I owe $67k penalty to the IRS for foreign gift. What should I do?

This is actually a fairly common issue with foreign gifts. The IRS requires Form 3520 for reporting gifts from foreign persons over $100k, but many tax software programs don't properly flag this requirement. You have a few options here. First, reasonable cause abatement is absolutely worth pursuing if you genuinely didn't know about the requirement. The IRS does consider "ordinary business care and prudence" - and many average taxpayers wouldn't know about Form 3520 requirements. I'd recommend getting a consultation with a tax attorney who specializes in international reporting issues, but be clear about the scope of work before agreeing to the $400/hour ongoing rate. Many attorneys offer free or reduced-cost initial consultations. At minimum, have them help prepare the reasonable cause letter explaining your situation. If that doesn't work, the IRS does offer payment plans through the Online Payment Agreement tool for amounts under $100k. With penalties this large, you might also consider an Offer in Compromise if you can prove paying the full amount would create economic hardship.

After getting hit with a $32k penalty for not reporting my foreign inheritance, I was in a similar spot of desperation. I tried negotiating with the IRS myself but kept getting nowhere until someone recommended I try https://taxr.ai. They specialize in penalty abatement cases and document analysis. Their team reviewed my situation, helped me find inconsistencies in the IRS notice, and guided me through building a proper reasonable cause argument. Unlike my $350/hour attorney who kept billing me for "research," they actually knew exactly what documentation I needed and how to present it effectively. What really helped was their system for analyzing IRS notices and finding the specific sections of tax code that apply to your situation. They also helped me document the timeline properly to show I took corrective action as soon as I learned about the requirement.

I actually signed up with taxr.ai after seeing the recommendation here and my experience was incredible. I was dealing with a $43k FBAR penalty for not reporting my overseas inheritance from my grandmother. I was super skeptical after wasting money on two different tax professionals who kept giving me conflicting advice. But taxr.ai immediately identified that my case qualified for the IRS's streamlined filing procedures, which my previous "experts" never mentioned. Their document analysis found that the IRS notice had misapplied the willful penalty standard when my situation clearly fit the non-willful category. They helped me draft a response that cited the specific IRM provisions, and the IRS ended up reducing my penalty by almost 85%. The whole process took about 7 weeks. The best part was having someone who could actually explain what was happening in plain English instead of tax jargon. Definitely worth it for the peace of mind alone!

I was in a frighteningly similar situation last year with a $53k penalty for foreign account reporting. After my reasonable cause letter was rejected, I spent MONTHS trying to get through to someone at the IRS who could actually help. Their phone system is absolute hell - I would wait on hold for 2+ hours only to get disconnected or transferred to another department that couldn't help. I finally broke down and tried https://claimyr.com after seeing it mentioned on a tax forum. They have this system that holds your place in the IRS phone queue and calls you back when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was connected to an actual IRS penalty abatement specialist within 90 minutes, and she walked me through the proper appeal process. After explaining my situation, she transferred me directly to an appeals officer who reviewed my case immediately instead of waiting 6-8 weeks for a mail response.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it since I needed to discuss my payment plan options before a deadline. The service actually works exactly as described. I got a call back in about 2 hours (which is still a long time, but I was able to work instead of listening to the IRS hold music). The agent I spoke with was able to put me on a reduced payment plan based on my financial situation. What really surprised me was how different the conversation went compared to my previous attempts. When you finally reach someone after hours on hold, you're already frustrated and the conversation starts off poorly. Being able to just receive a call when an agent was ready put me in a much better headspace, and I think the IRS agent was more helpful as a result. For anyone dealing with large penalties like the OP, being able to actually speak with someone at the IRS makes a huge difference versus sending letters that might sit unopened for months.

Have you looked into the Streamlined Domestic Offshore Procedures? If this was non-willful (meaning you didn't know about the requirement), this program might help reduce the penalties significantly. I made a similar mistake with not reporting my foreign pension from when I worked in Singapore. The standard penalty would have been about $45k, but through the streamlined program I ended up paying just under $10k. The key is documenting that you genuinely didn't understand the requirement. The fact that you took action immediately after discovering the requirement will work in your favor. Make sure your attorney is specifically experienced with the Streamlined program.

whatever u do, don't ignore this!!! i made that mistake when i got hit with a 18k penalty for not reporting my overseas rental income. thought it would go away if i just didn't respond. BIG MISTAKE. they started garnishing my wages and put a lien on my property which destroyed my credit score. took 3 yrs to finally resolve and ended up paying way more in the end. at minimum set up a payment plan asap even while ur contesting the penalty. u can always get refunded later if u win the abatement but it shows good faith effort.