Foreign Trusts With CPA Gary Carter: Forms 3520, 3520A And IRS Penalties

January 4, 2021 - Participants Include:

 

John Richardson - @Expatriationlaw

Gary Carter - GWCarter.com

 

Prologue 2019:

In 2019 thousands of Americans abroad were issued $10,000 penalties for the alleged late of filing of IRS Form 3520A. The Form 3520A penalty story was well documented and discussed at Tax Connections by CPA Gary Carter. Ultimately the efforts of Gary and others played a role in Revenue Proc 2020-17 which provided a filing exemption for certain "Foreign Trusts". For those interested I highly recommend the following two posts at Tax Connections.

Form 3520 and Substitute Form 3520A For Foreign Trusts And Gifts From Nonresidents

 

Treasury Exempts Applicable Tax Favored Foreign Trusts - From The 3520 And Therefore The Form 3520A Requirement

______________________________________________________________

 

This podcast features a discussion with Gary Carter that includes:

 

1. What exactly is required for something to qualify as a trust under the Internal Revenue Code?

2. Assuming you have a trust, what does the Internal Revenue Code 6048 say about the reporting requirements (ultimately found in Form 3520 and Form 3520A)?

3. What exactly is a "substitute" Form 3520A and when is it due?

4. How and why did the IRS issue thousands of Form 3520A penalties in 2019?

5. How did the work of Gary and others lead to the IRS issuing Rev Proc 2017 (exempting certain foreign trusts from the 3520 and 3520A requirements)?

6. What about reasonable cause as a defense to the IRS penalties?

7. How can you get the penalties abated with a single phone call? (Answer: Call 267 941 - 1000 and select option 3. Tell them that you timely filed a Form 3520 and you filed a substitute Form 3520A with/attached to the Form 3520. Good luck!)

___________________________________________________________

A special thanks to Gary Carter for sharing his expertise!