Penalties for Not Filing Form 3520

The IRS requires a U.S. person receiving a gift from a foreign individual, corporation, partnership, or estate to report by filing Part IV Form 3520. Failure to file or late, incorrect, or incomplete filing is subject to a severe penalty. A penalty of 5% of the amount of the gift for each month not reported is given. The penalty does not exceed a total of 25% of the gift. A penalty is not imposed if the taxpayer shows reasonable cause for failure to report.

When receiving a penalty for failure to file Form 3520, Notice CP 15 or CP 215 is sent to the taxpayer notifying the taxpayer which requires a timely response. If the taxpayer wishes to appeal the penalty, they should submit a written request to appeal within 30 days from the date of the notice explaining the reasonable cause for failure to report. This appeal should include all relevant facts and documents supporting the taxpayer’s position.

If no action is taken, the taxpayer will receive one of three letters: Letter 1058, Notice of Intent of Your Right to a Hearing; LT11, Final Notice of Intent to Levy and Notice of Your Right to a Hearing; or Letter 3172, Notice of Federal Tax Lien and Your Rights to a Hearing under IRC 6320.

Taxpayers who have incurred penalties for failure to file Form 3520 or late Form 3520 should contact Patel Law Offices. Over the years, our office has successfully represented numerous taxpayers with protests of Form 3520 penalties.

Patel Law Offices offers a free strategy session to discuss how to resolve your foreign asset problem. Conveniently schedule online today by completing our questionnaire and online scheduler.

Patel Law Offices offers a free strategy session to discuss how to resolve your legal problem. Conveniently schedule online today...

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