The IRS Office of Associate Chief Counsel (International) has agreed to investigate an erroneous penalty campaign by the IRS targeting foreign trust owners who have timely filed Substitute Form 3520-A. If you have clients who have received one of these Form 3520-A penalty notices, we need your input.
The IRS would like specific information from taxpayers who have been targeted, so I have created a password protected information form to distribute to practitioners. Your client (or you) should complete the form, save it, then open it to ensure the data is there before sending it back to me. Request Form from me at firstname.lastname@example.org
Out of frustration with the IRS, I published a blog article last summer describing my experience with one of my clients who had received a $10,000 penalty notice for Form 3520-A after properly filing the form. The comments and reactions to the article have indicated the problem is systemic and pervasive, potentially affecting thousands of taxpayers. The Taxpayer Advocate office has been unable to help.
I happened to sit next to Mark Koziel, Executive Vice President of the AICPA at a dinner in October. I described the problem to him. He sent my article to Eileen Sherr with the AICPA Tax Policy & Advocacy Team.
On November 15, the AICPA Trust, Estate and Gift Tax Technical Resource Panel met with IRS representatives from the Office of Associate Chief Counsel and described the issue. The IRS attorneys then had a call with the IRS processing and penalty groups responsible for these penalty notices and relayed our concerns. The processing and penalty groups agreed to a follow up call with the AICPA in January to address the issue, but first wanted to get details about individuals affected.
Update on the client I wrote about: Over 9 months of calls and letters to the IRS about this client’s penalty notice produced no results. Finally, yesterday we called for an update and the agent immediately cancelled the penalty and said the client would be receiving a letter of apology from the IRS.
We had the same result with another client this morning. If you have clients in this situation, I suggest giving the IRS a call. I think our efforts are finally producing results.
My membership in TaxConnections.com is a direct result, thanks to the help and support of Kat Jennings.
I would like to get responses back to the IRS as soon as possible. Tax Practitioners can request the form directly from me.
Gary Carter PhD, MT, CPA