Delinquent International Form 3520 Information Return Submission Procedures

Delinquent International Form 3520 Information Return Submission Procedures

Delinquent International Form 3520 Information Returns

Delinquent Form 3520 Submission: The IRS Delinquency Procedures aka Delinquent International Information Return Submission Procedures (DIIRSP) were used as a way to submit previously unreported information returns such as Form 3520. In November, the IRS modified the program into a regular “reasonable cause” submission. While DIIRSP can still be used in lieu of are  Streamlined Procedure or Voluntary Disclosure — the request to waive penalties will be more heavily scrutinized by the Internal Revenue Service.

Form 3520 Delinquency Procedures: How to Apply

The IRS provides the following summary on how to apply to Delinquency Procedures for various international reporting forms:

Who Can Apply to Form 3520 Delinquency?

As provided by the IRS:

      • “Taxpayers who have identified the need to file delinquent international information returns who are not under a civil examination or a criminal investigation by the IRS and have not already been contacted by the IRS about the delinquent information returns should file the delinquent information returns through normal filing procedures.
      • Penalties may be assessed in accordance with existing procedures.
      • All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.
      • All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.
      • Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement. It may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.
      • Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.

Form 3520 Reasonable Cause

As provided by the IRS:

      • “As part of the reasonable cause statement, taxpayers must also certify that any entity for which the information returns are being filed was not engaged in tax evasion.  If a reasonable cause statement is not attached to each delinquent information return filed, penalties may be assessed in accordance with existing procedures.
      • All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.  
      • All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.  
      • A reasonable cause statement must be attached to each delinquent information return filed for which reasonable cause is being requested.
      • Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns. Delinquent Procedures Frequently Asked Questions and Answers

An Effective Form 3520 Reasonable Cause Statement is Key

With the IRS regularly issuing automatic Form 3520 penalties, as well as increasing scrutiny of reasonable cause letters, it is crucial that the reasonable cause statement be effective. While a Reasonable Cause statement does not guarantee success, it sets the taxpayer up to fight the good fight at each step of the process. Taxpayers should consult with a Board-Certified tax specialist to get an accurate lay of the land before making any representations to the IRS.

Form 3520 Delinquency Procedures Tax 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.

Contact our firm today for assistance.

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