The American Institute of CPAs (AICPA) has become aware of 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 who are receiving incorrect letters from the Internal Revenue Service (IRS) regarding the completion and filing of Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, for 2010 and earlier years.
The AICPA urged the IRS to investigate to determine the source of the processing problem so it could stop sending out the erroneous letters and to consider issuing an announcement that such erroneous letters do not require a response.
“The letters are inconveniencing taxpayers and causing them to incur unnecessary professional fees when practitioners must respond to the IRS explaining why the IRS letters are incorrect and request an abatement of the penalties,” the AICPA said in its Aug. 28, 2012 letter to the IRS.The letters with erroneous conclusions are being received by taxpayers who filed Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, for 2010 and earlier years.
The AICPA letter described six specific errors the IRS letters claim taxpayers have made, including filing Form 3520 late when it was filed on time.
Read more at: Tax Times blog