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Department of the Treasury

Internal Revenue Service

Instructions for

Form 3520-A

Annual Information Return of Foreign Trust

With a U.S. Owner

Section references are to the Internal Revenue Code unless otherwise noted.

continues after the IRS mails a notice of failure to comply with

General Instructions

required reporting. See section 6677(a).

Criminal penalties may be imposed under sections 7203,

Purpose of Form

7206, and 7207 for failure to file on time and for filing a false or

Form 3520-A is the annual information return of a foreign trust

fraudulent return.

with at least one U.S. owner. The form provides information

Reasonable cause. No penalties will be imposed if the

about the foreign trust, its U.S. beneficiaries, and any U.S.

taxpayer can demonstrate that the failure to comply was due to

person who is treated as an owner of any portion of the foreign

reasonable cause and not willful neglect.

trust.

Note: The fact that a foreign country would impose penalties

Who Must File

for disclosing the required information is not reasonable cause.

A foreign trust must file Form 3520-A to satisfy its annual

Similarly, reluctance on the part of a foreign fiduciary or

information reporting requirements under section 6048(b). Each

provisions in the trust instrument that prevent the disclosure of

U.S. person treated as an owner of any portion of a foreign trust

required information is not reasonable cause.

under sections 671 through 679 is responsible for ensuring that

the foreign trust files Form 3520-A and furnishes the required

Definitions

annual statements to its U.S. owners and U.S. beneficiaries.

Distribution

When and Where To File

A distribution is any gratuitous transfer of money or other

File a complete Form 3520-A (including pages 3 and 4) with the

property from a trust, whether or not the trust is treated as

Internal Revenue Service Center, Philadelphia, PA 19255, by

owned by another person under the grantor trust rules, and

the 15th day of the 3rd month after the end of the trust’s tax

without regard to whether the recipient is designated as a

year. Give copies of the Foreign Grantor Trust Owner

beneficiary by the terms of the trust. A distribution includes the

Statement (page 3) and the Foreign Grantor Trust

receipt of trust corpus and the receipt of a gift or bequest

Beneficiary Statement (page 4) to the U.S. owners and U.S.

described in section 663(a).

beneficiaries by the 15th day of the 3rd month after the end of

A distribution also includes constructive transfers from a

the trust’s tax year.

trust. For example, if charges you make on a credit card are

An extension of time to file Form 3520-A (including the

paid by a foreign trust or guaranteed or secured by the assets

statements) may be granted. For details, get Form 2758,

of a foreign trust, the amount charged will be treated as a

Application for Extension of Time To File Certain Excise,

distribution to you by the foreign trust. Similarly, if you write

Income, Information, and Other Returns.

checks on a foreign trust’s bank account, the amount will be

treated as a distribution.

Who Must Sign

Also, if you receive a payment from a foreign trust in

If the return is filed by:

exchange for property transferred to the trust or services

•

An individual or fiduciary, it must be signed and dated by that

rendered to the trust, and the fair market value (FMV) of the

individual or fiduciary.

payment received exceeds the FMV of the property transferred

•

A partnership, it must be signed and dated by a general

or services rendered, the excess will be treated as a distribution

partner or limited liability company member.

to you.

•

A corporation, it must be signed and dated by the president,

Examples

vice president, treasurer, assistant treasurer, chief accounting

officer, or any other corporate officer (such as a tax officer)

1. If you sell stock with an FMV of $100 to a foreign trust

authorized to sign.

and receive $150 in exchange, you have received a distribution

The paid preparer must complete the required preparer

of $50.

information and:

2. If you receive $100 from the trust for services performed

•

Sign the return, by hand, in the space provided for the

by you for the trust, and the services have an FMV of $20, you

preparer’s signature (signature stamps are not acceptable).

have received a distribution of $80.

•

Give a copy of the return to the filer.

If you, or a person related to you, received a loan from a

related foreign trust, it will be treated as a distribution to you

Penalties

unless the obligation you issued in exchange is a qualified

The U.S. owner is subject to a penalty equal to 5% of the gross

obligation. For this purpose, a loan to you by an unrelated third

value of the portion of the trust’s assets treated as owned by

party that is guaranteed by a foreign trust is generally treated as

the U.S. person at the close of that year if the foreign trust:

a loan from the trust. See Section V of Notice 97-34, 1997-1

(a) fails to file a timely Form 3520-A or (b) does not furnish the

C.B. 422. You can find Notice 97-34 on page 22 of Internal

information required by section 6048(b). See section 6677(b).

Revenue Bulletin 1997-25 at

Additional penalties may be imposed if noncompliance

irb97-25.pdf.

Cat. No. 25096U

Instructions For Form 3520-A - Annual Information Return Of Foreign Trust With A U.s. Owner - 2002

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