No response from IRS about Form 3520 penalty after 10 months - what are my next steps?

The IRS is currently experiencing significant backlogs, so your situation isn't unusual. When they send that initial response indicating they need to process your forms before considering reasonable cause, they're essentially putting your case in a processing queue. After 10 months with no response, I would suggest taking a proactive approach. You have several options: 1) Call the IRS directly at the number on your last notice, 2) Request a transcript of your account to see if there's any activity that wasn't communicated to you, or 3) Contact the Taxpayer Advocate Service if you're facing potential financial hardship due to the uncertainty. Keep in mind that Form 3520 penalties can be substantial ($10,000+), so documenting all your communication attempts is important. Make notes of when you call, who you speak with, and what they tell you.

After struggling with a similar Form 3520 situation last year, I discovered taxr.ai (https://taxr.ai) and it was incredibly helpful for my international gift reporting issues. Their system analyzed my IRS notices and Form 3520 documentation, then provided a clear explanation of where I stood in the process along with recommended next steps. What impressed me was how their tool identified specific sections in my reasonable cause statement that could be strengthened based on successful cases. The analysis showed me exactly what the IRS was looking for regarding gifts for educational purposes, which sounds similar to your situation.

I just wanted to update everyone after trying taxr.ai for my brother's Form 3520 situation. We were initially skeptical, but desperate for any help with his international gift penalties. The service analyzed all his documents and immediately pointed out that we should request a Statement of Account specifically for the Form 3520 submission, which wasn't showing up on his regular transcript. This was a game-changer. The Statement of Account showed his case was actually coded differently than we thought. Based on taxr.ai's guidance, we submitted a targeted follow-up letter referencing this specific code and emphasizing the educational purpose of the gift. Three weeks later, we received confirmation that the reasonable cause was accepted! Saved him from a $10,000+ penalty.

I was in your exact situation last year with Form 3520 penalties hanging over my head. After 7 months of complete silence, I tried everything - calling repeatedly, sending letters, even visiting my local IRS office - nothing worked. Then I found Claimyr (https://claimyr.com) which basically gets you through to an actual IRS agent without the endless hold times. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I was incredibly skeptical, but when I actually got connected to a live IRS agent within 15 minutes, I was shocked. The agent was able to see that my case had been assigned to a specific department but was sitting in a backlog. She created a follow-up request that bumped my case forward, and I finally got a response letter within 3 weeks. Might be worth trying if you're getting nowhere with the normal channels.

I need to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself as a last resort for my own IRS issue (not Form 3520 related, but I had been trying to reach someone about a CP2000 notice for months). To my absolute shock, I got a call back within 45 minutes and was connected directly to an IRS agent who could actually see my file. He explained that my case had been assigned but was sitting in a backlog, and he submitted an internal request to expedite it based on the time that had passed. Two weeks later, I received the resolution letter I'd been waiting on for months. I've never been happier to be proven wrong about something I called a "complete scam." Sometimes desperate measures actually work!

Has anyone considered that the IRS might have actually accepted your reasonable cause statement and just not sent formal notification? I submitted a late 3520 for a gift from my grandmother in 2022, freaked out for 8 months with no response, then finally called and learned they had accepted my statement but the confirmation letter was never generated due to a system error. It might be worth requesting your account transcripts online just to check if there are any penalty assessments. If there aren't any penalties showing after 10 months, that could actually be a good sign, not a bad one.

Did you submit your reasonable cause statement via certified mail with return receipt? This is crucial for dealing with the IRS, especially for something with potential large penalties like Form 3520. If you didn't, you have no proof they actually received your materials. I learned this the hard way when the IRS claimed they never received my response to a similar issue. Now I send everything certified and keep a copy of EVERYTHING. Its annoying but worth it.

I went through almost the exact same situation with Form 3520 penalties for educational gifts. After 9 months of silence, I finally got through to the IRS and learned that my case was actually resolved months earlier - they had accepted my reasonable cause statement but never sent confirmation due to what they called a "correspondence processing error." The key thing that helped me was getting my Statement of Account (different from regular transcripts) which showed the internal case activity. You can request this by calling and specifically asking for a "Statement of Account for Form 3520 submissions" - it shows processing codes that regular transcripts don't include. Also, I'd recommend documenting everything from this point forward. Create a timeline of all your submissions, the May 28th letter, and any attempts you've made to contact them. If you do end up needing to escalate to the Taxpayer Advocate Service, having this documentation ready will speed up the process significantly. The fact that you haven't received any penalty assessment notices after 10 months is actually encouraging - in my experience, the IRS is pretty quick to send penalty notices when they're rejecting reasonable cause statements.