The international tax experts at LSL CPAs provide an update on IRS Form 3520 and the filing requirements in this two-part blog. Part 1 focuses on who is required to file IRS Form 3520, and Part 2 is focused on who is not required to file IRS Form 3520. If you have questions, please contact Yana Weaver, the LSL CPAs international tax expert, at 714.569.1000.

Who Has To File IRS Form 3520?

Any US Person who meets at least one of the following requirements must file IRS Form 3520. Since the form has four parts, it is essential to know what parts you must fill out and what parts you can leave blank. This is how an international tax consultant can help when it comes to filling out IRS Form 3520:

1. Transferor to a Foreign Trust: If you created a foreign trust and/or transferred money or other property to your foreign trust, you must file Form 3520 and fill out Part I.
2. Responsible Party: If you are the executor of the estate of a US decedent and the decedent made a transfer to a foreign trust because of death or was treated as the owner of any portion of the foreign trust immediately before death, you will be required to file Form 3520 and fill out Part I.
3. Owner of Trust:  If you own a foreign trust or even a portion of a foreign trust, you must file Form 3520 and fill out Part II.
4. Trust Distribution Recipient:  If you received (directly or indirectly) a distribution from a foreign trust, you must file Form 3520. How you fill out Form 3520 is different compared to if you are the owner of a foreign trust. As a recipient of a distribution from a foreign trust, you must fill out Part III instead of Part II.
5. Foreign Trust Obligation Holder: If you held an obligation from a foreign trust (debenture, bill receivable, note receivable, or other evidence of indebtedness), you are required to report these obligations as distributions in case of non-qualified obligations on Form 3520 Part III or, in case of qualified obligations, disclose them on Form 3520, Part I.
6. Gift Recipient from a Foreign Person or Estate:  If you received a gift or bequest from a foreign person or estate of at least $100,000, you must file form 3520, completing the top identification section and Part IV.
7. Gift Recipient from a Foreign Corporation or Trust:  If you received a gift or a bequest of at least $14,723 from a foreign corporation or a foreign partnership, you must file form 3520, completing the top identification section and Part IV. 

Help With IRS Form 3520

This list of who is required to file IRS Form 3520 can be quite confusing to the non-tax professional. This is why you need an international tax expert on your side. In addition, although this content contains accurate information, it is inherently limited because of the length of the article and the complexity of the issues at hand. As a result, it presents only a partial view of the subject matter. To learn more about how these issues might apply to your particular filing case or tax situation from a more three-dimensional perspective, please call LSL CPAs international tax expert Yana Weaver at 714.569.1000.