October 25, 2024 - Participants include:
Virginia La Torre Jeker - @VLJeker
John Richardson - @ExpatriationLaw
This was a podcast that came together quickly. On October 24, 2024 the IRS announced that it would no longer automatically assess penalties to file Form 3520 reporting the receipt of foreign gifts. (The requirement is found in Internal Revenue Code 6039F (see below).
Notably this does NOT end the penalty regime for the failure to report foreign gifts. It simply means that the penalties will no longer be assessed without considering reasonable cause.
In the words of the Taxpayer Advocate:
"Spoiler Alert
The IRS has ended its practice of automatically assessing penalties at the time of filing for late-filed Forms 3520, Part IV, which deal with reporting foreign gifts and bequests. And…
By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal Revenue Code (IRC) § 6677 penalty. This favorable change will reduce unwarranted assessments and relieve burden on taxpayers by giving them the opportunity to explain their situation before the IRS assesses a penalty. TAS has recommended these changes for years and the IRS listened. IRS Commissioner Danny Werfel announced these changes during the UCLA Extension Tax Controversy Conference."
The complete blog post is here ...
https://www.taxpayeradvocate.irs.gov/news/nta-blog/irs-hears-concerns-from-tas-and-practitioners-makes-favorable-changes-to-foreign-gifts-and-inheritance-filing-penalties/2024/10/
26 U.S. Code § 6039F - Notice of large gifts received from foreign persons
(a)In general If the value of the aggregate
received by a United States person (other than an organization described in section 501(c) and exempt from tax under section 501(a)) during any taxable year exceeds $10,000, such United States person shall furnish (at such time and in such manner as the Secretary shall prescribe) such information as the Secretary may prescribe regarding each
received during such year.
(b)Foreign gift
(c)Penalty for failure to file information
(1)In generalIf a United States person fails to furnish the information required by subsection (a) with respect to any
within the time prescribed therefor (including extensions)—
(A) the tax consequences of the receipt of such gift shall be determined by the Secretary, and
(B) such United States person shall pay (upon notice and demand by the Secretary and in the same manner as tax) an amount equal to 5 percent of the amount of such
for each month for which the failure continues (not to exceed 25 percent of such amount in the aggregate).
(2)Reasonable cause exception
(d)Cost-of-living adjustment
(e)Regulations
(Added
, Aug. 20, 1996,
; amended
, Dec. 22, 2017,
.)
