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Common Form 3520 Mistakes to Avoid Common Form 3520 Mistakes to Avoid Common Form 3520 Mistakes to Avoid: One of the most dangerous international information reporting forms for US Persons is one that for most people has nothing to do with tax. The form 3520 is used to report a large gift from a foreign person (individual or entity) and trust distributions. Oftentimes, there is no tax consequences associated with the form 3520 filing. Rather,…
How Foreign Gifts & Form 3520 Leads to FBAR Filing How Foreign Gifts & Form 3520 Leads to FBAR How Foreign Gifts & Form 3520 Leads to FBAR Filing Requirements: Oftentimes, when a US person receives a money gift from a foreign person and the value of that gift exceeds the form 3520 filing requirement, the US person has to file Form 3520 with the IRS. It is not uncommon for the Taxpayer to…
Form 3520 Form 3520 Form 3520: In recent years, the Internal Revenue Service has significantly increased the enforcement for the reporting of foreign gifts and trusts. When a US person receives a large gift from a foreign person or has certain transactions with a foreign trust — they may become subject to reporting requirements on Forms 3520 and/or 3520-A. These forms are not necessarily used for tax purposes as much as they are used for…
Form 3520/3520-A Requirement for Reporting Foreign Pension Form 3520/3520-A Requirement for Foreign Pension Foreign Pension Account & Form 3520: When a U.S. person has an interest in a foreign pension, that interest is considered an interest in a foreign trust. While technically foreign pensions are considered trusts, the question of whether they are reportable on IRS Forms 3520/3520-A is still unclear. This is further complicated by the fact that recent Revenue Ruling 2020-17 exempts certain…
Nongrantor Trust and Form 3520 Nongrantor Trust and Form 3520 Nongrantor Trust and Form 3520: When most U.S. persons refer to trusts, they are generally referring to a basic grantor trust. With a grantor trust, the grantor retains power over the trust. For example, if a person owns a home and decides to put it into a trust, they form a revocable trust. The grantor or creator of the trust is able to control, change,…
Penalty Relief and Exemptions for Form 3520 New Exemptions & 3520 Penalty Relief Procedures Penalty Relief & Exemptions Under New Form 3520 Guidelines: The Form 3520 penalties can be severe. When a person receives a gift from a foreign person, the penalty can be upwards of 25% value of the gift. So for example, if a person receives a $600,000 gift or inheritance from a Foreign Person, the general IRS penalty for that amount would…
Form 3520/3520-A Amnesty Form 3520/3520-A Amnesty  Form 3520 Amnesty: When a US person has certain transactions with a foreign trust or received large gifts from a foreign person (including individuals or entities) they may have an IRS form 3520 and 3520-A requirement. If a person does not file the forms timely, they may be subject to fines and penalties. These penalties can be relatively high in light of the violations, especially when most taxpayers do…
Form 3520 Penalty Abatement Form 3520 Penalty Abatement Abatement of a 3520 Penalty:  When it comes to the IRS and international information reporting penalties, the Form 3520 is one of the worst penalties the IRS can issue. Primarily, it is because the taxpayer is oftentimes blindsided by the penalty since it does not stem from unreported income or undisclosed FATCA or FBAR assets. Rather, the U.S. person usually just received a gift from a foreign…
Form 3520 Penalty Abatement Form 3520 Penalty Abatement Abatement of a 3520 Penalty:  When it comes to the IRS and international information reporting penalties, the Form 3520 is one of the worst penalties the IRS can issue. Primarily, it is because the taxpayer is oftentimes blindsided by the penalty since it does not stem from unreported income or undisclosed FATCA or FBAR assets. Rather, the U.S. person usually just received a gift from a foreign…
New Foreign Retirement Trust 3520 Exemptions & Penalty Relief Example Foreign Retirement Trust Reporting Exemption & Penalty Relief 3520 Penalty Relief & Exemptions for Foreign Trusts: Back in March of 2020, the IRS released Revenue Procedure 2020-17. The purpose of this Revenue Procedure is to provide certain foreign trusts from having to report on Form 3520 and 3520-A.  The trusts referred to in the Revenue Procedure are not for your traditional types of trusts,…