The Internal Revenue Service ("IRS") F3520 informational tax return may carry substantial penalties if the deadline is missed. A quirk of the legal system, the penalty is only subject to abatement by the IRS itself, without normal recourse of tax court or appeal to District Court. Recently, the IRS affirmmed the existing policy to assess penalties for failure to file Form 3520 without considering taxpayer-provided reasonable cause statements. The website warns that taxpayers will need to resubmit their defenses after the penalties have been assessed.
Recently, the IRS website has changed to that may not be enough to assert the reasonable cause defense and avoid the assessment of penalties. The newly updated site says:
“Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement. It may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.”
If you have found yourself with a F3520 filing obligation or received a CP15 notice of penalties, contact the Tax Attorneys at Fazzio Law Offices!
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