Extension Granted for Gift Tax Returns and Payments – No Extension for Form 3520

My earlier blog post detailed the extensions for filing and payment of US income taxes on account of the COVID-19 emergency.  Further relief was just granted on March 27 by the Internal Revenue Service (IRS) in Notice 2020-20 to all taxpayers who have Federal gift (and generation-skipping transfer) tax returns and payments due on April 15, 2020.

The April 15, 2020 deadline is postponed to July 15, 2020. This extension is automatic. No need to request any extension. Associated interest, additions to tax, and penalties for late filing or late payment will be suspended until July 15, 2020.

Notice 2020-20 will be in  the Internal Revenue Bulletin (IRB) 2020-16, dated April 13, 2020.  Once in the IRB, the Notice is authoritative and can be relied upon, but otherwise, IRS information is not reliable.  The IRB is the “official” source for reliable IRS tax information. If it’s not in the IRB, it’s legal weight is likely zero.

Don’t Get Confused – This is NOT an Extension for Filing Form 3520 – Receiving a Gift/Bequest from a Foreigner!

People are often confused about the US Gift Tax.  This is a transfer tax and it is imposed on the giver of the gift, not on the recipient of the gift. 

The giver of the gift (even if he is a non-US person) may have US Gift Tax consequences when he makes a gift. This is very distinct from the tax issues relevant to the recipient of the gift.  Read more about the US Gift tax and how it applies to non-US persons in my earlier blog posts here and here. 

If the recipient of the gift is a US citizen or resident and the gift is received from a foreign (non-US) person or entity, the gifts may need to be reported on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return.  In a nutshell, the gift is not taxable (in most cases), but, the IRS must still be notified of the gift.  You can read more about the tax issues involved with, and reporting of, foreign gifts at my blog post here.  

Form 3520 is also not part of the US income tax return. It is a separate information return and is sent to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.  As such, the due date for the Form 3520 is without regard to the recent IRS extensions granted for income tax returns and payments as set out in IRS Notice 2020-18.  These extensions were discussed in my blog post here.

Due Date

In general, a US person’s Form 3520 is due on April 15th, but eligible US persons living and working abroad have until June 15th to file the form.  Such an individual must include a statement on the Form 3520 showing that the taxpayer is a US citizen or resident who meets one of these conditions:

• Taxpayer lives outside of the United States and Puerto Rico and his place of business or post of duty is outside the
United States and Puerto Rico; or
• Taxpayer is in the military or naval service on duty outside the United States and Puerto Rico.

The Instructions to Form 3520 should  be carefully reviewed to ensure filing is handled correctly and penalties avoided.

UPDATED  APRIL 13 2020 — Form 3520 is included in the filing relief. Details are in my blog post —

Buying Time – International Tax Forms & More…IRS Notice 2020-23 Expands Relief for US Tax Filings, Elections, Payments

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