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[quote=Anonymous]OP here.  Thank you so much for continuing to provide your thoughts. I want to discuss this all with my Tax Attorney but at $600/hour, I need to be very specific with my questions.

To answer/discuss some questions:

1) [i]Was this a GIFT? An inheritance? Or a distribution from a FOREIGN TRUST?  [/i]

This was NOT a distribution from a foreign trust. This was an inheritance, given as a gift of money.

2) [i]In general, the typical abatement standards do not apply in a situation in which one fails to timely file a 3520 tax form. An argument can be made under a "reasonable cause" standard if seeking to be excused from the penalty. What constitutes "reasonable cause" for failure to timely file a 3520 is unclear[/i].

My Tax Attorney was confident that the abatement applies to a 3520, although further research showed that the IRS considers this a gray area- that's why my attorney wants to argue it in court and also present the "honest mistake theory."  This is my very first ever tax filing mistake.  My job requires continuous evaluation and financial disclosures. I will not make it as a money launderer.

3) [i]I read most of the sftaxcounsel.com blog referenced above. As I suspected, either your CPA or your tax attorney reacted too quickly in sending a protest letter to the IRS which killed your right to challenge the assessed penalty in Tax Court. If my reading is correct, then your choice is to pay the $40,000 and challenge in Court of Claims or in Federal District Court or to pay the reduced amount of $20,000.[/i]

Answer- - No need to say "not giving legal advice here"... because I find it so crazy that even after I hired a CPA and a Tax Attorney that the process I went through doesn't seem completely correct.  Yes, those are my 2 choices right now- 40k or 20k.

[i]4) It's family money that was taxed in another country and you rightfully don't owe any taxes in the US. Hope it works out for you.[/i]

Yes, it has already been taxed in another country... and it's just so sad to even get to that point of getting cash- there was so much drama that occurred 5 generations above me. Plus my sibling got scammed by a land developer. Just can't make this stuff up.

And now to collect what I need to ask my Tax Attorney:

1) Ask about GIFTS from foreigners: late filing assessment formula may be 5% per month of the gross amount of the gift up to a maximum of 25%. (that 35% was literally pasted from the email I got from my Attorney when I asked for the calculation)

2) Did we already miss all opportunities for Tax Court where I don't have to pay up front?

3) What room for negotiation do we have with the Office of Appeals? As I noted from the IRS website: [quote]However, at its discretion, Appeals may reconsider its prior decision if evidence becomes available that indicates further consideration is warranted.[/quote]

Would further reconsideration include... I hired professionals who didn't process my case in the best way possible?  Can you provide them with my timeline documentation, along with the documentation from my CPA. Can we review the process of what I went through to see if things were done correctly?

Anything else I should be asking? [/quote]

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