Help - IRS letter indicating penalty for late 3520

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
shopgirl1
Posts: 27
Joined: Wed Mar 21, 2012 2:19 am

Post by shopgirl1 » Thu Sep 20, 2012 8:55 pm

CdnAm - thanks for taking the time to reply.

After reading your response, I'm comfortable waiting until tomorrow and speaking with someone at 8am. I have already called twice today at 3pm, and the first person put a referral on my account, the second person said to call the business office. I then spent upwards of 40 min on hold for the business office before I gave up.

I am hopeful that I will speak with someone as helpful as the agent whom you spoke with. The form letter that I received most recently was printed in a more modern font, and didn't have any agent's name on it, unlike the previous letters, so I do hope it's as you described.

CdnAmerican
Posts: 220
Joined: Tue Aug 30, 2011 12:15 am

Post by CdnAmerican » Thu Sep 20, 2012 9:26 pm

My experience is that the unsigned form letter has been an actual bill, rather than a description. The signed letters seem to be the ones that better describe what has happened. Good luck tomorrow!
Not a professional opinion.

primo
Posts: 93
Joined: Mon Jan 23, 2012 11:51 pm

Post by primo » Fri Sep 21, 2012 8:29 am

Shopgirl, I posted this on the other thread about 3520 letters.
Seems unwarranted error letters for 3520/3520a are pretty common. The american institute of CPA's has sent a letter to Schulman at the IRS asking that this be looked into. Here is the letter

http://www.aicpa.org/InterestAreas/Tax/ ... mitted.pdf

I'm sure this will get straightened out, but what a huge headache and waste of your time. Good luck!

shopgirl1
Posts: 27
Joined: Wed Mar 21, 2012 2:19 am

Not an error letter

Post by shopgirl1 » Fri Sep 21, 2012 9:30 am

Primo- thanks for your post.

My conversation of an hour ago is below.

8.30AM THIS MORNING
I called the IRS business division and finally spoke with someone who was helpful. Although the news wasn't great.

It turns out the penalty letter exists because I am being charged a penalty on my account, for one of the accounts, but not for the other, for the same tax year. When the agent looked into my personal account, she could see the penalty itself, something that agents on the personal tax return side could not see.

Her explanation is that the agent probably processed the letter against one account and not against the other. The agents are not required to process more than one account on one tax year for a single piece of correspondence. I hope that is the reason that I was assessed the penalty. It is nerve-racking to have to do this again and hope the penalty is waived.

She asked me to fax to her the letter explaining why my 3520 was filed late (this is the 2nd fax, and 4th time overall that I will be sending it to the IRS). She will walk it over to the agent to review.

So I have learned that I need to send all correspondence for each unit separately. No more saving on postage and registered letter fees. And it didn't matter that I already sent my explanation for that specific account by registered letter. I still have to fax it. Oh well.

primo
Posts: 93
Joined: Mon Jan 23, 2012 11:51 pm

Post by primo » Fri Sep 21, 2012 10:06 am

Shopgirl
I sent an individual response for each account in its own addressed envelope. I put all of the envelopes in one Canada Post Express post package and sent it to the street address of the IRS in Philadelphia, not the PO Box. When it was received, I got a receipt online and the name of the IRS employee that signed for it. I was warned in a phone call to the IRS about my 1040s that if there was more than one year sent together, only the year on top may be looked at. Seems incredibly lazy and stupid but what do I know!
Good luck!

shopgirl1
Posts: 27
Joined: Wed Mar 21, 2012 2:19 am

Post by shopgirl1 » Fri Sep 21, 2012 1:38 pm

:roll:

Primo - I thought it would be more confusing to send separate envelopes. Thanks for the tip, and on putting it altogether in 1 express envelope too.
Hoping to send the fax today and call back. She says I can leave a message and she'll personally call me back. That's the very first time anyone has ever offered to do so.

shopgirl1
Posts: 27
Joined: Wed Mar 21, 2012 2:19 am

Still keeping fingers crossed

Post by shopgirl1 » Tue Sep 25, 2012 2:45 pm

Well, wonder of wonders, I spoke to the first non-zombie IRS agent this morning.

She looked into my accounts, and says she removed the penalty, as well as put a note on my account that there are to be no civil penalties placed on the account for the prior tax years.

I was shocked, to say the least. She says that I should be receiving letters sometime next week indicating that the penalty was removed, and that I should not be receiving any further letters.

***Interestingly, she said that as long as I had responded to the IRS' letters regarding the late filing, it was not important what the actual reason provided was. It was the timeliness and effort to respond that she said the IRS was interested in.***

Needless to say, I will keep an eagle eye out for the letters stating that the penalty was removed.

What a nightmare. I hope everyone else in a similar situation is able to get a penalty waiver without having to do as many phone calls, faxes and registered letters as I did.

primo
Posts: 93
Joined: Mon Jan 23, 2012 11:51 pm

Post by primo » Tue Sep 25, 2012 8:30 pm

Great news, Shopgirl! Have a good sleep tonight :)

CdnAmerican
Posts: 220
Joined: Tue Aug 30, 2011 12:15 am

Post by CdnAmerican » Tue Sep 25, 2012 9:32 pm

Great job shopgirl! Your persistence paid off! One note of mild gloom .. I had a mostly similar situation, but still got some penalty letters after this reassurance. It seems as though the computer may spit these letters out even after verbal confirmation that they won't apply. In my case, the agent said that more letters might come (they did), and bills might even come (they did), but that abatement letters indicating the penalty was removed would come a week or two after that (and they did too).

But hopefully yours will be even simpler :) .
Not a professional opinion.

zad888
Posts: 32
Joined: Tue Jan 24, 2012 2:24 am

Post by zad888 » Tue Sep 25, 2012 11:13 pm

That's awesome news Shopgirl!!! =D

I wish my penalty issue will end on a positive note too! I haven't heard back from when they sent a letter stating that they need 45 days to do further research. The only letter I received after that was the 2nd reminder for penalty payment. It has been 75 days since the 45-day letter, should I call to follow-up??

CdnAm, thanks for your response...now I'm thinking whether this TFSA is still worth it or not!?!

nanic
Posts: 55
Joined: Mon Nov 21, 2011 2:26 pm

Stupid question

Post by nanic » Wed Sep 26, 2012 9:45 am

Can I ask a stupid question. What jurisdiction does the IRS have in Canada. If you live in Canada and you get a letter about penalties how can they collect?

3520woes
Posts: 5
Joined: Thu Sep 27, 2012 4:25 pm

Post by 3520woes » Thu Sep 27, 2012 4:29 pm

I wanted to share my story...basically the same as everyone else's.
Filed (with explanation) 7 years of old 3520s and current year's under OVDI FAQ 18, I had paid taxes but didn't know about the form. In June, I got a letter saying that my forms were incomplete (they weren't...the line I hadn't filled out, line 23, was not required) and to provide missing information, and also to explain why they were late. I sent in my responses in July, never heard back, called the IRS after 40 days, they claimed they never got my responses, I sent in the responses again, got penalty letters, called again, they claimed they never got my responses, etc. etc. And oh yeah--in late September, two and a half months after I sent in my explanation and after getting penalty notices for every OTHER year, I got an acknowledgement that they received my original response (the one I sent in July)--regarding 2010 (not the rest of the years) and would take 45 more days to analyze it!


Anyway, I opened a case with the Taxpayer Advocate as soon as I got the first penalty notices. Less than a week after I called them, an agent got in touch with me, and a week and a half after that, they called me back to tell me all penalties were abated. (Interestingly, when I called Philly after getting an advocate assigned, Philly told me there was nothing they could do after the case had been sent to TAS.)

Moral of the story:
-Send all letters for every account/year under separate cover. If I had done that in the first place, I'm sure I wouldn't've gotten the penalty letters. Using the online form, I submitted a systemic advocacy issue to TAS regarding the way multiple years' responses in one letter are handled, we'll see if anything happens on that front.
-TAS is your friend.

CdnAmerican
Posts: 220
Joined: Tue Aug 30, 2011 12:15 am

Post by CdnAmerican » Thu Sep 27, 2012 11:40 pm

3520wose: YOur story is a lot like mine, except that mine is almost but not quite resolved. I have a couple of new penalty letters, but have been assured that they have been abated - I'm just waiting for a letter to prove that.

I strongly agree with your point about sending in correspondence separately for each account. I wish I had known that at the beginning. I resubmitted the same letter mutliple times, and the only thing that makes sense is that the letter was not attached to each account separately. I had assumed that my account with them was all in one place, when in fact I think they separate it out by TIN as well as year.

I appreciate that you described your situation with the TAS. ONe would hope that mutlipe people describing difficulteis with their process in this situation woudl result in a change so that peopel who file later on don't have the same kind of hassles we have had.

nanic - I guess it's not a stupid question, since you got no response! My thought is that at least for peopel on this board, we are tending to be compulsive enough to want to avoid penalties, even in a different country. I honestly don't know the answer to your question. Does anyone?

zad - I hate the idea of closing an account just because of the onerous tax reporting burden, but that's what I did with my TFSA and may do with my RESP (or, at least, transfer it into someone else's name). I will start a thread some time asking about exactly how you would do that (or, more to the point, how you report that to the IRS). You may want to call to follow up, as it probably couldn't hurt.
Not a professional opinion.

3520woes
Posts: 5
Joined: Thu Sep 27, 2012 4:25 pm

Post by 3520woes » Thu Sep 27, 2012 11:54 pm

TAS actually told me that I might not get letters indicating that the penalties were abated. They told me that the best way to confirm would be to call the IRS and ask if their records indicated I owed them any money. Since seemingly every person I've talked to at the IRS has been able to tell whether there were penalties on my account, this seems pretty reasonable and reliable to me.

3520woes
Posts: 5
Joined: Thu Sep 27, 2012 4:25 pm

Post by 3520woes » Thu Sep 27, 2012 11:58 pm

Oh, and in response to nanic--Canada has indicated they aren't going to help the IRS collect penalties, although nothing is keeping them from changing that position, it's not like it's written into the Charter of Rights and Freedoms or something. Personally I live in the USA, so that doesn't help me any. Obviously, if you ever wanted to own property or open a bank account or hold a job in the USA and had a huge unpaid US tax bill, that would be a problem. If you never plan to live here, maybe it doesn't matter.

Post Reply