Green card holders must file Form 3520 for Vietnam gifts over $100,000

When parents or relatives in Vietnam who are neither US citizens nor US residents give or leave money to a US citizen, green-card holder or other US tax resident, the recipient owes no US income tax on it.

Above $100,000 in a tax year, such gifts and bequests must be reported to the Internal Revenue Service (IRS) on Part IV of Form 3520, and a late report risks a penalty of 5% of the gift a month, up to 25%.

Form 3520 is separate from the reports on foreign accounts and assets described in a separate article on what FATCA means for US permanent residents.

A gift is not income, but it is reported

Section 102 of the Internal Revenue Code (official text via govinfo) excludes from gross income “the value of property acquired by gift, bequest, devise, or inheritance”. The exclusion stops at the gift itself: income the property later produces is not excluded, and Publication 525 names interest, dividends and rents.

The Instructions for Form 3520 (Rev. December 2025) require Part IV from a “U.S. person”: for an individual, a US citizen or resident, including a dual resident who claims treaty benefits.

Under section 7701(b), a foreign national is resident for a calendar year if they hold a green card at any time in it or meet the “substantial presence” test, a count of days in the country.

$100,000 in IRS guidance, $10,000 in the statute

The Instructions require Part IV from anyone who received more than $100,000 in the tax year “from a nonresident alien individual or a foreign estate”, counting foreign persons related to that donor, that they treated as gifts or bequests. The statute sets a lower figure.

Section 6039F requires a US person whose foreign gifts in a taxable year exceed $10,000 in aggregate to furnish the information the Treasury prescribes, and indexes that $10,000 for inflation.

The IRS’s Internal Revenue Manual states both: the threshold for gifts from nonresident alien individuals and foreign estates “is statutorily $10,000, but the amount was raised to $100,000 under Notice 97-34“, issued in 1997.

Gifts from foreign corporations and partnerships are measured against the statute’s $10,000 after indexing, which Revenue Procedures 2024-40 and 2025-32 put at $20,116 for 2025 and $20,573 for 2026. The IRS page on gifts from a foreign person warns that the IRS may recharacterise purported gifts from such entities.

This means that money sent by a family company in Vietnam, rather than by a parent personally, falls under this lower figure.

Distributions from a foreign trust are reported in Part III of the form, not Part IV. Cross-border trusts are covered in a separate article.

Gifts from related donors are added together

Gifts from different nonresident aliens and foreign estates are added together for the $100,000 if the recipient knows, or has reason to know, that they are related to each other, or that one is acting as a nominee or intermediary for the other.

Related persons include family members: siblings, a spouse, parents, grandparents and other ancestors, children, grandchildren and other descendants, and their spouses. This indicates that gifts from a father and from a mother in Vietnam count toward one total, as do gifts from grandparents and parents.

Once the threshold is passed, line 54 of Form 3520 asks, for each gift above $5,000, its date, a description of the property and its fair market value.

Line 54 does not ask who an individual donor was; the Treasury’s preamble to regulations proposed in May 2024 (official text via govinfo) restates that the recipient “is not required to identify the transferor”, though Notice 97-34 says the IRS may ask for the donor’s identity. Line 55, for gifts from foreign corporations and partnerships, does ask for the donor’s name, address and taxpayer identification number.

Tuition paid straight to the school is excluded

Section 6039F leaves out of “foreign gift” any “qualified transfer” under section 2503(e)(2): an amount paid on an individual’s behalf as tuition to an educational organisation, or to a provider of medical care as payment for that care.

Money a parent sends to a student who then pays the school is therefore not a payment to the school on the student’s behalf, and it counts toward the $100,000.

Gift tax falls on the donor, and on a non-US donor only for US property

The donor, not the recipient, is generally responsible for paying US gift tax, according to the IRS’s questions and answers for nonresident donors, last updated on 23 July 2026.

Donors who are neither US citizens nor US residents are subject to it for gifts of “real and tangible property situated in the United States”; gifts of US-situated intangible property are not taxed, the IRS says on a separate page. Neither page says where money or a bank transfer is situated.

The rules on where property is situated are set out in Treasury regulation 25.2511-3 (official text via govinfo). Real and tangible property is US property “only if” physically in the United States.

A bank deposit whose primary obligor is a US person is US property, even if the deposit is at a foreign branch of that US bank, and any other bank deposit “constitutes property situated outside the United States”; currency “is not a debt obligation” for that rule.

Applied to a transfer from Vietnam, these rules indicate that money a parent transfers from an account at a Vietnamese bank that is not a branch of a US bank is property situated outside the United States, and that no US gift tax arises for that parent. By the same rules, banknotes handed over inside the United States fall under the rule for tangible property physically there.

Whether a parent’s estate owes US estate tax is a different question, set out in a separate article on cross-border succession.

Due on 15 April, by post to Ogden

For an individual with a calendar tax year, Form 3520 is due on 15 April of the following year. Those who live and work outside the United States have until 15 June, with a statement attached.

An extension for the income tax return carries Form 3520 to 15 October at the latest; the IRS page says to tick box 1k and enter the return’s form number so that the form is not treated as late.

The form is filed separately from the income tax return and posted to the IRS at P.O. Box 409101, Ogden, UT 84409. The Instructions add that only a complete form counts as filed on time and that e-signatures are accepted.

5% a month, up to 25%

If a foreign gift is not reported in time, section 6039F lets the IRS determine the tax consequences of receiving it and imposes a penalty of 5% of the gift for each month the failure continues, up to 25%; the IRS page applies the same exposure to a Part IV that is incomplete or incorrect.

At those rates the penalty on a $200,000 gift reaches its maximum, $50,000, after five months. No penalty applies if the recipient shows that the failure was due to reasonable cause and not to willful neglect.

The IRS’s first-time abatement waiver does not reach it: its penalty manual lists Form 3520 among returns for which relief under that waiver “is NOT applicable”.

“The IRS has ended its practice of automatically assessing penalties at the time of filing for late-filed Forms 3520, Part IV,” the National Taxpayer Advocate wrote in a blog post on 24 October 2024, reporting an announcement by IRS Commissioner Danny Werfel.

The current section of the Internal Revenue Manual for staff who process the form, dated 1 May 2026, tells them not to assess any penalty on Part IV, and says the “IRS is no longer assessing penalties at filing on late Forms 3520 reporting foreign gifts and bequests in Part IV”.

The Taxpayer Advocate Service’s 2025 objectives report describes the same change as applying where a reasonable-cause statement is attached and accepted; the two accounts do not match.

The penalty remains in the statute. The manual’s chapter on international penalties, in the copy read for this article, last dated 2021, provides for an examiner to assert it where a reportable gift was received, Form 3520 was filed late and reasonable cause was not shown.

The 2024 change therefore ended automatic assessment when a late form arrives; it did not waive the penalty.

The first year with a green card

Under section 7701(b), a person who becomes resident during a year is treated as resident only from the “residency starting date”. For a green-card holder who does not meet the substantial presence test, that is the first day in the year on which they are present in the United States as a lawful permanent resident.

Publication 519 adds that the person is a nonresident alien for the part of the year before that date. For an EB-5 investor the first card is conditional, as explained in a separate article on the EB-5 investment amount and the two-year conditional green card; whether that card counts for the green card test is noted at the end.

Section 6039F covers foreign gifts “received by a United States person”. This indicates that a gift received before the residency starting date is received by a nonresident alien and falls outside Part IV.

The only official text found to say so expressly is the set of regulations proposed in May 2024, under which a person is not a US person for the part of a year in which they are treated as a nonresident alien. They are not final, and a taxpayer and all related persons may rely on them only if they apply them in their entirety and consistently.

In Vietnam, the tax reaches securities, business stakes and property

Vietnam’s Personal Income Tax Law 109/2025/QH15, in force since 1 July 2026, treats as taxable income from gifts and inheritances four kinds of asset: securities, capital stakes in businesses, real estate and other assets whose ownership or use must be registered.

The rate is 10% of the value above VND 20 million for each receipt, and for a recipient not resident in Vietnam it applies to such gifts in Vietnam. Gifts of real estate between spouses, parents and children, parents-in-law and children-in-law, grandparents and grandchildren, and siblings are exempt.

A cash gift is therefore not among the four kinds of asset listed. Transfers of settlement money out of Vietnam are covered in a separate article.

What this article has not established

No IRS text read for this article says whether Form 3520 can be filed electronically, or whether a conditional green card, held by EB-5 investors before conditions are removed, counts for the green card test. The Instructions and the IRS page give only the Ogden address, and the Instructions add that e-signatures are accepted.

Nor does any IRS publication read for this article apply the regulation’s bank-deposit rule to a transfer from a Vietnamese account; that conclusion, and the one on banknotes, are drawn from the regulation’s text alone. The Instructions do not address a year in which a person becomes resident, and the proposed regulations that do are not final.

The IRS’s own text of the October 2024 announcement was not found, nor any figure on Part IV penalties asserted in examinations since. The Taxpayer Advocate Service says the IRS plans to apply first-time abatement to eligible taxpayers from 2026, while the IRS manual still lists Form 3520 as ineligible.

Inflation-adjusted figures for 2027 had not been published on 12 October 2026. Code sections were read in the 2024 edition; later amendments were not checked.

The status of a US–Vietnam income tax treaty was not checked, Decree 253/2026/NĐ-CP was not read, and the new Vietnamese law was not compared with the one it replaced. Any individual’s position is outside the article.