The Tax Times: Foreign Trust Form 3520-A Filing Date Reminder & Tips To Avoid Penalties

Monday, March 16, 2020

Foreign Trust Form 3520-A Filing Date Reminder & Tips To Avoid Penalties

The due date for the foreign trust’s information reporting return, the Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner (Under section 6048(b)), is the fifteenth day of the third month following the end of the foreign trust’s taxable year or March 15th for calendar year taxpayers.

An extension of time to file Form 3520-A may be requested by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.

How To Avoid Penalties:

1. Form 3520-A

File by the fifteenth day of the third month after the end of the trust’s tax year, the due date may be extended 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 an Employer Identification Number (EIN) for the foreign trust. Forms 7004 for a foreign trust cannot be processed under an individual’s Social Security Number (SSN). Please obtain an EIN for the foreign trust.

If the foreign trust does 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 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 attached to your timely filed Form 3520, with extensions.

2. Form 3520:

When completing Form 3520, be sure to check Box 1K on page 1, and enter the form number of the income tax return if an extension was filed.

If the foreign trust fails to timely file a complete and accurate Form 3520-A, and its U.S. owner also fails to file a complete and accurate substitute Form 3520-A (by attaching a Form 3520-A to its timely filed 3520, including extensions), the U.S. owner is subject to a separate penalty, equal to the greater of $10,000 or 5 percent of the gross value of the portion of the foreign trust's assets treated as owned by the U.S. owner under the grantor trust rules at the close of the taxable year.
This penalty is in addition to any applicable penalty of the same amount for the U.S. owner’s failure to timely file a complete and accurate Part II of Form 3520. See IRC section 6677(a) through (c) and the Instructions for Form 3520 and Form 3520-A.