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Call To Action For Tax Professionals Worldwide: This Taxpayer Needs Help Resulting From Form 3520 Filing

Tax Professionals: We Need Help

Note From TaxConnections CEO: Is This Happening To Your Clients?

We frequently receive requests from taxpayers for referrals on a wide range of tax issues. This particular issue with a Form 3520 Filing and IRS response has happened to thousands of unknowing taxpayers. If you have advice for this taxpayer please leave it in comments section which we will now collect and memorialize for taxpayers.

There were numerous posts and comments on the matter and unfortunately (for some reason) many of the comments have been cut off. We are uncertain why this happened except perhaps WP wanted to save space. There were hundreds of valuable comments on the topic of Form 3520 mostly from taxpayers experiencing this nightmare scenario.

Here is an important comment made on TaxConnections last evening and at the end of this post will be a series of posts you will want to read to get up to date with tax professionals around the world on TaxConnections regarding filing Form 3520.

Here is the “Letter From Taxpayer” last evening to TaxConnections!

I found this site as I am going through an extremely stressful period because I need to pay a hefty penalty for late filing of form 3520 to disclose a foreign gift. I saw posts on the same topic here from 2019 and hope to see if any updates are available on that front.

I am a foreigner living in the U.S. on the H-1B work visa. My family (non US citizen/ non-green card holders) living abroad wired me money to help fund purchase of my house in 2018. I did my tax return for that year using Turbotax in Feb. 2019, without knowing that I should also file form 3520 together to disclose the gift I received from parents.

I became aware of this requirement at the end of April and I consulted a few tax lawyers about the situation and see what my options are, knowing that the 4/15 deadline is past. Tax lawyers I consulted told me just to mail in the form 3520 without filing any amended returns because it’s only a disclosure form and I have already filed my regular 1040 tax return before the deadline so I should be fine. I mailed in the form with a cover letter in early May.

Nothing had happen during the rest of 2019 and the majority of 2020…until on 12/10/2020, I received a horrible notice from IRS saying that I need to pay a penalty of $90K because I was late filing of form 3520. Firstly, how could IRS assume any ordinary taxpayers have knowledge of this specific reporting requirements? Secondly, I tried my best to comply with this requirement by sending the form as soon as I became aware of it. There is no mention of it on any paid Turbotax copy and no first time abatement is allowed on this penalty. Thirdly, this is a reporting form which does not even incur any tax implication.

I felt extremely desperate and have been in panic mood for the past couple days. It was somewhat relief to see similar posts gaining traction on this site. I truly want to see what my options are because not many tax attorneys are even aware of this. Hope to get some help from the professionals in this community! Please help!

~TaxConnections Taxpayer Visitor

Read Related Posts To Get Up To Speed On Form 3520 Filings

Then Make Your Comments Below!!!

The IRS Form 3520 Nightmare: Annual Return to Report Transactions With Foreign Trusts And Receipt of Gifts

Shocking Behind The Scenes Story: Tax Professionals Advocating For Taxpayers On 3520-A IRS Penalties


Foreign Trusts: IRS Penalty Notices For Late Forms 3520-A Traumatize Many Innocent Taxpayers!

Like FBAR, Form 8938, Form 3520 And Form 5471 – Canada Has Its Own Foreign Asset Reporting Rules

Does Your Client Have A Foreign Trust? Is The Form 3520 Nightmare Happening To Your Tax Clients?

Be Form Warned And Form Armed: The Easiest Way To Receive A Form 3520A Penalty Would Be To File A Form 3520

TaxConnections Admin

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6 thoughts on “Call To Action For Tax Professionals Worldwide: This Taxpayer Needs Help Resulting From Form 3520 Filing

  1. The Form 3520 penalty arena is difficult to navigate at this time. Without knowing the specific facts of this case, the Form 3520 probably should have been filed a statement of reasonable cause. There is generally a 30-day deadline for protesting the penalty stated in the notice. The deadline is from the date of the IRS Notice (not date of receipt). If so, the Taxpayer should retain a tax attorney with experience in protesting Form 3520 penalties ASAP. Depending the facts and the quality of the penalty protest, the taxpayer may receive a full or partial abatement of the penalty from the IRS or IRS Office of Appeals. It is very important to comply with the IRS deadlines.

  2. Avatar Tian says:

    Thanks for the advice Teig! I will retain a tax attorney ASAP and kick off the protesting procedure. Appreciate your advice!

  3. Avatar Bob says:

    More evidence that the surest way to get form 3520/3520-A penalties is to file forms 3520/3520-A.

    • Avatar Tian says:

      Indeed! I was trying to comply with the requirement as soon as I became aware of it and now I am subject to hefty penalty. Maybe others who intentionally not filing the form have some chance to get away 🙁

      This behavior is just to discourage people who try to comply with the tax code.

  4. Those unfamiliar with the the US tax system generally and the draconian penalties triggered by “All Things Foreign” specifically, don’t even believe that this could be taking place. It is indescribably unjust. In many cases those who want the most to be in compliance are those who suffer the greatest penalties. Sometimes this is because of the IRS, but often it is because of he way that the statutes are written – creating a presumption of a penalty.

    A couple of weeks ago Gary Carter and I did a podcast on the continuing 3520 and 3520A problems. It might be in the interest of Tax Connections for the podcast to be posted on the Tax Connections blog too.

    Given the draconian nature of these penalties, inflicted on those who try the hardest to comply, taxpayers could be forgiven for weighing the risks associated with compliance against the risks associated with noncompliance.

    What a tragedy for both the individual taxpayer and the integrity of the U.S. tax system!

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