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Foreign Gift Penalty Abatement

A U.S. taxpayer may be required to report gifts or bequests from foreign sources even though no U.S. tax may be owed.

If you fail to disclose a foreign gift to the IRS, then you could be subject to a penalty of 25% of the gift’s value. Partner with the California lawyers at Kugelman Law today to resolve such disclosures and prevent penalties.

Such gifts must be reported on Form 3520, which is an information return, not a tax return, because foreign gifts are not subject to income tax.

In general, according to the IRS, “a foreign gift is money or other property received by a U.S. person from a foreign person that the recipient treats as a gift or bequest and excludes from gross income.”

Kugelman Law’s California attorneys can help a taxpayer seek abatement, or removal, of the Foreign Gift Penalty.

Options include:

The IRS takes this requirement seriously and will impose a 25% penalty if a taxpayer does not timely report the gift by failing to file Form 3520 when it is required. Part of the reason why penalties for unreported foreign income are so steep is because the IRS wishes to discourage people from thinking they can get away with not paying taxes on foreign income by hiding it.

These laws often ensnare normal expats that are unaware of the filing requirements for foreign gifts. The IRS has established formal disclosure programs that require amending returns, additional filings, and paying a penalty.

You may be penalized if you do not file your Form 3520 on time or if it is incomplete or inaccurate for failure to report foreign gifts, and/or for undisclosed foreign financial asset understatements. This form must be filed separately from your income tax form. The due date for a U.S. person to file a Form 3520 follows the same income tax filing deadline of April 15, but you can seek an extension of the due date to October 15.

In 2020, the normal filing deadline of April 15 was pushed back to July 15 as a result of certain tax relief given to taxpayers due to the worldwide coronavirus pandemic. However, it is not known how 2021 deadlines will be impacted, if at all. It is important to speak to a tax attorney to be ensure you are current on all tax deadlines and obligations.

Let Kugelman Law’s California foreign gift compliance lawyers guide you through Foreign Gift Penalty Abatement in order to help prevent having to pay enormous penalties for violations.

By working with Kugelman Law, you will benefit from the tax expertise of our attorneys who have helped clients throughout San Francisco, Irvine, California, and the world just like you to successfully abate foreign gift penalties.

Our lawyers’ combined decades of experience include serving as an IRS Chief Counsel attorney as well as years spent at the U.S. Tax Court and a U.S. District Court. You have a trusted tax law partner in Kugelman Law. Please contact us today to help resolve your tax issue.

Client Reviews
★★★★★
Alexander helped me break down my tax situation and used his expertise to figure out the next actionable steps, make sure that all the bases were covered (that I wasn't aware even existed), and confirm that things were done correctly. If you are confused and stuck in a difficult tax situation, Alexander will guide you forward and help you confidently resolve the issue. Henry Wang
★★★★★
If you are having tax trouble, Alexander is the one to help you. He was very professional, personable, and easy to reach. His explanation of the entire process is helpful for easing the stress that is associated with tax trouble. We never felt intimidated or out of the loop while working with him. The process was handled to our liking and we are satisfied with the results. Even the after care has been phenomenal! Tony W.
★★★★★
If anyone out there is in need of stellar legal tax assistance, look no further and contact Alexander Kugelman. He helped me tremendously with my tax situation and is always there to help when needed. If I can give Alexander more stars, I would because 5 stars is not enough! Thank you for everything, Alex!!! Flo Lauzon
★★★★★
Alexander has been a life saver! I got dragged into some serious IRS issues with a complicated foreign assignment component, which included divorce. Alexander has been working with me to resolve directly with the IRS. Alexander is detail oriented, responsive and I trust him to guide me. I will be using Alexander for all tax related matters from now on! He is stuck with me forever. Eve T.
★★★★★
Alexander helped me understand the IRS audit process and prepared my response. There were certain records that I had lost, but he suggested alternatives that the IRS accepted. Even better, he showed up at the audit for me and I never actually had to talk with the IRS. I didn't have to pay any penalties. I'd definitely recommend hiring Alexander to deal with an IRS issue. L.R.