The\nFlorida Bar Tax Section recently made some excellent comments in response to\nthe Internal Revenue Service’s request for comments concerning Forms 3520 and\n3520-A. The comments were intended to enhance the quality, utility, and clarity\nof the information to be collected. Some of the selected comments are pasted\nbelow. <\/p>\n\n\n\n
The\nfirst encourages the IRS to create a new Form 3520 (maybe Form 3520-I for inheritance).\nThe most current of Form 3520 pertains to foreign trust\nreporting, which is entirely irrelevant to a U.S. person filer who seeks to\nreport a large foreign gift or inheritance received. It is confusing and nonsensical\nto keep disparate reporting in the same form.<\/p>\n\n\n\n
The\nsecond comment encourages the IRS to publicize that the IRS is currently\nassessing maximum penalties for late and amended Forms 3520, which is not the\ncase for most other international reporting tax forms. As a result, unsuspecting\nU.S. person filers who fail to timely report a significant\nforeign gift or inheritance are subject to punitive penalties. Our firm has\nspent countless hours helping penalized clients. After much advocacy, we find\nthe IRS ultimately abates (canceling) almost all such penalties.<\/p>\n\n\n\n
The\nlast comment asks the IRS to abate Form 3520 late penalties via the expansion of\nits popular First Time Abatement program, which currently abates specific penalties\nfor failure to pay income tax timely. <\/strong><\/p>\n\n\n\n The\ncurrent Form 3520 has dual uses \u2014 to report transactions with foreign trusts\nand the receipt of certain foreign gifts. Parts I through III (nearly 5 of the\n6 pages) of the current Form 3520 relate only to transactions with foreign\ntrusts. Those parts of the form are more complex and generally irrelevant when\nthe filer is a U.S. person who merely seeks to report a large foreign gift or\ninheritance. In contrast, Part IV of the current Form 3520, which is less than\none page, simply asks the filer to identify the donor and provide the date,\ndescription, and fair market value of the gift or inheritance. The dual nature\nof the form and complexity of Parts I through IV can cause confusion and inefficiencies.\nAccordingly, we recommend that the IRS create a separate form for reporting\nlarge foreign gifts and inheritances.<\/p>\n\n\n\n Further,\nwe recommend that the IRS make clear to the public and tax professionals that\nthe IRS is currently assessing maximum penalties for late and amended Forms\n3520 relating to reporting foreign gifts and inheritances. The IRS’s lack of\ncommunication regarding this practice of assessing systemic penalties at\nmaximum rates all the while advertising the Delinquent International\nInformation Return Procedures3<\/a><\/sup> is\nnon-transparent. We request more transparency from the IRS about its penalty\nprocedures and campus practices<\/p>\n\n\n\n In\naddition, we recommend the extension of the IRS’s First Time Abatement policy (“FTA”)\nto include the Relevant Forms so that taxpayers who fail to timely file these\nforms may avoid penalty without showing reasonable cause. FTA should apply not\nonly to the first tax year in question, but all tax years filed by the taxpayer\nduring an initial reporting period. For example, if a taxpayer was not aware of\nthe filing obligation, hires new counsel and learns of the obligation, and then\nfiles the Relevant Forms for the prior 3, 6 or any amount of prior years in\norder to come into compliance, the taxpayer should be exempt from penalty for\nall of the years in question under FTA. This will reduce the chilling effect on\ncompliance and reporting as taxpayers will not be fearful of penalties being\nassessed for multiple years when trying to come into compliance for the first\ntime.<\/p>\n","protected":false},"excerpt":{"rendered":" The Florida Bar Tax Section recently made some excellent comments in response to the Internal Revenue Service’s request for comments concerning Forms 3520 and 3520-A. The comments were intended to enhance the quality, utility, and clarity of the information to be collected. Some of the selected comments are pasted below. The first encourages the IRS […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"1","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4515","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=4515"}],"version-history":[{"count":2,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4515\/revisions"}],"predecessor-version":[{"id":4520,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4515\/revisions\/4520"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=4515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=4515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=4515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Move Part IV of Form\n3520 to a Separate Form<\/strong><\/h2>\n\n\n\n
Clarify\nthe Current Penalty Assessment Environment<\/h2>\n\n\n\n
Extend First Time Abatement Program to Include Forms 3520 and\n3520-A<\/h2>\n\n\n\n