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[quote=Anonymous][quote=Anonymous]OP here.

$20k is a lot for me.

I did mentally prepare for the $10k that the CPA told me. I thought $10k (although still very painful) is still a tough price to pay for a first-time honest mistake. I am extremely diligent with deadlines- so I am really knocking myself on how I could have messed this up.

It is a bit unclear to me how much dialogue the Tax Attorney and the Appeals Officer will have, and if I should ask to be part of that conversation.

My thinking right now is to instruct my Tax Attorney to negotiate:

Offer 5k first. If no, then offer 8k. If no, then offer 10k.

My mental preparation was at 10k. Add the $4K fee to the Tax Attorney and the $1k fee to the CPA, and that brings my total mistake to $15k.

If Appeals says no to the 10k, my gut feeling is to go through with litigation.

The Tax Attorney said that if we go through with litigation, he can:

-Present the law that covers the abatement
-Present the "honest-mistake theory" (I didn't know that this is really a thing). 
-Provide background info on my diligence in doing the right thing, and reporting the error as soon as I realized it. I have given them a timeline, along with my email timestamps. I studied the filing process of the 3520 and FBAR very thoroughly- but again, mistake on the deadline of one of them.

If I litigate and get the refund, I'd be out... 9k for the success fee, 4k for the Tax Attorney (so far), and 1k for the CPA. That's $14k total.

[/quote]

The IRS is trying to prevent money laundering.

To assess competency, ask about proceeding in Tax Court.

Ask if MINIMUM PENALTY is set by statute or other law. determine minimum penalty. This should help guide your thoughts.[/quote]

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