The purpose of Form 3520 is to provide the IRS with information about these transactions, not to tax the gift or inheritance.
Failure to file Form 3520 when required can result in substantial penalties. The penalty for not reporting a foreign gift is 5% of the amount of the gift for each month the failure to report continues, up to a maximum of 25%, unless you have reasonable cause for the untimely filing or inaccurate filing of this form.
Note:
Qualified tuition or medical payments made on behalf of a U.S. person are not considered gifts for the purpose of these reporting requirements. Therefore, if a foreign person pays tuition directly to a school or medical expenses directly to a hospital on behalf of a U.S. person, these payments do not need to be reported.
The due date for filing a Form 3520 is every 15th of April. If you're an expat, you have until June 15 to file this form and can also apply for a filing extension until October 15th.