Statute of Limitations Remains Open Forever For Any Return Which Fails to File An Associated Information Report!

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Taxpayer spend some of their time monitoring when the statute of limitations expires for certain tax return exposure items. This means watching the calendar until you are clear of audit. Unless you skip filing taxes entirely, you might assume your risk of audit eventually passes.

Taxpayers with a unreported income from a foreign bank account find that this situation is tough to resolve. The safest approach is going into the IRS Offshore Voluntary Disclosure Program, although some clients opt for more aggressive approaches.

Failure to file any one of the various foreign information reporting forms (e.g. 5471, 3520, 8838, etc.) leaves the statute of limitations open for every item in the associated federal income tax return.

Besides the various $10,000 penalty per year, per report, associated with each failure file a foreign information report; the statute of limitations for the IRS to discover and assess tax on the associated with federal return remains open indefinitely and thereby creates a double whammy.

These $10,000 penalty per year, per report, associated with each failure file a foreign information report; apply even where no additional tax is due.

Source: Forbes

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Mr. Marini concentrates his practice in Representation before the IRS and All Other Tax Authorities, IRS Collections, Offers in Compromise, Installment Payment Plans, Appeals, Sales Tax Audits, International and Tax Law, Asset Protection and Estate Planning.

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One comment

  1. The extended SOL is often overlooked. But it gets more complicated for years where the statute was open on March 18, 2010 in which cases a return can be partially open indefinitely for omitted foreign items.

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