I got a CP15 for Form 3520. What do I do?
A CP15 referencing Form 3520 is a proposed §6039F penalty. The number looks scary because it's the cap, not the typical outcome.
The 30-day clock comes first
Find the date in the upper-right corner of the notice. You have approximately 30 days from that date to respond in writing before the proposed penalty becomes a hard assessment. Write down the notice number, the tax year, the unreported amount the IRS is citing, the proposed penalty, and the response deadline.
What CP15 actually is
CP15 is the IRS's general-purpose civil penalty notice template. It is used for many penalty types — Form 3520, FBAR, late-filed information returns, frivolous return positions, and others. The header looks the same; the underlying penalty statute is what varies.
When the CP15 references Form 3520, the underlying statute is IRC §6039F — the foreign-gift reporting requirement and its penalty for non-filing. The notice is a proposal; until you let the response window expire, it is not yet an assessment.
The math: 5% per month, capped at 25%
The §6039F penalty is 5% of the unreported amount for each month the form is late, capped at 25% of the unreported amount. On a $200,000 foreign gift filed late, here's how the math grows:
Beyond 5 months, the penalty stops growing. The 25% cap is the ceiling — being years late and being months late hit the same maximum number. See the full 25% penalty math for the worked examples at different gift sizes.
Why this penalty looks huge but often shrinks
§6039F has been criticized by the Government Accountability Office, the National Taxpayer Advocate, and the Treasury Inspector General for Tax Administration. The criticism: the penalty does not scale with willfulness, intent, or whether any tax was owed. A late-filed report of a non-taxable gift gets the same percentage treatment as a hidden offshore stash.
The result, in practice, is a high reversal rate when these penalties are challenged. The GAO has flagged the program publicly. A well-drafted reasonable cause statement — especially when the gift was non-taxable income and the filer voluntarily discovered the obligation — frequently leads to full or partial abatement.
The reasonable cause statement is the entire game
For a non-willful Form 3520 case, the written reasonable cause statement filed inside the response window is the document that decides the outcome. It needs to cover (1) when you learned about Form 3520, (2) what you did the moment you learned, (3) whether the gift / inheritance was taxable income, and (4) your prior compliance history.
For the full structure, see how to write a Form 3520 reasonable cause statement.
Two paths people typically take
Engage an international tax practitioner. They draft a written reasonable cause response, file the late Form 3520 with the statement attached, and submit before the deadline on the CP15. Many cases are abated at this stage. Cost: typically $1,500 to $5,000 for the response.
Pay the proposed penalty, then sue for refund. Slower, more expensive, and harder to win. Most practitioners only recommend this when the response window has already passed.
What 3520 File can and cannot help with
3520 File is a filing tool for Form 3520 Part IV. It does not respond to IRS notices or represent filers before the IRS. The CP15 itself needs an international tax practitioner.
If the practitioner determines the late Form 3520 still needs to be filed alongside the response, 3520 File can produce the auto-filled PDF Part IV for $99 — but the reasonable cause statement and the response itself are practitioner work.
Frequently asked questions
CP15 is a Civil Penalty Notice. When the CP15 references Form 3520, the IRS is proposing the §6039F penalty for failing to report a foreign gift, bequest, or trust transaction. It is a proposal, not a final bill.
5% per month of the unreported amount, starting from when the form was due, capped at 25%. On a $200,000 unreported foreign gift filed five months late, the cap math reaches $50,000.
No. It is a proposed assessment. You have a response window (typically 30 days from the notice date) to challenge it before it becomes final.
Yes. The standard challenge is a written reasonable cause statement. Many non-willful Form 3520 cases are abated or reduced at this stage. After assessment, an Appeals Office review and refund litigation are possible but harder.
The Government Accountability Office has publicly flagged the IRS's Form 3520 penalty program for high reversal rates on appeal — meaning the IRS often loses challenges to these penalties. The exact percentage varies, but the headline is that these penalties are unusually winnable on a well-drafted reasonable cause response.
Generally no. Paying and seeking a refund is harder than challenging the proposal up front. The pay-first path is usually reserved for cases where the response window has already passed.
Find an international tax practitioner
A CP15 for Form 3520 should be handled by someone who handles Form 3520 cases specifically — not a general CPA.
- • AICPA “Find a CPA”, filtered by international tax
- • ABA Tax Section practitioner directory
- • Search firm websites for “Form 3520 reasonable cause” or “6039F penalty defense”
For next year's Form 3520
If you have another foreign gift or inheritance coming, file on time. $99 flat, ~20 minutes, auto-filled Part IV PDF.
3520 File does not respond to the notice you already have. It files Form 3520 Part IV correctly going forward.