Foreign Gift Form 3520: How to Report Gifts and Inheritances From Abroad

Form 3520 and Form 3520-A are forms that a person or entity may be required to submit under IRS requirements. If a required form is not submitted on time and there is no extension, a CP15 notice will be issued if the IRS catches the problem. The CP15 notice is what triggers the penalty assessment. Not every late filing results in a CP15 notice or a penalty.

Receiving money, property, or an inheritance from abroad may trigger a U.S. reporting obligation even when no tax is due. This guide explains when Form 3520 is required, what to gather, when to file, and what to do if you are late.

When a Foreign Gift or Inheritance Must Be Reported on Form 3520

You must file Form 3520 if you are a U.S. person and received more than $100,000 from a nonresident alien individual or a foreign estate, including related foreign persons, and treated the amount as a gift or bequest. The $100,000 threshold applies per donor.

Form 3520 is filed separately from your income tax return, and the foreign gift or inheritance is generally reported in Part IV. The IRS Instructions for Form 3520 provide the controlling filing details.

A Foreign Gift Is Generally Not Taxable Income, but It Still Must Be Reported

A genuine foreign gift or inheritance is generally not taxable income to you. However, it may still be reportable. If the applicable threshold is met, you must file accurately and on time.

Late, incomplete, or inaccurate reporting can lead the IRS to issue a CP15 notice if there is no extension and the IRS catches the problem. The CP15 notice triggers the penalty assessment. For additional background, see this overview of Form 3520 reporting for foreign gifts and inheritances.

Who Counts as a Foreign Person for Form 3520 Reporting?

A foreign person may include a nonresident alien individual, foreign corporation, foreign partnership, foreign estate, or a domestic trust treated as owned by a foreign person. A U.S. person generally includes a U.S. citizen or resident, domestic partnership or corporation, U.S. estate, or domestic trust.

A distribution from a foreign trust is generally reported in Part III as a foreign trust distribution rather than in Part IV as a gift.

What Counts as a Gift, and What Does Not Count as a Reportable Gift?

A gift may include cash, property, or a bequest or inheritance from a foreign estate. Property should be valued carefully, and you should keep support for value and date of receipt.

Certain payments are excluded from gift treatment. Qualified tuition paid directly to an educational institution and amounts paid directly for medical care are not treated as gifts for this purpose. Direct payment matters; reimbursement or transfer to you requires separate review.

How the $100,000 Threshold and Section 6039F Rules Apply to Foreign Entities

For gifts or bequests from a nonresident alien individual or foreign estate, Form 3520 is required when total receipts from that donor exceed $100,000, including related foreign persons. Gifts from foreign corporations or foreign partnerships fall under section 6039F and use their own annually adjusted threshold.

If a foreign corporation or partnership is involved, confirm the correct threshold for the tax year and review the facts carefully, because the IRS may question whether a transfer truly qualifies as a gift.

If a required Form 3520 is not submitted on time and there is no extension, the IRS may issue a CP15 notice if it catches the problem. The CP15 notice triggers the penalty assessment. The penalty may be 5% of the unreported amount for each month, up to a 25% maximum. Reasonable cause, if established and not due to willful neglect, can excuse the penalty. But a foreign country’s penalty for disclosure, or a fiduciary’s reluctance to provide information, does not qualify as reasonable cause. The IRS international penalty guidance addresses this standard.

What Information and Records Should You Gather Before Filing?

Before filing, gather the donor or estate identity, country, relationship to you, dates and amounts received, currency conversion support, bank or transfer records, gift or inheritance documents, and any valuation support for property. If tuition or medical payments are involved, keep proof that the amounts were paid directly to the school or provider.

For a practical filing roadmap, review these five critical steps for reporting foreign gifts and inheritances. Form 3520 is due on the 15th day of the fourth month after the end of your tax year, which is generally April 15 for calendar-year taxpayers. U.S. citizens or residents living and working abroad receive an automatic extension to June 15, and further extensions are available; check box 1k on Form 3520. Mail the return to:

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

What to Do If the Form 3520 Deadline Has Passed

Do not ignore a missed deadline. File a complete and accurate Form 3520 as soon as possible, then consider whether a reasonable-cause statement should be submitted with it. Your explanation should clearly describe the facts, timing, records, and corrective actions.

If you received a CP15 notice or another IRS penalty notice, act promptly. The Form 3520 penalty appeal and abatement process often requires a structured response supported by documents and legal analysis.