Certain US taxpayers may have additional foreign informational filing requirements beyond the usual year-end tax filings, and the filing deadlines for these forms may differ from, and in some cases be earlier than, the usual April 15 due date. Affected taxpayers include US income tax residents who:

— Have created foreign trusts, either in the current year or in the past, even if the taxpayers were not US residents at the time they created the trusts
— Are beneficiaries of foreign trusts
— Are treated as owners of foreign trusts
— Own foreign assets
— Have signatory authority over foreign bank accounts
— Receive gifts or bequests from a foreign person or foreign entity

Below is a list of these additional filing requirements and their respective due dates.

Form 3520-A — DUE MARCH 15

Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner, must be filed or extended by March 15. The form may be extended for six months to September 15 by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. An extension cannot be made by simply extending the due date for Form 1040. The penalty for failure to timely file Form 3520-A is the greater of $10,000 or 5% of the value of the portion of the trust treated as owned by the US person.

Form 3520-A must be filed by a foreign grantor trust with a US owner, as determined under Sections 671 through 679. The return must be filed by the trustee of the foreign trust. Ultimately, however, it is the US owner's responsibility to ensure that the foreign trust files Form 3520-A and furnishes the required annual statements to all US owners and US beneficiaries. Therefore, if the trustee of the foreign trust does not file Form 3520-A, the US owner may file the return.

Form 3520 — DUE APRIL 18

Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, is an annual return that is required to be filed no later than April 18. Note that this return can only be extended by extending a taxpayer's income tax return (Form 1040). Form 3520 cannot be extended independently of Form 1040. Thus, if Form 3520 cannot be filed by April 18, the taxpayer's Form 1040 must be extended to extend the due date for filing Form 3520. Generally, the failure to timely file Form 3520 will result in a penalty of 35% of the unreported amount (5% of the value of the portion of the trust treated as owned by the US person if filing solely to report ownership of a foreign grantor trust), with a minimum penalty of $10,000.

Form 3520 must be filed by US persons to report certain transactions with foreign trusts and the receipt of certain large gifts and bequests from foreign persons. The following persons must file Form 3520:

1. A US person who (directly or indirectly) receives a distribution from a foreign trust, regardless of the amount of the distribution

2. A US person who, during the current tax year, is treated as the owner (under Sections 671 through 679) of any part of the assets of a foreign trust

3. A US person who (directly or indirectly) received gifts from a foreign person exceeding, in aggregate, $100,000 during the current tax year

4. A US person who is the issuer of an obligation held by a foreign trust that the US person treats as a "qualified obligation"

5. The grantor, transferor, or executor (the responsible party) must file Form 3520 to report a "reportable event"; reportable events generally include:

— The creation of a foreign trust by a US person
— The direct or indirect transfer of any money or property to a foreign trust by a US person (including a transfer by reason of death)
— The individual who directly or indirectly transferred property to a foreign trust as a nonresident alien becomes a US income tax resident within five years after such transfer
— A change in status from a domestic trust to a foreign trust
— The death of a US citizen or US resident if the decedent was treated as the owner of any portion of a foreign trust or any portion of a foreign trust is included in the gross estate of the decedent

Form 8938 — DUE APRIL 18

Form 8938, Statement of Specified Foreign Financial Assets, is filed by an individual if the aggregate value of all of the individual's specified foreign financial assets (SFFAs) exceeds an applicable threshold amount. The form is attached to the individual's income tax return for the tax year and is due on the due date for the individual's Form 1040 (generally April 18, or later if the Form 1040 is extended). The initial penalty for non-compliance is $10,000. If an individual fails to file for more than 90 days after the IRS notifies the individual of the failure to comply, a penalty of $10,000 for each 30-day period (or fraction thereof) applies with a maximum penalty of $50,000. In addition, if an individual fails to file Form 8938 or report a specified foreign financial asset, the statute of limitations for the tax year may remain open for all or part of the taxpayer's income tax return (not just the Form 8938) until three years after the date the individual files Form 8938.

SFFAs generally include: (1) any financial account maintained by a foreign financial institution; and (2) any of the following foreign assets if they are not held in an account maintained by a financial institution: (a) stocks or securities issued by someone who is not a US person (see Section 7701(a)(30) for the definition of a US person) (b) any interest in a foreign entity and (c) any financial instrument or contract with an issuer or counterparty that is not a US person.

If the taxpayer is single and living in the United States, the applicable threshold amount is either: (1) $50,000 on the last day of the tax year; or (2) $75,000 at any time during the tax year. If married, filing a joint return and living in the United States, the threshold amount is either: (1) $100,000 on the last day of the tax year; or (2) $150,000 at any time during the tax year. If married, filing separate returns and living in the United States, the threshold amount is either: (1) $50,000 on the last day of the tax year; or (2) $75,000 at any time during the tax year. If single and living abroad, the threshold amount is either: (1) $200,000 on the last day of the tax year; or (2) $300,000 at any time during the tax year. If married, filing a joint return and living abroad, the threshold amount is either: (1) $400,000 on the last day of the tax year; or (2) $600,000 at any time during the tax year. If married, filing separate returns and living abroad, the threshold amount is either: (1) $200,000 on the last day of the tax year; or (2) $300,000 at any time during the tax year.

FinCEN Form 114 (formerly Form TD F 90-22.1) — DUE JUNE 30

FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed by a US person who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. For purposes of FinCEN Form 114, financial accounts include shares in a mutual fund or similar pooled fund, insurance policies with a cash value, annuity policies with a cash value, and commodity futures or options accounts. The relationship must be reported each calendar year by filing the FBAR with the Department of the Treasury on or before June 30 following the close of the tax year. No extension of time is available for filing FinCEN Form 114.Civil and criminal penalties, including in certain circumstances a fine of the greater of $100,000 or 50% of the balance in the account and imprisonment of not more than five years, apply for failure to file a report, supply information, and for filing a false or fraudulent report. Filing a Form 8938 for the tax year does not obviate the requirement to file the FBAR. All timely, amended, and late FBARs must be filed electronically through the FinCEN BSA system.

For questions regarding any of these informational reporting forms, contact any of the following members of the NTD PCS team listed below.

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