post-Form 3520 IRS confusion

[Catherine]

Situation: client is originally from Australia and is now resident in the US. His father lived in Australia all his life; no connection with the US other than his son's family was here. 

Father died a good ten years ago. Left his estate in trust, with his wife (client's stepmother) having a life interest in the home they shared. She has also now passed, and the trust is being wrapped up with home being sold etc. 

As part of this wrap-up of an Australian trust for an Australian estate, the client received some money as (a good chunk of) his inheritance from his father's estate. Long convoluted name is "trust for estate of the late john q smith" and listed as such in Line 2a of Form 3520 along with the Australia-only address (of one of the trustees, *not* my client).  Monies received (in four tranches) listed as "corpus distribution from trust for deceased father's estate."   Form 3520 was mailed in back in February of this year.

Client now sends to me a CP 576 A notice dated late March 2024, that finally wended its way to the trustee in Australia - mistakenly listing my client as trustee (he is not). The notice says "we assigned you an EIN" and then demands a filled-out Form SS-4, Application for EIN.

Does anyone here have any idea what gives?

There is absolutely no connection between this trust/estate and the US, there should be no US EIN assigned to it, and I have no idea whatsoever on how to respond to the client's query on "what do I do with/about this?"

Advice, pointers to information, instructions on where and how to hide under my desk, all gladly accepted.  Can I retire now?

[Catherine]

Oh, yeah - along with all the nonsense already listed, the #$%^ letter also yaks about tax returns, taxable years, taxable income, etc. This is a 100% foreign entity, not subject to US taxation whatsoever.  So it seems these nincompoops are expecting to make a buck off of something not under their jurisdiction, half a world away.

[BulldogTom]

Just took a quick look at the instructions for Form 3520 and it looks to me like the 3520form must be filed by the taxpayer (can't tell from the OP if you did that for them or not).   Look at the instructions for Who Must File, and if your client received a distribution from a foreign trust, it looks like that should have been included in the year of the distribution.

As for the trust requiring a EIN, I would probably reply to the 576A form by denying that my client is the trustee and giving the IRS the name and all information about the trustee to the IRS.  Let the trustee handle that, your client should not have to deal with anything other than reporting of the distributions from the foreign trust.

Tom
Longview, TX

[Lee B]

The IRS is really cracking down on "offshore tax schemes" and your client was caught up.