IRS Form 3520: Filing Rules, Deadlines, and Penalties

IRS Form 3520 is the information return U.S. persons use to report large gifts or bequests from foreign individuals or estates and certain transactions with foreign trusts. The most common trigger is receiving more than $100,000 in gifts or inheritances from a nonresident alien or a foreign estate in a single tax year.¹ No tax is due with the form. It is purely informational. The reason to take it seriously anyway is the penalty structure: fines start at $10,000, climb quickly, and a missed filing keeps your entire income tax return open to audit with no time limit.

Who Has to File

“U.S. person” for this purpose covers citizens, green card holders, resident aliens, and domestic entities such as corporations, partnerships, and estates. Three separate categories of activity require a filing, each with its own threshold.¹

Large gifts or bequests from foreign individuals or estates. File if the total you received from a nonresident alien individual or a foreign estate during the year exceeded $100,000. Gifts and inheritances both count, and the threshold applies to the combined total from a single source over the calendar year.

Gifts treated as coming from foreign corporations or partnerships. A much lower, inflation-adjusted threshold applies here. For 2025 the figure was $20,116. The IRS publishes the current year’s amount in a Revenue Procedure at IRS.gov/InflationAdjustment.¹

Foreign trust transactions. File if you created a foreign trust, transferred money or property to one, received a distribution from one, or are treated as the owner of any portion of a foreign trust under the grantor trust rules. There is no dollar floor here. Any reportable event triggers the requirement, and grantor-trust owners must file even in years when nothing moved.²

Combining Gifts From Related Donors

The $100,000 threshold is not per person in the simple sense. You must add together gifts from different foreign individuals or foreign estates if you know, or have reason to know, that the donors are related, or that one is acting as a conduit for another. “Related” reaches siblings, half-siblings, spouses, parents, grandparents, children, grandchildren, and spouses of those people.¹ If your foreign-resident mother sends $60,000 and your foreign-resident father sends $50,000 in the same year, you have crossed the threshold.

What Does Not Count

Amounts paid directly to an educational institution for tuition, or directly to a medical provider on your behalf, are not treated as reportable foreign gifts.¹ The word “directly” is doing the work. A foreign relative who pays your university’s bursar office is outside the rule. The same relative who sends the money to you, so that you pay the school yourself, has made a reportable gift.

When Form 3520 Is Due

The form is due on the 15th day of the fourth month after the end of your tax year. For calendar-year filers that is April 15. An extension to file your income tax return automatically extends Form 3520, out to October 15 for calendar-year filers.¹

U.S. citizens and residents whose home and place of business or military duty station are outside the United States and Puerto Rico on the regular deadline get an automatic two-month extension to June 15 without having to request it. Attach a statement to the form explaining that you qualify.¹

How to File It

Form 3520 must be paper-filed by mail. It is not attached to your Form 1040 and does not travel with your regular return. The address is:

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409¹

The IRS does not send a receipt confirmation. Use certified mail with return receipt or a private delivery service with tracking so you can prove timely filing later if you need to.

Spouses can file one Form 3520 jointly only if they file a joint income tax return for the same year and both are transferors, grantors, or beneficiaries of the same foreign trust. Joint filing is not available where one spouse simply received a large foreign gift; only the recipient files in that situation.¹

What the Form Asks For

You will need identifying details for every party involved: legal name, address, and taxpayer identification number for each foreign donor, trust, trustee, and beneficiary. Where no U.S. TIN exists, provide whatever foreign identifier is available.

For gifts, describe the property and give its fair market value as of the transfer date. If your total from a single foreign source exceeds $100,000, you must separately identify each gift over $5,000.³ Non-cash gifts require a good-faith fair-market-value estimate. The IRS does not require a formal appraisal for most non-cash foreign gifts, but you should keep bank statements, transfer confirmations, property records, and any valuations you obtain in your own files. The form is signed under penalty of perjury.

Trust-related sections ask for the structure of the trust, the nature of your relationship to it, and the amount and character of any distributions.

Form 3520-A and Form 8938: The Boundaries

If a foreign trust has a U.S. owner, the trust itself must file Form 3520-A each year.⁴ When the trust does not file, the U.S. owner has to prepare a substitute Form 3520-A and attach it to their own Form 3520. Skipping that step exposes the owner to the same penalties as failing to file Form 3520 itself.⁵

Form 3520 also intersects with FATCA reporting on Form 8938. A foreign trust interest reported on Form 3520 does not need duplicate asset detail on Form 8938, but Form 8938 must still note that a Form 3520 was filed. The two forms cover different ground: Form 3520 tracks transactions and relationships; Form 8938 tracks the value of foreign financial assets more broadly.

Penalties for Missing or Wrong Filings

The penalty regime is unusually aggressive for an information return, and the numbers depend on which part of the form you missed.

Foreign Trust Penalties

For failing to report the creation of a foreign trust, a transfer to one, or a distribution from one, the initial penalty is the greater of $10,000 or 35% of the gross reportable amount. Gross reportable amount means the value transferred (for creation or transfer events) or the gross distribution received.⁶ An unreported $200,000 transfer produces a $70,000 opening penalty, not $10,000.

For U.S. owners who fail to file the annual trust ownership return, 5% replaces 35%. The initial penalty is the greater of $10,000 or 5% of the gross value of the trust assets treated as owned by that person at year-end.⁶

Continuation Penalties

After the IRS mails a notice of failure, penalties escalate. Once 90 days have passed from the notice date, an additional $10,000 penalty applies for each 30-day period, or fraction of one, that the failure continues. These stack on top of the initial penalty until you file a complete and accurate return or the total reaches the gross reportable amount.⁶

Foreign Gift Penalties

Late or incomplete reporting of large foreign gifts is penalized separately: 5% of the unreported gift amount for each month the failure continues, up to a cap of 25% of the gift value. The IRS can also determine the income tax treatment of the receipt on its own and may recharacterize the amount as taxable income.¹

The Statute of Limitations Trap

This is where a missed Form 3520 becomes far more serious than the penalty numbers alone suggest. The IRS normally has three years from the filing of your income tax return to assess additional tax. If you were required to file Form 3520 and did not, that three-year clock never starts. The whole income tax return stays open to audit indefinitely until the missing Form 3520 is filed complete and accurate.⁷

Once you file, the standard three-year window starts running from the new filing date. If you can show the failure to file was due to reasonable cause rather than willful neglect, the open exposure narrows so that only items related to the unreported foreign information remain open, not the entire return.⁸

Fixing a Missed Filing

If you find out you should have filed Form 3520 in a prior year, the IRS offers the Delinquent International Information Return Submission Procedures. You qualify as long as you are not under civil examination or criminal investigation and the IRS has not already contacted you about the missing return.⁹

Under the program, you file the delinquent Form 3520 following the normal instructions and attach a reasonable cause statement. Write “Reasonable Cause Statement attached” at the top of the first page. The IRS considers your explanation before assessing any penalty, so a solid explanation can avoid the financial hit entirely.⁹

Form 3520 is explicitly excluded from the IRS’s First Time Abate program, so ignorance of the requirement and a clean prior record are not by themselves enough. Reasonable cause requires a showing that you exercised ordinary business care and prudence but still could not comply. The IRS weighs what happened, when it happened, what you did to try to comply, how you handled your other tax obligations at the time, and what you did once the obstacle lifted. Serious illness, natural disaster, inability to obtain necessary records despite good-faith effort, and reliance on a qualified tax professional who was given accurate information can all support the claim.¹⁰ Simple forgetfulness will not. One argument is barred by statute: you cannot claim that a foreign country’s secrecy laws would penalize disclosure. That is not reasonable cause.⁶

Filing through the delinquent procedures is not a guarantee of penalty-free treatment, and amended returns can be selected for audit. For taxpayers who genuinely didn’t know about the requirement and are otherwise compliant, it is still the best path available. Waiting until the IRS makes contact eliminates the option.

1
Internal Revenue Service. Instructions for Form 3520
2
Office of the Law Revision Counsel. 26 USC 6048 – Information With Respect to Certain Foreign Trusts
3
Internal Revenue Service. Gifts from Foreign Person
4
Internal Revenue Service. About Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner
5
Internal Revenue Service. Failure to File the Form 3520/3520-A – Penalties
6
Office of the Law Revision Counsel. 26 USC 6677 – Failure to File Information With Respect to Certain Foreign Trusts
7
Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection
8
Internal Revenue Service. Overview of Statute of Limitations on the Assessment of Tax
9
Internal Revenue Service. Delinquent International Information Return Submission Procedures
10
Internal Revenue Service. IRM Part 20 – Penalty and Interest, 20.1.1 Introduction and Penalty Relief