Certain trusts have their own annual reporting obligation, separate from anything the people who benefit from them file.
The obligation attaches to the role of trustee, which is often accepted informally and years before anyone thinks about filings. Trustees regularly discover the requirement after a notice rather than before a deadline.
This covers which arrangements have to file, what the return reports, what has to be attached to it, who signs, and what happens where the filing has been missed.
IRS Form 5227 is an annual information return required for split-interest trusts, legal arrangements where the income or principal is split between charitable and non-charitable beneficiaries. It is NOT an income tax return; no tax is paid on the form itself. The IRS uses Form 5227 to monitor whether split-interest trusts are being administered properly and to ensure that donors are claiming appropriate charitable deductions.
Types of Trusts That Must File Form 5227
| Trust Type | Description |
|---|---|
| Charitable Remainder Annuity Trust (CRAT) | Pays a fixed dollar amount annually to non-charitable beneficiaries for a period, then the remainder passes to charity |
| Charitable Remainder Unitrust (CRUT) | Pays a fixed percentage of trust assets (revalued annually) to non-charitable beneficiaries, then remainder to charity |
| Charitable Lead Annuity Trust (CLAT) | Pays a fixed amount annually to charity for a period, then remainder passes to non-charitable beneficiaries |
| Charitable Lead Unitrust (CLUT) | Pays a fixed percentage of assets annually to charity, then remainder to non-charitable beneficiaries |
| Pooled Income Fund | Contributions are pooled and invested; income distributed to non-charitable beneficiaries for life, then assets go to charity |
This is a reporting obligation attached to a role somebody accepted, often informally and often years earlier. Trustees are regularly unaware the filing exists at all. If you have agreed to act, find out what the arrangement obliges you to file before the first year end, rather than after a notice.
Ankit Sarawagi, CPA, CA, MBA · LinkedInFiling Deadline
Form 5227 is due April 15 of the year following the tax year. An automatic 6-month extension is available by filing Form 8868 (not Form 7004) by April 15. If the 15th falls on a weekend or holiday, the deadline moves to the next business day.
What Form 5227 Reports
Part I, Distributions
Reports income distributed to non-charitable beneficiaries and retained in the trust.
Part II, Distributable Net Income (DNI) and Distribution Deductions
Calculates the four-tier ordering rule for characterizing distributions: (1) ordinary income, (2) capital gain, (3) other income, (4) principal.
Part III, Balance Sheet and Reconciliation
Must attach a balance sheet showing beginning and ending assets and liabilities, and a statement of income and expenses for the year. These attachments are not standardized forms, the trustee or CPA prepares them.
Part IV, Charitable Deduction Information
Tracks amounts permanently set aside for charitable purposes. Important for the donor who took an upfront charitable deduction when funding the trust.
Part V, Excise Tax
Certain prohibited transactions or distributions can trigger a 2% excise tax on net investment income or other penalties.
Required Attachments
- Balance sheet (beginning and end of year)
- Income statement / statement of receipts and disbursements
- Trust agreement (first year only, a copy must be attached to the first filing)
- Amendments to trust agreement, if any were made during the year
Where to File
Form 5227 is filed with the IRS Ogden, UT 84201 office regardless of the trust's location. E-filing is not available for Form 5227, it must be paper filed.
Penalties for Non-Filing
The penalty for failing to file Form 5227 is $20 per day up to $10,000. For trusts with gross receipts over $1 million, the penalty is $100 per day up to $50,000. The penalty can be abated for reasonable cause.
Who Prepares and Signs
The trustee (or a duly authorized officer) signs the form. If a paid preparer assists, the preparer also signs and provides their PTIN. A CPA or tax attorney with experience in charitable trusts typically prepares this form given its complexity.
Pro Tip: Many CRUTs and CRATs are set up through community foundations or donor-advised fund sponsors who handle the Form 5227 filing as part of their administrative services. If your CRT is self-trusteed, engage a specialist.
Book a free consultation and we will take the return off your desk.
Frequently Asked Questions
Is Form 5227 a tax return?
No. It is an information return. No income tax is reported or paid on the form itself. The trust may be subject to UBTI (unrelated business taxable income), which is reported on Form 4720.
Does a charitable lead trust also file Form 5227?
Yes. Charitable lead trusts (CLATs and CLUTs) that are not grantor trusts file Form 5227.
Does a donor-advised fund file Form 5227?
No. Donor-advised funds are not split-interest trusts and file Form 990 instead.
What if the trust had no activity during the year?
A zero-activity return may still be required. Consult the Form 5227 instructions and your tax advisor.
Can Form 5227 be e-filed?
No. As of current IRS guidance, Form 5227 must be paper filed.
Written by
Ankit Sarawagi, CPA, CA, MBA
Ankit leads the finance team at Profitjets, where he has worked with 500+ businesses across the US on bookkeeping, tax and CFO-level strategy. He writes about the habits that keep small business books accurate all year. Connect on LinkedIn
Free consultation
Want the Filing Handled?
Book a free consultation and we will take the return off your desk.