Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner
Annual information return filed by a foreign trust that has at least one U.S. owner, reporting the trust's income, expenses, and distributions.
Overview
IRS Form 3520-A is the Annual Information Return of Foreign Trust With a U.S. Owner. It is filed by a foreign trust that is treated as having a U.S. owner under the grantor trust rules of IRC Sections 671–679. The form serves as the trust-level counterpart to Form 3520, which is filed by the U.S. owner or beneficiary. Together, these two forms give the IRS a complete picture of the foreign trust's financial activity — its income, deductions, assets, and distributions — from both the trust's perspective and the U.S. person's perspective.
The filing requirement exists because foreign trusts are not subject to U.S. income tax directly; instead, the income is attributed to the U.S. owner under the grantor trust rules. Without mandatory reporting at the trust level, a significant information gap would exist. Form 3520-A captures the trust's balance sheet and income statement, identifies all U.S. owners and beneficiaries, and quantifies any distributions made during the year. The IRS uses this data to cross-reference what U.S. owners report on their own returns and to detect unreported foreign trust income.
Although the form is technically the obligation of the foreign trust itself, the IRS holds the U.S. owner responsible for ensuring it is filed on time. If the foreign trust fails to file, the U.S. owner is subject to the penalties — not the trust. As a practical matter, most CPA firms advise U.S. owner clients to either file the form on behalf of the trust or to obtain a copy of the completed form and attach it to their own Form 3520. The filing deadline is March 15 for calendar-year trusts, with an extension available to September 15 if a proper extension request is submitted.
Who Files This Form?
Form 3520-A must be filed by every foreign trust that has at least one U.S. owner within the meaning of IRC Sections 671–679. A foreign trust is generally defined as any trust that is not a domestic trust — that is, any trust where either a U.S. court does not have primary supervisory jurisdiction, or U.S. persons do not control all substantial decisions of the trust.
The U.S. owner is the person who, under the grantor trust rules, is treated as owning all or a portion of the trust's assets. This most commonly arises when a U.S. person transfers property to a foreign trust, when a U.S. person has the power to revoke the trust, or when a U.S. person retains certain interests or controls over trust distributions or income. Partial ownership is possible — if a U.S. person owns only a portion of the trust, the form still must be filed, but only the portion attributable to the U.S. owner is fully reportable.
The filing obligation technically falls on the foreign trust itself, but the IRS places the practical burden — and the penalty exposure — squarely on the U.S. owner. If the foreign trustee refuses or fails to file, the U.S. owner must file a substitute Form 3520-A on the trust's behalf. The substitute filing must include a statement explaining why the foreign trustee did not file.
Notable exceptions: foreign trusts that are treated as owned entirely by a U.S. person and that hold only certain types of retirement or pension assets may qualify for relief under specific IRS guidance, but practitioners should confirm applicability on a case-by-case basis. Trusts involved in tax-exempt activities or certain grantor trusts created by reason of death may also have modified obligations. When in doubt, filing is always the safer course given the magnitude of the penalties.
Key Fields
Part I: Trust Identification and General Information
This section identifies the foreign trust — its name, country of creation, employer identification number (EIN) or foreign equivalent, and the name of the U.S. owner. Every foreign trust with a U.S. owner should obtain a U.S. EIN; filing without one can delay processing and trigger IRS correspondence.
Part II: Trust Income Statement
Reports the trust's gross income by category — interest, dividends, rents, royalties, capital gains, and other income — along with deductions and net income. Amounts should be reported in U.S. dollars using an appropriate exchange rate; the IRS generally accepts the average annual rate published by the Treasury Department or another consistently applied rate.
Part III: Trust Balance Sheet
A snapshot of the trust's assets, liabilities, and net worth at the beginning and end of the tax year. The gross value of trust assets reported here is critical because the failure-to-file penalty is calculated as the greater of $10,000 or 5% of this gross asset value. Accurate valuation is therefore not just an accounting matter — it is directly tied to penalty exposure.
Part IV: Distributions to U.S. Persons
Lists all distributions made to U.S. beneficiaries during the year, including the beneficiary's name, TIN, and the amount distributed. This information must be consistent with what is reported on the U.S. beneficiary's Form 3520 and, where applicable, their individual income tax return.
Part V: U.S. Owner Information
Identifies each U.S. owner, the portion of the trust they are treated as owning, and the income attributable to that ownership interest. This section produces the 'Foreign Grantor Trust Owner Statement,' a copy of which must be provided to each U.S. owner so they can properly report their share of trust income on their personal return.
Foreign Grantor Trust Owner Statement
A required attachment that the trust prepares and furnishes to each U.S. owner by March 15 (or the extended due date). The U.S. owner attaches this statement to their Form 3520. Failure to furnish this statement is a separate compliance issue that can draw IRS scrutiny even if the 3520-A itself was filed.
Foreign Grantor Trust Beneficiary Statement
Similar to the Owner Statement but directed at U.S. beneficiaries who are not themselves U.S. owners. This statement reports the amount and character of distributions so the beneficiary can properly report the income. It must also be furnished by March 15.
Exchange Rate Disclosure
The form requires disclosure of the exchange rate(s) used to convert foreign currency amounts into U.S. dollars. Using a consistent, documented methodology is important — inconsistent rates across the 3520-A and related forms (3520, 8938, FBAR) are a common audit trigger.
Filing Deadlines
March 15
September 15
Penalty of the greater of $10,000 or 5% of the gross value of trust assets for failure to file.
Step-by-Step Instructions
- 1
Confirm whether the trust is a foreign trust with a U.S. owner by applying the two-part test under IRC Sections 7701(a)(30)–(31) for foreign trust status, and IRC Sections 671–679 for grantor trust ownership. Document your analysis in the workpaper file.
- 2
Obtain the trust's financial records — trial balance, general ledger, or financial statements prepared by the foreign trustee — and convert all amounts to U.S. dollars using a consistently applied exchange rate. Document the rate source (e.g., Treasury Reporting Rates of Exchange) in your workpapers.
- 3
Obtain or apply for a U.S. Employer Identification Number (EIN) for the foreign trust if one has not already been obtained. The form cannot be processed without a valid U.S. TIN for the trust.
- 4
Complete the Trust Income Statement (Part II) using the converted financial data. Categorize income carefully — capital gains treatment, passive versus active income, and foreign tax credits all depend on proper income characterization.
- 5
Complete the Trust Balance Sheet (Part III) with beginning and end-of-year asset values. Obtain third-party valuations for hard-to-value assets (closely held interests, real property) and document the valuation basis, since gross trust assets drive the penalty calculation.
- 6
Complete the Distributions section (Part IV) by listing every distribution to a U.S. person during the year. Cross-reference these amounts with the Forms 3520 filed by U.S. beneficiaries to ensure consistency.
- 7
Prepare the Foreign Grantor Trust Owner Statement and Foreign Grantor Trust Beneficiary Statement as applicable, and provide copies to each U.S. owner and U.S. beneficiary no later than March 15 (or the extended due date).
- 8
File Form 3520-A by March 15 for calendar-year trusts. Mail to the IRS at the address specified in the current instructions (typically the Ogden, UT service center). If more time is needed, file a written extension request before the original deadline — there is no IRS form specifically for extending 3520-A, so a letter or Form 7004 analogy approach is used per current IRS guidance.
- 9
Retain a complete copy of the filed form, all supporting schedules, workpapers, exchange rate documentation, and evidence of mailing (certified mail or private delivery service receipt) for a minimum of six years given the extended statute of limitations applicable to international information returns.
Common Mistakes to Avoid
U.S. owner assumes the foreign trustee will handle filing and takes no action.
The U.S. owner bears direct penalty exposure if the form is not filed. Confirm each year whether the foreign trustee has filed; if not, the U.S. owner must file a substitute Form 3520-A with an explanatory statement attached.
Filing Form 3520-A late or not filing because the trust had no U.S.-source income or made no distributions.
The filing requirement is triggered by ownership status, not by income or distribution activity. A zero-income, zero-distribution year still requires a timely-filed 3520-A.
Inconsistent figures between Form 3520-A and the U.S. owner's Form 3520 or Form 8938.
Reconcile all reported amounts across related forms before filing. The IRS matches these forms, and discrepancies frequently generate CP-series notices or examination referrals.
Using an undocumented or inconsistent exchange rate to convert foreign currency.
Select a published exchange rate (such as the Treasury's Fiscal Service rates) and apply it consistently across all international reporting forms for the same tax year. Document the source in the workpaper file.
Failing to furnish the Foreign Grantor Trust Owner Statement or Beneficiary Statement to U.S. recipients by the deadline.
Treat the owner and beneficiary statements as separate deliverables with hard March 15 deadlines. Build a delivery checklist into your workflow so statements are not overlooked even when they are filed as attachments to the trust's return.
Omitting hard-to-value trust assets from the balance sheet or using a stale valuation.
Obtain or update valuations annually for illiquid or closely held assets. An underreported balance sheet not only misrepresents the trust's financial position but understates the penalty base if the IRS later asserts a failure-to-file penalty.
Frequently Asked Questions
Form 3520 is filed by the U.S. person — the owner or beneficiary — to report transactions with, or distributions from, a foreign trust. Form 3520-A is filed by the foreign trust itself and provides a detailed accounting of the trust's income, assets, and distributions. Both forms are often required in the same year; 3520-A is due March 15 while Form 3520 follows the taxpayer's individual return deadline (typically April 15, or October 15 with extension).
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