The Internal Revenue Service would like to remind all U.S. owners of a foreign trust and their return preparers of the filing requirements for Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner (Under section 6048(b)). See the Instructions for Form 3520-A for more information.
- Who must file. A foreign trust with a U.S. owner must timely file a complete and accurate Form 3520-A and furnish the required annual statements to its U.S. owners and U.S. beneficiaries in order for the U.S. owner to avoid penalties for the foreign trust's failure to file a Form 3520-A. If a foreign trust fails to timely file Form 3520-A, the U.S. owner must complete and attach a substitute Form 3520-A to Part II of Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, and furnish the required annual statements by the due date of Form 3520.
- When to file. A Form 3520-A must be filed by the 15th day of the third month after the end of the trust's tax year. For example, a foreign trust with a tax year ending December 31, 2020, must file a Form 3520-A by March 15, 2021. However, if the U.S. owner files a substitute Form 3520-A with the owner's Form 3520, then the substitute Form 3520-A is due by the due date of the U.S. owner's Form 3520 and not the due date of for the Form 3520-A. A Form 3520 is due by the 15th day of the fourth month following the end of the U.S. owner's tax year, or April 15th for calendar year taxpayers (with extensions).
- Extension of time to file. An automatic 6-month extension of time to file Form 3520-A may be granted by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, with the foreign trust's Employer Identification Number (EIN) by the 15th day of the third month after the end of the trust's tax year. Caution: A Form 7004 for a foreign trust cannot be processed if it has the U.S. owner's Social Security number (SSN). In addition, an extension of time to file an income tax return will not provide an extension of time to file Form 3520-A.
- Use EINs to identify the foreign trust. Only an EIN should be used to identify the foreign trust in Part I, Line 1b of Form 3520-A. If the foreign trust does not have an EIN, refer to How to Apply for an EIN. Caution: Do not enter the U.S. owner's SSN or individual taxpayer identification number (ITIN) in line 1b.
- Where to file. File Form 3520-A and Form 7004 with Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409. File Form SS-4 with the Internal Revenue Service Center, Attn: EIN Operation, Cincinnati, OH 45999 or by fax at 855-641-6935.
- Exceptions from Form 3520-A filing requirements. A Form 3520-A is not required to be filed for Canadian registered retirement savings plans (RRSPs) and Canadian registered retirement income funds (RRIFs). See Rev. Proc. 2014-55 (PDF). In addition, a Form 3520-A is not required to be filed for certain tax-favored foreign retirement trusts or tax-favored foreign non-retirement savings trusts, provided that the U.S. owner is an "eligible individual" and the tax-favored foreign trust meets certain requirements. See Rev. Proc. 2020-17 (PDF). Caution: These exceptions do not affect any reporting obligations that the U.S. owner may have to report specified foreign financial assets on Form 8938 or any other reporting requirement, including the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
- Form 3520 filing requirements. In addition to ensuring that the foreign trust files Form 3520-A, a U.S. owner may be required to file a Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. See the Instructions for Form 3520 for more information.
Form 3520-A filing tips to avoid penalties:
- File Form 3520-A using an EIN for the foreign trust on Line 1b of the form rather than the U.S. owner's SSN or ITIN. If the foreign trust does not have an EIN, refer to How to Apply for an EIN.
- File by the 15th day of the 3rd month after the end of the trust's tax year. An automatic 6-month extension may be granted by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns. Form 7004 must be filed with the foreign trust's EIN.
- If the foreign trust will not file a Form 3520-A, the U.S. owner of the foreign trust must file a substitute Form 3520-A by completing a Form 3520-A to the best of their ability and attaching it to a timely filed Form 3520, including extensions (see Form 3520-A and Form 3520 instructions for more information on filing a substitute Form 3520-A). Do not separately file a duplicate Form 3520-A if you are filing a substitute 3520-A.