I have so far filed tax three times in the US (2017, 2018, 2019) after moving from Canada. I received a notice for form Form 3520-A. The charge seems to be for Failure to File Form 3520-A. This letter is in relation to tax year 2018.
I received one letter so far mentioning that I have been penalized 5k$. There was a phone number mentioned on the letter and I called them this afternoon. I couldn't get through to an actual person due to high call volumes so will call back in the morning to hopefully speak to someone. However, in one of the options there was an option to get a detailed summary of the account and I found out that in total I am penalized for 13k$. I have not seen a letter for the rest of the 7k$ but I am assuming it will be in the mail sometime soon.
What could be my options? I have always filed 3520 and 3520A together so I do not understand how there could be a 'Failure to file'. Are there any other phone numbers that someone can provide using which I can reach an actual person to speak with?
Any help is greatly appreciated. Thanks so much!
Form 3520A - Penalty charge
Moderator: Mark T Serbinski CA CPA
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cdn_in_amrica
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Re: Form 3520A - Penalty charge
I got to spoke to someone in IRS. She was able to pull up my profile and said that I got penalized because i did not submit by Mar 15 but before Apr 15. So now I am preparing letter trying to explain how if a trust doesn't file by Mar 15 then the individual can file the form 3520A, which would anyway be submitted after Mar 15.
Would anybody have insight or dealt with anything similar? Thank you.
Would anybody have insight or dealt with anything similar? Thank you.
Re: Form 3520A - Penalty charge
I had the exact same penalty a couple of years ago. I had not filed an extension for the 3520-A as well but had extended my 1040. I called the IRS and told them the situation and had also written a letter. They did reverse the penalty after I sent the letter. It caused me many sleepless nights. Here is the letter I wrote if it helps you as it has the relevant IRM. Not sure if anything has changed, but hope it helps you in some way. Seems like you did not file the extension for the 3520-A by Mar 15 but you filed your return on time so you should not have the penalty. Letter below:
Dear Sir/Madam:
I am writing to request an abatement of penalties in the amount of $xxxxx as assessed in the enclosed CP15 notice that is dated xxx. The notice indicates that Form 3520-A was not filed by the time prescribed, did not include all the required information, or included incorrect information. Beyond this, no other specific information is provided in the letter. As such, I am responding based on the information I have at this time. Kindly provide additional information regarding the penalty and details regarding the three reasons indicated on the letter.
I am attaching a check for the penalty amount in good faith but request that the penalty be removed based on reasonable cause as detailed by the facts below.
The reason why Form 3520-A was filed after the due date was due to the fact that I had prepared and attached Form 3520-A to Form 3520 and mailed them together in the same envelope to PO Box 409101,Ogden, Utah 84409 on date xxx.
Please note that the trustee of the account, a Canadian financial institution, does not prepare or file Form 3520-A. Therefore I prepared the form as the owner of the account and attached it to my timely filed Form 3520 as per the form instructions.
IRM 21.8.2.19.3 (7) and (8), states that:
‘If the foreign trust does not file Form 3520-A, but the U.S. owner completes and attaches a substitute Form 3520-A for the foreign trust to the U.S. owner's timely filed Form 3520 in accordance with the instructions for Form 3520, the U.S. owner will not be subject to the penalty for failure to file Form 3520-A.’
Based on the above IRM section, I filed Form 3520-A with Form 3520.
My Form 3520 and 1040 was extended on Form 4868 and was filed timely on xx. I am attaching the Form 4868 extension and my the USPS receipts showing the date the 3520 and 3520-A were mailed.
I prepared all forms based on the above facts and do not believe that I should be assessed a penalty. In addition, I have made all reasonable efforts to ensure that Form 3520-A was filed timely and correctly with all information that was required on these forms. I do not owe any other taxes, penalties or interest to the IRS and have always had a record of being tax compliant. Any action on my part related to Form 3520-A which may have indicated otherwise was not willful.
I request that you remove my penalty and that the enclosed check will not be cashed.
Dear Sir/Madam:
I am writing to request an abatement of penalties in the amount of $xxxxx as assessed in the enclosed CP15 notice that is dated xxx. The notice indicates that Form 3520-A was not filed by the time prescribed, did not include all the required information, or included incorrect information. Beyond this, no other specific information is provided in the letter. As such, I am responding based on the information I have at this time. Kindly provide additional information regarding the penalty and details regarding the three reasons indicated on the letter.
I am attaching a check for the penalty amount in good faith but request that the penalty be removed based on reasonable cause as detailed by the facts below.
The reason why Form 3520-A was filed after the due date was due to the fact that I had prepared and attached Form 3520-A to Form 3520 and mailed them together in the same envelope to PO Box 409101,Ogden, Utah 84409 on date xxx.
Please note that the trustee of the account, a Canadian financial institution, does not prepare or file Form 3520-A. Therefore I prepared the form as the owner of the account and attached it to my timely filed Form 3520 as per the form instructions.
IRM 21.8.2.19.3 (7) and (8), states that:
‘If the foreign trust does not file Form 3520-A, but the U.S. owner completes and attaches a substitute Form 3520-A for the foreign trust to the U.S. owner's timely filed Form 3520 in accordance with the instructions for Form 3520, the U.S. owner will not be subject to the penalty for failure to file Form 3520-A.’
Based on the above IRM section, I filed Form 3520-A with Form 3520.
My Form 3520 and 1040 was extended on Form 4868 and was filed timely on xx. I am attaching the Form 4868 extension and my the USPS receipts showing the date the 3520 and 3520-A were mailed.
I prepared all forms based on the above facts and do not believe that I should be assessed a penalty. In addition, I have made all reasonable efforts to ensure that Form 3520-A was filed timely and correctly with all information that was required on these forms. I do not owe any other taxes, penalties or interest to the IRS and have always had a record of being tax compliant. Any action on my part related to Form 3520-A which may have indicated otherwise was not willful.
I request that you remove my penalty and that the enclosed check will not be cashed.