November 2018 Agostino Journal

This article is a follow-up to Erin Collins’s and Garrett Hahn’s article titled Foreign Information Reporting Penalties: Assessable or Not? published in Tax Practice’s Tax Notes, on July 9, 2018.

The Internal Revenue Service’s (“IRS” or “Service”) bifurcation of income tax and international information return examinations has created an inefficient and expensive procedure for examining income tax returns of taxpayers with off-shore income and assets. This article focuses on why penalties for failure to file international information returns must be processed under deficiency procedures, rather than the procedures created for assessable penalties.

The article examines the statutory authority for three of the most frequently asserted international penalties under Sections 6038B, 6038, and 6038D of the Internal Revenue Code (the “Code”). These penalties relate to the failure to file, comply, or substantially comply with instructions for Forms 926, Return by a U.S. Transferor of Property to a Foreign Corporation, 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, and 8938, Statement of Specified Foreign Specified Foreign Financial Assets. …

Form 8865, Return of U.S. Persons With Re- spect to Certain Foreign Partnerships, by Frank Agostino, Esq. and Joseph A. Stackhouse, Jr.

The Internal Revenue Service (“IRS”) generally uses international information returns to analyze how taxpayers interpret the Internal Revenue Code (“IRC” or “Code”), guard against abuse of tax provisions, and start investigations into tax evasion. In the November 2018 Public Report the IRS Advisory Council identified Form 8865, Return of U.S. Persons with Respect to Certain Foreign Partnerships, as an important tool for analyzing high level transfer pricing risk and conducting economic and statistical analysis. This article examines Form 8865 and explains the categories of taxpayers that must file Form 8865, the transactions that must be reported, the consequences of failure to file, and how non-filers can become compliant. …