We have had several clients recently subject to Form 3520 penalties, so we thought we would remind everyone of the need to timely file these forms when receiving a foreign gift. <\/p>\n\n\n\n
When a U.S. person receives a gift from a foreign individual, corporation, partnership, or estate which is treated as a gift or bequest and excluded from gross income, the recipient may be required to file Part IV of Form 3520<\/a>. Form 3520<\/a> is the Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. The form is uncommon and little known since few people have to file it on a regular basis.<\/p>\n\n\n\n When\nreceiving a gift from a foreign individual, a U.S. person is required to report\nthe gifts when the aggregate amount received during a taxable year exceeds\n$100,000. When the $100,000 threshold is met, the U.S. recipient must\nseparately identify each gift over $5,000. When receiving a gift from a foreign\ncorporation or partnership, a U.S. person is required to file the gifts when\nthe aggregate amount received during a taxable year exceeds $16,649. When the\n$16,649 threshold is met, the U.S. recipient must separately identify the gifts\nand provide the name of the donor. <\/p>\n\n\n\n Form 3520\nis typically due on the same day your income tax return for that year is\ndue. U.S. persons living outside of the\nUnited States have a due date to file of June 15th following the end of the tax\nyear. U.S. persons granted an extension to file have a due date around October\n15th following the end of the tax year. There is no automatic extension to file\nForm 3520.<\/p>\n\n\n\n Form 3520\nis filed separately from your income tax return and sent to the following\naddress:<\/p>\n\n\n\n Internal Revenue Service Center P.O. Box 409101 Ogden, UT 84409. A late Form 3520<\/a> will result in an automatic computer-generated penalty. The penalties are a trap for the unwary and unfamiliar. <\/p>\n\n\n\n Professional legal counsel is recommended for Form 3520 filers. Taxpayers who have received a foreign gift or are planning to receive a foreign gift should contact Patel Law Offices. Over the years, our office has successfully assisted numerous taxpayers regarding their Form 3520 compliance issues<\/a>.<\/p>\n\n\n\n