IRS Challenges to Foreign Gifts Received: Failure to File Forms 3520 and 3520-A

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Course Details

Course Information

smart_display Format
On-Demand
signal_cellular_alt Difficulty Level
Intermediate
work Practice Area
Tax Preparer

Date & Time

event Date
Wednesday, December 13, 2023
schedule Time
1:00 p.m. ET./10:00 a.m. PT
timer Program Length
110 minutes

Credit Information

BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$197.00

This webinar will address the IRS' current and often overreaching effort to collect penalties related to the filing of Forms 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, and 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner. Our panel of international tax experts will review the IRS' penalty regime for inadequate reporting, recent cases regarding the receipt of foreign gifts, and provide examples of the best responses to IRS assessments of penalties relating to reporting foreign gifts received in specific scenarios.

Faculty

Matthew L. Roberts

Partner

Gray Reed

Mr. Roberts is a tax litigator and trusted advisor with considerable experience helping U.S. and international clients successfully resolve all types of federal tax controversies involving civil or criminal liability, from tax audits and investigations to litigation, appeals and collection matters. Having served nearly three years as an attorney-advisor to the Chief Judge of the U.S. Tax Court in Washington, D.C., Mr. Roberts brings unique insight to navigating intricate government processes and developing innovative and cost-effective solutions to his clients’ tax problems. His client list spans many industries and ranges from individuals and entrepreneurs to non-profits, trusts and estates, partnerships and corporations.

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Frank Agostino

President

Agostino & Associates, PC

Mr. Agostino is the founder and president of Agostino & Associates, P.C. Prior to entering private practice, he was an attorney with the Internal Revenue Service’s District Counsel in Springfield, Illinois and Newark, New Jersey. Mr. Agostino also served as a Special Assistant United States Attorney, where he prosecuted primarily criminal tax cases. As an adjunct professor, he taught tax controversy at Seton Hall University W. Paul Stillman School of Business and Rutgers School of Law. Mr. Agostino also served as the co-director of the Rutgers Federal Tax Law Clinic.

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Description

Under Section 6677, the IRS can assess a penalty for incomplete, inaccurate, or failure to file Forms 3520 and 3520-A. The penalties imposed are the greater of $10,000, 35 percent of the gross value of any property transferred to or distributed from a foreign trust, or five percent of the gross value of the portion of the foreign trust's assets owned by a U.S. person in a grantor trust. Additional penalties apply when taxpayers fail to remedy noncompliance 90 days after notification from the IRS.

IRS' 2018 Compliance Campaign focusing on foreign trusts, Form 3520, and Form 3520-A is thriving. The IRS continues to assess these reporting penalties, knowing many taxpayers are oblivious to the information filing requirements surrounding the receipt of foreign gifts. Although the IRS is required to allow abatement of these penalties for reasonable cause (IRC Section 6039F(c)(2)), many believe the IRS fails to offer this relief for reasons that should qualify. Since a definition of reasonable cause is not codified, litigation is often the only recourse taxpayers have.

The IRS admittedly is looking for untaxed income disguised as gifts; however, the results of its egregious campaign have been numerous cases brought against the Service including those for "stacking" penalties (Wilson v. U.S., No. 20-603 (2d Cir. 2021)), ignoring valid reasonable cause exceptions (Wrzesinski v. U.S., No. 2:22-cv-03568 E.D. Pa. Mar. 7, 2023), and time-barred assessments (Fairbank v. Comm'r, T.C. Memo. 2023-19). The scope and excessive penalties the IRS imposes on unreported foreign gifts make understanding the application of and defenses to these penalties critical for international tax advisers.

Listen as our panel of federal tax litigation experts reviews the current state of IRS challenges to individuals and trusts receiving and distributing foreign gifts.

Outline

IRS challenges to foreign gifts received: introduction
IRS' attempts to impose taxes on foreign gifts
Recent notable cases
Responding to IRS penalty notices
Best practices and strategies

Benefits

The panel will review these and other critical issues:

Calculating penalties imposed under IRC Section 6677
The current state of the IRS' 2018 compliance campaign targeting receipt of foreign gifts
Current cases against the IRS for assessment of penalties for inadequate or non-filing of Forms 3520 and 3520-A
Appropriate responses to assessment of penalties for non-filing Forms 3520 and 3520-A

NASBA Details

Learning Objectives

After completing this course, you will be able to:

Identify penalties assessed on unreported foreign gifts received
Determine how IRS' current initiative impacts taxpayers receiving and reporting the receipt of foreign gifts
Decide how best to respond to IRS penalty notices for not filing Form 3520
Ascertain when litigation is a viable alternative to penalties assessed for not reporting foreign gifts received

Field of Study: Taxes
Level of Knowledge: Intermediate
Advance Preparation: None
Teaching Method: Seminar/Lecture
Delivery Method: Group-Internet (via computer)
Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.