U.S. citizens engaging in certain transactions involving foreign trusts must report these activities via Form 3520. Specifically, U.S. citizens must fill out the form 1) after a reportable event, 2) to report income and trust assets, 3) to disclose distributions received as a beneficiary, and 4) to report gifts received from a trust. The 3520 form is due with the U.S. taxpayer’s annual tax return but is filed separately. Failure to timely file can result in thousands of dollars in penalties.
See Ian Weinstock, The Many Faces of Form 3520, The CPA Journal, August 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
