Form 3520-A Reference for Tax Professionals

A foreign trust must file Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner) for each tax year in which any U.S. person is treated as an owner of any portion of the trust under the grantor trust rules of Internal Revenue Code §§ 671 through 679.

Under IRC § 6048(b)(1), the trustee of the foreign trust is responsible for ensuring that:

• The trust files a full and complete Form 3520-A annually with the IRS;
• Each U.S. owner receives a Foreign Grantor Trust Owner Statement (Pages 3 and 4 of Form 3520-A); and
• Each U.S. beneficiary receiving a distribution receives a Foreign Grantor Trust Beneficiary Statement (Page 5 of Form 3520-A).

Common foreign grantor trusts include revocable foreign living trusts created by U.S. citizens living abroad, foreign asset protection trusts where a U.S. person retained administrative powers, irrevocable foreign trusts with U.S. beneficiaries funded by a U.S. transferor under IRC § 679, and certain foreign savings vehicles.

The statutory due date for Form 3520-A is the 15th day of the 3rd month following the close of the trust’s tax year. For calendar-year foreign trusts, the return is due on March 15th.

To extend the filing deadline for Form 3520-A, the foreign trustee or authorized U.S. agent must file Form 7004 (Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns) using return code 27 on or before March 15th.

Form 7004 grants an automatic 6-month extension, moving the filing deadline to September 15th for calendar-year trusts. Note that Thomson Reuters UltraTax CS’s help documentation states it cannot produce a Form 7004 with code 27 for Form 3520-A. Agena Software generates a printable Form 7004 extension now, with direct e-filing coming once IRS ATS certification is complete.

In practice, foreign trustees frequently refuse, fail, or lack the legal capacity or authorization under local law to prepare and file U.S. tax returns. Because IRC § 6677(b) imposes severe civil penalties directly on the U.S. owner when the trust fails to file, the IRS provides a mechanism for the owner to satisfy their obligations: the Substitute Form 3520-A.

Under the Form 3520 instructions (Part II, line 22), the Form 3520-A instructions, and IRS Notice 97-34, if the foreign trustee does not timely file Form 3520-A, the U.S. owner should:

1. Complete a Form 3520-A to the best of their ability using available trust accounting records, checking the box on page 1 indicating it is a Substitute Form 3520-A;
2. Attach the completed Substitute Form 3520-A to the U.S. owner’s timely filed Form 3520 (Part II); and
3. File both returns together by the due date of the U.S. owner’s Form 3520 (generally April 15th, or October 15th with an individual Form 4868 extension).

The substitute filing is the mechanism by which the U.S. owner meets their statutory reporting obligation under § 6048(b) when the trustee fails to file. While filing a substitute return demonstrates good-faith compliance and substantially mitigates penalty risk, it is not an automatic statutory guarantee against inquiries if material financial information is omitted.

Penalties for failure to file Form 3520-A or provide required statements are among the most severe in the Internal Revenue Code:

Under IRC § 6677(d), penalties may be abated only if the failure was due to reasonable cause and not willful neglect. Crucially, § 6677(d) specifically provides that the fact that a foreign jurisdiction would impose a civil or criminal penalty on the trustee or owner for disclosing the required information is not reasonable cause. Furthermore, refusal of a foreign trustee to cooperate is unlikely by itself to establish reasonable cause for the U.S. owner, underscoring the necessity of filing a substitute Form 3520-A.

Under current IRS Form 3520-A specifications, the return contains three pages of recipient statements:

Form 3520-A requires an Employer Identification Number (EIN) for the foreign trust on Line 1b. The foreign trust cannot use the grantor's Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

Because foreign trusts typically have a foreign trustee or foreign address, the IRS online EIN application cannot be used unless the responsible party has a U.S. SSN or ITIN. Practitioners obtain an EIN for a foreign trust using Form SS-4 (Application for Employer Identification Number) via one of three methods:

• Telephone (Fastest for International Applicants): Call the IRS International EIN Operation at +1 (267) 941-1099 (not a toll-free number), Monday through Friday, generally 6:00 a.m. to 11:00 p.m. Eastern Time (verify current hours on IRS.gov). The caller must be authorized to receive the EIN and answer questions about Form SS-4.
• Fax: Fax completed Form SS-4 to the IRS international fax unit at +1 (304) 707-9471 (or 855-215-1627 within the U.S.). The IRS typically faxes back an EIN within 4 business days.
• Mail: Mail Form SS-4 to Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999. Processing takes approximately 4 to 6 weeks.

Under IRC § 6048(b)(2), a foreign trust may authorize a U.S. person to act as its limited agent for IRS document requests and summonses. If a foreign trust has not authorized a U.S. agent (which is true for the vast majority of foreign trusts and substitute filings), the Form 3520-A instructions require mandatory attachments:

1. Summary of Trust Terms: A written summary of the terms of the trust, including all written trust agreements, amendments, and any oral agreements or understandings between the grantor, trustee, and beneficiaries;
2. Copies of Trust Documents: Complete copies of the original trust indenture, deed of settlement, letters of wishes, and modification instruments; and
3. Organizational Chart: An organizational chart explaining the ownership structure of the trust, including any underlying foreign corporations, holding companies, partnerships, or foundations.

Practitioner Note: Gathering and organizing these documents is frequently the most time-consuming aspect of preparing a Substitute Form 3520-A. If the trust fails to provide a U.S. agent or required attachments, the IRS has sole statutory discretion under § 6048(b)(2) to determine trust income amounts based on whatever third-party data it obtains.

A recurring question for cross-border practitioners is whether foreign savings vehicles—such as Canadian Tax-Free Savings Accounts (TFSAs) and Registered Education Savings Plans (RESPs)—require Form 3520 and substitute Form 3520-A reporting. Under Canadian law, a TFSA may be structured as an arrangement in trust, a deposit, or an annuity contract; the IRS has not issued formal guidance classifying TFSAs, making their U.S. tax classification unsettled, though practitioners commonly analyze them as foreign grantor trusts.

While IRS Revenue Procedure 2020-17 exempts certain eligible "tax-favored foreign retirement trusts" and "tax-favored foreign nonretirement savings trusts" (such as RESPs and RDSPs, which are commonly analyzed as potentially qualifying), TFSAs generally fall outside this relief because withdrawals are not restricted to retirement or to medical, disability, or educational purposes.

For an in-depth, primary-source analysis of foreign pensions, treaty exemptions, Rev. Proc. 2020-17 qualification criteria, and the 2024 proposed foreign trust regulations (§ 1.6048-5), see our reference guide: Foreign Retirement Accounts & Form 3520 Reporting Guide.

The signature line on Page 1 depends on whether the return is filed by the trust or by the U.S. owner:

The following example illustrates how financial data flows through Form 3520-A, into the Owner Statement, and onto the taxpayer’s Form 1040:

Standalone Form 3520-A returns must be filed on paper and mailed to:

Practitioners commonly use USPS Certified Mail with Return Receipt or an IRS-designated Private Delivery Service (PDS) to establish timely filing under IRC § 7502. When filed as a Substitute Form 3520-A, attach it to Form 3520 and mail both together to the Form 3520 filing address in Ogden.