AICPA Efforts and Updates on Erroneous IRS Form 3520 Letters 

    The AICPA Foreign Trust Task Force continues its dialogue with the IRS regarding IRS erroneous letters regarding Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. As was discussed in the October 19, 2012, October 18, 2012 and September 20, 2012 The CPA Advocate, and September 7, 2012 e-alert, the AICPA Foreign Trust Task Force has become aware of, and sent a letter in August 2012 to the IRS regarding, a widespread problem affecting numerous taxpayers across the country (including taxpayers in California, Florida, Maryland, Massachusetts, New York and Washington) as well as taxpayers in Canada. Taxpayers received (and unfortunately, are continuing to receive) incorrect letters from the IRS regarding the completion and filing of Form 3520 for 2010 and earlier years.
    We have been told that the IRS was not aware of the situation until our letter and is taking action. AICPA continues to hear from members with clients who received and are receiving such IRS erroneous letters, including letters assessing millions of dollars of penalties and intent to levy. We continue to provide this information to the IRS as we gather it from members, and our contact at IRS appreciates it as it lets him know what is continuing to be received and what needs to be fixed. IRS is attempting to stop issuing new letters except for those closing out the issue, so we have been told that no new letters after 11/1/12 are supposed to have been issued, and have shared with IRS the ones of which we have become aware. We continue to work with our contact in the IRS Large Business and International group who has been very helpful in looking into the specific issues and is hopefully working within the various IRS groups and processing automated systems and now collections too to resolve this soon. We will continue to keep members updated as we work with IRS to resolve this situation.

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