A Logical Program Made Unnecessarily Complicated: The IRS’ Approach to International Information Returns

The Difference Between Assessable Penalties and Deficiency Procedures

Applicable Forms and Code Sections

Form 926

Form 5471

Form 8938

The Reasonable Cause Defense

Potentially Applicable Penalties and Additional Amounts Owed

  • In Chapter 61 under Section 6707A(a): Per Section 6011, penalties are permitted for anyone who does not include a reportable transaction on a return in the amounts outlined in subsection (b).
  • In Chapter 1 under Section 527(j)(1)(B): As outlined in subtitle F, penalties granted in this section are to be collected in accordance with the policies set in Section 6652(c).
  • In Chapter 99 under Section 9707(f): Penalties allowed by the language in this section must be treated in the same way as taxes imposed by section 4980B.
  • In Chapter 77 under Section 7519(f)(1): Unless otherwise stated, payments required in this section must be assessed and collected in the same way as a tax imposed by subtitle C.
  • In Chapter 61 under Section 6039F(c)(1)(B): If provided demand and notice by the Secretary in the same manner as tax, any U.S. person must pay 5% of the amount of a foreign gift for each month a gift is not properly reported up to 25% of the aggregate amount of gifts.
  • In Chapter 61 under Section 6043(d): For issues related to a failure to file, see section 6652(c) or section 6652(1) as applicable.
  • In Chapter 61 under Section 6046(f) and Section 6046A(e): Violations in this section should be treated as outlined in sections 6679 and 7203.
  • In Chapter 61 under Section 5000A(g)(1): If provided demand and notice by the Secretary except as detailed in paragraph two, penalties under this section should be assessed and collected as those under subchapter B of chapter 68.
  • Section 6038: This Section states that if any U.S. person fails to furnish information with respect to foreign business entities as required in the time prescribed, a penalty of $10,000 for each annual accounting period is applied. Cross-references exist to Sections 7203 in regards to provisions for penalties and Section 7701(a)(30) for the definition of a U.S. person.
  • Section 6038B: This Section states that if any U.S. person fails to provide the information described in subsection (a) as stated in the regulations, a penalty equal to 10% of the fair market value of the applicable property at the time of the exchange will apply. If a contribution was made instead, gain must be recognized on the amount that would have been received had the property sold for fair market value on the date of the action.
  • Section 6038D: This Section states that if any U.S. person fails to provide the information described in subsection © in the ways described, a $10,000 penalty will be required.

Deficiency Procedures

Collection Due Process Proceedings Challenges in the Current System

Collateral Estoppel Complications

Considerations Regarding Statute of Limitations

Is Filing the Correct Form Necessary?

What Is the True Statute of Limitations?

Navigating the Challenges of International Information Returns

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Michael is an attorney specializing in entertainment law and a professionally-trained actor. He is a partner in the law firm of DeBlis Law.

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Michael DeBlis

Michael DeBlis

Michael is an attorney specializing in entertainment law and a professionally-trained actor. He is a partner in the law firm of DeBlis Law.

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