On its website, the IRS has announced that it has retired its Form 3520/3520A compliance campaign.
This Is Welcome Relief For Taxpayers!
US citizens and resident individuals who are settlors/grantors or beneficiaries of foreign trusts may be required to file Form 3520-A and/or Form 3520 to report (1) ownership of the trust, (2) transfers of property to the trust, or (3) distributions from the trust.
Two separate penalties equal to 5% of the trust's value (with a minimum penalty of $10,000) may apply for failure to report foreign trust ownership information on Form 3520-A and Form 3520, Part II. Separate penalties of up to 35% of a contribution to a foreign trust or 35% of a distribution from that trust (both with a minimum penalty of $10,000) may apply for failure to report the trust contribution or distribution on Form 3520.
Since May 21, 2018, when the IRS announced a Large Business and International (LB&I) compliance campaign focusing on noncompliance with the filing of Form 3520-A and Form 3520, IRS scrutiny of the forms has been significant. While the official campaign has been retired, the IRS will continue asserting penalties for late, incomplete or inaccurate Forms 3520-A and Forms 3520 as provided in its penalty assessment procedures.
The IRS's retirement of its official Form 3520-A/3520 LB&I compliance campaign should not be interpreted as the end of the agency's enforcement of these filings.
Forms 3520 and 3520-A are filed at a separate IRS location from a taxpayer's return, so it is relatively simple for the IRS to assert penalties on late, incomplete or inaccurate forms.
Taxpayers should therefore remain vigilant in ensuring that they timely comply with these filing requirements to avoid the imposition of significant penalties.
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Read more at: Tax Times blog
