting by U.S. owners receiving distributions from foreign grantor trust; Who Must File, item 3 ("a U.S. person (including a U.S. owner)" who received a distribution)

92 Instructions for Form 3520, Part III

“If a U.S. beneficiary receives a complete Foreign Grantor Trust Beneficiary Statement with respect to a distribution during the tax year, the beneficiary should treat the distribution for income tax purposes as if it came directly from the owner. For example, if the distribution is a gift, the beneficiary should not include the distribution in gross income.”Instructions for Form 3520 (Rev. December 2025), Part III, line 29

93 Form 3520, line 29

“Did you receive a Foreign Grantor Trust Beneficiary Statement from the foreign trust with respect to a distribution? ... If "No," complete Schedule A with respect to that distribution.”Form 3520 (Rev. December 2023), Part III, line 29

94 Form 3520, line 30

“If "Yes," attach the statement and complete either Schedule A or Schedule B below.”Form 3520 (Rev. December 2023), Part III, line 30

95 Form 3520, Schedule A

“Enter total distributions received from the foreign trust during the 3 preceding tax years ... Multiply line 33 by 1.25 ... Amount treated as ordinary income earned in the current tax year. Enter the smaller of line 31 or line 35 ... Amount treated as accumulation distribution. Subtract line 36 from line 31.”Form 3520 (Rev. December 2023), Part III, Schedule A, lines 33 to 37

79 26 U.S.C. §§665-668

96 Form 3520, Schedule C

“Enter tax on total accumulation distribution from line 28 of Form 4970. ... Interest charge. Multiply the amount on line 49 by the combined interest rate on line 51”Form 3520 (Rev. December 2023), Part III, Schedule C, lines 49 and 52: the interest charge on an accumulation distribution

97 Instructions for Form 3520, Part III, Schedule A

“Generally, if you complete Schedule A in the current year, or did so in prior years, you must continue to complete Schedule A for all future years ... The only exception to this consistency rule is that you may use Schedule B in the year that a trust terminates, but only if you are able to answer “Yes” to line 30 in the year of termination.”Instructions for Form 3520 (Rev. December 2025), Part III, Schedule A

98 Instructions for Form 3520, Part III

“If this is the first year that the trust has been a foreign trust, do not complete the rest of Part III.”Instructions for Form 3520 (Rev. December 2025), Part III, line 32

99 26 U.S.C. §6048(c)(2)(A)

“If adequate records are not provided to the Secretary to determine the proper treatment of any distribution from a foreign trust, such distribution shall be treated as an accumulation distribution includible in the gross income of the distributee”26 U.S.C. §6048(c)(2)(A)

100 Notice 97-34, section V.B

“it is expected that Form 3520 will allow the U.S. beneficiary to avoid treating the entire amount as an accumulation distribution if the U.S. beneficiary can provide certain information regarding actual distributions from the trust for the prior three years”Notice 97-34, 1997-25 I.R.B. 22, section V.B (Beneficiary Statements): the default treatment, which Form 3520's Schedule A now carries

101 26 U.S.C. §643(a)(6)(C)

“Paragraph (3) shall not apply to a foreign trust. In the case of such a trust, there shall be included gains from the sale or exchange of capital assets”26 U.S.C. §643(a)(6)(C)

102 26 U.S.C. §665(b)

“shall not include amounts properly paid, credited, or required to be distributed to a beneficiary from a trust (other than a foreign trust) as income accumulated before the birth of such beneficiary or before such beneficiary attains the age of 21”26 U.S.C. §665(b)

Leaving American Samoa income out of U.S. income does not remove any of these.¹⁰ A U.S. national who is not a citizen and is not a resident is not a U.S. person and files none of them.^51,40 FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.¹⁰³

10 26 U.S.C. §931(a), (c)

51 26 U.S.C. §7701(a)(30)(A)

“a citizen or resident of the United States”26 U.S.C. §7701(a)(30)(A) (a United States person)

40 26 U.S.C. §7701(b)(1)(B)

103 Instructions for Form 3520, Additional Reporting and Tax Information

“You may be required to file Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). In addition, you may be required to file Form 8938”Instructions for Form 3520 (Rev. December 2025), Additional Reporting and Tax Information

Gifts and inheritances

You report gifts and bequests on Form 3520 Part IV when, in one tax year, you receive more than $100,000 from a nonresident alien individual or a foreign estate, counting gifts from persons related to them together,¹⁰⁴ or more than $20,116 (for 2025) or $20,573 (for 2026) from foreign corporations or foreign partnerships, adding in gifts from foreign persons related to them.^105,106,107 Tuition someone pays directly to a school for you, and payments made directly to a medical provider for your care, are not foreign gifts and do not count.^108,109 If you rely on the 2024 proposed regulations, the $100,000 is adjusted for inflation, to about $201,160 for 2025 and $205,730 for 2026,¹¹⁰ and gifts from a covered expatriate (a former U.S. citizen or long-term resident covered by section 877A) received from January 14, 2025 are reported once the year's total passes $19,000.¹¹¹ A gift that is late or left off Part IV is charged 5% of its amount for each month the failure continues, up to 25%.¹¹² The IRS's own procedures no longer assess that penalty when a late Form 3520 reporting gifts arrives, but the law is unchanged and an examination can still assert it.¹¹³

104 Instructions for Form 3520, Who Must File

“More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests”Instructions for Form 3520 (Rev. December 2025), Who Must File, item 4

105 Instructions for Form 3520, Who Must File

“foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships)”Instructions for Form 3520 (Rev. December 2025), Who Must File, item 4

106 Rev. Proc. 2024-40, §2.48

“exceeds $20,116”Rev. Proc. 2024-40, §2.48 (taxable years beginning in 2025)

107 Rev. Proc. 2025-32, §4.47

“exceeds $20,573”Rev. Proc. 2025-32, §4.47 (taxable years beginning in 2026)

108 26 U.S.C. §6039F(b)

“Such term shall not include any qualified transfer (within the meaning of section 2503(e)(2))”26 U.S.C. §6039F(b)

109 26 U.S.C. §2503(e)(2)

“any amount paid on behalf of an individual ... as tuition to an educational organization ... for the education or training of such individual, or ... to any person who provides medical care ... with respect to such individual as payment for such medical care”26 U.S.C. §2503(e)(2); Treas. Reg. §25.2503-6(b)(2) and (c), Examples (3)-(4): the payment goes straight to the school or the provider, and reimbursing you does not count

110 Prop. Treas. Reg. §1.6039F-1(c)(2)(i)(A) and (v), 89 Fed. Reg. 39,471

“are increased by an amount equal to the product of the amounts specified in such paragraphs and the cost-of-living adjustment for the taxable year of the gift under section 1(f)(3)”Prop. Treas. Reg. §1.6039F-1(c)(2)(i)(A) and (v), 89 Fed. Reg. 39,471 (May 8, 2024): the adjustment runs from 1995, as section 6039F(d)'s does for the $10,000 that is $20,116 for 2025 and $20,573 for 2026, so the figures here are ten times those

111 Prop. Treas. Reg. §1.6039F-1(c)(2)(ii) and (h)(2)

“if the aggregate amount of covered gifts and bequests received by the U.S. person during the calendar year does not exceed the section 2801(c) amount, which is the dollar amount of the per-donee exclusion in effect under section 2503(b)”Prop. Treas. Reg. §1.6039F-1(c)(2)(ii) and (h)(2), for covered gifts received from the day the final section 2801 regulations were published, January 14, 2025 (90 Fed. Reg. 3,376); the section 2503(b) amount is $19,000 for 2025 and 2026 (Rev. Proc. 2024-40, §3.43(1); Rev. Proc. 2025-32, §4.42(1) and (3))

112 26 U.S.C. §6039F(c)(1)(B)

“an amount equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of such amount in the aggregate)”26 U.S.C. §6039F(c)(1)(B)

113 IRM 21.8.2.19.2

“IRS is no longer assessing penalties at filing on late Forms 3520 reporting foreign gifts and bequests in Part IV.”IRM 21.8.2.19.2 (05-01-2026), on answering inquiries; the penalty itself is unchanged in §6039F(c), and the examiners' penalty section, IRM 20.1.9.10, still covers it

The Samoan Income Tax Act adopts the U.S. income tax, not the U.S. estate and gift taxes,¹³ and no estate tax or gift tax of American Samoa's own was found for this guide, which is not confirmed. Most people born in American Samoa are U.S. nationals, not citizens,⁴¹ and a national who is not a citizen and has no green card is a nonresident alien for U.S. tax,^40,114 so a gift from such a relative counts toward the $100,000 Part IV threshold.¹⁰⁴ Part IV turns on whether the giver is a nonresident alien. A U.S. citizen living in American Samoa is not one, so a gift from them is not reported on Part IV.^104,40 A giver who is not a U.S. citizen and has no green card can be one even after years in American Samoa, because days in a territory do not count toward the substantial presence test.⁵⁷ For the U.S. gift and estate taxes, a citizen living in a territory whose citizenship came only from the territory, by birth, residence, or its citizenship, is treated as a nonresident not a citizen,^115,116 which changes the giver's own U.S. gift tax, not your Part IV.

13 A.S.C.A. §11.0403(a)-(b)

41 8 U.S.C. §1408(1)

40 26 U.S.C. §7701(b)(1)(B)

114 Instructions for Form 1040-NR (2025)

“U.S. nationals include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.”Instructions for Form 1040-NR (2025), U.S. national

104 Instructions for Form 3520, Who Must File

57 Treas. Reg. §301.7701(b)-1(c)(2)(ii)

115 26 U.S.C. §2501(c)

“but only if such donor acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States”26 U.S.C. §2501(c) (gift tax)

116 26 U.S.C. §2209

“be considered a “nonresident not a citizen of the United States” within the meaning of that term wherever used in this title, but only if such person acquired his United States citizenship solely by reason of”26 U.S.C. §2209 (estate tax)

Whether the estate of someone who lived in American Samoa is a foreign estate for Part IV is not settled. A foreign estate is one whose income from outside the United States is not in its U.S. gross income,¹¹⁷ and no IRS guidance applies that to an estate administered in a territory. The cautious course for a bequest of more than $100,000 in a year from such an estate is to report it on Part IV.¹⁰⁴

117 26 U.S.C. §7701(a)(31)(A)

“The term “foreign estate” means an estate the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A.”26 U.S.C. §7701(a)(31)(A) (foreign estate)

104 Instructions for Form 3520, Who Must File

Money from a foreign trust goes on Part III, not Part IV, even if it is a gift for income tax purposes.^118,92 Money passed to you by someone who received it from the trust can go on Part III too, where it was part of a plan to avoid U.S. tax: the regulation presumes that plan where you are related to, or otherwise close to, a grantor of the trust and receive the money within two years before or after the intermediary's receipt, unless you show otherwise, and it does not apply where the intermediary is the grantor or your year's total from foreign trusts is $10,000 or less.^119,120,121 A gift paid by a foreign company can be taxed as a distribution from it instead,¹²² and so can a payment from a trust a foreign company funded.¹²³ A distribution from a domestic trust treated as owned by a foreign person goes on Part IV, as a gift from that person, counted toward the $100,000 threshold above.^124,104 If a foreign trust, a plan read as one included, pays the estate of someone who has died, and the estate is a U.S. person, which it is unless it is a foreign estate,¹²⁵ the executor reports the payment on Part III for the estate, as any U.S. person reports a distribution.¹²⁶ Rev. Proc. 2020-17 and the proposed exemption cover an eligible individual's transactions, and an estate is not an individual, so on our reading they do not reach it.^127,128

118 Instructions for Form 3520, Part IV

“If a foreign trust makes a distribution to a U.S. person, the U.S. person must report the amount as a distribution in Part III, rather than as a gift in Part IV.”Instructions for Form 3520 (Rev. December 2025), Part IV

92 Instructions for Form 3520, Part III

119 26 U.S.C. §643(h)

“any amount paid to a United States person which is derived directly or indirectly from a foreign trust of which the payor is not the grantor shall be deemed in the year of payment to have been directly paid by the foreign trust to such United States person”26 U.S.C. §643(h), which applies "for purposes of this part", the rules on how trusts and their beneficiaries are taxed

120 Treas. Reg. §1.643(h)-1

“if the intermediary received the property from the foreign trust pursuant to a plan one of the principal purposes of which was the avoidance of United States tax ... Is related (within the meaning of paragraph (e) of this section) to a grantor of the foreign trust, or has another relationship with a grantor of the foreign trust that establishes a reasonable basis for concluding that the grantor of the foreign trust would make a gratuitous transfer ... within the period beginning twenty-four months before and ending twenty-four months after the intermediary's receipt of property from the foreign trust ... Paragraph (a) of this section does not apply if the intermediary is the grantor of the portion of the trust from which the property that is transferred is derived. ... This section does not apply if, during the taxable year of the United States person, the aggregate fair market value of all property transferred to such person from all foreign trusts either directly or through one or more intermediaries does not exceed $10,000.”Treas. Reg. §1.643(h)-1(a)(1), (a)(2), (b)(2) and (d): distributions through intermediaries

121 Instructions for Form 3520 (Rev. December 2025), line 56

“If the ultimate donor is a foreign trust, treat the amount received as a distribution from a foreign trust and complete Part III.”Instructions for Form 3520 (Rev. December 2025), Part IV, line 56: a donor acting as a nominee or intermediary

122 Treas. Reg. §1.672(f)-4(a)(2)

“if a United States donee directly or indirectly receives a purported gift or bequest (as defined in paragraph (d) of this section) from any foreign corporation, the purported gift or bequest must be included in the United States donee's gross income as if it were a distribution from the foreign corporation”Treas. Reg. §1.672(f)-4(a)(2): purported gifts from foreign corporations

123 Treas. Reg. §1.672(f)-4(c)(1)

“from a trust (or portion of a trust) to which a partnership or foreign corporation has made a gratuitous transfer, the United States donee must treat the transfer as a purported gift or bequest from the partnership or foreign corporation”Treas. Reg. §1.672(f)-4(c)(1): transfers from a trust a partnership or foreign corporation has funded

124 Instructions for Form 3520, Part IV

“a U.S. person should report the receipt of a distribution from a domestic trust that is treated as owned by a foreign person as a gift from a foreign person in Part IV, rather than as a distribution to a U.S. person in Part III”Instructions for Form 3520 (Rev. December 2025), Part IV

104 Instructions for Form 3520, Who Must File

125 26 U.S.C. §7701(a)(30)(D)

“any estate (other than a foreign estate, within the meaning of paragraph (31))”26 U.S.C. §7701(a)(30)(D): an estate is a United States person unless it is a foreign estate

126 Instructions for Form 3520 (Rev. December 2025), Who Must File

“an executor of the estate of a U.S. person who received, directly or indirectly, a distribution from a foreign trust during the current tax year”Instructions for Form 3520 (Rev. December 2025), Who Must File, item 3: an estate that receives a distribution

127 Rev. Proc. 2020-17, §3

“exempting from section 6048 information reporting an eligible individual's transactions with, or ownership of, an applicable tax-favored foreign trust”Rev. Proc. 2020-17, §3: what the exemption covers

128 Prop. Treas. Reg. §1.6048-5(b)(1), (b)(4), 89 Fed. Reg. 39,480

“do not apply to any eligible individual's transactions with, or ownership of, a tax-favored foreign retirement trust as defined under paragraph (b)(2) of this section or a taxfavored foreign non-retirement savings trust as defined under paragraph (b)(3) of this section”Prop. Treas. Reg. §1.6048-5(b)(1), (b)(4), 89 Fed. Reg. 39,480 (May 8, 2024): paragraph (b)(4) defines a de minimis savings trust (value $50,000 or less), and the preamble says it is exempt, but paragraph (b)(1), which grants the exemption, names only paragraphs (b)(2) and (b)(3)

Penalties and practical notes

A Form 3520 that is late, incomplete, or wrong is penalized at the greater of $10,000 or 35% of the amount involved: the value transferred, for a transfer missing from Part I, or the distributions received, for a distribution missing from Part III.^129,130 When a trust's Form 3520-A is late or incomplete, the U.S. owner owes the greater of $10,000 or 5% of the trust assets the owner is treated as owning at the end of the year.¹³¹ If a failure continues more than 90 days after the IRS mails a notice, $10,000 more is charged for each 30 days. In all, once the IRS can tell the amount involved, the penalties for one failure are cut to that amount and any excess is refunded, so a $7,000 distribution left off Part III costs no more than $7,000.^132,133,134 No penalty applies to a failure due to reasonable cause and not willful neglect, and a foreign law that forbids disclosing the information is not reasonable cause.¹³⁵ The Form 3520 instructions add that reluctance by a foreign trustee or other fiduciary to give information, or a trust term that prevents its disclosure, is not reasonable cause either.¹³⁶ A late or incomplete Part I, II, or III, or Form 3520-A, also keeps the IRS's time to assess the related tax open until 3 years after the information is filed: for the whole income tax return, or, if the failure had reasonable cause, only the items it relates to.¹³⁷ Separately, if you underpay income tax because of a transaction involving an asset you had to report for that year under section 6048, on Form 3520 or 3520-A, and did not, the accuracy-related penalty on that part of the underpayment is 40%, not 20%, and it applies on that ground alone.^138,139,140

129 26 U.S.C. §6677(a)

“the greater of $10,000 or 35 percent of the gross reportable amount”26 U.S.C. §6677(a)

130 26 U.S.C. §6677(c)(1), (3)

“the gross value of the property involved in the event ... the gross amount of the distributions”26 U.S.C. §6677(c)(1), (3) (gross reportable amount)

131 Instructions for Form 3520-A, Penalties

“The U.S. owner is subject to an initial penalty equal to the greater of $10,000 or 5% of the gross value ... of the portion of the trust's assets treated as owned by the U.S. person at the close of that tax year”Instructions for Form 3520-A (Rev. December 2025), Penalties; 26 U.S.C. §6677(b)

132 26 U.S.C. §6677(a)

“$10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. At such time as the gross reportable amount with respect to any failure can be determined by the Secretary, any subsequent penalty imposed under this subsection with respect to such failure shall be reduced as necessary to assure that the aggregate amount of such penalties do not exceed the gross reportable amount (and to the extent that such aggregate amount already exceeds the gross reportable amount the Secretary shall refund such excess to the taxpayer).”26 U.S.C. §6677(a)

133 26 U.S.C. §6677(b)(2)

“subsection (a) shall be applied by substituting “5 percent” for “35 percent””26 U.S.C. §6677(b)(2): for Form 3520-A, subsection (a), its limit included, applies at 5%

134 IRM 20.1.9.13.4, Penalty Computation

“In cases where the gross reportable amount is less than $10,000 the initial penalty is equal to the gross reportable amount.”IRM 20.1.9.13.4 (01-29-2021), Penalty Computation

135 26 U.S.C. §6677(d)

“No penalty shall be imposed by this section on any failure which is shown to be due to reasonable cause and not due to willful neglect. The fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the required information is not reasonable cause.”26 U.S.C. §6677(d)

136 Instructions for Form 3520 (Rev. December 2025), Penalties

“Similarly, reluctance on the part of a foreign fiduciary or provisions in the trust instrument that prevent the disclosure of required information is not reasonable cause.”Instructions for Form 3520 (Rev. December 2025), Penalties: the IRS's position, beyond the words of §6677(d)

137 26 U.S.C. §6501(c)(8)(A)-(B)

“the time for assessment of any tax imposed by this title with respect to any tax return, event, or period to which such information relates shall not expire before the date which is 3 years after the date on which the Secretary is furnished the information required to be reported under such section”26 U.S.C. §6501(c)(8)(A)-(B): if the failure was due to reasonable cause and not willful neglect, the rule applies only to the items related to it

138 26 U.S.C. §6662(b)(7)

“Any undisclosed foreign financial asset understatement.”26 U.S.C. §6662(b)(7): a ground of its own for the accuracy-related penalty

139 26 U.S.C. §6662(j)(2)-(3)

“any asset with respect to which information was required to be provided under section 6038, 6038B, 6038D, 6046A, or 6048 for such taxable year but was not provided by the taxpayer as required under the provisions of those sections ... subsection (a) shall be applied with respect to such portion by substituting "40 percent" for "20 percent"”26 U.S.C. §6662(j)(2)-(3)

140 Instructions for Form 3520 (Rev. December 2025), Penalties

“such penalty may be increased to 40% under section 6662(j) for any portion of an underpayment that is attributable to any transaction involving any asset with respect to which information was required to be provided on Form 3520-A”Instructions for Form 3520 (Rev. December 2025), Penalties, Section 6662(j): the instructions speak only of a U.S. owner and Form 3520-A, while the statute reaches any section 6048 information

The first question for anyone in American Samoa is whether they are a U.S. person: a U.S. national who is not a citizen, has no green card and does not meet the substantial presence test is a nonresident alien and has no Form 3520 to file for their own trusts and plans, while a citizen or resident does.^40,51 American Samoa has its own tax system,¹⁴¹ and a resident may have to file a U.S. income tax return as well as American Samoa's,¹⁵ but Form 3520 has its own due date, not tied to the income tax return's: the 15th day of the 4th month after your tax year ends, or the 15th day of the 10th month with an extension of your income tax return.^142,143 A citizen or resident who lives, and has a place of business, outside the United States and Puerto Rico can have until June 15, with a statement attached, and a resident of American Samoa appears to qualify, because the United States in a geographical sense is only the States and the District of Columbia.^144,20 Form 3520 goes to the IRS at Ogden, Utah, not to the American Samoa Government Tax Office.¹⁴⁵

40 26 U.S.C. §7701(b)(1)(B)

51 26 U.S.C. §7701(a)(30)(A)

“a citizen or resident of the United States”26 U.S.C. §7701(a)(30)(A) (a United States person)

141 IRS Publication 570 (2025)

“American Samoa has its own separate and independent tax system.”IRS Publication 570 (2025), American Samoa

15 JCT, JCX-132-15

142 Instructions for Form 3520 (Rev. December 2025)

“This may differ from and is not tied to the due date of the U.S. person's income tax return.”Instructions for Form 3520 (Rev. December 2025), When and Where To File: the 15th day of the 4th month after the tax year

143 Instructions for Form 3520 (Rev. December 2025)

“and are granted an extension of time to file your income tax return, the due date for filing Form 3520 is no later than the 15th day of the 10th month (October 15)”Instructions for Form 3520 (Rev. December 2025), When and Where To File

144 Instructions for Form 3520 (Rev. December 2025)

“You live outside of the United States and Puerto Rico and your place of business or post of duty is outside the United States and Puerto Rico.”Instructions for Form 3520 (Rev. December 2025), When and Where To File: June 15, with a statement attached

20 26 U.S.C. §7701(a)(9)

“The term “United States” when used in a geographical sense includes only the States and the District of Columbia.”26 U.S.C. §7701(a)(9)

145 Instructions for Form 3520 (Rev. December 2025)

“Internal Revenue Service Center P.O. Box 409101 Ogden, UT 84409”Instructions for Form 3520 (Rev. December 2025), When and Where To File

A trust's U.S. tax year is the calendar year.¹⁴⁶ Amounts in American Samoa are in U.S. dollars, so they need no converting for Form 3520-A, which must be in English and in U.S. currency.¹⁴⁷ For an account you own, the figures for a substitute Form 3520-A are its value and income from its statements; the substitute is attached to your Form 3520 and due on the same date.^78,148

146 26 U.S.C. §644(a)

“the taxable year of any trust shall be the calendar year”26 U.S.C. §644(a)

147 Instructions for Form 3520-A (Rev. December 2025)

“All information provided must be in English. All amounts reported must be in U.S. currency.”Instructions for Form 3520-A (Rev. December 2025), General Instructions, Note: English, and U.S. currency

78 Instructions for Form 3520-A, When To File

“If the foreign trust fails to file Form 3520-A, the U.S. owner must file a substitute Form 3520-A”Instructions for Form 3520-A (Rev. December 2025), When To File

148 Instructions for Form 3520, When and Where To File

“If you are the U.S. owner of a foreign trust, the due date for filing a substitute Form 3520-A is the due date of your Form 3520.”Instructions for Form 3520 (Rev. December 2025), When and Where To File

An account in American Samoa is not an account in a foreign country for the FBAR, because FinCEN's rules count the territories as part of the United States.^149,29 Form 8938 is different: it counts an account at a financial institution organized in a territory as a foreign asset, but a bona fide resident of the territory leaves accounts at its own institutions off.^24,30

149 31 C.F.R. §1010.350(a)

“a bank, securities, or other financial account in a foreign country”31 C.F.R. §1010.350(a) (FBAR: accounts in a foreign country)

29 31 C.F.R. §1010.100(hhh)

“the Territories and Insular Possessions of the United States”31 C.F.R. §1010.100(hhh) (the United States, for FinCEN's rules, the FBAR included)

24 Treas. Reg. §1.6038D-3(a)(2)

30 Treas. Reg. §1.6038D-7(c)

All notes (149)

GAO-24-105862 (2024): the public pension plans of the other four territories, the American Samoa Government Employees' Retirement Fund among them“The plans are the public pension plans for the other four U.S. territories (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and Puerto Rico)”
Treas. Reg. §301.7701-4(a)“an arrangement created either by a will or by an inter vivos declaration whereby trustees take title to property for the purpose of protecting or conserving it for the beneficiaries”
Treas. Reg. §301.7701-7(a)(1)-(2): a trust is domestic only if it meets both the court test and the control test“The term foreign trust means any trust other than a domestic trust.”
Treas. Reg. §301.7701-7(c)(3)(ii)“a court within a territory or possession of the United States or within a foreign country is not a court within the United States”
26 U.S.C. §404(a)(4)“If a stock bonus, pension, or profit-sharing trust would qualify for exemption under section 501(a) except for the fact that it is a trust created or organized outside the United States”
26 U.S.C. §402(b)(1)“Contributions to an employees' trust made by an employer ... shall be included in the gross income of the employee in accordance with section 83”
26 U.S.C. §402(d)“which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or organized outside the United States shall be treated as if it were a trust exempt from tax under section 501(a)”
Treas. Reg. §1.402(b)-1(b)(6), which makes the employee owner only if the grantor trust rules (subpart E) are also satisfied“contributions made by an employee are not incidental when compared to contributions made by the employer if the employee's total contributions as of any date exceed the employer's total contributions on behalf of the employee as of such date”
Treas. Reg. §1.402(b)-1(a)(2): where the employer's contributions for an employee are not known, an amount worked out by a formula or by recognized actuarial principles“is not determinable or for any other reason is not known”
26 U.S.C. §931(a), (c): bona fide residents of Guam, American Samoa, and the Northern Mariana Islands leave income from there out of U.S. gross income“In the case of an individual who is a bona fide resident of a specified possession during the entire taxable year, gross income shall not include”
Prop. Treas. Reg. §1.6048-5(e), 89 Fed. Reg. 39,481 (May 8, 2024): for a trust located in a mirror code possession, to the extent the person is a bona fide resident of it (§1.937-1(b))“Sections 6048(a) through 6048(c) do not apply to a trust located in a mirror code possession to the extent the responsible party”
Prop. Treas. Reg. §1.6048-5(e) (mirror code possession)“a mirror code possession is a possession of the United States where, under the income tax system of the possession, the income tax liability of the residents of the possession is determined by reference to the income tax laws of the United States as if the possession were the United States”
A.S.C.A. §11.0403(a)-(b) (the Samoan Income Tax Act)“The income tax and the income tax rules in force in the United States of America in effect on December 31, 2000, where not clearly inapplicable or incompatible with the intent of this section, are adopted by American Samoa, and shall be deemed to impose a separate Territorial income tax”
IRM 4.71.21.3 (02-16-2024), Key Definitions: Mirror Code System of Taxation“The territories that use a Mirror Code System of Taxation are the USVI, Guam and CNMI.”
Joint Committee on Taxation, JCX-132-15 (Sept. 28, 2015): American Samoa and Puerto Rico“are non-mirror Code possessions. These two territories have their own internal tax laws, and a resident of American Samoa or Puerto Rico may be required to file an income tax return with both the territory of residence and the United States.”
Rev. Proc. 2020-17, §5.02 (eligible individual)“is compliant (or comes into compliance) with all requirements for filing a U.S. federal income tax return ... and to the extent required under U.S. tax law, has reported as income any contributions to, earnings of, or distributions from, an applicable tax-favored foreign trust”
Rev. Proc. 2020-17, §5.03 (and §5.04, in the same words)“a foreign trust for U.S. tax purposes that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust's jurisdiction)”
Rev. Proc. 2020-17, §5.03“to operate exclusively or almost exclusively to provide, or to earn income for the provision of, pension or retirement benefits and ancillary or incidental benefits”
26 U.S.C. §7701(a)(4)-(5): a corporation or partnership is foreign unless created or organized in the United States or under the law of the United States or of any State“means created or organized in the United States or under the law of the United States or of any State”
26 U.S.C. §7701(a)(9)“The term “United States” when used in a geographical sense includes only the States and the District of Columbia.”
Joint Committee on Taxation, JCX-132-15 (Sept. 28, 2015)“Entities organized in U.S. possessions are generally treated as foreign persons.”
IRM 4.71.21.4 (07-15-2019), Introduction to Retirement Plans Maintained in U.S. Territories (the IRS's examination procedures, not a ruling)“are generally treated as foreign for U.S. tax purposes, unless otherwise specified in the Code or related statutes”
Rev. Proc. 2020-17, §3 (why the exemption is given)“may be required under section 6038D to separately report information about their interests in accounts held by, or through, these trusts”
Treas. Reg. §1.6038D-3(a)(2) (Form 8938)“A specified foreign financial asset includes a financial account maintained by a financial institution that is organized under the laws of a U.S. possession.”
Rev. Proc. 2020-17, §3 (why the exemption is given)“which are imposed under the laws of the country in which the trust is established”
Preamble to the proposed regulations, 89 Fed. Reg. 39,454 (May 8, 2024), on proposed §1.6048-5(b)“under the laws of the country in which they are established”
26 U.S.C. §901(b)(1) (taxes paid to foreign countries and to possessions, named separately)“to any foreign country or to any possession of the United States”
Treas. Reg. §1.911-2(g)-(h): for §911 the United States includes the possessions, and a foreign country is territory under another government“The term “foreign country” when used in a geographical sense includes any territory under the sovereignty of a government other than that of the United States.”
31 C.F.R. §1010.100(hhh) (the United States, for FinCEN's rules, the FBAR included)“the Territories and Insular Possessions of the United States”
Treas. Reg. §1.6038D-7(c)(1)-(4): a bona fide resident of a possession leaves off Form 8938 accounts at, and interests in, entities organized in that possession“A financial account maintained by a financial institution organized under the laws of the U.S. possession of which the specified individual is a bona fide resident”
Prop. Treas. Reg. §1.6048-5(b)(2) (and (b)(3)-(4), in the same words)“means a foreign trust that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust's jurisdiction)”
Joint Committee on Taxation, Federal Tax Law and Issues Related to the Commonwealth of Puerto Rico (JCX-132-15), Sept. 28, 2015“Federal tax rules apply to the territories in a manner that is different from their application in relation to both the States and foreign countries.”
IRM 4.71.21.4 (07-15-2019), Tax Coordination Agreements and Mutual Agreement Procedures“Tax Coordination Agreements allow the U.S. Competent Authorities and the relevant territory to resolve, by mutual agreement, inconsistent tax treatment between the two jurisdictions.”
26 U.S.C. §6048(a)(3)(B)(ii)“Subparagraph (A) shall not apply with respect to a trust which is ... described in section 402(b), 404(a)(4), or 404A”
26 U.S.C. §6048(b) (U.S. owner of a foreign trust: Form 3520 Part II and Form 3520-A)
26 U.S.C. §6048(c)(1) (distributions, Form 3520 Part III)“If any United States person receives (directly or indirectly) during any taxable year of such person any distribution from a foreign trust, such person shall make a return”
Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing“Distributions from foreign trusts that are taxable as compensation for services rendered (within the meaning of section 672(f)(2)(B) and its regulations), so long as the recipient reports the distribution as compensation income on its applicable federal income tax return.”
Treas. Reg. §1.672(f)-3(c)(1)(i): compensatory trusts“A nonexempt employees' trust described in section 402(b)”
Rev. Rul. 2007-48 (amplifying Rev. Rul. 74-299), on a nonexempt employees' trust“The taxation of the distributions is not governed by the provisions of § 662.”
26 U.S.C. §7701(b)(1)(B); a resident is a green card holder or someone who meets the substantial presence test (§7701(b)(1)(A))“An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States”
8 U.S.C. §1408(1)“the following shall be nationals, but not citizens, of the United States at birth: (1) A person born in an outlying possession of the United States on or after the date of formal acquisition of such possession”
IRS Publication 519 (2025): U.S. nationals who are not citizens file as nonresident aliens“Only nonresident aliens who are U.S. nationals; residents of Canada, Mexico, or South Korea; or students and business apprentices from India who qualify for benefits under Article 21(2) of the income tax treaty with India can claim the CTC.”
Rev. Proc. 2020-17, §3“This revenue procedure does not affect any reporting obligations under section 6038D or under any other provision of U.S. law, including the requirement to file FinCEN Form 114”
Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing and Additional Reporting“The exemptions from foreign trust information reporting described in Rev. Proc. 2014-55, Rev. Proc. 2020-17, and the proposed regulations under section 6048 do not affect any other reporting obligations.”
Treas. Reg. §1.402(b)-1(a)(1)“but only to the extent that the employee's interest in such contribution is substantially vested at the time the contribution is made”
26 U.S.C. §402(b)(3)“A beneficiary of any trust described in paragraph (1) shall not be considered the owner of any portion of such trust under subpart E”
26 U.S.C. §679(a)(1)“A United States person who directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)) shall be treated as the owner ... if for such year there is a United States beneficiary of any portion of such trust”
Treas. Reg. §1.679-4(a)(2): §679 does not apply to“Any transfer of property to a foreign trust described in sections 402(b), 404(a)(4), or 404A”
26 U.S.C. §6048(a)(3)(A)(ii) (reportable events, Form 3520 Part I)“the transfer of any money or property (directly or indirectly) to a foreign trust by a United States person”
Treas. Reg. §301.7701-4(b)“generally are created by the beneficiaries simply as a device to carry on a profit-making business”
26 U.S.C. §7701(a)(30)(A) (a United States person)“a citizen or resident of the United States”
26 U.S.C. §679(a)(4)(A)“If a nonresident alien individual has a residency starting date within 5 years after directly or indirectly transferring property to a foreign trust, this section and section 6048 shall be applied as if such individual transferred to such trust on the residency starting date”
26 U.S.C. §672(f)(1)-(2)(A): a foreign person is treated as owner only of a trust they can revoke alone or with the consent of a related or subordinate party subservient to them, or one that can pay only them or their spouse during their life“this subpart shall apply only to the extent such application results in an amount (if any) being currently taken into account ... in computing the income of a citizen or resident of the United States or a domestic corporation”
26 U.S.C. §677(a)(2): the grantor is treated as owner of a portion whose income may be held for the grantor“held or accumulated for future distribution to the grantor or the grantor's spouse”
26 U.S.C. §671“Any remaining portion of the trust shall be subject to subparts A through D.”
8 U.S.C. §1101(a)(29)“The term “outlying possessions of the United States” means American Samoa and Swains Island.”
Treas. Reg. §301.7701(b)-1(c)(2)(ii): for the residence tests, the United States is the States and the District of Columbia“It does not include the possessions and territories of the United States”
26 U.S.C. §679(c)(4)“if any person has the discretion (by authority given in the trust agreement, by power of appointment, or otherwise) of making a distribution from the trust to, or for the benefit of, any person, such trust shall be treated as having a beneficiary who is a United States person unless ... the terms of the trust specifically identify the class of persons to whom such distributions may be made, and ... none of those persons are United States persons during the taxable year.”
Treas. Reg. §1.679-2(a)(2)(iii), Example 10: a trustee's discretion to benefit anyone studying ancient Greek“Because it is possible that a U.S. person will receive distributions of income or corpus, or will have income accumulated for his benefit, FT is treated as having a U.S. beneficiary. This result applies even if, during a tax year, no distributions or accumulations are actually made to or for the benefit of a U.S. person.”
Treas. Reg. §1.679-2(a)(4)(i)(A)-(B), (a)(4)(ii)(A) and (a)(4)(iii), Example 2: understandings, amendment powers and letters of wishes“All written and oral agreements and understandings relating to the trust; ... Memoranda or letters of wishes; ... If the terms of the trust instrument allow the trust to be amended to benefit a U.S. person, all potential benefits that could be provided to a U.S. person pursuant to an amendment must be taken into account ... a letter of wishes directs the trustee of FT to provide for the educational needs of B, who is about to begin college. The letter of wishes contains a disclaimer to the effect that its contents are only suggestions and recommendations ... FT is treated as having a U.S. beneficiary.”
26 U.S.C. §679(d): presumption that a foreign trust has a United States beneficiary“the Secretary may treat such trust as having a United States beneficiary for purposes of applying this section to such transfer unless such person ... demonstrates to the satisfaction of the Secretary that such trust satisfies the requirements of subparagraphs (A) and (B) of subsection (c)(1)”
26 U.S.C. §679(c)(3)“A beneficiary shall not be treated as a United States person in applying this section with respect to any transfer of property to foreign trust if such beneficiary first became a United States person more than 5 years after the date of such transfer.”
26 U.S.C. §679(b): a trust that acquires a U.S. beneficiary“the transferor shall be treated as having income for the taxable year (in addition to his other income for such year) equal to the undistributed net income (at the close of such immediately preceding taxable year) attributable to the portion of the trust referred to in subsection (a)”
Treas. Reg. §1.679-2(c)(1) and (c)(3), Example 1: a trust acquiring a U.S. beneficiary“The amount of the additional income is equal to the trust's undistributed net income, as defined in section 665(a), at the end of the U.S. transferor's immediately preceding taxable year and is subject to the rules of section 668, providing for an interest charge on accumulation distributions from foreign trusts. ... A is treated as receiving an accumulation distribution”
Treas. Reg. §1.672(f)-3(a)(1)“the power to revest absolutely in the grantor title to such portion is exercisable solely by the grantor ... without the approval or consent of any other person. If the grantor can exercise such power only with the approval of a related or subordinate party who is subservient to the grantor, such power is treated as exercisable solely by the grantor.”
Treas. Reg. §1.672(f)-3(a)(2)“the grantor is treated as having a power to revest for a taxable year of the trust only if the grantor has such power for a total of 183 or more days during the taxable year of the trust”
Treas. Reg. §1.672(f)-3(a)(1), last sentence“A trust (or portion of a trust) that fails to qualify for the exception provided by this paragraph (a) for a particular taxable year of the trust will be subject to the general rule of § 1.672(f)-1 for that taxable year and all subsequent taxable years of the trust.”
Treas. Reg. §1.672(f)-3(a)(3), with (b)(3) for §677 and (d) for later gifts: trusts in existence on September 19, 1995“the general rule of § 1.672(f)-1 does not apply to any portion of a trust that was treated as owned by the grantor under section 676 on September 19, 1995, as long as the trust would continue to be so treated thereafter ... treated as owned by the grantor under section 677 (other than section 677(a)(3)) on September 19, 1995, as long as the trust would continue to be so treated thereafter. However, the preceding sentence does not apply to any portion of the trust attributable to gratuitous transfers to the trust after September 19, 1995.”
26 U.S.C. §676(a)“The grantor shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under any other provision of this part, where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a non-adverse party, or both.”
26 U.S.C. §678(a)(1): a person other than the grantor is treated as owner of a portion of a trust they alone can take“such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself”
Treas. Reg. §1.672(f)-3(a)(4) and (b)(4), Examples 2: a foreign grantor's death“the exception in paragraph (a)(1) of this section is no longer applicable, because FP2 is not a grantor of T within the meaning of § 1.671-2(e). ... The exception in paragraph (b)(1) of this section is no longer applicable, because W is not a grantor of FT within the meaning of § 1.671-2(e).”
Treas. Reg. §1.684-2(e)(1): a portion that stops being owned by a U.S. person, for the gain rule“the U.S. person shall be treated as having transferred, immediately before (but on the same date that) the trust is no longer treated as owned by that U.S. person, the assets of such portion to a foreign trust”
Treas. Reg. §1.684-3(c)(1): transfers at death“The general rule of gain recognition under § 1.684-1 shall not apply to any transfer of property to a foreign trust or foreign estate ... by reason of death of the U.S. transferor, if the basis of the property in the hands of the transferee is determined under section 1014(a).”
Treas. Reg. §1.684-3(g), Examples 2 and 3: a U.S. owner's death, with and without a power to revoke“A retained the power to revoke FT, thus, the value of all property owned by FT at A's death is includible in A's gross estate for U.S. estate tax purposes. Pursuant to paragraph (c) of this section, A is not required to recognize gain ... A retains no power over FT, and FT's basis in the property transferred is not determined under section 1014(a). Under § 1.684-2(e)(1), A is treated as having transferred the property to FT immediately before his death”
26 U.S.C. §684(a)“in the case of any transfer of property by a United States person to a foreign estate or trust, for purposes of this subtitle, such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of”
26 U.S.C. §684(b)“Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any person is treated as the owner of such trust under section 671.”
Instructions for Form 3520 (Rev. December 2025), Definitions, Reportable Event and Responsible Party“The transfer of any money or property, directly or indirectly, to a foreign trust by a U.S. person, including a transfer by reason of death. ... The death of a U.S. citizen or resident if: The decedent was treated as the owner of any portion of a foreign trust under the rules of sections 671 through 679, or Any portion of a foreign trust was included in the gross estate of the decedent. ... The executor of the decedent’s estate in any other case (whether or not the executor is a U.S. person).”
Instructions for Form 3520-A (Rev. December 2025), When To File“If the foreign trust fails to file Form 3520-A, the U.S. owner must file a substitute Form 3520-A”
26 U.S.C. §§665-668: an accumulation distribution from a trust that is not a grantor trust is taxed as if paid in the years the income was earned (§667), with an interest charge for a foreign trust (§668); figured on Form 4970
Preamble to the proposed regulations, 89 Fed. Reg. 39,455 (May 8, 2024), on proposed §1.6048-6(b): a transfer or distribution is reportable“whether or not there are any U.S. income tax consequences associated with the transfer or distribution”
Rev. Proc. 2020-17, §1“certain tax-favored foreign retirement trusts and certain tax-favored foreign nonretirement savings trusts, as described in sections 5.03 and 5.04”
Instructions for Form 3520 (Rev. December 2025), Definitions, Distribution“any gratuitous transfer of money or other property from a foreign trust, whether or not a portion of such trust is treated as a grantor trust under the grantor trust rules of sections 671 through 679, and without regard to whether the recipient is designated as a beneficiary by the terms of the trust ... if charges you make on a credit card are paid by a foreign trust or guaranteed or secured by the assets of a foreign trust, the amount charged will be treated as a distribution to you by the foreign trust. Similarly, if you write checks on a foreign trust's bank account, the amount will be treated as a distribution.”
Prop. Treas. Reg. §1.6048-4(b)(3), 89 Fed. Reg. 39,477 (May 8, 2024): transfers from an entity a foreign trust owns to a related person, who under Treas. Reg. §1.679-1(c)(5) is a grantor, owner or beneficiary of the trust or someone related to one“A distribution includes any transfer of property from an entity in which a foreign trust directly or indirectly holds an ownership interest that is received by a U.S. person who is a related person ... unless the U.S. person demonstrates to the satisfaction of the Commissioner that the distribution from the entity is properly attributable to the U.S. person's ownership interest in the entity”
Instructions for Form 3520 (Rev. December 2025), Exceptions To Filing (the regulations were still proposed when these instructions were issued, and the Federal Register shows no final rule as of October 20, 2026)“You may rely on these proposed regulations for any tax year ending after May 8, 2024, and beginning on or before the date that final regulations are published in the Federal Register, provided you and all related persons ... apply the proposed regulations in their entirety and in a consistent manner”
Instructions for Form 3520 (Rev. December 2025), Part III, line 25“the amount of such loan or the FMV of the use of trust property will be treated as a reportable distribution, whether or not taxable”
26 U.S.C. §643(i)(1)“if a foreign trust makes a loan of cash or marketable securities (or permits the use of any other trust property) directly or indirectly to or by ... the amount of such loan (or the fair market value of the use of such property) shall be treated as a distribution by such trust to such grantor or beneficiary (as the case may be)”
26 U.S.C. §643(i)(2)(E)“In the case of the use of any trust property other than a loan of cash or marketable securities, paragraph (1) shall not apply to the extent that the trust is paid the fair market value of such use within a reasonable period of time of such use.”
Instructions for Form 3520 (Rev. December 2025), Definitions, Qualified Obligation“The obligation is reduced to writing by an express written agreement; The term of the obligation does not exceed 5 years (including options to renew and rollovers); All payments on the obligation are denominated in U.S. dollars; The yield to maturity of the obligation is not less than 100% of the applicable federal rate ... The U.S. person agrees to extend the period for assessment ... The U.S. person reports the status of the obligation, including principal and interest payments”
Instructions for Form 3520 (Rev. December 2025), Part III, line 28: a loan given for a qualified obligation“If the obligation fails to retain the status of a qualified obligation, you will be treated as having received a taxable distribution under section 643(i) from the foreign trust.”
Instructions for Form 3520 (Rev. December 2025), Part III, line 25, Note: a foreign trust with a U.S. transferor“the loan or use of trust property will not be treated as a taxable distribution under section 643(i) but will remain reportable on Part III of this Form 3520”
Instructions for Form 3520 (Rev. December 2025), Part III, Reporting by U.S. owners receiving distributions from foreign grantor trust; Who Must File, item 3 ("a U.S. person (including a U.S. owner)" who received a distribution)“If a U.S. owner (defined later) of a foreign trust receives, directly or indirectly, a distribution from the foreign trust, the U.S. owner must only complete lines 24 and 27 in Part III.”
Instructions for Form 3520 (Rev. December 2025), Part III, line 29“If a U.S. beneficiary receives a complete Foreign Grantor Trust Beneficiary Statement with respect to a distribution during the tax year, the beneficiary should treat the distribution for income tax purposes as if it came directly from the owner. For example, if the distribution is a gift, the beneficiary should not include the distribution in gross income.”
Form 3520 (Rev. December 2023), Part III, line 29“Did you receive a Foreign Grantor Trust Beneficiary Statement from the foreign trust with respect to a distribution? ... If "No," complete Schedule A with respect to that distribution.”
Form 3520 (Rev. December 2023), Part III, line 30“If "Yes," attach the statement and complete either Schedule A or Schedule B below.”
Form 3520 (Rev. December 2023), Part III, Schedule A, lines 33 to 37“Enter total distributions received from the foreign trust during the 3 preceding tax years ... Multiply line 33 by 1.25 ... Amount treated as ordinary income earned in the current tax year. Enter the smaller of line 31 or line 35 ... Amount treated as accumulation distribution. Subtract line 36 from line 31.”
Form 3520 (Rev. December 2023), Part III, Schedule C, lines 49 and 52: the interest charge on an accumulation distribution“Enter tax on total accumulation distribution from line 28 of Form 4970. ... Interest charge. Multiply the amount on line 49 by the combined interest rate on line 51”
Instructions for Form 3520 (Rev. December 2025), Part III, Schedule A“Generally, if you complete Schedule A in the current year, or did so in prior years, you must continue to complete Schedule A for all future years ... The only exception to this consistency rule is that you may use Schedule B in the year that a trust terminates, but only if you are able to answer “Yes” to line 30 in the year of termination.”
Instructions for Form 3520 (Rev. December 2025), Part III, line 32“If this is the first year that the trust has been a foreign trust, do not complete the rest of Part III.”
26 U.S.C. §6048(c)(2)(A)“If adequate records are not provided to the Secretary to determine the proper treatment of any distribution from a foreign trust, such distribution shall be treated as an accumulation distribution includible in the gross income of the distributee”
Notice 97-34, 1997-25 I.R.B. 22, section V.B (Beneficiary Statements): the default treatment, which Form 3520's Schedule A now carries“it is expected that Form 3520 will allow the U.S. beneficiary to avoid treating the entire amount as an accumulation distribution if the U.S. beneficiary can provide certain information regarding actual distributions from the trust for the prior three years”
26 U.S.C. §643(a)(6)(C)“Paragraph (3) shall not apply to a foreign trust. In the case of such a trust, there shall be included gains from the sale or exchange of capital assets”
26 U.S.C. §665(b)“shall not include amounts properly paid, credited, or required to be distributed to a beneficiary from a trust (other than a foreign trust) as income accumulated before the birth of such beneficiary or before such beneficiary attains the age of 21”
Instructions for Form 3520 (Rev. December 2025), Additional Reporting and Tax Information“You may be required to file Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). In addition, you may be required to file Form 8938”
Instructions for Form 3520 (Rev. December 2025), Who Must File, item 4“More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests”
Instructions for Form 3520 (Rev. December 2025), Who Must File, item 4“foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships)”
Rev. Proc. 2024-40, §2.48 (taxable years beginning in 2025)“exceeds $20,116”
Rev. Proc. 2025-32, §4.47 (taxable years beginning in 2026)“exceeds $20,573”
26 U.S.C. §6039F(b)“Such term shall not include any qualified transfer (within the meaning of section 2503(e)(2))”
26 U.S.C. §2503(e)(2); Treas. Reg. §25.2503-6(b)(2) and (c), Examples (3)-(4): the payment goes straight to the school or the provider, and reimbursing you does not count“any amount paid on behalf of an individual ... as tuition to an educational organization ... for the education or training of such individual, or ... to any person who provides medical care ... with respect to such individual as payment for such medical care”
Prop. Treas. Reg. §1.6039F-1(c)(2)(i)(A) and (v), 89 Fed. Reg. 39,471 (May 8, 2024): the adjustment runs from 1995, as section 6039F(d)'s does for the $10,000 that is $20,116 for 2025 and $20,573 for 2026, so the figures here are ten times those“are increased by an amount equal to the product of the amounts specified in such paragraphs and the cost-of-living adjustment for the taxable year of the gift under section 1(f)(3)”
Prop. Treas. Reg. §1.6039F-1(c)(2)(ii) and (h)(2), for covered gifts received from the day the final section 2801 regulations were published, January 14, 2025 (90 Fed. Reg. 3,376); the section 2503(b) amount is $19,000 for 2025 and 2026 (Rev. Proc. 2024-40, §3.43(1); Rev. Proc. 2025-32, §4.42(1) and (3))“if the aggregate amount of covered gifts and bequests received by the U.S. person during the calendar year does not exceed the section 2801(c) amount, which is the dollar amount of the per-donee exclusion in effect under section 2503(b)”
26 U.S.C. §6039F(c)(1)(B)“an amount equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of such amount in the aggregate)”
IRM 21.8.2.19.2 (05-01-2026), on answering inquiries; the penalty itself is unchanged in §6039F(c), and the examiners' penalty section, IRM 20.1.9.10, still covers it“IRS is no longer assessing penalties at filing on late Forms 3520 reporting foreign gifts and bequests in Part IV.”
Instructions for Form 1040-NR (2025), U.S. national“U.S. nationals include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.”
26 U.S.C. §2501(c) (gift tax)“but only if such donor acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States”
26 U.S.C. §2209 (estate tax)“be considered a “nonresident not a citizen of the United States” within the meaning of that term wherever used in this title, but only if such person acquired his United States citizenship solely by reason of”
26 U.S.C. §7701(a)(31)(A) (foreign estate)“The term “foreign estate” means an estate the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A.”
Instructions for Form 3520 (Rev. December 2025), Part IV“If a foreign trust makes a distribution to a U.S. person, the U.S. person must report the amount as a distribution in Part III, rather than as a gift in Part IV.”
26 U.S.C. §643(h), which applies "for purposes of this part", the rules on how trusts and their beneficiaries are taxed“any amount paid to a United States person which is derived directly or indirectly from a foreign trust of which the payor is not the grantor shall be deemed in the year of payment to have been directly paid by the foreign trust to such United States person”
Treas. Reg. §1.643(h)-1(a)(1), (a)(2), (b)(2) and (d): distributions through intermediaries“if the intermediary received the property from the foreign trust pursuant to a plan one of the principal purposes of which was the avoidance of United States tax ... Is related (within the meaning of paragraph (e) of this section) to a grantor of the foreign trust, or has another relationship with a grantor of the foreign trust that establishes a reasonable basis for concluding that the grantor of the foreign trust would make a gratuitous transfer ... within the period beginning twenty-four months before and ending twenty-four months after the intermediary's receipt of property from the foreign trust ... Paragraph (a) of this section does not apply if the intermediary is the grantor of the portion of the trust from which the property that is transferred is derived. ... This section does not apply if, during the taxable year of the United States person, the aggregate fair market value of all property transferred to such person from all foreign trusts either directly or through one or more intermediaries does not exceed $10,000.”
Instructions for Form 3520 (Rev. December 2025), Part IV, line 56: a donor acting as a nominee or intermediary“If the ultimate donor is a foreign trust, treat the amount received as a distribution from a foreign trust and complete Part III.”
Treas. Reg. §1.672(f)-4(a)(2): purported gifts from foreign corporations“if a United States donee directly or indirectly receives a purported gift or bequest (as defined in paragraph (d) of this section) from any foreign corporation, the purported gift or bequest must be included in the United States donee's gross income as if it were a distribution from the foreign corporation”
Treas. Reg. §1.672(f)-4(c)(1): transfers from a trust a partnership or foreign corporation has funded“from a trust (or portion of a trust) to which a partnership or foreign corporation has made a gratuitous transfer, the United States donee must treat the transfer as a purported gift or bequest from the partnership or foreign corporation”
Instructions for Form 3520 (Rev. December 2025), Part IV“a U.S. person should report the receipt of a distribution from a domestic trust that is treated as owned by a foreign person as a gift from a foreign person in Part IV, rather than as a distribution to a U.S. person in Part III”
26 U.S.C. §7701(a)(30)(D): an estate is a United States person unless it is a foreign estate“any estate (other than a foreign estate, within the meaning of paragraph (31))”
Instructions for Form 3520 (Rev. December 2025), Who Must File, item 3: an estate that receives a distribution“an executor of the estate of a U.S. person who received, directly or indirectly, a distribution from a foreign trust during the current tax year”
Rev. Proc. 2020-17, §3: what the exemption covers“exempting from section 6048 information reporting an eligible individual's transactions with, or ownership of, an applicable tax-favored foreign trust”
Prop. Treas. Reg. §1.6048-5(b)(1), (b)(4), 89 Fed. Reg. 39,480 (May 8, 2024): paragraph (b)(4) defines a de minimis savings trust (value $50,000 or less), and the preamble says it is exempt, but paragraph (b)(1), which grants the exemption, names only paragraphs (b)(2) and (b)(3)“do not apply to any eligible individual's transactions with, or ownership of, a tax-favored foreign retirement trust as defined under paragraph (b)(2) of this section or a taxfavored foreign non-retirement savings trust as defined under paragraph (b)(3) of this section”
26 U.S.C. §6677(a)“the greater of $10,000 or 35 percent of the gross reportable amount”
26 U.S.C. §6677(c)(1), (3) (gross reportable amount)“the gross value of the property involved in the event ... the gross amount of the distributions”
Instructions for Form 3520-A (Rev. December 2025), Penalties; 26 U.S.C. §6677(b)“The U.S. owner is subject to an initial penalty equal to the greater of $10,000 or 5% of the gross value ... of the portion of the trust's assets treated as owned by the U.S. person at the close of that tax year”
26 U.S.C. §6677(a)“$10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. At such time as the gross reportable amount with respect to any failure can be determined by the Secretary, any subsequent penalty imposed under this subsection with respect to such failure shall be reduced as necessary to assure that the aggregate amount of such penalties do not exceed the gross reportable amount (and to the extent that such aggregate amount already exceeds the gross reportable amount the Secretary shall refund such excess to the taxpayer).”
26 U.S.C. §6677(b)(2): for Form 3520-A, subsection (a), its limit included, applies at 5%“subsection (a) shall be applied by substituting “5 percent” for “35 percent””
IRM 20.1.9.13.4 (01-29-2021), Penalty Computation“In cases where the gross reportable amount is less than $10,000 the initial penalty is equal to the gross reportable amount.”
26 U.S.C. §6677(d)“No penalty shall be imposed by this section on any failure which is shown to be due to reasonable cause and not due to willful neglect. The fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the required information is not reasonable cause.”
Instructions for Form 3520 (Rev. December 2025), Penalties: the IRS's position, beyond the words of §6677(d)“Similarly, reluctance on the part of a foreign fiduciary or provisions in the trust instrument that prevent the disclosure of required information is not reasonable cause.”
26 U.S.C. §6501(c)(8)(A)-(B): if the failure was due to reasonable cause and not willful neglect, the rule applies only to the items related to it“the time for assessment of any tax imposed by this title with respect to any tax return, event, or period to which such information relates shall not expire before the date which is 3 years after the date on which the Secretary is furnished the information required to be reported under such section”
26 U.S.C. §6662(b)(7): a ground of its own for the accuracy-related penalty“Any undisclosed foreign financial asset understatement.”
26 U.S.C. §6662(j)(2)-(3)“any asset with respect to which information was required to be provided under section 6038, 6038B, 6038D, 6046A, or 6048 for such taxable year but was not provided by the taxpayer as required under the provisions of those sections ... subsection (a) shall be applied with respect to such portion by substituting "40 percent" for "20 percent"”
Instructions for Form 3520 (Rev. December 2025), Penalties, Section 6662(j): the instructions speak only of a U.S. owner and Form 3520-A, while the statute reaches any section 6048 information“such penalty may be increased to 40% under section 6662(j) for any portion of an underpayment that is attributable to any transaction involving any asset with respect to which information was required to be provided on Form 3520-A”
IRS Publication 570 (2025), American Samoa“American Samoa has its own separate and independent tax system.”
Instructions for Form 3520 (Rev. December 2025), When and Where To File: the 15th day of the 4th month after the tax year“This may differ from and is not tied to the due date of the U.S. person's income tax return.”
Instructions for Form 3520 (Rev. December 2025), When and Where To File“and are granted an extension of time to file your income tax return, the due date for filing Form 3520 is no later than the 15th day of the 10th month (October 15)”
Instructions for Form 3520 (Rev. December 2025), When and Where To File: June 15, with a statement attached“You live outside of the United States and Puerto Rico and your place of business or post of duty is outside the United States and Puerto Rico.”
Instructions for Form 3520 (Rev. December 2025), When and Where To File“Internal Revenue Service Center P.O. Box 409101 Ogden, UT 84409”
26 U.S.C. §644(a)“the taxable year of any trust shall be the calendar year”
Instructions for Form 3520-A (Rev. December 2025), General Instructions, Note: English, and U.S. currency“All information provided must be in English. All amounts reported must be in U.S. currency.”
Instructions for Form 3520 (Rev. December 2025), When and Where To File“If you are the U.S. owner of a foreign trust, the due date for filing a substitute Form 3520-A is the due date of your Form 3520.”
31 C.F.R. §1010.350(a) (FBAR: accounts in a foreign country)“a bank, securities, or other financial account in a foreign country”

References

IRC §6048 - Information reporting for foreign trusts: Form 3520 Parts I-III and Form 3520-A
IRC §6677 - Penalties for Forms 3520 and 3520-A
IRC §6039F - Reporting and penalty for large foreign gifts (Form 3520 Part IV)
IRC §402(b) - Employees' trusts that are not exempt under §501(a)
IRC §§671-679 - Grantor trust rules: who is treated as owner
Treas. Reg. §§301.7701-4 and 301.7701-7 - Whether an arrangement is a trust, and whether a trust is foreign
Treas. Reg. §1.402(b)-1 - Employer contributions, vesting, owner of employee contributions, and distributions
Rev. Proc. 2020-17 - Exemption for eligible individuals' tax-favored foreign retirement and savings trusts
Prop. Treas. Reg. §1.6048-5 (89 Fed. Reg. 39,440) - Proposed exemption with a value threshold; may be relied on as the Form 3520 instructions describe
Instructions for Form 3520 (Rev. December 2025) - Who must file, exceptions to filing, penalties
Instructions for Form 3520-A (Rev. December 2025) - The trust's return and the U.S. owner's substitute
A.S.C.A. §11.0403 (Samoan Income Tax Act) - The U.S. income tax as of December 31, 2000, adopted as a separate territorial income tax
IRC §931 - Bona fide residents of American Samoa leave income from there out of U.S. gross income
8 U.S.C. §§1101(a)(29) and 1408 - People born in American Samoa are U.S. nationals, not citizens
IRS Publication 519 (2025) and Instructions for Form 1040-NR (2025) - U.S. nationals who are not citizens file as nonresident aliens
Joint Committee on Taxation, JCX-132-15 - American Samoa and Puerto Rico are non-mirror Code possessions

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Last reviewed October 26, 2026