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What is a 3520-A and who needs to file one?

Form 3520-A is the ‘Annual Information Return of Foreign Trust with US owner’.

You need to file one if you are a US owner of a Foreign Trust.

Each US Person treated as an owner of any portion of a foreign trust under the grantor trust rules (sections 671 through 679) is responsible for ensuring that the foreign trust files Form 3520-A and furnishes the required annual statements to its US owners and US beneficiaries.

If a foreign trust fails to file Form 3520-A for the foreign trust to the US owner must complete and attach a substitute Form 3520-A for the foreign trust to the US owners Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.

Penalties

The US owner is subject to an initial penalty equal to the greater of $10,000 or 5% of the gross value of the portion of the trust’s assets treated as owner by the US Person at the close of the ta year.

The US owner is subject to an additional separate penalty equal to the greater of $10,000 of 5% of the gross value of the portion of the trust’s assets treated as owned by the US Person at the close of that tax year, if the US owner failed to timely file form 3520.

Additional civil penalties may be imposed if non-compliance continues for more than 90 days after the IRS mails a notice of failure to comply.

Criminal penalties may be imposed for failure to file on time and for filing a false or fraudulent return.