Ask Me Help Desk - Forgot to file form 3520

Forgot to file form 3520

During 2011, I received several gifts of money from an overseas relative (not a US resident or citizen). In each case, the money was wired to my US account from overseas, and was in excess of $100,000.
I did not realize when I filed my 2011 taxes that I have to file form 3520 "Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts"

Can I just file this form now, or do I have to amend my 2011 1040 tax return? Do I need to include any sort of explanation of why I didn't file the form (did not know). WIll I have to pay any penalty, or can I get a waiver of that? Is it better in this case to go back to the tax preparer and have them do it?

Thanks

Form 3520 is a stand-alone filing which is NOT submitted with the tax return.

File the form with a cover letter stating that you were NOT aware of the requirement and that you are submitting the form late, and ask that all penalties be waived.

Most of the time, the IRS will waive the penalties if you come forward on your own initiative.

Quote:

Originally Posted by AtlantaTaxExpert

Form 3520 is a stand-alone filing which is NOT submitted with the tax return.

Go ahead and file the form with a cover letter stating that you were NOT aware of the requirement and that you are submitting the form late, and ask that all penalties be waived.

Most of the time, the IRS will waive the penalties if you come forward on your own initiative.

Thank you for the reply. Couple of follow up questions:

1) The account to which the transfers were made are actually a joint account between my sister and myself. However, I am the primary account holder. I assume therefore that there is no need for my sister to also file a 3520 form?

2) The form asks for my spouses identification number. Should I include that even if I am the only one filing this form?

3) Will I hear something back from the IRS soon? (e.g. that my form has been accepted or that they have agreed to waive the penalty etc)?

Thanks

1) Unfortunately, your sister DOES have to submit her own Form 3520.

2) Submit your wife's SSN IF you filed a joint tax return for 2011.

3) Probably not; the IRS does not as a matter of routine respond to such submissions.

Quote:

Originally Posted by AtlantaTaxExpert

1) Unfortunately, your sister DOES have to submit her own Form 3520.

2) Submit your wife's SSN IF you filed a joint tax return for 2011.

3) Probably not; the IRS does not as a matter of routine respond to such submissions.

Thanks. Regarding reply #2, we did file a joint tax return in 2011. Therefore, in addition to the SSN, should I also list my wife's name in box 1a of the 3520 (name of persons filing return)? My wife has absolutely no connection to this account..

Thanks again

If you did not file a joint return , leave your wife OFF the Form 3520.

Quote:

Originally Posted by AtlantaTaxExpert

Form 3520 is a stand-alone filing which is NOT submitted with the tax return.

Go ahead and file the form with a cover letter stating that you were NOT aware of the requirement and that you are submitting the form late, and ask that all penalties be waived.

Most of the time, the IRS will waive the penalties if you come forward on your own initiative.

I filed the 3520. I did receive a reply, but it said that due to workload they have not been able to research my inquiry. And that they will respond within 45 days. Then a few weeks later I got another letter asking me to wait another 45 days. I think I have got that letter 3 or 4 times now.

Should I be concerned? Would calling the IRS help to bring the matter to closure?

From just googling, it appears that late filed 3520s are quite common, but the IRS is in a mess dealing with them, with people getting strange letters assessing penalties even after the penalties have been waived etc.

The IRS has been over-whelmed with filings of this nature, hence the delays in reviewing your case.

In my opinion, you have nothing to worry about.