IRS Form 3520 and 3520A Penalty Appeal and Abatement Procedures

The IRS Form 3520 is used to report certain transactions, such as gifts or bequests, made to foreign trusts or foreign derivatives. The IRS Form 3520-A is used to report information about foreign trusts, including their beneficiaries, trustees, and assets.

If your tax attorney wants to file a 3520 penalty appeal, here are some things you should know about the process:

1. The first step in the appeal process is to request an appeal with the IRS Office of Appeals.
2. The request for an appeal must be in writing and include a statement of the issues in dispute and any supporting documentation.
3. The IRS Office of Appeals will consider the request and any additional information or documentation provided by your attorney and make a decision on the appeal.
4. Your attorney can help you prepare the appeal request and provide any supporting documentation that may be relevant to your case.
5. If the appeal is denied by the IRS Office of Appeals, your attorney may advise you to file a petition with the United States Tax Court to have the case heard by a judge.
6. The Tax Court will consider the case and issue a decision based on the evidence and the applicable law.
7. It is important to work closely with your attorney throughout the appeal process and provide any information or documentation they may need to make the best case for you.
8. The entire appeals process can take several months or even years to complete
9. It's important to keep in mind that this process might not guarantee a positive outcome.
10. Keep in mind that the IRS is more likely to consider abating the penalty if you can demonstrate that the failure was due to reasonable cause and not due to willful neglect or intent to evade taxes.
11. It's important to work closely with your attorney throughout the appeal process and provide any information or documentation they may need to make the best case for you.
12. It's also important to consult with your attorney if you have any question or doubt about the process.
13. It's possible to still be liable for penalties even if the appeal is successful.
14. Keep in mind that the penalties and fines can be very high, so working with an attorney that has expertise in handling 3520 penalty appeals can be beneficial.
15. Your attorney will also be able to provide you with guidance on how to avoid penalties and fines in the future.

How can my tax attorney file for an abatement for Form 3520?

1. Gather documentation that supports the reason for the abatement request, including any information related to the failure to file Form 3520, such as medical records, death certificates, or records of events beyond your control.
2. Prepare a written request for abatement that explains the reason for the failure to file Form 3520, and how it was due to reasonable cause and not willful neglect.
3. Include any supporting documentation and a statement of the issues in dispute.
4. Submit the written request for abatement to the IRS through the appropriate channels, such as mail, fax, or e-file.
5. The IRS will review the request and supporting documentation and make a decision regarding whether to abate the penalties.
6. Your attorney will be able to assist you in providing all the necessary documentation and arguments to support your claim, and also follow-up with the IRS regarding the status of the request.
7. If the request is denied, your attorney can advise you on the next steps, such as requesting an appeal or seeking relief through the IRS's Voluntary Disclosure Program or the Offshore Voluntary Disclosure Program.

Penalties for Forms 3520 and 3520A

• Penalties for failure to file or provide correct information on Forms 3520 and 3520-A can be significant, potentially reaching up to 25% of the value of the transaction.
• Penalties for failure to file Form 3520 or 3520-A can be abated if the failure is due to reasonable cause and not willful neglect.
• Penalties for failure to provide correct information on Forms 3520 and 3520-A can be abated if the failure is due to reasonable cause and not willful neglect.
• To request abatement of penalties, a written request must be submitted to the IRS, including an explanation of the reasonable cause for the failure and any supporting documentation.
• The IRS will consider factors such as the taxpayer's history of compliance, the reason for the failure, and the steps taken to remedy the failure when determining whether to abate penalties.
• In the case of a penalty for failure to file Form 3520, the taxpayer may also request a filing extension by submitting Form 8892 to the IRS.
• The IRS may also abate penalties in cases of undue hardship, such as when the penalties would cause significant financial difficulties for the taxpayer.
• If the IRS denies a request for abatement of penalties, the taxpayer has the right to appeal the decision.
• The first level of appeal for an abatement of penalties is to the IRS Office of Appeals.
• The taxpayer must submit a written request for an appeal, including a statement of the issues in dispute and any supporting documentation.
• The IRS Office of Appeals will consider the taxpayer's request and any additional information or documentation provided.
• If the IRS Office of Appeals denies the appeal, the taxpayer may request a hearing before the United States Tax Court.
• The taxpayer must file a petition with the Tax Court and pay a filing fee.
• The Tax Court will consider the case and issue a decision based on the evidence and the applicable law.
• In some cases, taxpayers may also be able to seek relief from penalties through the IRS's Voluntary Disclosure Program or the Offshore Voluntary Disclosure Program.
• These programs allow taxpayers to come forward and disclose unreported income or failure to file Form 3520 or 3520-A, in exchange for reduced penalties.
• Taxpayers must meet certain eligibility requirements and pay a penalty in order to participate in these programs.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to a death, serious illness, or other unforeseen event.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to an error made by an agent or advisor.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to a significant hardship.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to events beyond the taxpayer's control.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to good faith reliance on incorrect or incomplete information from the IRS.
• The IRS may also abate penalties if the taxpayer can demonstrate that the failure was due to a delay caused by the IRS in responding to a request for information.
• Taxpayers should consider consulting a tax professional and providing documentation that supports the reason for the abatement request.