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Grantor trust was created by a US citizen living in the USA. It held a US property which was rented out. When the grantor/trustee was incompetent, her NRA sister became trustee. Assuming ceasing to be a grantor trust at that time. The property on grantor's death was sold & 8288A filed as no gain.

Escrow agent was sent a letter from IRS in August asking for more information on the transfer which they say it was not received. Followup letter was sent Sept 21 by the IRS which was received by the Escrow Agent and forward as an attachment to the trustee's accountant while he was on holidays. He was not able to open the attachment.. Unfortunately, the accountant forgot to contact escrow agent on his return early in Oct and just open the attachment which indicated that the withholding certificate been rejected and the tax withheld must sent with Form 8288 by Oct 11. What is the penalty for late payment and filing of 8288 and is there anything that can be done at this stage? There is no gain and ultimately the trust should received the full refund of the withholding taxes.
Non-Resident Tax Withholding Requirement


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