Delinquent International Information Returns: Filing and Penalties

To file delinquent international information returns, you attach the late forms to an amended income tax return (Form 1040-X) — Forms 3520 and 3520-A being the exceptions, which get filed separately under their own instructions — and include a signed reasonable cause statement for each form and each year explaining why it was late. This is the IRS Delinquent International Information Return Submission Procedures path. It is not an amnesty program: penalties can still be assessed during processing, and the reasonable cause statement is what stands between you and a penalty that starts at $10,000 per form.¹

Check Whether You Can Use These Procedures

Three conditions must all be true. You are not currently under a civil examination by the IRS. You are not under criminal investigation by the IRS. And the IRS has not already contacted you about the specific delinquent returns you plan to submit.¹ If any of those is off, this path is closed and you need to look at Streamlined Filing Compliance Procedures or talk with a tax attorney about voluntary disclosure.

A common misconception: that you must owe zero additional tax to use these procedures. That restriction belongs to the separate Delinquent FBAR Submission Procedures, where the IRS conditions penalty relief on the taxpayer having properly reported and paid all tax on the income from the foreign accounts.² The IRS page for delinquent international information returns does not impose an explicit “no tax due” condition. That said, if the missing forms reveal unreported income and a tax deficiency, Streamlined is usually the safer route.

How to File the Returns

The mechanics have changed from what older guides describe. You no longer mail a standalone packet to a specific service center with a notation written across each form. The current instruction is to file “through normal filing procedures,” which splits into two paths depending on the form.¹

For most international information returns — Forms 5471, 8865, 8938, 926, 8621, and similar — attach the completed form to an amended income tax return (Form 1040-X) and file according to the 1040-X instructions.
For Forms 3520 and 3520-A, file separately under those forms’ own instructions. Do not attach them to an amended return.

Attach a reasonable cause statement to each delinquent return. The IRS says taxpayers “may” attach one; skipping it is a gamble that rarely pays off when the baseline penalty is $10,000 per form, per year. Use certified mail with return receipt, or another delivery method that generates proof of mailing and delivery. If the return goes missing in processing, that receipt is your only evidence you filed at all.

Write a Reasonable Cause Statement That Can Carry the Weight

This statement is where your case lives or dies. It has to explain, in specific factual detail, why you failed to file each return on time. The IRS asks whether you exercised “ordinary business care and prudence” despite the failure. Generic claims — “I didn’t know about the requirement,” “my accountant didn’t tell me” — typically fail on their own, because the IRS takes the position that taxpayers involved in foreign transactions have a responsibility to research their own filing obligations.³

What the IRS specifically rejects as reasonable cause for international penalties:

Foreign secrecy laws. The fact that a foreign country would penalize you for disclosing the information is not reasonable cause.
Uncooperative foreign trustees. A foreign trustee’s refusal to provide information, for any reason, does not excuse the failure.
Reliance on someone else to file. Delegating the filing does not shift responsibility. The IRS holds you accountable for ensuring all returns are filed.

Stronger arguments involve specific, documented circumstances: a serious medical condition during the filing period, reliance on a credentialed tax professional who gave affirmatively wrong advice about the filing requirement (not just silence on it), or genuinely unusual circumstances that would have prevented a reasonably prudent person from complying. The statement must be signed under penalties of perjury, confirming that the information is true and that you are not using the procedures to facilitate tax evasion. Each form and each tax year needs its own statement addressing the specific facts for that period.³

What You’re Exposed To if You Don’t File

The penalty numbers vary by form, and knowing them helps frame how much your reasonable cause statement is worth.

Forms 5471 and 8865

Form 5471 is required for U.S. persons who are officers, directors, or shareholders in certain foreign corporations.⁴ Form 8865 applies to U.S. persons with interests in certain foreign partnerships.⁵ Both carry a $10,000 initial penalty for each failure to file. If the IRS mails a notice about the failure and you still don’t file within 90 days, an additional $10,000 penalty accrues for each 30-day period, up to a continuation cap of $50,000.⁶

Form 8938

Form 8938 reports specified foreign financial assets when their total value crosses thresholds that vary by filing status and whether you live in the U.S. or abroad. For unmarried filers in the U.S., the trigger is $50,000 on the last day of the tax year or $75,000 at any point during the year; thresholds are significantly higher for joint filers and for taxpayers living abroad.⁷ The penalty structure mirrors 5471 and 8865: $10,000 per failure, plus $10,000 for each 30-day period after a 90-day notice, up to $50,000 in additional penalty.⁸

Forms 3520 and 3520-A

Form 3520 is required when you receive gifts or bequests from a foreign person totaling more than $100,000 in a tax year, with gifts over $5,000 each identified individually.⁹ Form 3520 also reports transactions with foreign trusts, and Form 3520-A is the annual information return that a foreign trust with a U.S. owner must file.¹⁰

These are the steepest. For foreign trust reporting failures the penalty is the greater of $10,000 or 35% of the gross reportable amount. For Form 3520-A failures it is the greater of $10,000 or 5% of the gross reportable amount. Continuation penalties of $10,000 per 30-day period apply after a 90-day notice, and the aggregate penalty can reach the full gross reportable amount.¹¹ Some Canadian retirement plans and other tax-favored foreign trusts may be exempt from Form 3520-A filing under specific revenue procedures.¹⁰ Remember that these two forms are filed separately, not attached to a 1040-X.¹

Form 926

Form 926 reports transfers of property to a foreign corporation. The penalty is 10% of the fair market value of the transferred property, capped at $100,000 unless the failure was due to intentional disregard.¹²

Why Sitting on This Is Worse Than Filing Late

The statute of limitations catches most people off guard. Normally the IRS has three years from the date you file a return to assess additional tax. When a required international information return is missing, that clock never starts. The limitations period for assessing tax related to the unreported items stays open indefinitely until you actually furnish the required information; once you file, the IRS then gets three more years from that date.¹³

This rule reaches returns required under sections 6038, 6038A, 6038B, 6038D, 6046, 6046A, and 6048, which covers essentially all the forms above. If you never file, the IRS can pursue related tax liabilities from a decade ago or longer. A narrow exception: if the failure was due to reasonable cause and not willful neglect, the open statute applies only to items specifically related to the missing information rather than the entire return.¹³ Cold comfort, though, if the missing-return items are the ones with the largest tax impact.

What Happens After You File

The IRS does not send an acceptance letter and does not confirm that your reasonable cause statement was approved. Your returns enter the normal processing stream, and the agency has been explicit that penalties may be assessed during processing even if you attached a reasonable cause statement.¹ Your narrative may not be reviewed until after a penalty notice has already been generated, which means you might have to make the reasonable cause argument a second time in response to that notice.

If your returns are processed without any penalty notice or further correspondence, that generally indicates the IRS accepted the filing without issue. But silence is not a guarantee. Delinquent filings can still be selected for examination through normal audit channels.

If a Penalty Notice Arrives Anyway

A penalty notice does not end the matter. Respond to the notice with a written request for penalty abatement that lays out your reasonable cause explanation and attaches supporting documentation. If the abatement request is denied, you can request a conference with the IRS Independent Office of Appeals.¹⁴

To reach Appeals, all of the following must have happened: you received a letter assessing the penalty, you sent a written abatement request, the IRS denied it, and your denial letter includes your appeal rights. You generally have 30 days from the denial letter to file the appeal.¹⁴ Include a detailed factual explanation of why the failure was due to reasonable cause. If you’re appealing on the basis of timely filing, attach a copy of the certified mail receipt.

When a Different Procedure Fits Your Situation Better

Two boundaries are worth knowing before you commit to this path.

FBARs are not filed here. The Delinquent FBAR Submission Procedures apply to late FinCEN Form 114, which is filed electronically through FinCEN’s BSA E-Filing System rather than with the IRS, and the FBAR procedures offer explicit penalty relief when you properly reported all income from the accounts and paid all tax due.² If you’re behind on both FBARs and information returns, use both procedures in parallel.

Streamlined is the better path when unreported income is involved. The Streamlined Filing Compliance Procedures exist for taxpayers whose failure to report foreign income or file information returns was non-willful, and they address unpaid tax and unfiled information returns in one package. If your missing information returns are tied to unreported income and you owe additional tax, Streamlined is typically the right choice because the delinquent-return procedures are designed for situations where the underlying tax was already correctly reported.¹⁵ Streamlined requires a certification of non-willfulness and, for domestic filers, a 5% miscellaneous offshore penalty on the highest aggregate balance of unreported foreign financial assets; the Streamlined Foreign Offshore Procedures for taxpayers residing outside the U.S. carry no miscellaneous penalty at all. The trade-off is scope: Streamlined requires three years of amended returns and six years of FBARs, while the delinquent-return procedures let you address only the specific missing information returns without reopening your entire tax history.

Weigh whether you have a tax deficiency, how many years are affected, and your tolerance for uncertainty. The delinquent-return path is the quieter route when the only issue is missing information returns with no underlying tax problem, but it offers less certainty because penalty relief is not guaranteed by the program’s terms.

1
Internal Revenue Service. Delinquent International Information Return Submission Procedures
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Internal Revenue Service. Delinquent FBAR Submission Procedures
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Internal Revenue Service. IRM 20.1.9 – International Penalties
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Internal Revenue Service. About Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations
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Internal Revenue Service. About Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships
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Internal Revenue Service. International Information Reporting Penalties
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Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
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Office of the Law Revision Counsel. 26 USC 6038D – Information With Respect to Foreign Financial Assets
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Internal Revenue Service. Gifts From Foreign Person
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Internal Revenue Service. Instructions for Form 3520-A
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Office of the Law Revision Counsel. 26 US Code 6677 – Failure to File Information With Respect to Certain Foreign Trusts
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Internal Revenue Service. Form 926 – Filing Requirement for U.S. Transferors of Property to a Foreign Corporation
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Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection
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Internal Revenue Service. Penalty Appeal
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Internal Revenue Service. Streamlined Filing Compliance Procedures