Filing late Form 3520’s and the IRS robot


Posted by:
Phil Hodgen

Written on:
July 13, 2011

Posted in:
Tax bureaucracy
Voluntary Disclosure

Douglas Shulman thinks everyone knows as much about tax law as he does.*  Shockingly, a lot of regular people walking around the planet are unfamiliar with the nuances of the Internal Revenue Code, and so–innocently and in good faith–they don’t know about some pieces of paper that Douglas Shulman thinks they should.

Upshot:  we do a lot of remedial tax filings for our clients for obscure reasons.

One item of complete obscurity and hilarity is Form 3520 (PDF).  This is a multipurpose form, used for reporting that you received a gift from a nonresident, or an inheritance from a nonresident, or you formed a trust, or you funded a trust, or you received a distribution from a trust, or you got a loan from a foreign trust, and a bunch of other stuff.  It cleans your clothes and it rebuilds your carburetor.

The IRS office that receives Form 3520 filings seems–in our experience–to be populated in equal parts by humans and robots.

The Form 3520 robot seems to intercept every late-filed Form 3520 and send out a letter saying (in robot-talk) “Hey!  You filed late?  Howcome izzat?”  Then the letter is full of robot-mumbling about severe penalties if you don’t answer the robot-question correctly.

In many cases we get these letters and call the IRS office and talk to a human.  The human listens intently for a while, then says, “Oh. Say no more. Let me take care of something for a minute.”  And shortly thereafter the human announces that the robot will trouble our client no more.

I’ll tell you how stupid the robot is.  We have a voluntary disclosure program client (from 2009).  He submitted a late Form 3520 as part of that program.  Got the closing agreement signed.  Paid the taxes and the penalties.  And two weeks later, what should arrive but a letter from the Form 3520 robot asking why our client sent in the Form 3520 late.

Our country is in the very best of hands. (YouTube)

Robot hands.

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*Oblig. footnote.  I really wonder what happens when Douglas Shulman (“igorance of the requirements won’t relieve you from severe penalties”) sits around that big oak conference table and looks across at Timothy Geithner (“Yeah I’m really smart ‘n stuff but geez I had no idea tax law was this complicated and this $30 computer program I used to do my taxes whilst being a Captain of Industry led me astray.”)

Filing late Form 3520's and the IRS robot by
  • http://www.xptrs.com David Waxman

    Thanks – I have a slightly late 3520 to send in for a client.