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Case Study: Successful Form 3520 Appeal

A married couple in the United States each on an F-1 visa to attend school received more than $100,000 in one year from their respective parents overseas. Their CPA misadvised them and filed a late Form 3520 for each to report the gifts received in that year, which was not required. As a result, the IRS hit each with severe penalties.

Our recent experience with Form 3520s reveals that any initial penalty abatement request will be automatically denied by the IRS. While we hope the IRS works to correct this situation by implementing a more stringent review process, as the potential penalty can be severely high, the couple’s best recourse was to appeal the denial of the penalty abatement request.

Representing the couple on a contingency fee basis, the Hone Maxwell LLP team successfully appealed and won elimination of the penalties access to each individual. This was a typical Form 3520 situation and appeal, serving as an important reminder that experienced counsel is needed in this area to increase the chances of reducing or fully abating international penalties.

If you have questions about reporting foreign gifts or inheritances, be sure to speak with an international tax attorney who has experience with the requirements.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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