Reporting Requirements for U.S. Persons Who Receive Large Gifts From Foreign Persons
By Anthony Diosdi IntroductionThe Small Business Job Protection Act of 1996 (the “Act”) contained certain foreign gift reporting provisions. In order to facilitate compliance with the Act, the Internal Revenue Service (“Service” or “IRS”) developed Form 3520 entitled “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.” The Form 3520 must be filed by the due date (including extensions) of the U.S. recipient’s income tax return when he or she receives certain foreign gifts.Summary of the LawIn GeneralThe Act created reporting requirements for U.S. persons (other than certain tax exempt organizations) that receive gifts (including bequests) from foreign persons (i.e. anyone other than a U.S. person) that the recipient treats as a gift or bequest (presumably, non-taxable). Generally, if the value of the aggregate annual…