IRS Correcting Problem Flagged by AICPA
Published October 18, 2012
The American Institute of CPAs’ Aug. 28, 2012 letter alerting the Internal Revenue Service that erroneous letters from the Service to taxpayers filing a foreign trust form is a “widespread problem affecting numerous taxpayers” resulted in corrective action by the IRS. The IRS has stopped issuing new letters, as the AICPA requested.
The IRS was sending taxpayers inaccurate letters about Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. The targeted taxpayers were those filing Form 3520 for 2010 and earlier years.
The AICPA’s Foreign Trust Task Force continues to hear from members with clients who received such erroneous IRS letters, including letters assessing millions of dollars of penalties and intent to levy. The AICPA will continue to provide this information to the IRS as it is gathered from members.
The AICPA will work with the designated IRS official in the Service’s Large Business and International group, who is coordinating IRS efforts, until the systemic problem is resolved.
More details are available in the story included in the September 2012 issue of The CPA Advocate.