Form 3520 in 2027: $21,240.31 for Gifts From Foreign Companies, $100,000 From Foreign Individuals

Who the donor is decides which number applies

Section 6039F(b) defines a foreign gift as “any amount received from a person other than a United States person which the recipient treats as a gift or bequest.” The statute sets a base of $10,000 in aggregate foreign gifts in a taxable year and indexes it under subsection (d). The Instructions for Form 3520 turn that into two tests, and the Revenue Procedure only supplies the indexed one. The table keeps them apart.

Two points are easy to get wrong. First, the Revenue Procedure says only that section 6039F “authorizes the Secretary of the Treasury or the Secretary's delegate to require recipients of gifts from certain foreign persons to report these gifts if the aggregate value of gifts received in the taxable year exceeds $21,240.31.” It does not mention the $100,000 line, and a reader who searches the Rev. Proc. for the number that applies to a parent's estate will not find it. The IRM explains the history: the threshold for nonresident alien individuals and foreign estates “is statutorily $10,000, but the amount was raised to $100,000 under Notice 97-34”, and once it is reached only each gift over $5,000 is itemized. Second, the donor is tested by status, not by where the money sits: a gift from a US citizen living abroad is not from “a person other than a United States person.”

The 2027 figure next to the four before it

Each figure below is the section 6039F paragraph of the Revenue Procedure for that year, read in the document itself. The change is our arithmetic.

The 2027 increase of $667.31 is the same item that our 2027 estate and gift page and the Rev. Proc. 2026-35 1099 page list as one row among dozens. The 2027 figure is the first in this series with cents, which matters for a return filed in 2028: the test is “exceeds” $21,240.31, so a gift of exactly $21,240.31 does not trigger it. The IRS page on gifts from foreign persons, updated April 17, 2026, gives $20,116 for 2025 and $20,573 for 2026, matching the Revenue Procedures.

What counts, what does not, and how related donors add up

The Instructions say a gift to a US person “does not include any amount paid for qualified tuition or medical payments made on behalf of the U.S. person,” and the statute excludes qualified transfers under section 2503(e)(2). A distribution from a foreign trust goes in Part III, not Part IV. A domestic trust that is treated as owned by a foreign person is not itself required to report a contribution from that person, but a US person who receives a distribution from it reports it as a gift from a foreign person in Part IV. The IRS page adds that a “foreign person” includes a nonresident alien individual, a foreign corporation, a foreign partnership or a foreign estate.

Aggregation is where heirs lose track. For the $100,000 test the Instructions say you “must aggregate gifts from different foreign nonresident aliens and foreign estates if you know, or have reason to know, that those persons are related to each other or if one is acting as a nominee or intermediary for the other.” Related persons include brothers and sisters, a spouse, ancestors and lineal descendants, and a corporation in which the donor owns more than 50%. The Instructions give their own example: $75,000 from one nonresident alien and $40,000 from another who is known to be related means the answer is yes and each gift is listed.

The last row carries a warning in the Instructions and on the IRS page: gifts from foreign corporations or partnerships are “subject to recharacterization by the IRS under section 672(f)(4).” A payment that a company makes to a US person and that the recipient calls a gift can be treated as something else.

When it is due, and the October 15 trap

Form 3520 is filed separately from the income tax return (it goes to the Ogden service center, not with the 1040), and “only a complete Form 3520 is considered timely filed.” The dates in the Instructions are in the table.

For a gift received in 2025 by a calendar-year taxpayer, the IRS page says an extension request on Form 4868 also extends Form 3520 “until Oct. 15, 2026.” That date has now passed: as of November 7, 2026, a 2025 Form 3520 that has not been filed is late. Each late month adds 5% of the gift in the penalty, and the cap is reached in the fifth month (our arithmetic). The Instructions also say to check box 1k and enter the form number of the income tax return when an extension was filed. The IRS page states the reason: to avoid the form “being treated as filed late.”

What the penalty is, and what the IRS has said about collecting it

The statute (26 U.S.C. 6039F(c)(1)) does two things when the information is not furnished in time: the Secretary determines the tax consequences of receiving the gift, and the person pays “an amount equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of such amount in the aggregate).” Paragraph (c)(2) says the penalty does not apply when the person shows reasonable cause and not willful neglect. The Instructions repeat both.

The table counts whole months; the statute says “for each month” and we have not found a published IRS rule on partial months. The penalty is a percentage of the gift, so it does not depend on whether any tax is owed. Gifts and inheritances are generally not income to the recipient, as our page on tax on inheritance by asset shows; reporting changes nothing about that.

The data are the part nobody else publishes. On October 24, 2024 the National Taxpayer Advocate wrote that “The IRS has ended its practice of automatically assessing penalties at the time of filing for late-filed Forms 3520, Part IV.” The Advocate reported that over 2018 to 2021 the IRS abated section 6039F penalties on Part IV “totaling more than $179 million per year,” an abatement rate of “67 percent of the penalties assessed and 78 percent of the dollars assessed,” and that “even taxpayers who reported $400,000 or less in income received an average penalty of over $235,000.” For the foreign trust side (section 6677, Forms 3520 and 3520-A) the Advocate gave more than $224 million per year, 67% by count and 54% by dollars. Those are the Advocate's figures, and the Advocate says the abatement rate shows how often the penalties were erroneously assessed.

What that does and does not mean: the penalty can be reversed, and the IRS stopped the automatic step for Part IV in 2024 according to the Advocate's account. It does not mean the penalty is gone. The statute still sets 5% a month, and relief depends on showing reasonable cause. The IRM section we read (20.1.9.10, dated January 29, 2021) predates the 2024 change; we did not find the current IRM text for the post-2024 procedure, so we do not describe its details.

Form 3520, Form 3520-A, FBAR and Form 8938 are different reports

An inheritance that arrives as a foreign bank account triggers two different questions in two different years: the gift or bequest is reported once on Form 3520 when received, and the account is reported on the FBAR and possibly Form 8938 for every year it is held. For gifts from a spouse who is not a US citizen, see our page on the noncitizen spouse limit and the Form 3520 lines, and for the US side of annual gifts, the annual gift tax exclusion.

What a reader can do with this

What the documents let you check before talking to anyone:

• Sort each receipt by donor status. Write down who sent the money (a nonresident alien individual, a foreign estate, a foreign company, a foreign partnership, a foreign trust) and compare it with the matching line: $100,000 for individuals and estates, $21,240.31 for companies and partnerships in a 2027 year ($20,573 in 2026), and Part III for trusts.
• Add up related donors. Parents, siblings, a spouse and a company the donor owns more than 50% of are aggregated for the $100,000 test; list the gifts together for the year.
• Check the year, not the date you noticed. The test is the amount received in the tax year. A bequest paid in installments across two years is tested year by year.
• Calendar the October 15 date. If you extend the income tax return, Form 3520 does not follow the December 15 extension, and box 1k must be checked.
• If a report is already late, the clock is 5% of the gift a month to a cap of 25%. The Advocate's figures show that abatement on reasonable cause was common for 2018 to 2021; a written reasonable cause statement belongs with the late form, and what it says is for your tax professional.

The decision, and who makes it. Whether a transfer is a “gift” or income, whether a late report needs a reasonable cause statement, and how to file for a foreign estate are questions for a CPA or enrolled agent who prepares international information returns, or a tax attorney if a penalty has been assessed. A financial adviser can add what the money does after it arrives: where an inheritance of $250,000 or more goes, and what it does to income and estate planning. Nothing here is a recommendation to file or not to file.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on November 7, 2026: Internal Revenue Service, Rev. Proc. 2026-35 (section 3.51), Rev. Proc. 2025-32 (section 4.47), Rev. Proc. 2024-40 (section 2.48), Rev. Proc. 2023-34 (section 3.48) and Rev. Proc. 2022-38 (section 3.47); 26 U.S.C. 6039F (Legal Information Institute text); Instructions for Form 3520 (Rev. December 2025); IRS, Gifts from foreign person (page updated April 17, 2026); Internal Revenue Manual 20.1.9, International Penalties (version dated January 29, 2021); National Taxpayer Advocate blog “IRS Hears Concerns from TAS and Practitioners, Makes Favorable Changes to Foreign Gifts and Inheritance Filing Penalties,” October 24, 2024. Worked examples are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.