Penalty for late filing of 3520 w no new tax owing?

CdnAmerican · Post by **CdnAmerican** » Wed Oct 12, 2011 5:09 pm

I am a US citizen in Canada. I recently learned about the need to file 3520/3520A for my RESP accounts. I submitted these to the IRS at the same time as I sent in a 1040X in August 2011. I have filedmy 1040 returns on a timely basis, and have not had US tax owing for several years. With the 3520, there was no new tax owing; I simply did not know about the 3520 and 3520A requirement until recently. My presumption is that there would be no penalty for backfiling this, based on other posts I'd seen here.

I received an IRS letter today stating that "We received your request for penalty relief; however, we cannot consider your request because we have not compelted processing your tax return." I presume they are still working through the 1040X.

My question is, Is this simply a form letter, or should I expect some kind of penalty?

I've checked on other threads but haven't seen this one yet - my apologies if I've missed it. The info I have seen on other threads suggests that late filing of this form doesn't typically generate a penalty. I hope I'm right .. I would appreciate any others' experiences or impressions related to this.

Thanks!

nelsona · Post by **nelsona** » Wed Oct 12, 2011 5:21 pm

By no extra tax owing, tha timpliwes tha tyou reported the accrued income from within your RESP?

Btw, if you filed 3520 in August. likely it WAS timely.

You will not have any penalty. Just make sure that you have correctly reported the income on 1040.

CdnAmerican · Post by **CdnAmerican** » Wed Oct 12, 2011 5:49 pm

Nelsona - Thanks for your quick reply. I accounted for the RESP earnings in my 1040X, as I did not do this on my initial 1040. However, I easily had enough deductions otherwise so that I still had zero tax owing.

I also backfiled the 3520/3520A for the prior 4 tax years, with a similar result (that is, adding a little income which was noted on my 1040X, but with no tax owing). I don't think there would be a penalty - but what do you think?

Thanks again!

primo · Post by **primo** » Thu Mar 29, 2012 11:41 pm

I just received the same letter for my late filed 3520. Did you ever hear anything else after you received yours in October?
Thanks.

CdnAmerican · Post by **CdnAmerican** » Fri Mar 30, 2012 3:28 pm

Well, I resubmitted them, and I haven't gotten anything negative back, other than a letter saying they were reviewing them and would make a decision in 45 days or so. That was about 45 days ago, and was the second such letter I got after my first submission. So I am guessing that all is well. I still have a little anxiety when I check my mail, but probably that's paranoia on my part.

One thing that helps me in this process .. for all the fear that goes on related to filing these forms, I have not heard of anyone on this board or elsewhere who has complained about getting a fine just based on late filing of information forms. I am guessing there would be plenty of comments if there were a lot of those kinds of penalties.

primo · Post by **primo** » Fri Mar 30, 2012 7:01 pm

Why did you have to resubmit your 3520s? Did they send them back to you or something like that? What did you have to change?
Thanks for any info.

CdnAmerican · Post by **CdnAmerican** » Fri Mar 30, 2012 7:45 pm

I resubmitted them at the IRS' request. They wanted me to fill in some fields that I didn't fill in with NA, or filled in with "see above." It struck me as odd, but in retrospect I think that I didn't organize them very well when I sent them in (I didn't staple them, and in fact it would be easy for them to get mixed up). It was no big deal really, and their request to resubmit was reasonable, I thought.

primo · Post by **primo** » Fri Mar 30, 2012 7:50 pm

Thanks for replying. I had read on here somewhere, before I did mine, about someone else having to resubmit for not having N/A everywhere so I made sure mine was REALLY filled out. I also stapled them. Hopefully I don't hear anymore. I know what you mean about paranoia!