Help - IRS letter indicating penalty for late 3520
Moderator: Mark T Serbinski CA CPA
notice of penalty charge
Please help...
I just received a notice today [for failure to file even though I did] and spoke with an IRS agent who was suggesting that I file a 1040x along with my 3520A. He stated that they did not receive it and that he can hold my account for 120 days with a promise to pay the penalty???
I don't quite understand why he wanted me to promise payment when I submitted my 2010 form. Do I have to file a 1040x to send an amended 3520A? Has anyone had to submit an amended 3520A?
I just received a notice today [for failure to file even though I did] and spoke with an IRS agent who was suggesting that I file a 1040x along with my 3520A. He stated that they did not receive it and that he can hold my account for 120 days with a promise to pay the penalty???
I don't quite understand why he wanted me to promise payment when I submitted my 2010 form. Do I have to file a 1040x to send an amended 3520A? Has anyone had to submit an amended 3520A?
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CdnAmerican
- Posts: 245
- Joined: Tue Aug 30, 2011 12:15 am
I'm not sure, but I think you would file a 1040x if you had not previously claimed all your income from your 3520-A. I'm not sure what the 'promise to pay' statement involves, though. Maybe they are talking about income you didn't claim from the 3520-A which you are now supposed to pay tax on? Just a guess ..
Not a professional opinion.
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MikeRitchie
- Posts: 21
- Joined: Wed Feb 22, 2012 7:01 pm
I just received a similar letter asking for an explanation of late posting (sent in 3520 & 3520A for 2009 & 2010 TFSA last fall without an explanation letter). There was no mention of assessing a penalty, just that an explanation was required but would not ensure waiver of a penalty.
There is a phone number to call, which I will call, and likely send a letter saying that I wasn't aware of the requirement to file the form for this particular account. I'll let you all know if I get any different advice on the phone call.
There is a phone number to call, which I will call, and likely send a letter saying that I wasn't aware of the requirement to file the form for this particular account. I'll let you all know if I get any different advice on the phone call.
I had the same issue...I submitted both 2009 & 2010 in April 2011. i received the same letter you mentioned in january this year inquiring about my 2010 form and have since replied to them. they have responded in march regarding my 2009 form and stated:
"we have reviewed your information and determined no action was necessary on your account".
I thought that I was off in the clear but then I received another letter in March, then again in May, stating that they have not resolved the matter regarding my 2010 tax form. Just yesterday, I received the notice of penalty charge...basically a penalty in the total amount of my TFSA.
What am I to do now? I plan to write to them and send them all correspondences and explanations previously sent. Please help.
"we have reviewed your information and determined no action was necessary on your account".
I thought that I was off in the clear but then I received another letter in March, then again in May, stating that they have not resolved the matter regarding my 2010 tax form. Just yesterday, I received the notice of penalty charge...basically a penalty in the total amount of my TFSA.
What am I to do now? I plan to write to them and send them all correspondences and explanations previously sent. Please help.
Hi CdnAMerican,
I filed my 2011 3520 on Apr 2012 with 3520-A attached to it. I didn't file 3520-A separately. I was under impression that's good enough.
But I received a letter 3653c exactly same as yours "we are proposing a civil penalty" and asked me to explain the cause for late filing. I'm preparing the letter now. I will post the result.
Calvin
I filed my 2011 3520 on Apr 2012 with 3520-A attached to it. I didn't file 3520-A separately. I was under impression that's good enough.
But I received a letter 3653c exactly same as yours "we are proposing a civil penalty" and asked me to explain the cause for late filing. I'm preparing the letter now. I will post the result.
Calvin
That sucks.
Did they state the IRC code that the penalty is based upon? Have you sent the letter to explain why you were not able to comply? If yes, did they say your "reasonable cause" is rejected?
[quote="zad888"]I had the same issue...I submitted both 2009 & 2010 in April 2011. i received the same letter you mentioned in january this year inquiring about my 2010 form and have since replied to them. they have responded in march regarding my 2009 form and stated:
"we have reviewed your information and determined no action was necessary on your account".
I thought that I was off in the clear but then I received another letter in March, then again in May, stating that they have not resolved the matter regarding my 2010 tax form. Just yesterday, I received the notice of penalty charge...basically a penalty in the total amount of my TFSA.
What am I to do now? I plan to write to them and send them all correspondences and explanations previously sent. Please help.[/quote]
Did they state the IRC code that the penalty is based upon? Have you sent the letter to explain why you were not able to comply? If yes, did they say your "reasonable cause" is rejected?
[quote="zad888"]I had the same issue...I submitted both 2009 & 2010 in April 2011. i received the same letter you mentioned in january this year inquiring about my 2010 form and have since replied to them. they have responded in march regarding my 2009 form and stated:
"we have reviewed your information and determined no action was necessary on your account".
I thought that I was off in the clear but then I received another letter in March, then again in May, stating that they have not resolved the matter regarding my 2010 tax form. Just yesterday, I received the notice of penalty charge...basically a penalty in the total amount of my TFSA.
What am I to do now? I plan to write to them and send them all correspondences and explanations previously sent. Please help.[/quote]
calvin
is the 3520A due on Mar 15? Or is that only if it is prepared by a trustee and not the owner? That may be why they consider it late.
zad- I'm a little confused the order of events.In January they asked for an explanation about the the 3520A for 2010 but then answered about 2009? I would think if they were asking for an explanation about late filing2010 back in January, then they must have received it. Maybe someone more familiar can answer this, but I thought failure to file penalty was a penalty for failure to file on time. not necessarily that you never filed. I think the most you can do is send copies of all correspondence and another letter explaining the situation. I would send it by courier express post to get a signature. when I called I asked for the street address for couriers to the Philadelphia office and was told that it is:
IRS service center
2970 Market Street
Philadelphia, PA 19104
I'm assuming your letter has to go back to Philadelphia.
Also, I've found that it never hurts to call a second time, sometimes you get someone that is more helpful.
is the 3520A due on Mar 15? Or is that only if it is prepared by a trustee and not the owner? That may be why they consider it late.
zad- I'm a little confused the order of events.In January they asked for an explanation about the the 3520A for 2010 but then answered about 2009? I would think if they were asking for an explanation about late filing2010 back in January, then they must have received it. Maybe someone more familiar can answer this, but I thought failure to file penalty was a penalty for failure to file on time. not necessarily that you never filed. I think the most you can do is send copies of all correspondence and another letter explaining the situation. I would send it by courier express post to get a signature. when I called I asked for the street address for couriers to the Philadelphia office and was told that it is:
IRS service center
2970 Market Street
Philadelphia, PA 19104
I'm assuming your letter has to go back to Philadelphia.
Also, I've found that it never hurts to call a second time, sometimes you get someone that is more helpful.
Primo,
Yes, it seems like the 3520A is due on mar 15 instead of apr 17 as I thought. The trust never filed 3520A for me and I have to do it myself every year. But I don't know its due earlier than 3520. I just read that the penalty of late filing 3520A is greater of 10k or 5% of the value. Dang, my RESP doesn't even worth that much. It's a pain in the ass to have a RESP while in US. I have a feeling that they setup the complex laws just to trap us honest taxpayers.
[quote="primo"]calvin
is the 3520A due on Mar 15? Or is that only if it is prepared by a trustee and not the owner? That may be why they consider it late.
[/quote]
Yes, it seems like the 3520A is due on mar 15 instead of apr 17 as I thought. The trust never filed 3520A for me and I have to do it myself every year. But I don't know its due earlier than 3520. I just read that the penalty of late filing 3520A is greater of 10k or 5% of the value. Dang, my RESP doesn't even worth that much. It's a pain in the ass to have a RESP while in US. I have a feeling that they setup the complex laws just to trap us honest taxpayers.
[quote="primo"]calvin
is the 3520A due on Mar 15? Or is that only if it is prepared by a trustee and not the owner? That may be why they consider it late.
[/quote]
Calvin
I think it is easy to misunderstand when it is due if it is being prepared by the owner and not the trustee. When it says on the 3520 to attach the substitute 3520A, it is easy to assume that it is all due when the 3520 is due and not when the 3520A is due from the trustee. If you reported the income and haven't had any other compliance issues, I think you have a case for mercy! I think they can just issue a warning if is a first time issue. Good luck. Hope we all have a good outcome! Keep us posted. Might at least help someone else from the same pitfalls.
I think it is easy to misunderstand when it is due if it is being prepared by the owner and not the trustee. When it says on the 3520 to attach the substitute 3520A, it is easy to assume that it is all due when the 3520 is due and not when the 3520A is due from the trustee. If you reported the income and haven't had any other compliance issues, I think you have a case for mercy! I think they can just issue a warning if is a first time issue. Good luck. Hope we all have a good outcome! Keep us posted. Might at least help someone else from the same pitfalls.
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CdnAmerican
- Posts: 245
- Joined: Tue Aug 30, 2011 12:15 am
So, it seems that there is a group of us in more or less the same situation. Perhaps it's worth taking a step back; as far as I know, I have not seen a single person with a penalty for late filing of these - and I think that's been consistent with the guidance on this board. While these letters are chilling, I am assuming that a reasonable letter will be sufficient to take care of this. I will worry if I get word that a penalty has been assessed, but my bet is that this is a computer-generated letter, but that a response letter would be read by a (reasonable) human. Perhaps I am overly optimistic, but I am still going by IRS' own guidance (at least for those of us submitting these forms before September 2011 but still late) that there will be no penalty.
Here's an external link that corroborates this for those filing before August 31, 2011: http://www.us.kpmg.com/microsite/taxnew ... b/OVDI.pdf
I'll throw it out as a question - has anyone gotten a fine for simply having a late 3520 or 3520-A, when there was no new tax owing?
Here's an external link that corroborates this for those filing before August 31, 2011: http://www.us.kpmg.com/microsite/taxnew ... b/OVDI.pdf
I'll throw it out as a question - has anyone gotten a fine for simply having a late 3520 or 3520-A, when there was no new tax owing?
Not a professional opinion.
CndAmerican
I'm trying to remain optimistic too that this is just a robot writing us and a reasonable person will review our letters. The IRS notice published in December of 2011 also indicates that no penalties will be applied when no tax is owing. I reference this notice in my letter since it suits my situation the best.
http://www.irs.gov/newsroom/article/0,, ... 88,00.html
I'm trying to remain optimistic too that this is just a robot writing us and a reasonable person will review our letters. The IRS notice published in December of 2011 also indicates that no penalties will be applied when no tax is owing. I reference this notice in my letter since it suits my situation the best.
http://www.irs.gov/newsroom/article/0,, ... 88,00.html