Automatic Assessment of Form 3520 Penalties
Automatic Assessment of Form 3520 Penalties: When a U.S. Person is out-of-compliance with the IRS for non-compliance with foreign gift, inheritance or trust reporting rules, they may become subject to offshore penalties. U.S. Persons with certain foreign transactions with gifts and trusts are required to file IRS Form 3520. The Form is also referred to as “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.“
When a person does not file the form timely and/or does not submit a Reasonable Cause Statement package prior to being discovered by the IRS, the chance of penalties increases significantly.
In fact, the IRS has been issuing automatic assessment penalties for Form 3520.
Form 3520 Automatic Assessment
Recently, the IRS has begun issuing automatic assessment penalties for non-compliance with Form 3520.
In other words, when a taxpayer does not timely (or late with Reasonable Cause) file the Form 3520, the IRS issues penalties without providing the taxpayer an opportunity to respond first.
Instead of an audit notice, the Taxpayer receives a CP15 Notice.
The IRS CP15 Notice is a notice that provides for a penalty against Taxpayer.
Typically, the penalty is 25% value of the gift and could be worse for the trust.
For example, if Michelle received $900,000 from her foreign mother to help pay for a home in the U.S., the IRS can issue and automatic $225,000 penalty simply for not filing the form.
The form 3520 is required, even if the U.S. taxpayer is not required to file a tax return because they are below the threshold for filing for example.
The CP15 Notice has very strict response time requirements.
*If you miss the time to respond, there may be alternative routes to pursue, but they are typically more litigious (and costly to the Taxpayer).
Form 3520 International Tax Law Specialist Team
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure, including help clients with late reporting of Forms 3520 and 3520-A.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.