What is Form 3520?

Form 3520 is the “annual return to report transactions with foreign trusts and receipt of certain foreign gifts” It covers:

Transfers by U.S. persons to foreign trusts, or distributions from foreign trusts to U.S. persons.
Receipt by a U.S. person of large gifts or bequests from foreign persons (individuals or entities).
It is not a tax-computation form for gift or estate tax in the usual sense, but a disclosure obligation.

Key thresholds and points:

If you receive a gift or bequest from a foreign individual that exceeds $100,000 in a calendar year, you must complete Part IV of Form 3520.
If you receive a gift or bequest from a foreign corporation or partnership, there is a lower threshold (approx. ~$20,000 for 2025) per §6039F.
Due date: It generally accompanies your tax return (April 15 for calendar year individuals), or the extension of it.
Penalties for non-filing can be severe: e.g., 5% per month up to 25% for late foreign-gift filings.

What is Form 708 and What Changed Under OBBB?

With the OBBB era came the finalization of the regulations under IRC §2801 (imposed since the HEART Act (2008)) which targets “covered gifts/bequests” from “covered expatriates.” Under these rules, a new return, Form 708, has been drafted and will (when final) be the vehicle for reporting and paying tax on such transfers.

Highlights:

A “covered expatriate” is generally a U.S. citizen or long-term resident who relinquishes U.S. status after June 17, 2008 and meets certain thresholds (e.g., average annual net income tax, net worth, or failure to certify compliance). Final regs. under §2801 apply for gifts/bequests received on or after January 1, 2025.
A “covered gift” or “covered bequest” is property acquired from a covered expatriate as gift or by inheritance, there are many definitional wrinkles.
Form 708 (draft version posted by the IRS) is titled “United States Return of Tax for Gifts and Bequests Received from Covered Expatriates.”
Filing threshold for Form 708: If the aggregate amount of covered gifts/bequests received in the calendar year does not exceed the annual gift tax exclusion (for 2025, $19,000) then you may not need to file.
Tax rate: The computation under §2801 will use the highest estate or gift tax rate in effect (40% in 2025) after subtracting the exclusion.
Due date: Form 708 is due by the 15th day of the 18th month after the close of the calendar year in which the gift/bequest was received (with an automatic 6-month filing extension possible).
Recordkeeping: Recipients must keep “permanent books and records” necessary to establish the required information (including donor status, expatriate status, valuation, etc.).

High-level logic:

Did you receive a gift or bequest from a foreign individual or entity?
- Yes → Check if donor is a covered expatriate.
• If no → Use Form 3520 (if threshold met).
• If yes → Use Form 708 (if threshold met).
Did you transfer property to or receive distributions from a foreign trust? → Use Form 3520 (or Form 3520-A if required) and separately evaluate whether §2801 (Form 708) also applies (e.g., trust contributions or distributions attributable to a covered expatriate).
Are you under the threshold(s)? → Perhaps no form required—but keep documentation.

If you’ve recently received a foreign gift or bequest, or if you’re involved with a foreign trust and aren’t sure whether Form 3520, Form 3520?A or the new Form 708 applies, contact us @info@nggtaxgroup.com. We will quickly review your facts and point you in the right direction.

Foreign gift reporting rules, Form 3520 & 2025 updates

What is Form 3520?

What is Form 708 and What Changed Under OBBB?

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