A Deep Dive Into the IRS Form 3520

A Deep Dive Into the IRS Form 3520

Tax Law
By Anthony Diosdi The Form 3520 is an informational return used to report certain transactions with foreign trusts, ownership of foreign trusts, or large gifts from certain foreign persons to the Internal Revenue Service (“IRS”). The failure to correctly and timely report certain transactions with a foreign corporation or the failure to disclose certain gifts received from a foreign person can result in a penalty up to 35% of the unreported transaction or distribution. Lately, the IRS has been handing out penalties for not timely and incorrectly filing Form 3520s like its candy. Given the seriousness of these penalties, if you had transactions with foreign trusts or received foreign gifts, the Form 3520 may be the most important return you will ever file. This article is designed to introduce the…
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Fighting IRS Form 3520 Penalties- Your Best Defense is Your Offense

Fighting IRS Form 3520 Penalties- Your Best Defense is Your Offense

Tax Law
By Anthony Diosdi IntroductionUnder Internal Revenue Code Section 6677(a), if any United States Person beneficiary receives (directly or indirectly) a distribution from a foreign trust, that person is required to make a return with respect to such a trust using Internal Revenue Service (“IRS”) Form 3520, and show thereon the name of the trust, the amount of the aggregate distribution received, and any other data the IRS may require. A foreign gift, bequest, or inheritance that exceeds $100,000 must also be disclosed on a Form 3520. The IRS may assess an annual penalty equal to 35 percent of the gross value of the trust or 35 percent of the gross value of the property transferred from the trust if a Form 3520 is not timely filed. The IRS may also…
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Demystifying IRS Form 3520

Demystifying IRS Form 3520

Tax Law
By Anthony Diosdi Introduction United States persons with foreign assets are subject to an ever expanding universe of reporting requirements. A prime example of this can be found in Internal Revenue Code Section 667(a). This Internal Revenue Code Section provides that if a United States person beneficiary receives (directly or indirectly) a distribution from a foreign trust, that person is required to make a return with respect to such a trust using Internal Revenue Service (“IRS”) Form 3520, and show thereon the name of the trust, the amount of the aggregate distribution received, and any other data the IRS may require. A foreign gift, bequest, or inheritance that exceeds $100,000 from a nonresident must also be disclosed on a Form 3520.  This article will take a deep dive into Form…
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