§6039F · Foreign gifts
5% / month
Capped at 25% of the unreported gift
Applies for each month the failure to report continues.
Example: an unreported $200,000 gift can produce a $50,000 penalty at the maximum.
IRS penalty defense
Missed Filing Form 3520? An IRS CP15 Notice may follow.
An IRS CP15 Notice informs you that the IRS has assessed a civil penalty. When a required Form 3520 or Form 3520-A is late, incomplete or never filed, the IRS can assess a penalty and send this notice. We defend and appeal those penalties for individuals and companies, and request abatement.
International tax attorney & CPA (South Carolina)Former Big-4 Executive Tax Director
Clients worldwide
Form 3520 → CP15
How a missed filing becomes a penalty notice.
Form 3520 is the filing. An IRS CP15 Notice informs you that the IRS has assessed a civil penalty, which can result from a missed filing. They are two ends of the same problem.
- 01
Form 3520 is required
It reports certain foreign trust transactions, ownership of certain foreign trusts, and gifts or inheritances received from foreign persons. A foreign trust with a U.S. owner also has an annual Form 3520-A.
- 02
It is late, incomplete or missing
A filing that is not submitted on time, with no extension, or that contains incomplete or incorrect information, can trigger a penalty.
- 03
The IRS sends a CP15 notice
A CP15 is a letter telling you the IRS has charged a civil penalty. It is not a tax form. It states the penalty, the amount due, the reason and how to challenge it. Not every late filing results in one.
- 04
You respond, commonly within 30 days
Follow the deadline and instructions on your notice. Reply in writing with records, proof of filing and documents about the gift, inheritance or trust transaction.
- 05
We seek abatement or appeal
Relief is available where the failure was due to reasonable cause and not willful neglect. It depends on the facts and is not guaranteed.
What the CP15 can charge
Know what the IRS can assess.
Initial penalty amounts under IRC §§6039F and 6677. Continuation penalties may follow if you do not file within 90 days of an IRS notice.
Form 3520 · Part I
35%
Greater of $10,000 or 35%
Of the gross value of property transferred to a foreign trust and not reported.
Form 3520 · Part III
35%
Greater of $10,000 or 35%
Of the gross value of distributions received from a foreign trust and not reported.
Form 3520-A · U.S. owner
5%
Greater of $10,000 or 5%
Of the gross value of the trust assets treated as owned by you, if Form 3520-A is not filed.
No penalty is imposed where the failure is due to reasonable cause and not willful neglect. Relief depends on the facts and is not guaranteed. Sources: IRS international information reporting penalties; Instructions for Form 3520.
3520 Appeals · Our core services
Three ways we defend your position.
Focused exclusively on Form 3520, Form 3520-A, CP15 notices and related international information return penalties.
Penalty appeals
Challenge unfair IRS penalties and protect your international tax position.
Discuss this →Abatement requests
Reduce or remove penalties when you qualify for abatement relief, including a reasonable cause statement.
Discuss this →IRS representation
Direct representation with the IRS to resolve your 3520, 3520-A and CP15 issues.
Discuss this →How a matter begins
- Review the notice and filing history. We establish what was filed, what was missed and what deadline applies.
- Prepare the reasonable cause statement. We assemble the facts and records that address the two-part test: reasonable cause and not willful neglect.
- Represent you with the IRS. We handle correspondence, the abatement request and any appeal, under attorney-client privilege once an engagement is in place.
Confidential by design
Attorney-client privilege attaches once an engagement is in place, which a non-attorney preparer cannot offer.
27+
Years of international tax law experience
- 80%+ of clients are international businesses and U.S. expats abroad
About · Why the practice
We are built for cross-border complexity. US Tax Attorney & CPA (South Carolina) under one roof.
Jason Kovan, JD, CPA (South Carolina) is a U.S. international tax attorney and a former Executive Tax Director with a Big-4 firm. He has worked with some of the world's largest global tax firms, in the United States, Zurich, London and the Middle East, advising high-net-worth individuals, business owners and corporations.
He and his team have prepared and reviewed tens of thousands of individual, corporate and partnership tax returns, and he has appeared on syndicated radio and as a speaker at international symposiums.
JD, CPA (South Carolina)Former Big-4 Executive Tax DirectorATTORNEY - CLIENT PRIVILEGE FROM ENGAGEMENT
Clients served: U.S. expatriates, U.S. taxpayers and residents, green card holders, dual nationals, individuals and businesses with foreign accounts, trust beneficiaries, and high-net-worth clients across the U.S., Canada, Europe, the Middle East, Central and South America, India, Hong Kong and Singapore.
Our approach
Why work with a focused 3520 practice.
Specialized knowledge
We focus on Forms 3520 and 3520-A and represent clients before the IRS on related penalties.
Error identification
We review your original filing for the errors or omissions that led to the penalty.
Penalty mitigation
We negotiate to mitigate or abate assessed penalties and address issues before they escalate.
Handling of appeals
Our attorneys represent you in appeals and disputes over the penalty.
Efficiency and accuracy
Working solely on these forms keeps us current and saves you time and effort.
IRS process knowledge
We know the IRS's procedures and guide your case through them efficiently.
Questions before you respond
Form 3520 and CP15, answered.
Receiving an IRS penalty notice can be unsettling, especially when it involves money from overseas. Understanding why the IRS sent it is the first step.
Your CP15 response deadline
Commonly 30 days from the notice date. Follow the deadline printed on your own notice.
Get Relief Today →What is a CP15 notice?
A CP15 is a letter notifying you that the IRS has charged you a civil penalty. It is not a tax form. The notice identifies the penalty, the amount due and the reason for the charge. It may also show interest and explain how to challenge the penalty.
How does a CP15 relate to Form 3520?
Form 3520 reports certain foreign trust transactions, ownership of certain foreign trusts, and gifts or inheritances from foreign persons. If a required form is not filed on time and there is no extension, the IRS may assess a civil penalty and issue a CP15 Notice informing you of that assessment. The same applies to an incomplete or incorrect filing.
How much could the penalty be?
For unreported foreign gifts, 5% per month up to 25%. For unreported foreign trust transfers or distributions, generally the greater of $10,000 or 35%. For a missing Form 3520-A, generally the greater of $10,000 or 5% of the trust assets treated as owned by you.
What should I do if I receive a notice?
Check your deadline immediately and follow the instructions printed on the notice, including where to send your response. Respond in writing with relevant records, proof of filing, and documents relating to the gift, inheritance or trust transaction.
Can the penalty be removed?
The IRS allows relief when you can demonstrate the failure resulted from reasonable cause rather than willful neglect. You explain the circumstances and provide supporting evidence. Relief depends on the facts; an explanation does not guarantee approval.
Who must file Form 3520, and where do I mail it?
Whether you must file depends on the transaction and the reporting requirement involved. Use the mailing address in the current Form 3520 instructions for the return you are filing. Our office, 4440 PGA Boulevard, Suite 600, Palm Beach Gardens, FL 33410, is not an IRS filing address.
What is involved in a penalty appeal?
We review the facts, prepare a written statement of the reasons the penalty should be abated, file with the IRS office that imposed it or the appropriate appeals office, respond to IRS requests for documents, and represent you in further proceedings such as an appeals conference. The process can take significant time, so consult an attorney as soon as you receive a notice.
Who we help
Built for cross-border complexity.
Individuals
Expats, residents and beneficiaries
U.S. expats, citizens, green card holders, dual nationals, high-net-worth individuals and trust beneficiaries with foreign accounts, overseas assets, foreign trusts, gifts or inheritances.
Businesses & entities
Companies, partnerships and trusts
International businesses, foreign corporations, partnerships, and foreign trust owners and trustees facing cross-border reporting obligations or CP15 notices after a required form was not filed on time and no extension applied.
Insights & Guidance
Practical thinking on Form 3520, 3520-A and CP15 notices.
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Read the post ↗3520 and 3520A Tax PenaltiesDemystifying IRS Form 3520: a compliance guide
Read the post ↗Confidential enquiry
Start your consultation. Get relief today.
Tell us what arrived from the IRS. You will speak directly with Jason Kovan, JD, CPA (South Carolina), and we will help you understand the path forward.
- Office4440 PGA Boulevard, Suite 600
Palm Beach Gardens, FL 33410, U.S.A. - Phone+1 770 501-4413
- EmailJason@ExpatTaxPartners.com
Contacting us does not establish an attorney-client relationship. Representation begins once you and our firm sign an engagement letter. Please do not send sensitive information at this stage, as information submitted may not be protected by attorney-client privilege.