TaxConnections Member Annette Nellen

For the rest of 2015, I’m going to share my list of ten items from 2015 that I think have particular tax policy relevance.  It’s not a countdown so the start of this list today – #1, isn’t necessarily the biggest item of interest.

#1 – Congress can alter our tax system via a lot of non-tax bills.  In 2015, we saw ten bills enacted (as of 12/11/15) with tax changes. Yet, these bills were not intended to be tax bills, they all had a different primary purpose such as enacting trade deals or funding the Highway Trust Fund. Various tax changes were added in, many of which had been around for a while. For example, the GAO has been suggesting for years that additional information be required on Form 1098 mortgage interest statement. The change in due dates for some tax forms has also been talked about for some time and was even in Congressman Camp’s H.R. 1 (113rd Congress) tax reform bill. Read More

With all of the focus on FBARs and Form 8938s these days, it’s sometimes easy to forget about the other IRS international reporting forms. Below is a list of other important international reporting forms that relate to foreign asset reporting along with their penalties.

(1) Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts: Under IRC § 6048, taxpayers must report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust, and receipt of distributions from foreign trusts. This return also reports the receipt of gifts from foreign entities under IRC § 6039F. The penalty for failing to file each one of these information Read More

TaxConnections Picture - Money MagnetThe IRS has begun applying automatic penalties to late-filed Form 5472’s. We knew that since 2009 the IRS has automatically assessed a $10,000 penalty for late-filed Forms 5471’s – Information Return of US Persons With Respect to Certain Foreign Corporations.

However, we have been receiving a lot of calls from businesses who have recently received penalty notices regarding late filed or non-filed Form 5472’s.Upon further investigation, we discovered that the IRS has updated its IRM 20.1.9, Penalty Handbook, International Penaltieson March 21, 2013 to now include and Automatic Assessment of this $10,000 Penalty for Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.

The Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), is filed as an attachment to the U.S. income tax return by the due date of that return, including extensions. If the reporting corporation’s income tax return is not timely filed, Form 5472 nonetheless must be timely filed at the campus where the return is due. When the income tax return is ultimately filed, a copy of Form 5472 must be attached.The IRM 20.1.9, Penalty Handbook, International Penalties also provides: Read More